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IP Transition Catches Fire Island - Community Broadband Bits Podcast Episode #52

We welcome Harold Feld, Senior Vice President of Public Knowledge back to the show to discuss the latest update in the so-called IP Transition. Back in episode 32, Harold explained the five fundamental protections needed for our telecommunications system.

Today he returns to discuss the ways in which some of the islands devastated by Sandy are being turned into Verizon experiments as Verizon refuses to rebuild the copper phone number or upgrade to fiber; instead Verizon is installing an inadequate substitute, as we covered in this story.

Harold explains why this turn of events in New York and New Jersey is an important harbinger for the rest of us and why states should not premarturely deregulate important consumer protections like carrier of last resort and public utility commission oversight.

This show is 15 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Eat at Joe's for the music, licensed using Creative Commons.

Verizon Plans to Abandon Copper Wires In Islands Damaged by Sandy

Victims of Sandy are still recovering from the killer storm that ripped through the east coast last year. Two places hardest hit by the "Frankenstorm" were Fire Island, New York and the Barrier Island in New Jersey. In addition to homes and property, residents lost phone and Internet communications when telephone wires went down. They are still waiting to be reconnected.

Our readers know about the huge fight that has embroiled consumer advocates and the leading telephone providers in the past few years. AT&T and Verizon seek deregulation to escape the "carrier of last resort" obligation that requires maintenance of traditional copper lines for telephone service. AT&T and Verizon want to shed that responsibility in favor of wireless service that is less expensive to maintain, even though it does not support the range of uses today's copper networks do. 

Verizon is the incumbent telephone provider in Fire Island and Barrier Island but decided it will not repair damaged lines. It wants to instead deploy its inferior Voice Link wireless service on the island.

The Voice Link technology basically attaches to your house and uses Verizon's cellular network to connect the telephones in your home. Homeowners can continue to use their home phones, but the quality tends to be worse than on a proper wired telephone network. 

Under federal law,  telephone providers are obligated to replace or repair downed copper lines unless they substitute with a "line improvement," such as fiber-optic lines. Voice Link cannot be described as a "line improvement" - the only benefit it provides is that it costs Verizon less to build and maintain. 

Public Knowledge Logo

Jodie Griffin from Public Knowledge recently pointed out some of the many shortcomings of Voice Link, as revealed on Verizon's own Terms of Service. The people most harmed by this scaled back service include the people who, in one way or another, are most vulnerable. Harold Feld, also from Public Knowledge, addressed what he sees as the most critical changes and who those changes most affect:

1. Voice Link will not allow you to receive collect calls, use calling card minutes or other forms of cheap long-distance provider, and requires you to have a separate international plan to make international calls.

Who gets hurt most. Immigrant communities, anyone with a loved one incarcerated or who otherwise needs to make a collect call. Since Voice Link also does not support any data plan, anyone who used to subscribe to VZ DSL and depended on Skype or other VOIP product is equally out of luck. Again, given the tremendous use of Skype by immigrant communities to call relatives back in their country of origin, this hits them particularly hard.

 2. Voice Link will  not work with life alert systems or security alarm systems.

Who gets hurt. The elderly trying to maintain independence. Anyone with a burglar alarm or fire alarm system that does not have independent wireless connections.

 3. Voice Link will not work with DVRs or Fax machines.

Who gets hurt. Any consumer that owned this kind of equipment and stuck with Verizon because they wanted to keep using it.

 4. Voice Link will not work with credit card machines or other electronic payment processing.

Who gets hurt. Small businesses, especially when combined with losing their fax service to take orders by fax.

 5. 9-1-1 calls may fail due to congestion on network or for other reasons, including Verizon negligence in routing the call.

Who gets hurt.  Well, any of those elderly whose Life Alert no longer works, for a start.

Voice Link also cannot be used for Internet access, which whittles down an already short list of providers. 

FCC Logo

Verizon appeared to be circumventing the process until a June 7th request to the FCC. The telecom giant received permission from the New York Public Service Commission (NYPSC), and immediately began nurturing a plan to follow suit in other locations. Harold Feld, from Public Knowledge, wrote about Verizon's long term plans on his Tales of the Sausage Factory blog:

Since the NYPSC gave Verizon permission to deploy Voice Link instead of copper on Fire Island (at least on an interim basis), Verizon has moved full speed ahead to deploy Voice Link in other areas where Sandy destroyed the infrastructure, and is gearing up to deploy Voice Link in Florida to replace copper with Voice Link in something called “Project Thunder,” no doubt in anticipation of the active hurricane season predicted by the National Weather Service at NOAA.

