Tag: "competition"

Posted August 21, 2012 by Lisa Gonzalez

If you are a current or potential Verizon customer, by now you know that you no longer have the option to order stand alone DSL. When the business decision became public knowledge in April, DSL Reports.com looked into the apparent step backward and found existing customers were grandfathered in but:

However, if you disconnect and reconnect, or move to a new address -- you'll have to add voice service. Users are also being told that if they make any changes to their existing DSL service (increase/decrease speed) they'll also be forced to add local phone service. One customer was actually told that he needed to call every six months just to ensure they didn't change his plan and auto-enroll him in voice service.

By alienating customers from DSL, Verizon can begin shifting more customers to its LTE service, which is more expensive. Susie Madrak, from Crooks and Liars, speculated on possible repercussions for rural America:

Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.

The belief is that current DSL customers who don't want (or can't afford) the switch to the LTE service will move to Verizon's cable competition. Normally, losing customers to the competition is to be avoided, but when your new marketing partners ARE the competition, it's no big deal.

Recall that Verizon entered into an agreement with Time Warner Cable, Cox, Bright House (collectively SpectrumCo) to a purchase...

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Posted August 17, 2012 by Christopher Mitchell

A Business Journal story yesterday reveals that Time Warner Cable is adding 81 jobs in Kansas City, an increase of 9% over its present area workforce:

The company, which currently employs about 900 locally, wants to fill customer service, finance, sales and other positions.

These are the jobs that result from competition - which does not exist when the providers a limited to a complacent duopoly comprised of a single cable company and a single telephone company. This is one of the way that community networks create jobs.

Community Networks create traditional jobs to offer their own services (and a multiplier effect by using local accounting, local marketing, and other services). But they also create more revenue for local papers (advertising) and job opportunities with rival companies that suddenly need to fight for subscribers.

On a different track, Light Reading says it has a copy of Google's franchise with the city and notes that Google is under no obligation to serve everyone in the city. However, Karl Bode rightly notes that it was the state legislature in Kansas, flush with AT&T campaign contributions, that revoked the authority of local governments to require cable providers to serve everyone.

Presently, 14 "fiberhoods" in Kansas and 49 in Missouri have met the registration goals and will be among the first served. Google will build to any fiberhood that meets the minimum threshold of interest.

One cannot blame Google then for only building where they will profit. In fact, this is what one would expect any rational profit-maximizing company to do. It is a failure of governance to require that everyone have access to an essential infrastructure. And we know what causes these failures of governance - systematic legalized bribery in our campaign finance system.

Light Reading does note that the franchise is far more generous to Google than overbuilders can typically negotiate. This is a result of Google offering such a unique product. Local leaders decided to effectively subsidize Google's network with favorable terms in the right-of-way, including making inspections as quick and painless as...

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Posted August 8, 2012 by Lisa Gonzalez

A major difference between Main Street and Wall Street is that we view Comcast's lack of competition as a major problem. The prospect of Comcast increasing our rates year after year makes us want to scream. Prepare to scream. Or throw things.

The Lafayette Pro-Fiber Blog alerted us to a piercingly honest analysis from Wall Street. The article on SeekingAlpha.com, titled We-re Big Fans Of Comcast's Cash-Flow Generation captures one of the major policy failures of our time:

Comcast's traditional Cable Communications continues to grow and generate copious cash flow. Video revenue, Xfinity and other cable TV products, grew 2.8% to $5 billion, while High-Speed Internet revenue grew 8.9% to $2.4 billion. We're big fans of the firm's Video and High-Speed Internet businesses because both are either monopolies or duopolies in their respective markets. Further, we believe that both services have become so sticky and important to consumers that Comcast will be able to effectively raise prices year after year without seeing too much volume-related weakness.

Wow.

SeekingAlpha.com, describes itself as "…the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion."

We want to empower local businesses and communities to control their own destiny. Monopolistic telecommunications companies, with their Goliath market share, Wall Street priorities, and armies of lobbyists continue to attack local control and self-reliance. They are extracting assets from Main Street and shipping it to Wall Street.

