THE BLOG
01/07/2015 09:40 pm ET Updated Mar 09, 2015

2015: The Trend Line for Communications Services -- Phone, Broadband, Internet, Cable TV & Wireless -- Sucks

For the details see: "The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net".

As a telecom analyst for over 30+ years, I've been tracking the trend lines of communications services. And from the customer perspective -- your perspective -- 2015 will be like watching a train wreck in slow motion -- and continue over the next few years.

All of your rates on all of your services will go up and some of you will be priced out of having high speed broadband or cable TV service (or may not want to pay exorbitant fees). Depending on where you live, you may not even be able to get high speed broadband. Customer services will remove the word "service," and be replaced with -- "We're the phone company," and your rights to have a working phone line or your service restored in a timely fashion -- is over in many states. There's no competition to lower prices or make sure that your cable and phone company will 'do the right thing'. Your choice for services will be who's the least offensive.

You can 'cord-cut' to save money and get less or you can even get a 'deal,' which after you have it for a while will be anything but a good thing. Even with wireless, the incumbent wired phone companies control the wireless competitors' costs, so any gains may be short-lived.

And, to be frank, this is not the future we paid for. As of January 5th, 2015, America is now 26th in the world in broadband download speeds and 44th in upload speeds, and we've paid over and over and over again for upgrades that were never done, including the wiring of schools. We collectively paid about $400 billion to have the phone networks upgraded to fiber optics, and the cablecos' collected over $50 billion extra since 2000 under something called the 'Social Contract,' which was supposed to wire the schools.

Meanwhile, Time Warner and Comcast's profit margins on high speed Internet were 97 percent in 2013, there have been continuous rate increases for over 20+ years on cable service and, as I wrote elsewhere, a friend's email described that his 'triple play' in France cost him about $25.00 a month, US dollars, while his unlimited wireless service was about $20.00. My Time Warner triple play, advertised at $89.99, after two years cost $190.77; and I have the standard, basic package.

This is also about the larger issues like educational and economic development of your community, or the erosion of your rights through a series of nationwide campaigns to remove basic oversight that has been ongoing for the last few years. Simply put -- the plan has been to remove any obligations by the incumbent phone or cable companies, like fixing your wires if they break after a storm or worse, they'll just 'shut off' the wires and force you onto the companies' wireless service.

And let us be clear; this is now about ALL services --phone, high speed Internet, cable TV, video and even wireless, delivered by wireline or wireless infrastructure as they are now all tied and sold together in packages and offered by only a few companies, primarily the phone incumbents, AT&T, Verizon and Centurylink, and the cable companies, Time Warner and Comcast -- who control the wires that the other competitors use.

Let's review some of the issues we covered over the last year and then discuss how to fix this mess, not simply talk about it.

I've been a telecom analyst since the dawn of the break up of AT&T in 1984, which was done because the company had a monopoly control over local and long distance phone service. Thirty years later, I am sad to say that Humpty Dumpty is back, this time as a 'trust' controlling ALL services by just 5+ companies who don't really compete but collude, funding the same groups, associations, politicians, and even having non-compete deals with their brethren. And with the proposed cable mergers and AT&T buying DirecTV-- it's all just one big happy family, right?

It's time to do something about it. First, let's examine the scorecard.

The Starting Point: At the End of 2014:

While it varies by your location, the companies in control, as well as your income...

Broadband Issues, Lack of Competition, and Ever Increasing Rates.

