Tag: "fairpoint"

New Year, Same Lame Cable and DSL Monopolies

Posted January 3, 2012 by Christopher Mitchell

It's a new year, but most of us are still stuck with the same old DSL and cable monopolies. Though many communities have built their own networks to create competition and numerous other benefits, nearly half of the 50 states have enacted legislation to make it harder for communities to build their own networks.

Fortunately, this practice has increasingly come under scrutiny. Unfortunately, we expect to see massive cable and telephone corporations use their unrivaled lobbying power to pass more laws in 2012 like the North Carolina law pushed by Time Warner Cable to essentially stop new community broadband networks.

The FCC's National Broadband Plan calls for all local governments to be free of state barriers (created by big cable and phone companies trying to limit competition). Recommendation 8.19: Congress should make clear that Tribal, state, regional and local governments can build broadband networks.

But modern day railroad barons like Time Warner Cable, AT&T, etc., have a stranglehold on a Congress that depends on their campaign contributions and a national capital built on the lobbying largesse of dominant industries that want to throttle any threats to their businesses. (Hat tip to the Rootstrikers that are trying to fix that mess.)

We occasionally put together a list of notable achievements of these few companies that dominate access to the Internet across the United States. The last one is available here.

As you read this, remember that the FCC's National Broadband Plan largely places the future of Internet access in the hands of these corporations. On the few occasions the FCC tries to defend the public from their schemes to rip-off...

Vermont Network Takes Local Ownership to Next Level

Posted December 21, 2011 by Christopher Mitchell

Vermont's East Central Fiber-Optic Network (ECFiber) has finished its second round of financing. We noted that the network had exceeded its financing goals at the beginning of this year by raising over $1 million and subsequently began connecting rural homes with its next-generation network. (See all of our ECFiber coverage here.)

The network is now connecting 120 households, a bit below its goal of 164 for the end of the calendar year... but it also had to deal with an unexpected hurricane (Irene) that seriously disrupted the entire state and kept fiber-splicers running ragged.

ECFiber has just completed its second round of financing. While the first round was dominated by a few major investors, the second round had a broader base -- a sign that many in the community have embraced the approach. From the ECFiber press release:

ECFiber is using an innovative funding method to extend its network, supported by local citizens who lend funds that enable build-out to local neighborhoods within and across member towns. Citizens who invest as little as $2500 allow ECFiber to reach all households along designated routes. ECFiber determines where it will build by choosing routes that reach the greatest number of unserved businesses and households, which are then connected to ECFiber’s state-of-the-art fiber-optic service.

These people are literally investing in themselves. ECFiber is an InterLocal Contract with a Governing Board composed of a representiative from each member town (of which there are 23). Investors are purchasing tax exempt 15 year promissory notes that effectively earn 6% interest (due to the one year holiday from interest and principal).

They have raised $340,000 in this round of financing, which will allow the network to pass 60-65% of Barnard's 950 residents. Spokesman Bob Merrill said the network again surpassed its expectations of investor interest and noted that several neighborhoods came on board after one or two interested residents rallied neighbors to invest so they could finally have high-speed connections to the Internet.

The network remains committed to connecting every person in the 23-town area but absent outside...

A Survey of National Private Sector Broadband Providers

Posted November 4, 2011 by Christopher Mitchell

When it comes to expanding access to the Internet across the US, the federal government has long looked first to the private sector, ignoring hundreds of years of experience showing that unaccountable private companies cannot be trusted to sufficiently invest in or govern essential infrastructure.

Inevitably, they price access to high and invest too little as they maxmize their profits -- thereby minimizing the profits of all other parts of the economy.

So let's take a little survey of the progress we see from these companies.

We have long railed against the Verizon -> FairPoint fiasco in New England that left Verizon much richer at the expense of residents and businesses in rural Vermont, New Hampshire, and Maine particularly. Well, FairPoint creditors have realized the depth of Verizon's scam and are suing Verizon for $2 billion. Read the complaint [pdf].

