Recently in Telecommunications Category

Verizon has shed itself of many of its less profitable operations, specifically landlines, with sales to HawaiiTel, FairPoint, and Frontier. It appears Verizon did not let the money they received for those assets sit idle. The billions they got for the sale of of their more rural landline systems were put to good use, expanding their wireless and FiOS offerings.

With Verizon's recent purchase of additional wireless spectrum (to the tune of $3.6 billion) from a number of cable companies, they expect to be able to provide 4G LTE services to just about everyone in the US. The cable companies owned the wireless spectrum but hadn't done much with it. How better to provide such services than selling off the unused spectrum and then partnering with the buyer to bundle cable services (video, Internet, digital phone) with wireless services (phone, Internet, and video). The cable companies get to offer wireless services without having to put a dime into wireless infrastructure and Verizon gets to offer cable services, again without having to spend a dime on cable infrastructure. It's a win-win situation for cable and wireless.

But maybe not so much for some Verizon landline customers, particularly those also subscribing to DSL.

DSL has become the red-headed stepchild of Verizon, with little investment being put into it. Verizon DSL subscriptions have been declining as competitors like cable and fiber have been able to offer data speed many times that of DSL. DSL technology has been running out of steam, just about reaching its speed limit due to the limited bandwidth of the installed copper phone lines.

That doesn't mean the DSL is dead as a number of other telephone companies, mostly small independents and rural telcos will offer it for some time as it's "the only game in town." The WP In-Laws have FairPoint DSL, something that became available in their small rural town about a year and a half ago. Before that they were using Verizon Wireless Broadband. For them DSL provides a consistently better and faster connection. Cell site congestion would often slow the Verizon Wireless Broadband connection to speed barely better than the dial up connection they'd used before that. But who knows who long that will be true once Verizon starts offering 4G LTE services? At that point DSL might be seen as a less desirable service and customers will start dropping it in favor of the wireless service.

It will be interesting to see where all of this will take us and how long it will take before the remaining landline operations start feeling squeezed even more than they have been.

Gee, this is a shocker.

FairPoint Communications is laying off 400 workers across its service areas, with 190 of them in New Hampshire. The company cites decreasing revenues and a decline in customers as its reason for the layoffs.

This is not a surprise to anyone paying even a little attention to the telecommunications industry.

FairPoint's purchase of Verizon's landline operations in northern New England was a disaster from the beginning. The number of landline customers had been declining for some time and Verizon saw an opportunity to divest itself of an operation in a declining market. FairPoint was stupid enough to buy it despite protests from many that it was paying too much for assets that would continue to decline in value. Once FairPoint took over operations from Verizon the problems multiplied, with a loss of 10% of its landline customers in less than 6 months. The continuing hemorrhage of customers and problems with its operations finally forced it into Chapter 11 bankruptcy and its delisting on the New York Stock Exchange.

Even after reorganization its customer base continued to decline as competitors like cable companies and cell providers undercut it in price and services. Ironically one of its biggest competitors is Verizon, whose wireless operations were winning over an increasing share of customers.

FairPont isn't the first company to see its landline operations become a money losing operation. And in yet another bit of irony, Verizon has seen its own landline services suffering, prompting it to demand concessions from its union employees. This led to a strike by both the CWA and IBEW against Verizon last month. The unions figured since Verizon was making billions in profits that they were somehow entitled to a share. But it was their wireless and business operations making the profits, neither of which are unionized. The landline operations were shrinking and losing money, and Verizon wasn't about to use profits from other operations to fund higher pay and benefits for their landline workers.

Is it any wonder FairPoint is shedding excess employees as its fortunes decline?

Our cable company has done something kind of cool, something I noticed almost immediately.

They've cranked up the download speeds for their Internet service!

Download speeds for the level of service we pay for here at The Manse are now 10Mbps, up from 6Mbps. The upper residential service tier provides 18Mbps (requires a DOCSIS 3.0 cable modem).

I ran a number of tests over the past few days and the slowest download speed I measured was 8.6Mbps which occurred during a nominally heavy usage time of the day. Average speeds somewhere north of 9.6Mbps.

Unfortunately the upload speed hasn't changed at all, with 500Kbps being the norm, but it isn't often that we're uploading big files from The Manse.

I will admit to some suspicion about the reasons for the bump up in speed. Might it have something to do with upcoming franchise contract renewal negotiations for a number of towns within the cable company's service area? Maybe that's just me being paranoid...or not.

If we need any more evidence that stimulus funds did little to stimulate anything other than bureaucratic incompetence then all we have to do is look at how the Department of Agriculture's Rural Utilities Service pissed away Broadband Initiatives Program money by allocating far too much of it to communities that already had broadband services available rather than to those with none.

I thought it was ironic that one rural town here in this state received RUS stimulus funds when it already had DSL available while another town not all that far away with only dialup Internet services received not one thin dime.

Which community needed broadband more? Not the one that received the stimulus funds.

