Friday, December 13, 2013

Carrier of Last Resort

Verizon and AT&T hate to be reminded that they are the remaining RBOCs, monopoly ILECs. They are monopolies on two levels - cellular and wireline. About 80% of the US is covered by these two, despite their being numerous other rural LECs, HT and 4 non-Bell giants - Windstream, CenturyLink, Frontier and Fairpoint. Of coourse, 3 of those - Hawaii Telecom, Fairpoint and Frontier - consist of former Verizon assets.

The RBOCs would like to be unregulated. Despite the fact that they are where they are today exactly due to the regulations that they say choke them. Yeah, choke them. Have you seen their financials?

VZ: "Total operating revenues in third-quarter 2013 were $30.3 billion, a 4.4 percent increase compared with third-quarter 2012. Cash flow from operating activities totaled $28.4 billion in the first nine months of 2013, a 14.7 percent increase."

ATT: "Consolidated revenues of $32.2 billion, up 2.2 percent versus the year-earlier period; More than 2 million new wireless and wireline high speed broadband connections. Wireline consumer revenue growth of 2.4 percent versus the year-earlier period. First billion-dollar U-verse revenue month." NOTE: billion $$ MONTH!

Meanwhile, at C-Link (which is a roll up of CTel, Sprint, Embarq, Qwest and Savvis) - "Achieved operating revenues of $4.52 billion, including core revenues of $4.10 billion. Added 33,000 broadband and nearly 17,000 Prism TV customers during third quarter." [clink]

In the case of VZ, it would like to shed everything but VZW, Terremark and FiOS. The current CEO came from VZW, not VZB or VT. VZW is the land of no unions, no pension liability, no regs. Now VZ announced a re-org but when you have about 100,000 employees how does that change an ingrained culture of unions, bias, monopolistic mindset, and cubiclism? These are non-innovative mental and physical states.

So what do you do? Try to trick regulators as often as possible -- and buy the legislation that you need to move to unregulated.

What was the trick? Post Storm Sandy, VZ tried to replace copper with fixed LTE. NY State authorities called them on that BS and demanded that VZ replace the copper as the ILEC and carrier of last resort is required to do. "Now VZ is doing their best to not share what the costs were.. naturally, because they had given extremely high estimates to justify not doing it in the first place." Other than looking like stupid liars, they will pay a small penalty and do whatever they want. ATT and VZ paid more in lobbying than they did in taxes!!!! In fact, "Verizon received over $12 billion in government subsidies, money which helped fund the $52 million it paid for lobbying during that time." Nice huh?

For AT&T, it's all about revenue growth. They have hit a ceiling (kind of). As one of the largest telcos in the WORLD, their revenue at this point can only slow down. Stymied from buying T-Mobile and expanding into Europe, they are stuck with organic growth which isn't fun for them.

Broadband is the new utility. The FCC wants it everywhere. Google jumped into the fray with its Gigabit FTTH project more to make noise and push the Duopoly to step than to be an actual SP. Our economy turns on the heels of our Internet -- not just shopping, but learning, entertainment and jobs! And broadband in most of the US is on Copper. Windstream, C-Link, Frontier, HT and Fairpoint don't mind. Some rural ILECs are getting loans or funding to roll out FTTx projects. Ethernet to businesses in most cities is over copper. Windstream gets 72% of its revenue from broadband! The RBOCs don't like that idea at all.

ASIDE::: C-Link just raised the price of its stand-alone DSL product by $2 per month. Not sure the RBOCs even offer naked dsl any more. "One CenturyLink subscriber in Broadband DSL Reports' user forum said that the combination of the latest $2 increase and the $1 increase that the telco implemented in June means the total price of his service jumped to $72.99 a month," wrote DSLR.

Meanwhile, in Austin, ATT is offering gigabit service for $70 IF you let it spy on your searches! It will do that anyway and send a copy to the NSA for free, so you might as well take their offer.)

And we aren't done yet. In most states, DSL and business POTS service is unregualted. In some states, almost all telecom services are deregulated. Now AT&T is pushing a bill through Michigan that will reform telecom, landlines and inter-carrier comp. Fun stuff.

According to Paul Timmons, "What AT&T wants to eliminate is something very specific:"

Telephone service that is:

  • Regulated for price and quality,
  • Offered on nondiscriminatory, consistent and identical terms to everyone in their service area,
  • Is delivered on copper pair,
  • Has dialtone even with no equipment attached inside the customer premises

This comes on the heels of the Special Access Price changes. "See CLECAM13-099 as an example of the changes they're making to eliminate DS1/DS3/OC-3/OC-12/OC-48/OC-192 service around the same time by removing the ability to sign contracts that go past this target date."

Consumers, CLECs, ISPs, cellcos, and others need to pay attention because Comcast-VZ-ATT are carving up the country!

What happens when there is no Carrier of Last Resort? When you want phone service to your new building, you will have to pay to have it brought to your building. This will not be cheap. New residential sub-division will have to pay as well. A storm knocked out Internet and phone lines?? Too bad. We'll fix it when we fix it. Screw you! Plus your cellcos - Sprint, T-Mobile, C Spire - are out of luck. Copper to towers have to be replaced with fiber, with construction costs and higher rates. Fun times to mess up the only two things - cell and broadband - keeping the economy spinning.

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