Is CenturyLink About to Ditch Copper?

CenturyLinkIt’s no small secret that Verizon has been working really, really hard to ditch copper access lines. In areas where they haven’t rolled out FIOS, they’re letting older copper plants rot on the vine, ceding the wired space in those communities to the local cable companies. In areas of New York where Hurricane Sandy wiped out the copper plant, they’re flat-out refusing to rebuild any landlines, instead offering a high-margin fixed wireless service.

AT&T hasn’t been too much better. Their anemic speeds on FTTN constantly lag behind their cable counterparts. Like Verizon, most of their money comes from wireless operations, so that’s where their efforts have been focused. In fact, when was the last time you heard anything about U-Verse in the news?

It seems to me that CenturyLink is ready to follow suit. They recently announced that they would be building fiber to 19-20K cell towers in their service areas. I can’t say I blame them. This is a highly profitable business, one that I wish UTOPIA or its providers could crack. Given the slow and steady loss of both landlines and broadband customers (the latter due to a lack of network upgrades), I’m sure they’re looking at whatever boosts the bottom line.

You’ll note, however, that upgrading DSL users to ADSL2+, their FTTN solution, is a footnote. Their CFO and SVP more-or-less states it outright:

“We try to design the routes to bring fiber to the towers to where they can serve other needs that we have to in terms of providing fiber closer to business customers and closer to residential customers to provide some of the higher bandwidth services,” Ewing said.

That’s right: CenturyLink is stating rather plainly that their main concern is to get fiber to those cell towers, then, if it’s “feasible” (read: dirt cheap), you can have the leftover table scraps. Cable companies (and most other phone companies) have posted subscriber gains in broadband, yet CenturyLink, who hasn’t upgraded speeds past 40Mbps since 2009, is losing thousands of customers per quarter. Odds are good that any areas getting this fiber will just now be moving off of vanilla DSL to the same 40Mbps speed (or lower) that they’ve been pushing for the last four years. When Comcast is pushing 105Mbps and UTOPIA and Google Fiber are doing gigabit, how is it anything but a giant middle finger to current and potential customers?

CenturyLink is choosing to let copper customers loose for the same reasons that Verizon and AT&T are: it’s expensive to provide service, and they can make the same or more money from wireless (albeit on different ends) with lower costs and a lot less competition. The copper network has paid for itself many times over, so writing it off as it continues to degrade is no big deal. The money they invest in cell towers has a much better ROI than investing in wireline services, so what limited funds they have will be going there.

This isn’t just a problem for CenturyLink customers. As they slowly back away from consumers and shift their core business to wholesale transport for other businesses, most users in Utah will be left with just the cable company, Comcast, to fill the void. With only a single wireline provider in most of the state, speeds will stagnate, prices will rise, and service will worsen. When there’s no incentive to compete, why would you?

It's not just XMission: Qwest hurting other providers too

Salt Lake City Weekly just ran a story on Qwest’s attempts to limit competition and it looks like XMission isn’t alone. The CFO of Fibernet, Lee Livingston, says they have also experienced getting cut off from newer infrastructure and getting their customers poached. Tellingly, the Qwest PR flack tasked with responding refused to dispute the accuracy of the recorded phone call with their rep, instead trying a weak sauce accusation that it had been fabricated or altered. (Hey Qwest? That’s pretty much an admission of guilt and makes you look petty.) Fibernet used to complain to the FCC about these problems and gave up after they got no results.

The short of it is that the new era of competition that was supposed to be ushered in by the Telecommunications Act of 1996 flamed out almost as fast as it arrived. Incumbents have been actively thwarting wholesale customers to lock the market back up while claiming that they still have sufficient competition. Open networks like UTOPIA are the last chance to correct this market imbalance. And yes, it will be expensive and painful. Most mistakes are.