Yet we see the FCC, Congress, and many states pretending that the public interest is best served by giving more power to these massive companies. And we will continue to hear industry-funded think tanks claiming that broadband has robust competition and should be subject to less public oversight. Coming soon to an op-ed page near you.

Photo courtesy of JSquish via Wikipedia Commons

Posted August 2, 2012 by Christopher Mitchell

Of all the broadband stimulus projects, the Lake County FTTH network in Minnesota has been one of the most embattled in the nation (possibly only behind AT&T's attacks on South Carolina projects).

Mediacom has pulled out all the stops, including filing complaints with the Inspector General that included dubious allegations at best and then complaining after the Inspector General investigated and found nothing worth following up on.

What we have here is a company that wants to block a project that will deliver essential infrastructure to thousands of people who are presently lacking access. Why? Because part of that project will overlap with an outdated and overpriced Mediacom cable network that prefers its subscribers to have no choice in providers.

Recall that this is a part of the nation where a single fiber cut previously cut off all communications for 12 hours. Police could not run plates, no business could call outside the North Shore or run credit cards, ATMs were useless, 9-11 ceased functioning, and US Customs and Border Protection needed to use Canadian communications.

Minnesota Public Radio ran a solid article that explained the need for real broadband up there. It starts by talking about a local business, Granite Gear, that has suffered from the lack of proper access. (The rest of the quotes in this article come from that article.)

"The upload speeds that we have available to us here, are such that our art director frequently comes in at night and does that, when no one else is tying up the Internet bandwidth," Johnson said.

To help businesses like Granite Gear and solve the internet woes of northeast Minnesota residents, Lake County began stringing fiber Tuesday in Two Harbors, which is on Lake Superior's North Shore....

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Posted July 30, 2012 by Christopher Mitchell

In the excitement around Google's unveiling of the $70 gigabit broadband connection in Kansas City, some may be wondering how it is that Google can offer a gigabit for moderately more than what most of us pay for far slower cable broadband connections.

On one side of the equation is the fact that big cable companies (Time Warner Cable, Comcast, etc.) have long been ripping off consumers by pricing their services far above cost -- something they can easily do because they face so little competition. But the more interesting side of the equation is how Google can make its gigabit price so low.

Recall that Chattanooga made major waves with its gigabit service, priced then at the rock-bottom rate of $350/month. A gigabit is not available in many communities and where it is available, the price is often over $10,000 per month. We published an in-depth case study of their approach a few months ago.

But, as Milo Medin -- the head of the Google Fiber project -- is fond of saying, "No one moves bits cheaper than Google." Google has built an incredible worldwide fiber optic network. Let's call this lessons 1 and 2.

Lesson 1: Google built its own network. It isn't leasing connections or services from big telecommunications companies. Building your own network gives you more control -- both of technology and pricing.

Lesson 2: Google uses fiber-optics. These connections are reliable and have the highest capacity of any communications medium. The homes in Kansas City are connected via fiber whereas Time Warner Cable, CenturyLink, and others continue to rely on last-generation technologies because they are delaying investment in modern technology to boost their profits.

EPB Installs Fiber Cables in Chattanooga

Others have already followed these lessons but are not able to offer their gig for such a low prices. To understand why, let's start with some basics. I'm hypothetically starting Anytown Fiber Net in my neighborhood and I want to offer a gig. Whenever any of my Anytown subscribers want to transfer files amongst themselves, the operating cost...

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Posted July 27, 2012 by Lisa Gonzalez

Several months ago, we wrote this post but it got lost in the system. We think it still worthwhile, so here it is.

The word "cartel" drums up many negative annotations - drug cartels, oil cartels. Never anything positive, such as bunny cartels or chocolate cartels. Harold Feld (of Public Knowledge) explains the emergence of another cartel in My Insanely Long Field Guide To The Verizon/SpectrumCo/Cox Deal, on his Tales of the Sausage Factory blog. This is  great tutorial on how the deal came about and what it can mean for the future of broadband.