First, FairPoint Communications bought out Verizon's wireline operations in northern New England (Maine, New Hampshire, and Vermont). Then FairPoint ended up filing for Chapter 11 bankruptcy a little over a year later when it started hemorrhaging customers as its costs and rates rose, customer service quality dropped, and its income dropped with it.

Next, Frontier Communications buys out Verizon's wireline operations in the rural areas of a number of states, despite warnings it was probably getting in over its head, just as happened with FairPoint.

Now Frontier is cutting services, this time in Oregon as it shuts down the FiOS TV franchises it bought from Verizon. Frontier has been losing money on the operation because the operating costs were higher than they were led to believe. (Big surprise there...NOT.) And for those services they still offer through FiOS (Internet and VoIP), Frontier will now charge a $500 installation fee on top of the 46% rate increase it just laid upon its customers in Oregon at the first of the year.

Gee, this all sounds familiar, doesn't it?

I wonder how long it will be before Frontier ends up filing for Chapter 11 bankruptcy, just as FairPoint did?

I'll go out on a limb and say it will be before this time next year.

OK, dear readers, how many of you out there are still using Internet Explorer 6? If you are, why?

IE6 has to be the most targeted web browser for hacker exploits, even with the security patches provided by Microsoft. If you're still using it, it's time for a change. Just about any modern browser will be more secure than IE6.

We here at The Manse use Firefox 3.6.3 and we update it as soon as new updates are available. Microsoft has IE8. There's Opera, Chrome, Safari, and a whole host of other browsers out there. Pick one, try it, and if you don't like it, try another one. But get rid of IE6 now.

Note: For full disclosure, at work we use both Firefox and IE6. The decision about IE6 is not ours, but that of our corporate IT folks. About the only thing we (meaning Engineering) use it for is some internal applications (Oracle, Microsoft Project Web Access, and one or two other corporate applications), but never for URLs outside the corporate proxy server.

It appears Frontier Communications has fallen further under the spell of Verizon's sales pitch, with the sale of Verizon's Oregon assets to Frontier being OK'd by Oregon's PUC.

But not everything is rosy. At least someone in one state is questioning the wisdom of the sale in light of the fate of other small rural-service telcos that bought what Verizon was selling.

The State Journal-Register newspaper in Springfield reports that [Administrative Law Judge] Lisa Tapia said in a 46-page report that allowing Frontier to purchase the Verizon lines in Illinois "will diminish Frontier's ability to perform its duties to provide adequate, reliable, efficient, safe and least-cost public utility service."

--snip--

Unfortunately for Frontier, they are caught up in the back wash of Verizon's other local exchange divestments. Both FairPoint and Hawaiian Telecom completed similar transactions, and are both now in bankruptcy.

Both FairPoint and Hawaiian Telecom paid far too much for the assets they bought.

In northern New England FairPoint bought an increasing share of a decreasing market, always a formula for disaster. Wireline customers have been shedding themselves of traditional landlines and using either cell phones or VoIP services from their local cable companies for some time, both of which have been competitively priced compared to FairPoint. FairPoint lost over 13% of their customers since they took over operations from Verizon. And because of FairPoint's financial difficulties, its promise to expand broadband service to at least 95% of its service area has fallen by the wayside.

The best thing Illinois could do for telephone customers is to run from the Verizon-Frontier deal. In the end the only one such a deal helps is Verizon. Everyone else will be screwed. Frontier doesn't have the financial wherewithal to handle such a deal and will end up in the same situation as FairPoint and Hawaiian Telecom - in bankruptcy. That helps no one...except the lawyers.

Over the past few years the functionality of cell phones has grown to the point that there are so many functions built in that they rival many home computers in regards to the types and numbers of software applications they can run. They can act as organizers, send and receive e-mail, surf the web, text message, take pictures, record video and audio, play music, play games, give turn by turn directions, and perform a host of other tasks. But one thing they don't always do so well is make phone calls, something customers want them to be able to do.

Over 1,300 survey respondents were asked the open ended question, "What features are desired on your next phone?" The top three responses were better connectivity, better audio and simplicity.

In many cases vendors have been so focused on making complex camera phones, music phones or mobile Internet devices, they have lost sight of the fact that phone functionality is mediocre at best. How often have we seen someone with a finger in one ear and a cellphone pressed to the other ear, desperately trying to hear a conversation? Our survey responses suggest that there is an opportunity for vendors to develop phones with great audio quality, robust connectivity and antenna features that are simply easy to use.

I know there are times when I am not pleased with the quality of the connection and audio on my cell phone. It isn't a problem with drop outs that I find the most vexing, but the poor quality of the transmit and receive audio. It would be nice to have what is called toll-quality audio when I'm using my cell phone rather than the variable and consistently poor quality I deal with now.

Here's yet another non-surprise in regards to FairPoint Communications and their ongoing financial and operations difficulties: The New York Stock Exchange delisted FairPoint today. Their stock fell to a little over 10¢ per share after the NYSE's action.

And the hits keep on coming.

Let this be a lesson for Frontier Communications, a firm that also spent far too much money for some more of Verizon's rural wireline assets. That's what caused FairPoint's problems. I have a feeling Frontier will end up in the same boat.