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Free Press Responds to 'Sloppy' Incumbent Broadband Arguments
The American Recovery and Reinvestment Act of 2009 directed the Federal Communications Commission (FCC) to develop a national broadband strategy. FCC invited comments and then invited replies to those comments in summer 2009. The Free Press Reply Comments deserve to be singled out for revealing some of the lies of large telecommunications companies like Verizon, AT&T, Comcast, Qwest, and others. It also describes many of the ways that these companies harm the communities that are dependent on them for essential services. I've highlighted some passages below that show the ways in which these companies put profit above all else. These companies claim that regulation discourages investment and deregulation (allowing a higher degree of concentration or larger monopolies) encourages increased investment in better networks - an incredibly self-serving claim that Free Press shows to be false on pages 13-29.
Competition -- meaningful and real competition -- and not regulation is the primary driver behind investment decisions. Where meaningful competition exists, incumbents are compelled to innovate and invest in order to maintain marketshare and future growth. Where competition is lacking -- such as it is in our broadband duopoly -- incumbents will delay investment, knowing full well they can pad their profits on the backs of captured customers who have no viable alternatives. (Page 14)
Regulations like open access and non-discrimination encourage competition and should be strengthened. Free Press offers an in-depth explanation of how Verizon has dumped millions of customers on other companies that clearly could not handle the burden.
Verizon began the purging of less lucrative areas with the sale of Verizon Hawaii to the Carlyle Group in 2005, a company that had no previous experience in operating telecommunications services. By Dec. 2008, the company, now called Hawaii Telecom, had lost 21% of customers and filed for bankruptcy. (Page 26)
Verizon then sold most of their New England lines to Fairpoint, which is currently heading for bankruptcy. Fairpoint's customers are not the only ones suffering - the independent companies that resell services over that infrastructure are also suffering because Fairpoint is utterly unable to meet its obligations.
How NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package
Creating the Broadband Stimulus Language
The debate began in Congress as the House and Senate drafted broadband plans as part of the American Recovery and Reinvestment Act The House language on eligibility for stimulus grants made little distinction between global, private entities and local public or non-profit entities.the term `eligible entity' means--The Senate language clearly preferred non-profit or public ownership.(A) a provider of wireless voice service, advanced wireless broadband service, basic broadband service, or advanced broadband service, including a satellite carrier that provides any such service; (B) a State or unit of local government, or agency or instrumentality thereof, that is or intends to be a provider of any such service; and (C) any other entity, including construction companies, tower companies, backhaul companies, or other service providers, that the NTIA authorizes by rule to participate in the programs under this section, if such other entity is required to provide access to the supported infrastructure on a neutral, reasonable basis to maximize use;
To be eligible for a grant under the program an applicant shall—The final language, adopted by the Conference Committee and passed by both houses in February was a compromise. It favored a public or non-profit corporation but allowed a private company to be eligible only if the Assistant Secretary of the Department of Commerce found that to be in the public interest.(A) be a State or political subdivision thereof, a nonprofit foundation, corporation, institution or association, Indian tribe, Native Hawaiian organization, or other non-governmental entity in partnership with a State or political subdivision thereof, Indian tribe, or Native Hawaiian organization if the Assistant Secretary determines the partnership consistent with the purposes this section
Boston vs. Verizon
Menino is right to insist that telecommunication companies pay their fair share of taxes. In Boston, the exemption shifts more than $5 million a year onto the property tax bills of homeowners, say city officials. But tensions between Verizon and the mayor can be costly in many ways. City cable providers Comcast and RCN, for example, don’t offer the speedier fiber-optic connections into customers’ homes available from Verizon in 98 Massachusetts cities and towns. The new and faster broadband speeds - both downstream and upstream - offered by Verizon to Internet customers therefore remain beyond the reach of Bostonians, as do FiOS-related incentives on products such as mini netbooks and camcorders. Cable and Internet competition is alive and well in the suburbs, but flat in Boston.Verizon has previously threatened to withhold its investments in states that do not sufficiently deregulate -- after turning its back on the New England region by offloading its customers on the totally unprepared Fairpoint company, Verizon pushed franchise "reform" in Massachusetts. Franchise "reform" is when states agree to preempt local communities that selfishly want to regulate the quality of service offered by providers - things like requiring some local channels and thresholds for customer service. As Karl Bode noted in the link above:
While these bills are promoted as a magic elixir that will bring competition and lower TV prices to a region, when people go back to investigate whether these bills actually helped anybody (which is amusingly rare), data indicates that TV prices increased anyway and consumers got the short end of the stick.
