Allow me to channel a Verizon suit for a moment: The company has a lock on fixed line right of ways in a large geographic area. The only broadband competition is from the cable guys at the higher service levels. After investing in fiber to home, pay TV subscriptions have been flat and fixed line voice is dying. The leaves future  the fiber to home service a pure broadband play, and that not what investors were promised.  The company also have a new 4G wireless network to complete withing a little over 9 years or risk losing the world’s most valuable spectrum. Since the FCC has pretty much promised that there will be no fixed line competition, it’s time to emulate AT&T and put the majority of your customers in a DSL ghetto. The death star has been a very successful slum lord, keeping subscribers at very high margins without much new investment.

Verizon’s investment in fiber ends right outside of cities like Baltimore, Maryland
or Alexandria,
Virginia. According to Verizon, the company is taking a contemplative
pause to focus on marketing the service to areas that are already
deployed.

But according to long-time industry analyst Dave
Burstein, Verizon’s essentially cutting and running on additional
deployment plans, leaving a very large chunk of their footprint on
last-generation DSL and copper-based voice networks.

Burstein
tells Broadband Reports that he doesn’t see Verizon expanding any
further (with the exception of major cities where they’ve signed
franchise agreements) unless they get money from Uncle Sam (aka,
taxpayers). “They want to get on the gravy train, although I think the
new, less competitive leadership is the primary explanation,” says
Burstein when asked why Verizon’s shifting tactics. Seidenberg, the
driving force behind the first wave of FiOS, is on his way out — and
his replacements aren’t quite as bullish on angering investors for the
sake of this whole “future” thing. (DSL Reports)

Certainly, the recession also has a role in Verizon’s decision to scale back. But there’s much more at work here.  The Telco / Congress /FCC cabal has made the market for internet access progressive less competitive every year going back to the days of dial up service. If FiOS deployment continues, Verizon will probably plead the case that it will need stimulus money to keep its fiber deployment rolling.  Our current federal government will probably be happy to print up more monopoly money to provide it.

While US broadband languishes, the FCC is aggressively seeking more regulatory authority. The will certainly be counter productive based on the agency’s long and dismal broadband track record. I think it’s time to give up on Washington and give the power to regulate broadband back to the states. States will have compete with one another to provide the best infrastructure to grow their tax base. Those who tolerate a fixed line duopoly will lag behind, meaning none will tolerate it for long. We’ll get lots of new business and real jobs, and a better quality of life for those of us who would outside of the federal government. Maybe a forward thinking governor will exercise his or her 10th amendment rights and make it so.

First, as a public service I’ll remind you that as of today production LTE service is still vapor. The technology has been tested successfully, but that’s very different from even a soft  launch. Never the less, the company’s CTO is claiming that the service is ready to roll seemingly any day now.

Lunch said Verizon Wireless is in the final testing phase, or “Phase 4,” of its LTE technology. Within 60 days he said he expects testing to be completed in Boston and Seattle. After those trials are complete, Verizon will be ready to announce commercial deployments.

Initially, Verizon Wireless will offer USB air cards that access LTE for its laptop customers. Cell phones and other mobile devices with embedded LTE will be introduced later. That said, Lynch and other executives from the European carrier Orange as well as from equipment maker Ericsson, said that LTE handsets will be introduced sooner than anyone had anticipated.

Lynch said getting voice to work over LTE has been particularly challenging. But that challenge is getting resolved as Verizon and other members of the GSMA announced Monday they are supporting a standard that uses IMS technology to deliver voice services over LTE. Still, more work needs to be done. (Cnet)

So, if Verizon can really get equipment that is not yet in production onto towers, and upgrade its back haul capability, then maybe it can deliver service. I can’t imagine that work getting done any time this year at the if deployment comes at the typical telco pace. Then there’s the investment. New POPs and fat pipes don’t come cheap.  The there’s the “can’t make voice work” claim? Maybe big V should look at the VoIP technology it’s been suing competitors for infringing? I think what is really at work here  is not wanting to make new investments, along with a ploy to keep frequencies that are redundant if LTE is really on the fast track.

It’s a really bad time to be out of work, especially if you’re a fixed line service worker at Verizon. Good paying jobs with great benes are few and far between and the demand  for your skills is in free fall. Those still employed in the switched network trade are well advised to update their skills for a career change that will certainly come to more each year.