Rather than chocolate, drugs, oil, or bunnies, the product in question is telecommunications services. At the heart of the cartel are the familiar names: Verizon, Cox, and SpectrumCo. The latter being a consortium of Comcast, Time Warner Cable, and Bright House. All the big hitters in telecom are involved in a way that is veiled, secretive, and not good for competition.

"It's almost as if your companies got in a room together, and you agreed to throw in the towel and stop competing against each other," Sen. Al Franken to representatives from Verizon and the cable companies at the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, March 21, 2012.

Feld's investigation begins with the licensing and collecting of spectrum by SpectrumCo but ends with a more practical look at how these big hitters have decided that it is better to join forces than to compete. Side agreements, secretive multi-layered entities, and threaded loopholes keep the FCC at bay. This begins as an article about telecommunications, but quickly expands into an antitrust primer. The most alarming facet of this situation is that the product in question is information.

Joel Kelsey of Free Press testified at that same committee, warning how this deal will compromise access, quality, and affordability to broadband in America and how drive us further behind the rest of the world.

Update:

On August 16, 2012, the Department of Justice announced that it approved the deal with changes. Citing:

"...the spectrum transactions facilitate active use of an...

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Posted July 21, 2012 by Lisa Gonzalez

Time Warner Cable's announced intention to expand its usage based billing for broadband has recently received a little media attention. The company currently uses tiers for customers in parts of Texas, allowing customers to sign on to a plan which limits the amount of usage per month. If they come in under the plan amount (currently 5 gigabytes), they get a $5 dscount. If they go over, they are charged $1 per gigabyte over the tier limit.

One commentary we find particularly insightful is from Susan Crawford, "The Sledgehammer of usage-based billing." Crawford not only addresses TWC's billing change, but critiques New York Times' "Sweeping Effects as Bradband Moves To Meters" by Brian Stelter.

Crawford points out several statements in Stelter's article that sound rational on paper, but are actually "holes" in the fabric of reality. Based on what we have seen from companies like Time Warner Cable, we concur.

Stelter justifies Time Warner's decision to shift to usage-based billing based on the fact that its competitors are doing it. Crawford points out that:

Time Warner does not have competitors among cable companies – if by competition you mean a cable distributor that could constrain Time Warner’s pricing or ability to manage its pipe for its own purposes. Time Warner’s DOCSIS 3.0 services do compete with Verizon’s FiOS, but FiOS is available in just a tiny part of Time Warner’s footprint. The major cable distributors long ago divided up the country among themselves.

The Stelter article raises the issue of high usage and congestion, their connections to the usage tier billing model, and claims that there is no other way to handle high usage. Crawford calls out this error as it relates to the new billing plan:

Cable distributors have a choice: They could maintain the 90+ % margins they enjoy for data services and the astonishing levels of dividends and buybacks their stock produces, or they could rearchitect their networks to serve obvious consumer demand. But they are in harvesting mode, not expansion mode. And no competitor is pressuring them to expand.

Stelter quotes Comcast...

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Posted July 12, 2012 by Lisa Gonzalez

Last week, South Carolina's General Assembly passed H3508, the ALEC and AT&T bill we previously warned you about. AT&T, ALEC, and cable companies pushed this bill to limit broadband competition and revoke local authority to decide if public investments in broadband infrastructure are wise.

H3508 is one of the worst pieces of legislation we have seen. States usually incorporate language that "grandfathers in" existing projects as a way to avoid legal challenge and federal scrutiny of their anti-competition legislation. In South Carolina, however, crafty drafting puts one county BTOP project in the cross hairs while permitting two other projects to continue.

Below is a roundup of media coverage of the bill. We will soon release our analysis of the supposed "exemptions" to this bill but in the meantime, this coverage explains several of the problems with South Carolina's latest Monopoly Protection Act.