Verizon's action is shifting U.S. communications policy without moving through the proper (however flawed) channels of the FCC, shifting the balance away from the public interest. If the FCC allows Verizon to move forward unilaterally, AT&T will certainly follow suit. In a later post, Feld wrote:

In some ways, this is a little thing impacting only a few communities. In other ways, it is a very big deal. If there is a single moment to point to and say “This is it! This is The Day We Started To Shut Down The Phone Network,” that day is today. With this little routine barely noticed filing for an administrative procedure that impacts a handful of communities.

While the FCC will ask for public comment on Verizon's application, we should contact them now to express our concern about this situation. The public deserves a policy and a process for replacement of old copper lines. That policy needs to include improved service - not a more limited communications mechanism - and needs to be in place now rather than during natural disaster recovery.

State by State Campaign to Gut Consumer Telecom Protections

In most states, telephone companies are required to serve everyone and when there are problems with the service, the state can mandate that the company fix them. But AT&T and ALEC are leading the charge to let these massive companies decide for themselves who should have access to a telephone, taking state regulators out of the loop.

These big companies use several arguments we are well familiar with - that mobile wireless is already available (in many rural areas, it actually is not available) and there is plenty of competition. If only that were the case.

I was thrilled to see David Cay Johnston cover this in a column on Reuters:

AT&T and Verizon, the dominant telephone companies, want to end their 99-year-old universal service obligation known as "provider of last resort." They say universal landline service is a costly and unfair anachronism that is no longer justified because of a competitive market for voice services.

The new rules AT&T and Verizon drafted would enhance profits by letting them serve only the customers they want. Their focus, and that of smaller phone companies that have the same universal service obligation, is on well-populated areas where people can afford profitable packages that combine telephone, Internet and cable television.

What happens when the states hand over authority to these companies? David has an answer:

AT&T and Verizon also want to end state authority to resolve customer complaints, saying the market will punish bad behavior. Tell that to Stefanie Brand.

Brand is New Jersey's ratepayer advocate whose experience trying to get another kind of service - FiOS - demonstrates what happens when market forces are left to punish behavior, she said. Residents of her apartment building wanted to get wired for the fiber optic service (FiOS) in 2008. Residents said, "We want to see your plans before you start drilling holes, and Verizon said, 'We will drill where we want or else, so we're walking,' and they did," Brand told me.

Verizon confirmed that because of the disagreement Brand's building is not wired. And there's nothing Brand can do about it. Verizon reminded me the state Board of Public Utilities no longer has authority to resolve complaints over FiOS.

Better broadband is not just about technology. FiOS is an advanced fiber-optic network that crushes any cable or DSL network but Verizon still is not accountable to the community. This is exactly why communities are smarter to find ways to build networks that are democratically accountable rather than hoping a private company will make the necessary investment.

Progressive States Network

The Progessive States Network has been tracking these bills and recently alerted its readers to the threat from these bills:

A rash of backward thinking appears to be taking hold in a number of states that might be better spending their time considering how to create modern technology jobs and skills at home. Some states are considering how best to deploy modern high-speed Internet to ensure their local economies and residents are ready to compete in the global marketplace. But in other states, legislators are debating whether telephone service should be offered at all - leaving many observers wondering whether they would prefer to live in the 19th century, before Alexander Graham Bell's invention became ubiquitous.

Fortunately, consumers and advocates in many states can still stop this horrible legislation - as Kentucky did (with some assistance from the Rural Broadband Policy Group).

Under the bill, AT&T, Windstream and Cincinnati Bell would no longer have to provide basic landline services to all homes and businesses if a competitor were available to provide them. If there were no competitor, a company could provide cellphone service instead.

Opponents, including Tom FitzGerald, executive director of the Kentucky Resources Council, have argued that such a change would be a burden on the poor and the elderly who either can’t afford cellphones or are simply uncomfortable with them.

This came up recently in Mississippi:

A bill before the Legislature would wipe out the obligations of AT&T and some other phone companies to serve expensive customers and would limit the Public Service Commission's remaining authority over those firms.

Public Service Commissioners Brandon Presley, a Democrat, and Leonard Bentz, a Republican, are fighting the move, saying customers need regulators' intervention to get their problems fixed. Other phone companies are opposed to the bill, saying it could cut the connection fees collected by small rural telephone companies.

Minnesota has been considering a similar bill that has bipartisan support. Unfortunately, few in the state have realized just how bad this would be for rural and older residents.