The Smoking Gun: Qwest Caught Admitting That FTTN Eliminates Competition

Incumbent telcos haven’t exactly been thrilled at having to offer their lines at wholesale rates to competing ISPs, especially since landline revenues have been sliding into a ditch. While AT&T and Verizon can keep most of that revenue with a wireless division, Qwest has no such option and has struggled with making enough money to either reduce its staggering debt load or upgrade its network. Instead of offering, say, good service or a product that people want to buy, they instead figured out that rolling out FTTN would let them claim to no longer have a copper plant to share. Of course, they don’t admit so much in public, instead insisting that other ISPs are just too incompetent (heh) to handle their shiny new pipes.

Well, Xmission has called them on it with a recording of a Qwest agent saying flat-out that the point of FTTN has been to eliminate competition and bring all of those customers in-house. It’s pretty damning evidence that Qwest doesn’t want to compete based on the products and services they offer, but rather on locking out competition. Is it any wonder that we have fewer ISPs today than we did in 1997 and that the few remaining ones are on UTOPIA as a means of survival?

Is Twitter for Customer Service or Damage Control?

Comcast has gotten a lot of praise for their Twitter customer service team and I don’t doubt it’s been responsible for their sharply increased rating on the American Consumer Satisfation Index (ACSI). I’ve used their team myself to resolve problems that support doesn’t or get quick answers to service questions. While I think they’re doing a valuable job, their function has been misidentified as customer service.

In my mind, customer service starts the minute you initiate contact to resolve an issue. You have an expectation that when you call in, you’re going to walk away with some kind of resolution. When you get conflicting answers from a CSR or don’t get your problem resolved by tech support, you’re not getting good customer service. By the time you’re venting on your blog, on a forum, or on your Twitter account, the damage is done: you got poor service.

When the Twitter-based customer service ninjas swoop in to try and get the problem fixed, they’re in full-on damage control mode. This isn’t to say they aren’t doing a great job of cleaning up messes; they are. But the core problem, that the customer service team failed to deliver, still hasn’t been fixed. I often don’t bother calling in with problems because I know I’m going to spend half an hour rebooting everything to have them blame my router, demand escalation, sit on hold another 15 minutes, and then face getting disconnected. It’s a lot easier to either complain online or seek out the Twitter folks to get things done.

This lesson is an important one for other service providers as a lot of former Comcast customers I’ve spoken with have sworn off ever going back because of customer service issues. Many Mstar customers have been in the same boat. Even though XMission’s DSL service is slower than Comcast and sometimes a bit more expensive, customers are fiercely loyal because the service is, by all accounts, awesome. It’s not because they’re using Twitter, it’s because they don’t have to in order to resolve customer issues.

Broadband Bytes: January 1-9, 2008

Heartburn over the pending DTV switch, CES 2009 and a local retransmission battle are the main headlines of the last week. There’s also plenty of sour economic news and a few rays of hope for providers willing to grab onto innovative ways to deliver content. And, as expected, incumbents are trying to get in on the broadband spending bonanza.

  • Now that nobody can afford to buy an HDTV and the money for DTV converter boxes is completely gone (not to mention all of the nasty digital signal gaps), politicos and lobbyist are trying to push back the digital conversion date from February 17. So far, president-elect Obama is on-board as are several former chairmen of the FCC and Consumer’s Union. Draft legislation, however, does not move the date, instead choosing to assume a DTV coupon redeption rate of 70% instead of 100%. With anywhere from 2 million to 11 million people unprepared for the digital switch in just 5 short weeks, this could end up being a big issue in the 2010 mid-term election; some folks are rightfully pointing out that with the 10-year lead on this transition, the unprepared should suck it up. A delay in switching could spell problems rolling out services on the freed-up 700MHz spectrums, including delays in LTE deployment. If you still need a DTV converter box, sign up even though the money is gone; the feds will put you on a waiting list until they have more money.
  • Ah, CES. A time of releasing all kinds of gizmos you didn’t even know you needed until you knew they existed. For instance, LG is rolling out a TV with Netflix integrated into the set. That could set a trend of more set-topless boxes that can stream video from online providers. If the sets support flash-upgradability, they could even add more providers after you’ve already purchased the set. Sony already provides a module for many of its Bravia line that add sources such as YouTube and Sports Illustrated to the set and Samsung is working on it. This will fuel the projected growth in Internet viewers who use their TV.