Ars Technica's Cyrus Farivar contacted Jim Baller, a preeminent telecom attorney and expert in broadband issues:

"States have different ways to achieve the same end—discourage, delay, or derail public broadband initiatives," wrote Jim Baller, a telecom lawyer based in Washington, DC, in an e-mail to Ars on Thursday. He noted that similar bills were introduced in Minnesota and Georgia this year, the former of which has led to a "study bill," while the latter did not make it out of committee.

"In some ways, the South Carolina bill is worst of all because it does not grandfather existing projects and would retroactively undermine federal stimulus grants that Orangeburg and Oconee Counties have received,"  he added.

Ars Technica Logo

Farivar also looked into the chief author and found:

Public records show that in 2011, AT&T, itself an ALEC member, contributed $1,000 to the coffers of...

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Posted June 29, 2012 by Christopher Mitchell

Monticello faced a number of key decision moments throughout the history of its FiberNet. Given the recent changes in management and decision not to make up the different between debt service and revenues, some may be wondering if proceeding with FiberNet was the smart decision.

It was 2008 and the economy hadn't entered its death spiral. Monticello had overwhelmingly voted by a 3:1 margin for the local government to bond for and build the network.

When Monticello was beginning to sell its bonds, the incumbent telephone company (TDS) filed a lawsuit against the City, with the extremely dubious claim that Monticello did not have the authority to do what other cities in Minnesota had done. Courts later tossed it, finding that the TDS suit had no merit and making TDS reimburse Monticello for some of its costs due to the frivolous suit.

But the goal was never to win the lawsuit, it was to delay and harass. Monticello had to wait a year to begin building its network. Though TDS had previously maintained that its DSL was just fine for the needs of residents and busineses, it began pulling permits to significantly upgrade its DSL to a FTTH product. (TDS has steadfastly maintained, while investing more in Monticello than any other Minnesota community, that community networks result in less investment from incumbents.)

At any rate, Monticello had a decision. It faced an expensive court case and the City's action was apparently driving TDS to improve its poor network. Monticello could have backed down in the face of TDS' bullying.

And if it had? From what we have seen elsewhere, this is our best guess:

TDS Telecom Logo

TDS could have delayed its upgrades or changed its mind entirely when the economy tanked. If it continued with upgrades, it would likely have made some token investments but not lowered its prices because the threat of actual competition was removed. It certainly wouldn't have unveiled broadband tiers that were superior on speed and price to those in Minneapolis / St Paul metro area.

If they had unveiled a high-speed option like the 50/20 Mbps package, they likely would have priced it sufficiently high that few took it and then would have used that as...

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Posted June 8, 2012 by Christopher Mitchell

Monticello has been all over the muni broadband news lately, in the wake of a letter it sent to bondholders [pdf] alerting them that the City would no longer make up the difference between the revenues produced by the system and the debt payments. This came shortly after the company managing the network decided to step down.

Over the next year, the reserve fund will make up the difference while the City and bondholders come to some sort of an agreement.

The Star Tribune today published a good synopsis of the situation:

City administrator Jeff O'Neill said that the city has no intention of abandoning FiberNet's 1,700 customers, including about 130 businesses.

"This system isn't going anywhere," he said. "We're not going out of business."

Despite the problems, he said the city has one of the fastest Internet systems in the country that has driven down prices and improved services by providing competition.

The article also notes that prior to the City-owned network, the telephone company (TDS) provided very poor DSL service that was harming area businesses with slow and very unreliabile phone and broadband services. Without FiberNet Monticello, we don't know how many businesses would have been forced to relocate to be competitive in the digital economy.

We decided to dig a little deeper to get a sense of what Monticello has received for its investment and difficulty. We previously examined the prices charged by Charter cable in town and found that households taking that deal were saving $1000/year.

monticello-goodbadugly_0.jpg

We also noted that Charter was almost certainly engaging in predatory pricing. After talking with other networks, we would guess that Charter is losing between $30 and $50 (conservatively) per subscriber per...

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