It’s been quite a while since I departed the world of telecom, so I think I can be objective in describing the underlying problem. The industry is so disfunctional that it more closely resembles the federal government than free enterprise. Switched service should have been ended decades ago, but that would require rule changes at the FCC and telco investment. The investment required to equip every switched customer with VoIP service is so small that the cost could easily be recovered in the first few months and that cost is falling. Changing regulations could end the guaranteed return on local fixed line service the telcos currently enjoy and could possible reopen discussion on line sharing with competitors. The last thing Verizon wants is more competition. So, no matter how compelling it would be to retrain a few of its workers and go all digital, there is no will to do so in a business unit that can’t see past the 1970’s. So, switched service continues its irrational slow march in inevitable death. My bet is the number dismissed by Verizon will be much larger in 12 months, and that fixed line service with be with us for at least another decade. What a waste.

Verizon Communications Inc., coping with subscriber losses at its fixed-line phone business, plans to cut about 13,000 jobs at the division this year after posting fourth-quarter revenue that missed analysts’ estimates. (Bloomberg)

In this case its Verizon again. The name of the game is a Titanic shuffle of their data rate plan. May sound like small potatoes till you see the hurdle before you as a customer –

First, the details: Verizon has introduced a new data tier at $9.99 per month with a 25MB cap—this is the cheapest data plan now offered by the company and by most US wireless carriers, and applies to all 3G devices. Why does this equate to “upping” the data charges? Because the company is ditching its $19.99 per month plan with a 75MB cap altogether—you must either go with the $9.99 plan for a third of the data or or the $29.99 smartphone plan that applies to WinMo, Android, or BlackBerry devices.

This in a sense is a variant of the give the lantern away but charge for the oil dearly. Only this is charge minimally for low oil but if you want to use the lamp every night you has to pay!

Why can’t stuff be simple? Just charge .001¢ per kilobyte and be done with it. Equitable, quick and customers can check their bills quickly. But then that would not justify the marketees salary would it?

Linky.

Yes, with all that goes on in the telecom world there is always room for a lawsuit! Only this time Verizon is not the Plaintiff —

Located at 375 Pearl Street in Manhattan, the TriBeca Trib reports that the city is now suing Verizon and real estate company Taconic Investment Partners for $53 million. Allegedly the city lost that much money after what they claim were fraudulent dealings.

When they purchased the land and air rights from the city in 1972, “the agreement called for the phone company to give the city $17 million and to build Murry Bergtraum High School. But, the city says, New York Telephone built far more usable space—1.2 million square feet—than it said it would, thereby undervaluing the deal and shortchanging taxpayers.”

What’s a couple of thousand square feet of space between friends in one of the highest priced markets in the world?

More here.

Look, I think Verizon has the duty to make a buck for its shareholders. It also in my view has a obligation to play fair with its customer base. Sometimes the two are in conflict. When that happens, sometimes the FCC takes notice –

“Late Friday, Verizon Wireless responded to the Bureau’s queries. The company’s answers, however, are not satisfying and, in some cases, troubling. In particular, I am concerned about what appears to be a shifting and tenuous rationale for ETFs. No longer is the claim that ETFs are tied solely to the true cost of the wireless device; rather, they are now also used to foot the bill for ‘advertising costs, commissions for sales personnel, and store costs.’ Consumers already pay high monthly fees for voice and data designed to cover the costs of doing business. So when they are assessed excessive penalties, especially when they are near the end of their contract term, it is hard for me to believe that the public interest is being well served.

“I am also alarmed by the fact that many consumers have been charged phantom fees for inadvertently pressing a key on their phones thereby launching Verizon Wireless’s mobile Internet service. The company asserted in its response to the Bureau that it ‘does not charge users when the browser is launched,’ but recent press reports and consumer complaints strongly suggest otherwise.

“These issues cannot be ignored. Wireless communications are an essential part of our lives, linking us to our places of business, our communities, and our loved ones. The bottom line is that wireless companies can truly earn their desired long-term commitments from consumers by focusing primarily on developing innovative products, maintaining affordable prices, and providing excellent customer service. I look forward to exploring this issue in greater depth with
my colleagues in the New Year.

Or so says Mignon Clyburn.

Verizon responded –

* most customers who terminate do so in the first year;
* no matter when a customer terminates a contract, Verizon loses more money than the ETF covers;
* based on those two points, Verizon would lose too much money if it evenly prorated the $350 ETF;
* so by unevenly prorating, Verizon can keep the initial ETF lower than it otherwise would be, but high enough over the life of the contract to adequately offset losses.