    Another device worth mentioning is the Pogoplug, a network device that can turn any USB hard drive into an uber-NAS. In addition to the traditional NAS functions, it will also share your files over the Internet and includes both a iPhone app and a robust API. Transferring gigs of stored data means even more demand for bandwidth.

  • Are you a DirecTV subscriber? You may have noticed that you no longer have access to KJZZ, the primary source of Jazz games and an exclusive source for USU and WSU games. Despite getting retransmission fees from Comcast and Dish for the previously free channel, DirecTV said the cost was too high and has been attempting to negotiate a lower rate since March. When that failed, DirecTV dropped the station. The messy fight is drawing ire from viewers and causing black eyes for both DirecTV and Larry Miller, owner of KJZZ. With ad revenues sagging, it’s no surprise that broadcasters have turned to retransmission fees as a source of additional revenue. Retransmission revenues climbing at a precipitous rate: 32% in the first 9 months of 2008 with a projected tripling by 2012. With those kinds of rate increases, more subscribers will be driving into the arms of free Internet video.
  • Broadband subscriber growth is projected to drop about 12% this year with cable gobbling up about 75% of the growth. Why, you may ask? Because DSL is much slower and next-generation broadband options are few and far between. Verizon is already unsure that it will expand past the initial 18M-home footprint for FIOS, especially since it ends up being Verizon’s biggest competitor to its shrinking DSL subscriber base. Time Warner also dropped a bombshell when it wrote off $25B worth of AOL, an asset that continues to drag the company down. Both AT&T and Verizon at looking at some poor revenue forecasts with global telecom spending to inch forward a meager 1%. Don’t cry too hard for them, however. US companies topped worldwide broadband revenues with a nearly $9B lead over second-place Japan, a country that enjoys wide-spread 100Mbps service. US companies still charge a lot more per megabit than any other first-world country.

    Clearwire can’t get away from the bad news either. Despite launching service in Portland, Chicago has been delayed until the second half of this year. Comcast had to write off a significant chunk of its investment in Clearwire and Intel is hurting from the slow adoption of WiMax as handset vendors sit this one out.

  • Qwest is already trying to get in on the broadband spending bonanza. Their proposal is to give the money to the states and let them administer it, just like they did with the Telecommunications Act of 1996 that screwed over Americans to the tune of over $200B. Unsurprisingly, they also want broadband defined as 7Mbps downloads, about what their current FTTN system can support. It’s not just the obvious industry shills we have to worry about either; sock puppets and astroturfing are going to be as rampant as they’ve ever been. Given how pooly these companies have done with broadband already, some are rightfully asking if we should give money to the same folks who created the problem in the first place, especially since we so often see rising rates. While the details of the upcoming broadband spending are up in the air, it will include spending for smart electrical grids and improvements in medical IT systems, both of which should result in big job gains. A competing idea that should be thown into the mix is using loan guarantees instead of just giving the money away. At least then we could be guaranteed some some return on investment.
  • Remember how Qwest is using FTTN upgrades to degrade ADSL service and poach customers from other ISPs? Apparently other providers think it’s a pretty good idea. AT&T decided to downgrade 2G EDGE service to make way for faster 3G service, a move that forces many to seek a new handset. That spells a lot of angry 1st gen iPhone users who paid big bucks for a device that’s already woefully outdated. AT&T and Verizon have both used delays in moving phone and DSL service as an opportunity to upsell to U-Verse or FIOS. Customers increasingly fed up with incumbents are ready to bolt and Consumer Reports recommends going with a fiber provider. Will you be there to pick them up?
  • Speaking of dirty tricks, the fallout from the dispute between Qwest and SkyWi has the latter claiming that Qwest cost the company a bunch of customers that switched to other providers. State regulators in New Mexico slammed both companies for putting their differences before the best interests of customers. New Mexico’s AG also lambasted Qwest for “unfair billing and business practices” when dealing with CLECs. (He’d better watch their northern neighbor; Qwest decided to sue Colorado when it didn’t get the rate increases it wanted.) Idaho’s PUC didn’t get involved in the matter on behalf of that state’s affected customers since SkyWi is a VoIP provider and the PUC doesn’t believe it had authority to act. Small providers would likely be eager to jump to another transport given the opportunity, especially as Qwest flexes its muscle.
  • IPv4 is rapidly running out of addresses with another 200M snapped up in 2008. Developing countries such as China, Russia and Brazil had the biggest percentage spikes with most of the new addresses being used in North America and Asia. Google had already started a migration to IPv6; you should too.
  • Comcast has flipped the switch on its new throttling system and it appears to be solid engineering as opposed to a cheap grab for more subscriber dollars. (I’m looking at you, Time Warner.) If a particular network segment is congested and you’re part of the problem, your traffic bumps to a lower priority regardless of what protocols or programs you’re using. This is much better than using forged TCP reset packets or cutting off customers for using too much of an undisclosed amount of bandwidth. They still aren’t disclosing what happens when you hit the magic 250GB cap or how exactly we’re supposed to keep track of it, but this is a step in the right direction.
  • Broadcom is now offering up 8-channel DOCSIS 3.0 bonding which should be able to support up to 320Mbps downloads. That’s all fine and dandy, though cable operators have been slowing their DOCSIS 3.0 single-channel deployments, not to mention that most of them can’t spare 8 channels as they beef up HD offerings.