  • To repeat, as of January, 5th, 2015, America is 26th in the world in broadband download speeds and 44th in upload speeds, according to Ookla's NetIndex. Need I say more?
  • There Is No Serious Competition for Higher Speed Services in America -- A recent government study, and even the FCC chairman Tom Wheeler, detailed that we have a 'duopoly' or a 'monopoly,' at best for higher speed services -- i.e., at 25 Mbps or higher speeds only 25 percent have two or more companies offering service; 75 percent of the US is left with a monopoly cable provider, or worse, about 20 percent of these customers can't even get high speed broadband from a wired provider -- or any provider.
  • No Choice of Providers Over the Existing Wires -- Even though the Telecom Act of 1996 was supposed to open the phone networks to direct competition, today you can't choose a competitor for primary services over the wires coming into your home or office; primary services being broadband, the connection to the Internet (ISP service) and cable TV.
  • Wireless Is Not a Competitor for Higher Speed Services or Cable TV -- Wireless not only doesn't deliver the higher speeds, but it gets worse because of 'bandwidth caps,' which starts the meter running for higher cost, or the slowing or "throttling" of the speed of service after you used up your allotted time.
  • There Is No Serious Wired Cable TV Competition to Lower Prices -- Cable TV prices for Time Warner Cable, Brooklyn have had continuous rate increases over the last 20 years -- over 300 percent. Worse, my Triple Play advertised at $89.99, costs $190.77 after only two years. Where's the competition?
  • Your Communications Bills are Christmas Trees of Revenues for the Companies -- From made up fees, or pass-through taxes, multiple additional revenues are spread (or hidden) throughout the bill.
  • The Entire Sales Process for Communications Services Is Now Simply a Deceptive Con -- The advertised price for the Triple Play can be $89.99 but no customer can ever get that price as most of these added charges are not included in the advertised price, just direct revenues to the companies.
Controls of the Marketplace
  • The Wired-'Special Access' Networks, Sometimes Called "Backhaul," Control All Services -- These secret networks aren't special but they handle the wireless and broadband traffic, even for competitors. They are also monopoly services controlled by the incumbent phone companies, AT&T, Verizon and CenturyLink, and have obscene profit margins. They are a bottleneck for any long lasting changes in wireless, especially things like 'data-caps'.
  • "Buy Off Everyone You Can" -- The public interest side of all of this is no match for the telco-cable paid-to-play state and federal politicians, astroturf, corporate-funded think tanks, skunkworks groups and networks like the American Legislative Exchange Council, ALEC, or the co-opted non-profits, especially minority groups, many of whom are funded out of foundation grant monies as a cover -- even though it appears that this expense, too, has been dumped into the costs of your service.
  • Collusion 101 -- Verizon has essentially a non-compete with the cable companies in areas where they bundle wireless and cable packages. AT&T, Verizon and Centurylink have a defacto non-compete to not enter each other's territories, even though every merger to make these companies larger required direct competition between these wireline providers. And Comcast doesn't compete with Time Warner, for example. In short, they just divvied up America to keep their own turf intact.

Erosion of Our Rights and Oversight.

  • The ALEC Bills being Used for Telecommunications have Passed in the Majority of States -- Mostly overlooked by those who care about ALEC activities, these ugly, corporate-designed bills are for strip-mining the telecom laws, including removing the telecommunications ("Title II") laws that Net Neutrality-ists claim they care about. This includes getting rid of 'carrier of last resort,' (requiring the companies to upgrade or replace the wireline infrastructure or provide service) or closing down the state utility commissions' ability for oversight. And in addition to these telephone deregulation laws, over 20 states have put in place laws to block municipalities from offering competitive high-speed broadband communications infrastructure and services.
  • The FCC's "IP Transition" Is a Con to Get Rid of Title II; Shame Most People Didn't Notice -- You want irony? While everyone has been ranting about something called Net Neutrality and advocates have been calling for the 'reclassifying' the broadband networks back to something called "Title II," the ALEC bills and their federal version, which is the FCC's "IP Transition" proceeding -- has been designed to do the opposite -- 'classify' telecommunications infrastructure and services as an "information" service, "Title I," which doesn't have the same rules as a "Title II" telecom service. You would think that the Net Neutrality advocates would notice, but many have helped back the ALEC-state bills, knowingly or not, as they were framed as "Free the Internet."

2015: Trend Lines to Worse, Not Better.

You don't need a weather vane to know which way the wind blows in 2015.