Here’s the problem with their logic. If the customers require such high support $$ then adjust you plan rates. Also please explain why we keep hearing in the press about phantom key sequences that activate services without knowledge of the customer. It might explain the additional support costs. Also if most smartphone users quit in the first year then smart money would say you slam them for $350 up to and including month 13 or 14. Then prorate monthly as the chance of leaving has decreased significantly. Eh?

Bottom line? All the carriers thought they were just selling a cell phone with the capability to view short video clips. They never thought people would spend hours watching YouTube clips, short films, etc. They were wrong, got caught flatfooted and so now they are CYA’s themselves all over the place. No sympathy fellas.

Linky.

When two elephants start a fracas in the room what is the best course of action? Get the Hell out of the room of course! Well that is what is preparing to go on between Verizon and AT&T. The two are locked horns on the coverage map ads that Verizon is running in reference to their 3G wireless network

I hope the judge has a good sense of humor. He will need it for this case. –

In essence, we believe the ads mislead consumers into believing that AT&T doesn’t offer ANY wireless service in the vast majority of the country. In fact, AT&T’s wireless network blankets the US, reaching approximately 296M people. Additionally, our 3G service is available in over 9,600 cities and towns. Verizon’s misleading advertising tactics appear to be a response to AT&T’s strong leadership in smartphones. We have twice the number of smartphone customers… and we’ve beaten them two quarters in a row on net post-paid subscribers. We also had lower churn — a sign that customers are quite happy with the service they receive.

The fun part of this? Like these two companies don’t have something else to do? Like maybe lay some fiber or something? But it is par for the course in the Telco industry. Now I suspect that why AT&T did this has little to do with the ads and more to do with some underlying cross interlata agreement they have been locking horns on. You don’t burn $1,000/hr in legal costs for this kind of piddly stuff.

Endgadget has the gory details.

Before you you rush out and and sign a contract to get your hands on that hot new Droid handset in a couple of days, consider this: If you want our of the contract, you’ll have to pony up as much as $350 to leave the dark helmeted one’s network. The ETF will decline by $10 a month. That means you’ll still pay as much as $120 to leave in the last month of a two year contract.

The carrier is raising early termination fees on Novermber 15 to $350 for “advance devices” only. Clearly VZW is targeting users who were abusing the buy one get one free BlackBerry deals and those that figured out that it was cheaper cancel their current contract and pay the $175 ETF than to pay full retail for the hot new handsets like the Droid. (Mobilecrunch)

How’ that much ballyhood “network neutrality” for mobile really working out? As long as carriers can lock devices to their networks, and keep other compatible devices out, the marketplace will never work for the consumer. While there’s been plenty talk from the almighty FCC about addressing this, no real action has been taken.

It’s not difficult to understand Verizon’s strategy for the future. It’s all about fiber in major population centers and wireless. He’s pretty much summed it up in recent statements:

Mr. Seidenberg said that his “thinking has matured” and that trying to predict when the company would stop losing voice landlines “is like the dog chasing the bus.”

“We don’t look any different than Google,” he said. “We can begin to look at eliminating central offices, call centers and garages.” (New York Times)

Never the less, Verizon’s boss still has a view of the future that is distorted by his will to justify very questionable investments. This quote that will prove wrong, at least as he presents it, is:

“Video is going to be the core product in the fixed-line business,” Mr. Seidenberg declared. And the focus will move from selling bundles of video and landline to video and cellphones, he added. (New York Times)

The closed video systems  are dying, and the traditional cell phone has peaked. Net based video on demand and portable, device independent voice services are the future. I think Seidenberg probably knows this, but letting the rest of the world in on your mistakes is not good for your career.

With the Clearwire consortium accelerating new launches in several major cities this year, 4G wireless has arrived. Verizon is sending signals that it will compete in this space with its own 4G offering sooner rather than later.

Verizon Wireless, the largest US mobile carrier, has just announced that it has successfully completed LTE (4G) data calls in Boston and Seattle – which currently have 10 functional LTE cell sites each.

Based on the 3GPP Release 8 standard, the data calls were made over Verizon’s 700 MHz spectrum, and involved file downloads/uploads, streaming video, Web browsing, and voice transmissions using VoIP.

Will two players be enough to create a competitive market? Probably not in wireless alone. But Clearwire intends to take market share from fixed line providers as well as 3G. Don’t expect Verizon to join in that attack until it’s fiber fixed line service has much broader coverage.  With the current pace of deployment, that time will not come soon.