Fairpoint May Declare Bankrupty
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.
Community Broadband - High Capacity, Low Cost
Services Comparison
Community broadband networks offer some the highest capacity connections at the lowest costs. Many of these communities, before building their networks, were dependent on 1.5 Mbps connections that cost hundreds of dollars, or less reliable DSL and cable networks. The community broadband networks below are full FTTH networks, so the advertised speeds are the experienced speeds -- unlike typical cable advertised speeds, which users pay for but rarely experience due to congestion on the shared connection. In comparing some of the fastest publicly owned broadband networks to some of the fastest national private sector networks, we found that the publicly owned networks offer more value per dollar. Update: A few weeks after this was published, Verizon upped its speeds and prices for several of the tiers.
The data we used is below. We thought about comparing also Qwest's "Fiber-Optic Fast" speeds, but their fastest upload speeds are below 1 Mbps, which makes them too pokey for the above networks.
Community Broadband Networks: The Best of the Best
Note: Speeds are expressed as Mbps Down/Up. Each network has distinct offering for each tier.
Tier 1 | Tier 2 | Tier 3 | Tier 4 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
City | State | Speed | Price | Speed | Price | Speed | Price | Speed | Price | Notes |
Lafayette | Louisiana | 10/10 | $28.95 | 30/30 | $44.95 | 50/50 | $57.95 | - | - | All connections come with 100Mbps connections to others on the local network. |
Wilson | North Carolina | 10/10 | $34.95 | 20/20 | $54.95 | 40/40 | $99.95 | 60/60 | $199.95 | There is also a 100/100 tier for $299.95. These prices come from the bundled options. There is one unbundled option - 20/20 for $59.95 |
UTOPIA | Utah | 15/15 | $39.95 | 30/30 | $49.95 | 50/50 | $59.95 | 100/100 | $147 | This is an open access network, 100/100 is not offered by all service providers |
Tullahoma | Tennessee | 10/1 | $37.95 | 5/3 | $49.95 | 20/5 | $59.95 | 50/15 | $149.95 | There is also a 100/30 tier for $299.95 |
Loma Linda | California | 5/5 | $29.95 | 10/10 | $49.95 | 15/15 | $99.95 | - | - | |
Compare to the best from the private sector: | ||||||||||
Comcast | DOCSIS 3 in MN | 1/.384 | $39.95 | 12/2 | $59.95 | 16/2 | $69.95 | 22/5 | 79.95 | A higher tier of 50/10 is available for $139.95/month. These are unbundled prices, bundling generally saves $15/month. Speeds are "up to" depending on neighborhood congestion. Comcast marketing makes it difficult to understand what speeds you are paying for. |
Verizon | FiOS | 10/2 | $49.99 | 20/5 | $59.95 | 20/20 | $69.95 | 50/20 | $144.95 | These are unbundled prices - bundling with phone reduces monthly price by $5. FiOS is not available throughout Verizon footprint. |
The table reflects real rates, not short-term introductory rates. Do not be fooled into thinking that community broadband networks are able to offer the best deal because they are use taxpayer dollars. Very few community networks have ever used taxpayer money. Most networks are built using revenue bonds - which means that private investors fund the network, and are typically repaid over a period of twenty years using revenues generated by the services. Some cities choose to "back" the bonds with taxes -- which means that if the network does not generate sufficient revenue, the city will make up the difference with public money. Other cities choose not to back the bonds; this is a choice made by each community and impacts the interest rate on the bonds. In most cases, community networks have been safe investments that have not missed debt payments because the communities had an urgent need for broadband. In many cases, they have so many people wanting to take service, they have long lists for the installers. The idea that these networks frequently fail is an utter myth. However, not all community broadband networks offer the blazing speeds at great prices displayed above -- some were built five years ago, when those speeds were sufficient. Others do not feel the need to push the envelope, the community is content with what they have. However, they are able to meet higher demands if a citizen requires it. So even if a community network advertises its highest tier as being an 8/1, it is likely able to offer an even faster connection to those who need it. This is one of the many benefits of community broadband - the network is accountable to the community. The community broadband networks being built today almost always offer the fastest speeds currently available - as seen above with two ongoing builds, Lafayette and Wilson.