America's Speeds are Going to Slow Down:

  • Verizon announced it has stopped its fiber optic deployments and is planning to force-migrate customers onto wireless, while Verizon has a non-compete agreement with the cable companies to sell the Verizon Wireless services with the cable bundle of Time Warner and Comcast.
  • AT&T's entire U-Verse is based on copper-to-the-home, using the old, existing, copper utility wires and AT&T's plans for 'GigaPower' are more about getting the DirecTV merger through and Net Neutrality rules eliminated -- and recently AT&T decided to hold hostage any upgrades only to backpedal on this threat when they realized that maybe they had gone too far.

Thus,

  • Whole areas of the US are going to have their phone lines shut off and replaced with more expensive wireless service. This is instead of these copper wires getting upgraded to fiber optics.
  • AT&T's GigaPower? There's more fiber in your cereal than is coming to your home by AT&T. While they may pick a few places for show -- AT&T now controls 22 states and AT&T wants to force-migrate customers onto their own wireless, as told by their own "IP Transition" plans.
  • By-passed by municipality build-outs, Google Fiber and independent Wireless ISPs (WISPs)? God bless them, as they are filling in the gaps in infrastructure and services in specific areas but the words "too little, to late" comes to mind; they won't make a dent on the national front, or even in the states.

No Competition -- Net Neutrality Doesn't Fix This.

  • No Open Networks, No Competition -- There is nothing on the horizon to open the incumbent networks to direct competition and sadly most of the Internet companies et al, who are yelling about Net Neutrality, simply don't understand the difference of 'open networks' vs 'open internet'-- i.e., 'Open Networks' (sometimes called "Open Access") means you have a choice of providers' services over the incumbent's wire coming into your home and office vs 'Open Internet' where one provider is still controlling the infrastructure and all of the primary services, but they want the company to 'play nice' and not create discriminatory "Fast Lanes" and "Slow Lanes" for content delivery.
  • Higher Prices -- If there is no competition for services or content, there is no incentives for a government protected monopoly/duopoly to 'lower prices'.
  • Net Neutrality Will be Sued Over -- Ya Think? Of course it will because it is a 'feign' -- a distraction to cover over all of these other facts and telco-cable actions. Even if Net Neutrality is in place, it doesn't fix any of the current major problems liking bringing back competition, lowering prices or getting unwired areas of the US wired.
  • Insult to Injury -- You are Being Charged for Their Lawyers and Lobbyists -- Did I mention that you are probably paying for the Verizon et al lawyers' fees, as we found that at least Verizon has dumped these legal and lobbyist fees into local service rate increases. AT&T is most likely doing the same thing.
  • Finishing the Strip-Mining of Your Rights by ALEC, et al. -- This will just get worse as, like a 'whack-a-mole' game, these bills will continue to spring up, or doubly-worse, have portions of them dumped into other state actions, like the state budget, as tried in New York State. And it will get triple-worse as the Republican-majority Congress will simply pick up this as a 'mandate' to finish the job, (not to mention that there is a 'corporatist mob' in Congress who are also members of ALEC.)

Fixing this Mess.

Before I lay out a plan to stop these abuses, I've written a few more stories to give you some of the details that you need to know. Coming up:

  • Exposing Verizon's Financial Shell Game -- It's a lot Worse than You Think.
  • "Open Networks" Now. Period. "Open Internet" is Simply a Band-Aid, Not a Complete Solution.

For the details see: "The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net".

Coda: There is one shining light -- A wise friend of mine once said, "It has to get so bad that people actually notice." With 4 million people commenting about Net Neutrality, the so called "ISPs" being considered the 'most hated companies in America' in 2013 and Time Warner and Comcast being the most hated companies in 2014 -- out-stripping every other industry, or that the major media actually used the term "Title II"-- maybe, just maybe, the sheep have woken up from their slumber.

But, right now, for communications, the year 2015 looks like it will just suck to be a customer of America's telecom-cable trust.