When we hear the news of a tornado, fire, flood or other natural disaster, most of us feel empathy for victims whose lives are disrupted by loss and upheaval.  But AT&T, Comcast, Charter, and CableOne have all been criticized for their callous behavior in the wake of disasters. Now we can add Verizon to the list.

In a recent DSLReports story, Karl Bode shares the story of Jarrett Seltzer, whose apartment and possessions were destroyed by a fire. Seltzer was a FiOS customer and, even though he called to cancel service and explain the situation, Verizon demanded he hand over $2,300 to cover the price of four cable boxes (each 6 years old) and an old FiOS router. Karl writes:

Seltzer notes that Verizon continued to bill him after learning about the fire, and his attempt to resolve this with Verizon has involved being on hold for several hours, being transferred fourteen times, while speaking to fifteen different Verizon support representatives.

We would like to report that Verizon had a change of heart, realized their callousness, and reached out to be more cooperative with Mr. Seltzer. Unfortunately, Verizon only eased up after Jarrett's video on YouTube began to get noticed.

As part of a longer response to DSLReports' request for comment, Verizon said this:

Even though this (customers are responsible for maintaining the equipment in good condition while in their possession) is a part of the terms of service with all of our customers, we need to be empathetic with our customers in such difficult situations.

So far, it sounds like we could have done a better job of communicating with him and been more helpful in addressing next steps. At the same time we are reviewing our internal processes to ensure we are providing appropriate consideration for customers in situations like these.

Jarrett's video sums up the situation:

A  recent book by David Cay Johnston, The Fine Print, examines specifically how big companies have found ways to take advantage of the tax and regulatory systems to their benefit and to the detriment of consumers. The sad part - we don't even realize it.

Johnston discusses how big companies and their leaders exploit tax rules to re-distribute wealth upwards. Johnston also examines how this exploitation is almost never covered in the media, encouraging big companies to stoop to new lows in ripping off consumers. Telecommunications is one of the industries he covers in the new book.

In the first chapter (read the first chapter via Democracy Now!), Johnston describes how friend and journalist, Bruce Kushnick, came across twenty years' worth of telephone bills in his elderly aunt's possessions. Kushnick tracked the changes in her bills, systematically reviewing and comparing every charge. Kushnick found an array of confusing and cryptic "fees," "charges," and "taxes." The end result:

When he cross-checked his aunt’s telephone bills over the years, he could hardly believe the numbers. His aunt paid $9.51 for her local phone service in 1984. By 2003 her bill had swollen fourfold to $38.90. In the two decades since the breakup of the AT&T monopoly, even after adjusting for inflation, his aunt’s telephone cost $2.30 for each dollar paid in 1984. And that was without any charges for long-distance calls.

Johnston notes the method used by telecoms to increase prices over time:

DSLReports has accurately noted the continued decline of competition between DSL and cable providers. Heck, it seems like no large company wants to invest in the future of broadband in this country. Verizon and AT&T have chosen to focus on wireless technology, resulting in less true competition. Cable (or FTTH if you are lucky to have that option) tends to offer faster, more expensive connections and DSL is the slower, less expensive option for many.

As we noted in an earlier post, Verizon no longer offers stand alone DSL and is voluntarily losing customers to focus on their more profitable (and more expensive) fixed LTE service. Many of the companies providing DSL service simply lack the interest or capacity to invest in modern networks.

Windstream lost broadband subscribers last quarter for the first time ever losing 2,200 subscribers for a 1.36 million total. Verizon added just 2,000 net broadband users last quarter, the worst quarterly result in four years. The AP quotes Verizon as saying that the hit was due to Verizon's decision to stop selling standalone DSL.

...

Meanwhile, smaller telcos like Windstream, Frontier, Fairpoint and CenturyLink find themselves unable or unwilling to upgrade their networks to keep pace with faster cable speeds. That's going to result in considerably more bloodshed for the telcos as additional subscribers jump ship (assuming they have the choice), resulting in cable's domination of the U.S. residential broadband market.

Continued reliance on these companies to build the essential infrastructure our economy and citizens need is foolish. The incentives are all wrong for their model and the amount of public money it will take to bribe them into building better infrastructure would offer far higher returns when invested in models that are democratically accountable to the community -- networks owned by local governments, cooperatives, or other nonprofit organizations.

The Department of Justice released a statement on August 16th, that it will allow the controversial Verizon/SpectrumCo deal to move forward with changes. We have watched this deal, bringing you you detailed review and analysis by experts along with opinions from those affected. One week later, the slightly altered deal was also blessed by the FCC.

Many telecommunications policy and economic experts opposed the deal on the basis that it will further erode the already feeble competition in the market. In addition to a swap of spectrum between Verizon and T-Mobile, the agreement consists of side marketing arrangements wherein Verizon agrees not to impinge in the market now filled with SpectrumCo (Comcast, Time Warner Cable, Cox, and Bright House Communications).

Verizon has been accused of hoarding spectrum it doesn't need. The marketing arrangements constitute anti-competitive tools that the DOJ has decided need some adjusting. From the announcement:

In December, 2010, Verizon Wireless began operating its network via C-Block spectrum with licenses it acquired in the 2008 auction. In keeping with net neutrality rules unique to C-Block usage, Verizon agreed long ago that it would not block or limit consumers' ability to tether on their 4G LTE network.

