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Bruce Kushnick

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Broadband Wars, Verizon NJ Update: Kick the Wireless Cantenna?

Posted: 06/27/2012 7:26 pm

(Fifth in a series. Also see: Please, sir, may I have another?; How wireless hype is hurting America; The great Verizon FiOs ripoff; and Broadband wars: The battle for New Jersey has begun.)


To summarize the situation in New Jersey, Verizon, New Jersey, the company in charge of the state's Public Switched Telephone Networks (PSTN), (the state's telecom utility), was supposed to have 100 percent of New Jersey upgraded by 2010 with a fiber optic wire that would replace the old copper wiring and could deliver a residential service capable of 45 Mbps in both directions.

In March of 2012, the State's Board of Public Utilities issued a show cause order for Verizon to explain why they never completed this state requirement, especially since state laws were changed to give the company billions of dollars for the upgrades.

This action started because two small towns in Cumberland County -- Greenwich and Stow Creek -- were never wired with fiber optic, and in fact don't even have reliable phone service.

Verizon responded by claiming they fulfilled their requirements. Now the question is whether the state commission will actually hold Verizon accountable for this obviously false claim. Verizon hasn't wired about 50 percent of the state with anything, and its fiber optic service, FIOS, is in only 60 percent of the state's 70 communities.)

Now a new wrinkle has hit this story -- the Cantenna.

That's right, a wireless antenna that looks like a can -- Cantenna. Though it sounds like a Mexican drinking hole in an old, dusty western, Verizon has been rolling out Cantenna to rural areas so that they don't have to bother upgrading the wires -- just let 'em buy a can.

And Verizon Wireless has stepped into the picture to offer these two small town wireless services by constructing a new tower in the town, most likely for 'Cantenna.'

The Cantenna, with its overhyped "4G" service, is ostensibly "designed for use in rural and remote homes that can't get DSL or cable." But it can't provide cable television, nor is it competitive even with DSL -- not to mention FiOS -- as it is a wireless service that's very expensive to use.

Every resident of these two towns already has a wire for phone service. Why wasn't it upgraded over the last 20 years? And why is the wireless company offering services? Aren't wireless services supposed to compete with wireline services?

Let's Play Kick the Cantenna: Why wireless is not a substitute for wireline.

Verizon is marketing Cantenna as HomeFusion:

  • It is only a broadband/data service.

  • It costs $60 to $120 a month, depending on how much usage you want to buy.

  • For $60 you get 10 Gigabytes (GB) of allowable usage. The $120 plan comes with 30 GB of allowable usage. By comparison, according to Netflix, downloading or streaming an HD movie takes up 1 to 2.5 GB.

  • It costs $10 a GB after that.

  • The speed is 5 to 12 Mbps downloading and 2 to 5 Mbps uploading.

Let's compare Cantenna to FiOS: (See Chart)

  • Basic service packages costs $94.99 to $119.99
  • Speeds are 15 Mbps to 50 Mbps downstream
  • Comes with unlimited downloads (so far)
  • Includes unlimited phone service (so far)
  • Unlimited cable viewing, with 270-385 channels

Or even Verizon's DSL

  • Speeds of 1 to 15 Mbps
  • Costs $19.99 to $29.99
  • Has unlimited downloading (so far)
  • The "double play" with DSL and unlimited phone costs $54.99

So, wireless Cantenna vs. wired services aren't even close.

Cantenna's $60 plan allows for about three HD movies per month and doesn't come with phone service. It does not come with cable and can't do cable. For someone who wanted to stream the national average of 33 hours of TV a week (or 132 hours a month per person), one month's viewing for one person would come to $790 a month. (Using the highest price at $120, with $10 per GB later)

We note that the prices mentioned are not actual prices but "listed prices." Verizon places a caveat that "gov't taxes & our surcharges could add 6% - 40% to your bill" -- and notice that it is their surcharges, meaning additional fees added to the bill because they can get away with it, as compared to putting these extra fees into the actual listed price customers see in their advertisements.

But Verizon customers who currently don't have FiOS may have no choice but to go wireless. Verizon has announced that FiOS is no longer being built out and appears to be on the way to abandoning DSL, meaning that they are closing down the wireline services to force people onto Cantenna. Gigaom blog writes: "The slow death of DSL will cause the rapid rise of expensive broadband for underserved areas if Verizon's Fusion home broadband service is any indication."

A Cantenna of Worms

So here's where things stand:

Customers all over New Jersey -- residences, business, schools, libraries, the government -- all paid higher premiums since 1993 to upgrade the entire Public Switched Telephone networks, (PSTN) to an all-fiber network.

First, Verizon pulled a bait and switch and instead of upgrading everything to fiber optics, rolled out DSL over the old copper wiring.

In 2006, Verizon rolled out FiOS, claiming it is a separate network -- even though all funding comes directly from the original monies supposed to be used for the PSTN upgrades.

Verizon cherrypicks where to actually lay the FiOS cable, only choosing 60 percent of New Jersey's 70 communities, or about 50 percent of the customers. And because even where it's available Verizon FiOS only has an uptake rate of 25 to 30 percent, that translates to 12.5 percent of the state's customers actually using the fiber-optic services, while 50 percent paid for upgrades they will never get.

Customers who won't get FiOS are actually in worse shape than they would otherwise have been, because both Verizon and AT&T are expected to abandon DSL and are not doing upgrades of the copper infrastructure, according to the installers we talked to from the unions. Also, Verizon in some states got rid of any obligations to provide services as "last resort" -- meaning if it breaks, screw Aunt Ethel.

Now that some New Jersey communities are complaining that they didn't get what they paid for, Verizon is offering them an extremely expensive substandard (third-world-style) service from their wireless division -- which, for good measure, has been hugely subsidized by the landline business and continues to be subsidized because it gets to use the FiOS lines everyone paid for.

What's next? Stay tuned as we find out: Will the State hold Verizon accountable and stop this ridiculous bait and switch and require that the companies actually do what they were paid to do and rewire New Jersey? Or will it cave in and kick New Jersey residents in the can?

 
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