Access Humboldt Logo

California is considering a bill RIGHT NOW.

"IP enabled communications services include not only broadband internet and online media services, but also the basic voice telephony services that we all use every day," said Sean McLaughlin, executive director of Access Humboldt and a Knight Media Policy Fellow with New America Foundation. "We are concerned that the Public Utilities Commission, along with Counties, Cities, Community Services, School and other special Districts will be hamstrung by SB 1161, prevented from protecting consumers, and hindered from developing community broadband projects that meet our local needs and interests."

Access Humboldt has echoed concerns of The Utility Reform Network (TURN), Mendocino County Board of Supervisors, Rural Broadband Policy Group, and the California Broadband Policy Network, in opposition to SB 1161. TURN is actively organizing statewide consumer opposition to the bill - joined by national organizations such as Free Press and the Rural Broadband Policy Group.

The LA Times has just noted the incredible power of AT&T's lobbyists in Sacramento.

At the 2010 event, AT&T's president and the state Assembly speaker toured Pebble Beach together in a golf cart, shaking hands with every lawmaker, lobbyist and other VIP in attendance.

The Speaker's Cup is the centerpiece of a corporate lobbying strategy so comprehensive and successful that it has rewritten the special-interest playbook in Sacramento. When it comes to state government, AT&T spends more money, in more places, than any other company.

Despite AT&T's massive power in California, there is still time to stop this backward-moving legislation.

A Guide to Understanding Why US Broadband is so Poor

Publication Date: 
October 7, 2010
Author(s): 
David Rosen
Author(s): 
Bruce Kushnick
Publication Title: 
Alternet

David Rosen and Bruce Kushnick discuss the ways in which telephone companies have bilked Americans for over $300 billion - increasing their profits while failing to deliver the services they promised.

The scam was simple. Starting in 1991, Verizon, Qwest and what became AT&T offered each state -- in true "Godfather" style -- a deal they couldn't refuse: Deregulate us and we'll give you Al Gore's future. They argued that if state Public Utility Commission (PUCs) awarded them higher rates and stopped examining their books, they would upgrade the then-current telecommunications infrastructure, the analog Public Switched Telephone Network (PSTN) of aging copper wiring, into high-speed and two-way digital optical fiber networks.

State regulators, like state politicians, are seduced by the sound of empty promises -- especially when sizable campaign contributions and other perks come their way. Hey, what are a few extra bucks charged to the customer every month for pie-in-the-sky promises? And who cares about massive tax breaks, accelerated depreciation allowances and enormous tax write-offs? The promises sound good on election day and nobody, least of all the voter, reads the fine print.

Few have the expertise necessary to decipher the many scams these companies have pulled as ineffective public utilities commissions do little to safeguard the public interest. This is the larger problem with embracing regulation as a solution for ensuring essential infrastructure benefits the many rather than the few. PUCs are inevitably "captured" by the industries they are supposed to regulate (think BP Gulf Oil Spill). Public ownership is a structural solution that offers fewer opportunities for massive companies to game the system to their exclusive advantage.

The article offers some in depth examples of how this regulation system has failed.

New Jersey state law requires that by 2010, 100 percent of the state is to be rewired with 45-mbps, bi-directional service. To meet this goal, Verizon collected approximately $13 billion in approved rate increases, tax break and other incentives related to upgrading the Public Switched Telephone Networks. To cover its tracks, Verizon submitted false statements year after year, claiming that it was close to fulfilling its obligations. For example, in its 2000 Annual Report, it claimed that 52 percent of the state could receive "45-mbps in both directions or higher."

...

The company also benefited from more invisible perks. It secured massive write-offs on its network even though it wasn't being replaced; it actually secured a write-off of over 105 percent above the amount of construction. These write-offs helped save it billions in taxes. These factors have helped significantly heighten the company's Return on Equity, the standard measurement of profits, jump from 12-14 percent before deregulation to 30-40 percent.

But all this gets complicated as they are no longer required to submit full New Jersey annual or quarterly reports and the FCC's filing requirements stopped in 2007. So, in 2009, Verizon, New Jersey outlined financials showed a "net income" loss of $194 million dollars, and a $160 million "tax benefit" and a series of "affiliate transactions," meaning transferring expenses to the utility but without showing monies flowing back.

This is not a ballot issue and probably never will be. Most Americans will never take the time to understand why our broadband is more expensive, less reliable, and considerably slower than key peer nations. Take a few minutes to read the full article and get a better sense of how these massive companies are able to enact their agenda at the expense of the rest of us.