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Verizon Actions Show Carriers Will Not Wire Rural America

Tue, September 22, 2009 | Posted by christopher

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 economy.

Perhaps the most frustrating angle of these transactions are the many ways in which Verizon benefits from stranding thousands of communities. West Virginia is one of the states most impacted by the proposed Verizon-Frontier swap and has generated in-depth coverage of the story.

She [Elaine Harris of Communications Workers of America (telephone employees union)] believes the payoff for Verizon is it cannot only make money selling off its assets, but it can take advantage of a federal tax loophole that allows tax-free mergers between companies. The smaller companies are left saddled with debt and, as a result, can't make the necessary upgrades to existing infrastructure, turning off customers and ultimately leading to work force reductions as dissatisfied customers turn somewhere else.

Trying to figure out how to force absentee-owned, profit-maximizing corporations to bring true broadband to everyone ignores the reality of our market system: we are trying to force the square peg through the round hole. These companies may well invest in urban and suburban areas (though these areas continue to fall behind major cities elsewhere in the world) but they have no reason to invest in rural America. To get the job done, we need smart public investments to ensure everyone benefits from the communications revolution.

When we expanded telephone and electrical infrastructure to everyone, everyone in the United States benefited because networks always become more valuable as they increase in size. More people on the network means increased markets, increased productivity, and a higher quality of life.

Ensuring everyone has quality broadband is not charity for rural folks, it is in all of our self-interest. The narrow self-interests of Verizon, Frontier, and FairPoint (this is not a shot at them, companies are designed to have a narrow self-interest for legitimate reasons) do not line up with our larger national interest - something that too few people understand when dealing with broadband policy.

This is a video offering good coverage of the FairPoint problems:

Photo by Derek Jensen, used under creative commons license.

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Stimulus Updates

Fri, August 07, 2009 | Posted by christopher

  • NTIA head Larry Strickling has suggested that if an incumbent wants to veto a stimulus grant in its territory, the data it uses to show the area is served will be on the public record. As this is a step in the direction of making such information public, it is good. However, there is still no clear method of appealing such a veto.

  • Craig Settles has called for letters to the NTIA asking for a deadline extension for the first round of grant applications. Muniwireless.com published a commentary explaining why a delay is a good idea.

  • West Virginia, one of the most-underserved states by broadband providers, is starting to worry much of the state may not qualify for broadband funds according to the Charleston Daily Mail. Unfortunately, they are relying on data from the industry-backed Connected Nation operation, so who knows? Being so heavily influenced by incumbents, Connected Nation significantly overstates existing coverage.

    However, the story is interesting in pointing out that the approach taken by NTIA will not result in sustainable network. Because network deployers must stick to the areas of least density, they have no revenue base with which to cover operating costs. Once the stimulus money goes away, one wonders how many of these networks will fold -- though NTIA has claimed that networks must demonstrate fiscal viability after the grants run out.

  • Champaign-Urbana is planning a fiber network contingent on stimulus funds. They have had to scale back plans for the network due to the stringent definition for "underserved." Illinois has set aside $50 million to help Illinois applicants as each applicant must provide 20% of the project cost to qualify under stimulus rules. The project will fund connections to the home in 11 census blocks that are currently underserved, create 35-40 computer labs for public use, and create a more advanced lab to assist the public computer labs. It will also build fiber rings to connect over 100 anchor institutions (hospitals, schools, government buildings) that may later be useful to expand access to the network.

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Op-Ed: Support Publicly Owned Broadband

Tue, July 07, 2009 | Posted by christopher

The Charleston Gazette published this opinion piece encouraging publicly owned broadband on July 5, 2009:

Just as railroads and highways were the essential infrastructure for development in the 19th and 20th centuries, broadband networks will be essential for 21st-century competitive economies. Small cities and even isolated, rural communities that have strong educational systems and human talent will be able to compete in the new global information economy.

West Virginia's beautiful mountains and valleys, coupled with low density make most of the state an unattractive investment for private phone and cable companies. Fortunately, no community has to be left behind, each can seize the future with smart public investments.

This should not come as a surprise. Local and state governments built our roads. Thousands of rural communities gained access to electricity through publicly owned networks.

Thousands of communities today are forced to make a difficult choice when it comes to fast and affordable broadband networks. Our international peers have used smart policies to surpass our broadband networks while Washington has proved unable to keep up. But hundreds of communities across the United States have grown tired of waiting and publicly provide some level of broadband to encourage economic development or educational opportunities.

There are some who argue, as Frank Rizzo recently did in these very pages, that publicly owned broadband systems never succeed. These myths have been encouraged by telecom-funded think tanks for more than a decade, despite having been proved false time and time again.

Mr. Rizzo claimed, "commercial providers generally offer more reliable and faster service." But the fastest networks at the most affordable prices are publicly, not privately owned. In Lafayette, La., the public utility's network offers 10Mbps symmetrical connections for less than $30 a month. In Wilson, N.C., the publicly owned network offers a better triple-play package (phone, TV and Internet) at substantially lower prices than the private provider, Time Warner. Details and more comparisons are available from Municipal Networks and Community Broadband.

Across the country, public networks have succeeded by every metric. They create local jobs by keeping support services local rather than off-shoring it. They keep prices down because they don't have to pay millions to their CEOs. Their shareholders are the community - who can hold the network accountable in ways they never can an out-of-state company.

West Virginia has twice considered a powerful tool that would have encouraged public networks - the Electronic Telecommunication Open Infrastructure Act. In the first consideration, the Legislature killed it. The second time, the bill passed but the governor vetoed it. Meanwhile, the private sector has failed to build these crucial networks: those in West Virginia lucky enough to have access to broadband pay too much for slow speeds.

By contrast, nearby Bristol, Va., confronted the same dilemma but responded differently. Bristol's publicly owned utility built a fiber network throughout southwest Virginia, creating more than a thousand jobs and receiving national recognition as a rural broadband success story.

West Virginia's hopes for a private-sector financed miracle all but disappeared last month when Verizon sold off its local lines to Frontier. Following a similar Verizon divestment last year in New England, the already poor service in those rural communities became even worse - something many thought impossible.

West Virginia's proud tradition of self-reliance will be important as communities meet the challenge of our new information economy. To bring a high-speed information highway to every home and business, West Virginians should learn from the successful efforts of hundreds of cities and towns across this land.

Link: 
More of the pattern - Verizon Dumps Hawaii Landlines to company that goes Bankrupt
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