Broadband Bytes: November 15-21, 2008

Mike just posted a Broadband Bytes, but there’s a few other things that are worth mentioning in the world of telecommunications.

  • Remember how pinched consumers are more likely to drop video service than data service? A recent survey shows that unhappy people watch a lot more television than happy people do. With economic times getting tough, it may be a smart move to come up with innovative low-cost video packages to snag/retain these customers. Comcast is already trying out a $50/mo data/voice combo and is offering free basic cable for a year for anyone who subscribes to either voice or data services.
  • Comcast is looking at sneaking in data rate increases after all. Their plan is to upgrade various tiers of service to higher speeds with accompanying higher rates. If you want to downgrade to a lower-priced package, tough noogies: speeds under 12Mbps will be gone except for a 768Kbps “value” tier. Competing providers should be able to snap up a lot of customers by offering a slower and cheaper tier between the two. T-Mobile is also raising rates on data packages, but with a 10GB monthly cap and terrible ping times, few are likely to use it for primary access.
  • Copper is dead? Multichannel is pretty sure that DSL is DOA and the subscriber numbers back that up as cable dominates. (Ars Technica offers some excellent commentary on the Multichannel article.) AT&T, while still clinging to FTTN with U-Verse, is already using WiMax as a DSL replacement in rural areas and could very well push voice over WiMax. Businesses are also seeing the light (bad pun, I know) and choosing Ethernet and big-pipe services (think OC-3/OC-12+) over T1 and T3. The price of T1 lines is also leading many small businesses to look at business-class DSL and cable options. Some are going so far as to say that copper landlines could be dead by the end of Obama’s first term as customers flock to VoIP and cell phones.
  • Telcos are hurting but cable could stick around for a while as coax offers a good chunk of bandwidth. They do, however, feel the pinch from the massive amount of bandwidth eaten up by video services. Even as SDV and DTA boxes ease some of that up, the demand for higher-quality signals to all of these shiny new HDTV sets will eat up a lot of the gains as cable operators are forced to move from 480p to 720p and 1080p signals. Competing providers will need to move quickly to offer true HD signals with low compression and superior data rates while the cable companies perform system-wide upgrades over the next 18-24 months. There’s something said for being first to market.
  • Speaking of HD, incumbents are still making agressive inroads with their HD channel counts. Comcast and Time Warner announced more HD channels this week and Dish Network is agressively adding OTA HD to many of their markets. HD isn’t the only content being expanded; both Verizon and Dish are adding more international programming as well.
  • Video isn’t just for your TV. Netflix is rolling out HD streaming with coincides with Watch It Now movies on the XBox360. YouTube is also doing a trial of high-quality video. Of course, streaming isn’t everything. Bright House is also pushing customers towards online video, just of the pay variety. They’ve inked a deal with RoadRunner to sell via their online store. All of these things is going to increase demand for greater bandwidth. And speaking of “content” delivery, you can now use your TiVo to order a pizza from Dominoes.
  • Comcast apparently feels bold enough these days to blow off the FCC. FCC Chairman Kevin Martin asked for data on the operator’s policy of moving channels out of analog tiers and into more expensive digital ones, but Comcast was bold enough to give him only partial data even as threats of fines loom.
  • It also appears that DTA boxes could be a sticky subject. CableONE asked the FCC for a waiver for a HD-capable DTA box with integrated security. This could shut out CableCARD (and possibly Tru2way) as well as a number of third-party devices like TiVo DVRs. Manufacturers are already pushing these boxes which could very well kill the Carterphone of video before it gets off the ground. Competitive operators will see the opportunity to be fully interoperable with CableCARD and Tru2way and ensure that customer DVRs will work on their systems.
  • Local programming is in high demand, but there are some chinks in the incumbents’ armor. Since local programming options like high school sports, General Conference and rebroadcasts of local news are so popular, competing operators should mimic what Comcast is doing and look into an old-school public access channel.
  • Online college classes are starting to show serious promise. Minnesota is pushing to get a quarter of college credits completed online by 2015. A collection of Utah colleges and universities headed by USU is pushing OpenCourseWare, entire courses in digital format that are free to reuse and distribute. These kinds of initiatives could drive demand for metro area networks between the universities and students.