According to the complaint (pdf), Verizon not only made out like a financial bandit up front, but took advantage of regulatory delays to strip mine the assets of anything of value, including core IP network components, business services, and localized billing and support assets required to support the three states. Verizon then billed out their support assistance for millions per month during the very rocky transition, during which time 911 and other services saw repeated outages, resulting in millions more in refund penalties.

Karl Bode is right to criticize the state authorities that allowed this fiasco to occur. Their inability to regulate in the public interest has hurt everyone stuck in the mess. While we can expect powerful companies like Verizon to try to game the system at every opportunity, there is no excuse for making it so easy for them.

As long as we are talking about Verizon shedding its rural investments, let's take a look at how Frontier is doing since it inherited thousands upon thousands of FiOS customers as part of its recent deal with Verizon. Frontier has decided the best approach is to...

FairPoint Undermining Broadband Access in Vermont

Posted March 8, 2011 by Christopher Mitchell

In an op-ed, Tom Evslin discusses FairPoint and their opposition to a middle mile stimulus grant that would improve broadband access around the state. FairPoint had taken over Verizon's New England lines a few years ago. Verizon had a reputation for poor service but FairPoint took that to new levels before reorganizing under bankruptcy (yet another high-profile private sector failure).

FairPoint fought a middle-mile project in Maine and was eventually bribed into silence by the Legislature. Having learned the only lesson one can learn from such an experience, they are now fighting a middle mile project in Vermont.

Unfortunately FairPoint, the successor to Verizon for landlines in Northern New England, wants Vermont to choose between protecting a badly flawed FairPoint business plan or improving the economic future of Vermont’s rural areas. The choice is stark: use the federal “middle mile” stimulus grant already awarded to the Vermont Telecommunication Authority (VTA) to bring fiber closer to rural Vermonters and make wholesale backhaul and institutional broadband affordable in rural areas of the state or forfeit the grant and leave these areas without adequate business, residential and cellular service.

Vermont should move forward with its stimulus project to expand open access middle mile connections across the state. Appeasing FairPoint yet again is not only bad for Vermont's many underserved, it would further embolden FairPoint in its fight against any competition, public or private.

The VTA was formed to improve broadband access while not providing services directly. There is no reason it should not invest in these middle-mile networks. Quoting again from Evslin op-ed:

Now President of FairPoint in Vermont, Mike Smith said yesterday in an interview broadcast on WCAX that he never meant that the VTA should build fiber networks and provide middle-mile (backhaul) service. He thought it would be directing its...

The Burlington Telecom Mess in Perspective: a Letter to the Community

Posted January 25, 2011 by Christopher Mitchell

We are posting another perspective about Burlington Telecom, this time from Tom Streeter, a Professor of Sociology at UVM and author of Selling the Air, The Net Effect and other works about telecommunication. He circulated this letter in the community and gave us permission to republish it here. Read his original PDF here.

There's no doubt that the Burlington Telecom situation is a serious mess. But in all the accusations and counter-accusations, it can be hard to get some perspective on the nature of the problem. I've been studying things like cable TV, the internet, and telecommunications for most of my career, and I think a sense of the larger picture might help.

First, nobody has been accused of lining their private pockets with public money. There is nothing about the current scandal reminiscent of the one surrounding BT's former legal antagonist Adelphia Cable, whose CEO is still cooling his heels in jail for essentially stealing from his own company. Second, Burlington Telecom is hardly alone in having a hard time paying the bills. Vermont's primary telephone service provider, Fairpoint, filed for bankruptcy late in 2009, and cable providers nationwide are scrambling for ways to stay alive nationwide in the face of the first annual decline in cable subscriptions in the industry's history. Times are extremely tough throughout the industry, and the fact that BT is in a financial tight spot is by itself hardly surprising.