Tethering allows a consumer to use a device, such as a smartphone, as a modem to funnel Internet access to an additional device. On July 31, the FCC agreed to end an investigation into whether or not Verizon Wireless had violated this rule. In exchange, Verizon Wireless would make a $1.25 million "voluntary contribution."  Verizon Wireless did not admit it broke the rules. The FCC's consent decree requires the practice cease and that Verizon Wireless implement policies to curtail the behavior.

The story began in 2011. Verizon Wireless began charging its customers an addition $20 per month to allow them to tether additional devices to their smartphones and called the feature "Mobile Broadband Connect."

The Free Press filed a complaint. The FCC began their investigation in October, 2011. From the Free Press website:

Free Press argued that by preventing customers from downloading these applications that allow customers to use their phones as mobile hotspots, Verizon violated conditions of its 700 MHz C Block licenses, the spectrum in which Verizon operates its LTE service. When Verizon purchased the licenses, it agreed to abide by conditions that it not “deny, limit or restrict” its customers’ ability to use the applications or devices of their choosing.

The company also asked the Google Play Store store to block Verizon Wireless customers from accessing software that would enable tethering. Google complied with the request, even though it has often advocated for net neutrality, but were not investigated because they are not an ISP.

If you are a current or potential Verizon customer, by now you know that you no longer have the option to order stand alone DSL. When the business decision became public knowledge in April, DSL Reports.com looked into the apparent step backward and found existing customers were grandfathered in but:

However, if you disconnect and reconnect, or move to a new address -- you'll have to add voice service. Users are also being told that if they make any changes to their existing DSL service (increase/decrease speed) they'll also be forced to add local phone service. One customer was actually told that he needed to call every six months just to ensure they didn't change his plan and auto-enroll him in voice service.

By alienating customers from DSL, Verizon can begin shifting more customers to its LTE service, which is more expensive. Susie Madrak, from Crooks and Liars, speculated on possible repercussions for rural America:

Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.

The belief is that current DSL customers who don't want (or can't afford) the switch to the LTE service will move to Verizon's cable competition. Normally, losing customers to the competition is to be avoided, but when your new marketing partners ARE the competition, it's no big deal.

Several months ago, we wrote this post but it got lost in the system. We think it still worthwhile, so here it is.

The word "cartel" drums up many negative annotations - drug cartels, oil cartels. Never anything positive, such as bunny cartels or chocolate cartels. Harold Feld (of Public Knowledge) explains the emergence of another cartel in My Insanely Long Field Guide To The Verizon/SpectrumCo/Cox Deal, on his Tales of the Sausage Factory blog. This is  great tutorial on how the deal came about and what it can mean for the future of broadband.

Rather than chocolate, drugs, oil, or bunnies, the product in question is telecommunications services. At the heart of the cartel are the familiar names: Verizon, Cox, and SpectrumCo. The latter being a consortium of Comcast, Time Warner Cable, and Bright House. All the big hitters in telecom are involved in a way that is veiled, secretive, and not good for competition.

"It's almost as if your companies got in a room together, and you agreed to throw in the towel and stop competing against each other," Sen. Al Franken to representatives from Verizon and the cable companies at the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, March 21, 2012.

Feld's investigation begins with the licensing and collecting of spectrum by SpectrumCo but ends with a more practical look at how these big hitters have decided that it is better to join forces than to compete. Side agreements, secretive multi-layered entities, and threaded loopholes keep the FCC at bay. This begins as an article about telecommunications, but quickly expands into an antitrust primer. The most alarming facet of this situation is that the product in question is information.

Joel Kelsey of Free Press testified at that same committee, warning how this deal will compromise access, quality, and affordability to broadband in America and how drive us further behind the rest of the world.

Update:

On August 16, 2012, the Department of Justice announced that it approved the deal with changes. Citing:

If you live in Boston, Baltimore, Albany, Syracuse, or Buffalo, you won't be getting FiOS from Verizon. Absent any public investment, you will likely be stuck with DSL and cable... like 80% of the rest of us.

Not long after Verizon announced it would cease expanding FiOS, we learned that Verizon was coming to an arrangement with the cable companies that would essentially divide the broadband market. Verizon won't challenge cable companies with FiOS and the cable companies won't challenge Verizon's "Rule the Air" wireless domain.

For a while now, the FCC has reviewed a potential deal for a Verizon purchase of Comcast's wireless spectrum. The possible deal involves multi-layered questions of anti-competitive behavior, collusion, and corporate responsibility. 

Along with many other interested parties, such as the Communications Workers of America, Free Press, Public Knowledge, and  the five towns are publicly opposing the deal. They have expressed their derision to the FCC but whether or not they will influence the result remains to be seen.

From a FierceTelecom article by Sean Buckley:

Curt Anderson, chair of the Baltimore City Delegation to the Maryland House of Delegates, expressed...outrage on the agreement the telco made.

"Under this transaction, Baltimore will never get a fiber-optic network, and the city will be at a disadvantage," he said. "The direct job loss will be the hundreds of technicians that would be employed building, installing and maintaining FiOS in the area. The indirect costs of this deal are even higher: the lack of competition in telecommunications will raise prices and reduce service quality.

And:

The deal, said Albany Common Council President Carolyn McLaughlin, "is not in the best interest of those who need to get and stay connected the most and is "a step backwards in bridging the digital divide."