The Need for Speed: Comcast Plans to Up Speeds, Qwest Putting FTTN on Ice

As a sure sign that the souring economy is causing broadband issues, Qwest is planning to ramp down deployment of their FTTN-based ASDL2+ service. While one of their supplies cites the coming winter weather as the reason for the slow-down, but analysts are reading between the lines that plunging landline subscriptions paired with a slowing economy means rough rides ahead for telcos. AT&T is also seeing some effects of slowing subscriber demand. It’s good news for ISPs, though: the wholesale price of bandwidth continues to drop and consumers are more willing to drop cable TV than high-speed Internet, especially as Comcast continues to raise rates.

Meanwhile, details of Comcast’s new DOCSIS 3.0 deployments is coming to light and, while good news for current subscribers or those switching from DSL, it’s hardly competitive with offerings from UTOPIA. In addition to a 50Mbps/5Mbps tier at $150/mo, Comcast plans to upgrade current subscribers to 12Mbps/2Mbps at $42.95/mo and offer a 22Mbps/5Mbps tier at $62.95/mo to compete with a similar offering from Verizon. Compare that to a 15Mbps/15Mbps plan at $40/mo or 50Mbps/50Mbps for $55/mo from either MSTAR or XMission. Just be thankful you aren’t a SureWest customer. They charge around $192/mo for a 50Mbps connection.

Broadband Bytes: Weekend Edition

Today’s Broadband Bytes was brought to you by the letters C, W, and T.