Another thing about telecommunications is that it is an infrastructure business. Like roads, bridges, and sewers, you have to build most of the thing to completion before you get the benefit; no one will pay the toll for a bridge that goes halfway across the river. So you have to spend the money up front in hopes of making the money back years into the future, a future which is impossible to know with certainty. BT had to spend the money...

FairPoint Continues Fight Against Competition in Maine

Posted March 31, 2010 by Christopher Mitchell

Light Reading took an in-depth look at FairPoint's anti-competition, anti-public ownership lobbying in Maine, where it is fighting a stimulus award to a consortium that includes a public entity. We have previously covered goings-on in Maine where FairPoint is involved due to their terrible track record of offering services while pushing for rules that would prevent communities from building their own networks.

For those who are not familiar, FairPoint had bought the lines from Verizon as part of a tax-dodge called the "Reverse Morris Trust" (one loophole that might be closed before Verizon can abuse it again). FairPoint promptly went bankrupt, but not before screwing up service for thousands upon thousands of residents and businesses in New England (from months of screwed-up billing to weeks without telecom services). Now FairPoint wants to make sure many Maine residents have no choice in providers for the foreseeable future.

Carol Wilson's look at this situation is fairly comprehensive.

... Maine Fiber Co., won a $25.4 million grant to build what is called the Three-Ring Binder, an middle-mile fiber optic network that will include three fiber rings in Western, Northern, and Downeast Maine. Maine Fiber’s intent is to lease dark fiber as an open access network, and not to sell commercial services.

More details about the Three Ring Binder are available here and here.

The Maine Fiber Company is a private sector entity that has partnered with the University of Maine System. Though the company will run the network, some fibers will be reserved for the schools - this is a common private-public partnership that is mutually beneficial. This network will be open access - meaning that all can use it on equal terms (as opposed to being monopolized solely by the owner, as FairPoint does with its network). But FairPoint sure doesn't want to deal with competition in the many areas that it currently monopolizes with poor service at high prices.

It [Three Ring Binder Network] is now facing a challenge from FairPoint Communications Inc. , which bought...

Folks in Maine Resent FairPoint's Lobbying Against Broadband Awards

Posted February 8, 2010 by Christopher Mitchell

As Karl Bode recently asked, "Should Fairpoint Really Be Giving Broadband Advice?" They have been lobbying against other stimulus projects in Maine that could allow FairPoint subscribers to actually get service that works and puts communities first.

Given FairPoint's horrendous track record in New England since taking over Verizon's run-down network, I'm glad to see a local paper taking them to task for their attempts to deny broadband to significant swaths of the state.

FairPoint is demanding that Maine law prevent the university from selling access to its network to any customer outside the governmental sector. Instead, those customers would have to take their business to FairPoint.

If FairPoint could take care of the customers it already has, and if it was keeping up with its promises to serve more of the state with high-speed Internet, it might have a stronger case.

People in Maine need to realize they will remain behind in network infrastructure so long as they depend on companies like FairPoint rather than the old New England values of self-reliance. Absent public competition, FairPoint will remain the only "option" because no private provider will find profits competing in these rural areas.

Verizon Actions Show Carriers Will Not Wire Rural America

Posted September 22, 2009 by Christopher Mitchell

In a recent post the NY Times Bits Blog, Saul Hansell reports "Verizon Boss Hangs Up on Landline Phone Business" - something we have long known. Nonetheless, this makes it even more official: private companies have no interest in bringing true broadband to everyone in the United States.

Verizon is happy to invest in next-generation networks in wealthy suburbs and large metro regions but people in rural areas - who have long dealt with decaying telephone infrastructure - will be lucky to get slow DSL speeds that leave them unable to participate in the digital age. These people will be spun off to other companies so Verizon can focus on the most profitable areas.

For instance, Verizon found it profitable to spin off its customers in Hawaii to another company that quickly ran into trouble before unloading most of its New England customer on FairPoint, moves that enhanced Verizon's bottom line while harming many communities (see the bottom of this post and other posts about FairPoint).