  • Robert X. Cringely has some words to say about Comcast’s new bandwidth caps. He compares today’s caps to the caps he had years ago. Do they match up? Is Comcast offering a better deal than the ISP’s of the late 1990’s? And from Slashdot, “Comcast has filed a court appeal of an FCC ruling that says the company can’t delay peer-to-peer traffic on its network because it violates FCC net neutrality principles.
  • Australia’s caps make Comcast’s look great.
  • With all the talk about city wifi networks becoming ubiquitous there are some downsides…scalability. Networkworld has an interesting article about the the technical problems with scaling WiFi to meet today’s bandwidth hungry users. As a side note, some users ask the network engineers at my place of employment (higher ed) when wifi will become our primary means of connecting desktops to the network. The answer is always the same: never. They say: “What do you mean I can’t use this new 2.4Ghz phone I just purchased?” Some departments decide to go wireless anyway (usually to avoid the cost of wiring) but later end up having to convert to physical connections anyway.
  • It looks like Comcast’s new caps are around thanks to Florida consumer protection laws. It seems that prior to the 250Gig caps there was no cap. They just cut off the top 1000 users every month. Because consumers were unable to find out how to avoid this in the future the Florida AG became involved.
  • As the Analog TV signals fade out, will you receive the new digital signals? In rural areas you may not!
  • Along those lines I dug up these old articles about Utah getting a jump start on converting the state-wide network of TV translators to digital signals. One interesting tidbit from the article: “It is widely believed that Utah has the largest terrestrial-analog translator network in the world. The system provides rural viewers with over-the-air television in approximately 80 percent of the state.”
  • Speaking of rural communities, two very small communities got federal grant money totaling $1.7 million from the United States Rural Development to build fiber optic networks. Is this different than the RUS funding UTOPIA originally had?
  • Verizon is using Yahoo as their “portal partner” for all their broadband users.
  • We’ve talked about the FCC wanting free broadband before. Here’s a company that wants to make it happen (good details). In a letter to the editor in USA Today, the writer asks, why should broadband be free? (he thinks it shouldn’t be). T-Mobile has been the most vocal opponent to this plan by the FCC to give out free broadband, they say because it could cause interference with other wireless signals. The FCC is trying to put that fear to rest in a demonstration.
  • The Register (based in the UK) has a great piece titled “Why the U.S. faces broadband price hikes” (due to the recent FCC Comcast net neutrality ruling).  But in somewhat unrelated news, others like CNET are talking about broadband price wars brewing. Those price wars could end up hurting consumers though instead of helping them.
  • Cable broadband is growing faster than DSL and tecos, and interestingly, VOIP is a big factor in driving broadband growth and makes up the biggest percentage of broadband value added services.

Frontier Guarantees Mass Migration to UTOPIA in Tremonton with New 5GB Monthly Cap

Frontier Communications, the incumbent phone carrier in Tremonton, has decided to give UTOPIA a helping hand by implementing a 5GB monthly cap on all of their DSL customers to drive them into the arms of a competitor. By comparison, the lowest cap available from a UTOPIA provider is 20 times that at 100GB per month. When the service starts rolling out in September and October, I’m sure that UTOPIA will see a good number of signups from angry customers who don’t appreciate per-byte billing.

One of two possibilities exists: they arrogantly think they’re so much better that nobody will switch or don’t see how boneheaded a move this is. Either way, it highlights the need for a bit of competition in the marketplace.

The Need for Speed: Comcast, Verizon Start Boosting Bandwidth

The race for the speed crown continues as Verizon rolls out 50Mbps/20Mbps service to all of its current FIOS customers. The super-fast tier of service comes at a price of around $150/month, not far off from what Qwest is charging for inferior 20Mbps/896Kbps DSL service. This also prepares Verizon for a fight to the death in the Lone Star State with AT&T's inferior U-Verse service where it plans to overbuild to 600,000 homes in the GTE territories it purchased. I'm sure Qwest is sweating as well; it also borders several Verizon markets and can't compete on speed either.

Comcast also made some speed announcements, bumping upload speeds on the 6Mbps and 8Mbps tiers to 1Mbps and 2Mbps respectively. I've independently speedtested this claim and found that I'm getting a solid 1.3Mbps of upload on my 6Mbps plan. While the plan is to roll out 50Mbps service in multiple markets after testing in the Minneapolis area, that will also come with all kinds of protocol-agnostic throttling and potentially a 250GB monthly transfer cap.

Despite all this increased speed, we're still doing terribly in broadband availability and adoption. OECD numbers show us slipping to 15th out of 30 with China stealing the crown from us for most fixed broadband connections. Caps and throttling are also going to prove highly unpopular as we approach a new variant of Moore's Law that shows IP traffic doubling every two years through at least 2012. Maybe its time for companies to respond to consumer demand for more bandwidth instead of trying to smother it with a pillow, you know?