Isen has been writing about it recently - picking up on FairPoint immediately breaking its promises to expand broadband access in the newly acquired territories. No surprise there.

Isen also delved deeper into Verizon's actions, with "Verizon throws 18 states under the progress train." He is right to push this as a national story - the national media focused intently on the absence of major carriers in the broadband stimulus package but they seem utterly uninterested in major carriers running away from broadband investments in rural areas.

Though Frontier likes to position itself as a company focused on bringing broadband to rural areas, it offers slow DSL broadband and poor customer service to people who have no other choices - more of a parasite than angel. As long as we view broadband as a vehicle for moving profits from communities to absentee-owned corporations rather than the infrastructure it truly is, we will farther and farther behind our international peers in the modern...

FairPoint unfairly competing with UMaine?

Posted August 14, 2009 by Christopher Mitchell

FairPoint's lobbyists in Maine have gone on the offensive, arguing that another group attempting to get stimulus funds is competing unfairly. FairPoint, you may remember, has already accomplished the improbable: it took over the dilapidated networks in New England from Verizon and made them worse. The charge of unfair competition, even if it were true, would be silly because FairPoint has proven it cannot provide these important services.

Karl Bode put Fairpoint in its place:

Even if the company was competing directly with UMS, at least Maine residents could be certain the University will even exist a year from now. But as it stands, Fairpoint isn't competing with the University of Maine. They're competing with a public private partnership of which the University is only a member. Applications for Federal funds are open to public entities and private companies. Given recent history, giving taxpayer dollars to somebody other than the regional dysfunctional incumbent might not be the worst idea in the world.

Bangor Daily News argues that rural Maine cannot afford to fight over who will expand broadband access. Unfortunately, Bangor Daily News' why-can't-we-all-just-get-along approach ignores the very real damage Fairpoint has already done to the state. Their suggestion that these competing networks just "be merged" seems like a call for open access but ignores the need for Fairpoint to maximize profits (right after it gets out of bankruptcy) rather than invest in communities.

The larger point is ominous: the idea that large institutions should suffer with whatever crummy service Fairpoint provides (at the high prices they will provide it) in order that Fairpoint can expand its poor DSL service to rural areas, misses the important point that Fairpoint cannot and will not offer the services that Maine needs. As Mayor Joey Durel of Lafayette suggested, maybe Maine should just send its jobs down to Lafayette, where they are building the necessary infrastructure for the future.

...

Fairpoint May Declare Bankrupty

Posted June 30, 2009 by Christopher Mitchell

Last year, Verizon sold all of its landline assets in New England to a tiny company named Fairpoint. Even as Verizon was starting to wire suburban and urban areas with fiber-to-the-home networks, it continued to underinvest in rural communities, where those lucky enough to have DSL generally paid a lot for slow very slow speeds.

Rather than continue ignoring these properties, Verizon sold them to Fairpoint in a deal that some questioned as fraught with problems. Fairpoint has since met expectations: it is woefully unable to provide good service to people living in New England.

More recently, Fairpoint is hinting at future bankruptcy

In a filing with the Securities and Exchange Commission, the company warns that if the offer does not go through, it might not be able to make its interest payments due Oct. 1.

In a worst-case scenario, it said, this could lead to "an alternative restructuring plan (that) may include a bankruptcy."

If this were a publicly owned network, it would be championed by cable and phone companies as proof that those networks fail. We are not suggesting the opposite - that this is proof that all private networks in rural areas are doomed to failure, but it does offer evidence that a purely private sector-based model in rural areas is foolhardy.

Verizon is now getting rid of more rural assets by selling them to Frontier - a company better poised than Fairpoint to handle them, but also a company known for offering slow DSL speeds with a 5GB cap.

Communities that want to keep up with the rest of the world should look to themselves to build the networks they need. The private sector is either unable or unwilling to build the necessary networks to compete in the digital economy.

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