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America’s Failing Telecom Infrastructure

Looking Beyond Hurricane Sandy

by DAVID ROSEN

In the wake of Hurricane Sandy, the media documented the vulnerabilities of metro-New York’s underlying infrastructure of electrical power, roadways and fuel delivery. Many people suffered and died as a consequence of widespread system failures.

One component of the infrastructure that took it on the chin was the telecom system, especially wireless services. Telco service disruptions were reported in 158 counties and 10 states stretching from Maine to Virginia.

Julius Genachowski, chairman of the Federal Communications Commission (FCC), estimated that about 25 percent of the Northeast’s wireless cell towers were knocked out during the storm and some 911 emergency call centers were disabled. During the storm Genachowski opined, “Our assumption is that communications outages could get worse before they get better.” And they did.

Service disruptions due to Sandy expose the deeper structural problems besetting the nation’s telecom infrastructure. While the immediate service failures will be repaired, the long-term structural problems are due to far more systemic factors, most especially the collusion between the telecom companies (with their well-financed and effective lobbyists) and both the FCC and state legislations (including state public utility commissions).

The sad state of U.S. broadband services is either ignored or denied by the telecom industry, politicians and the media. No wonder it was not an issue in the 2012 election. According to Europe’s Organisation for Economic Co-operation and Development (OECD), the U.S. ranks 15th in terms of subscribers per 100 inhabitants (as of December 2011) and 19th in terms of broadband datarate (as of July 2011).

The long-term crisis facing America’s communications system is rooted in the telco and cable companies’ effort to deregulate and privatize the public network. Their efforts are aimed at ending communications services as a public utility and turning it into a pay-for-usage private service. This strategy is designed to increase telecom corporate profits. The consequences of this strategy are alarming: it will end net neutrality and an open Internet, erode services for poor and rural Americans, and further compromise the nation’s long-term economic prospects.

* * *

Hurricane Sandy took its toll on telecom services. All the major service providers were hit: AT&T, Verizon, Sprint and T-Mobil reported significant disruptions; the major cable operators, including Cablevision, Comcast and Time Warner, also reported problems. A Barclays’ analyst estimated that cleanup and repair costs for telco and cable companies at $600 million.

Besides troubles with its wireless network, AT&T experienced damage to its landline operations, most significantly in Connecticut. Like other telcos facing electrical problems, AT&T relied on battery backup in power outage areas.

Verizon took a big hit. The lobby of its corporate headquarters at 140 West Street in Lower Manhattan was flooded with three feet of water and three critical switching centers in Manhattan, Queens and Long Island were knocked out. This led to failure of wireline, Internet, FiOS and wireless service. The loss of electricity and downed trees contributed to service failures in regional suburban locals.

Sprint seems to have been the hardest hit wireless carrier. In anticipation of the storm, it closed about 180 stores. It also suffered services outages in New York, New Jersey, Connecticut, Pennsylvania, Washington DC, Maryland, North Virginia and throughout New England where cell sites were damaged.

T-Mobile reported service outages to its cellular networks mostly from power outages.

The cable companies faced similar disruption in service. For example, Cablevision faced services failures in Long Island and Connecticut due to power outages and damaged overhead wiring. An analyst with Canaccord Genuity estimates Cablevision’s loses at $40 million.

Time Warner customers in Brooklyn lost television, Internet and phone when the storm hit. Subscribers also suffered outages across upstate New York and in Portland, ME, due to power failures and infrastructure damage. The cable companies, including Cablevision, Comcast, Cox and Time Warner, said they would provide credits to customers who lost service.

* * *

Key to the deeper crisis besetting the telcos is their shift from regulated landline systems to unregulated wireless networks. As of June 2012, more than one-third (34%) of American households were wireless-only, more than triple the rate in June 2007 (10.5%). And the reason for this shift is simple: wireless is deregulated and more profitable!

The vulnerability of wireless services was revealed in the Sandy crisis. Public Knowledge’s Harold Feld points to the underlying cause of this situation: “The biggest issue is they have not wanted to invest the money in hardening their networks sufficiently against a catastrophic event.”

Wireless providers adhere to voluntary, industry-based best practices emergence preparedness policies. There are few requirements as to how they should prepare or respond to natural disasters. Most illuminating, these companies do not have to provide state or federal regulatory agencies with detailed emergency plans. As Feld notes, “It’s basically left up to the industry to decide whether to put plans in place.”

Two recent reports illuminate the status of this deregulated telecom environment.

Sherry Lichtenberg reports in “The Year in Review: The Status of Telecommunications Deregulation in 2012” that “between 2010 and April 30, 2012, 21 state legislatures enacted laws that limit what PUCs can regulate.” Among the issues at risk are: whether they make public customer pricing information, whether they must meet quality-of-service standards, whether they must offer carriers-of-last-resort service and whether they provide Lifeline services.

She makes clear that all the states that passed deregulation policies shifted Internet broadband and VoIP (Voice over Internet Protocol) services to free-market services. Many states rationalized deregulation on the basis of what is euphemistically called “competition,” that a locale offers more than one telecom service whether it is wireline, wireless, cable or satellite.

James Baller’s report, “State Restrictions on Public Communications Initiatives,” is narrower in scope. It details efforts implemented by 20 states, from Alabama to Wisconsin, to restrict localities from offering public or municipal telecom services. In 2001, there were only 16 government-run networks in nine states. Today, there are an estimated 150 communities around the country with their own publicly-owned broadband network.

For example, major municipal services are operating in Chattanooga, TN, Bristol, VA, and Lafayette, LA. In Chattanooga, the municipally-owned electricity company operates a telecom business serving approximately 170,000 business and residential customers with telephone, Internet and video; in Lafayette, the city offers a gigabit network services as fast as Google’s new 1 Gbps network in Kansas City.

Missing from both reports is a discussion of role of the American Legislative Exchange Council (ALEC). Founded in 1973, it works closely with corporate interests to create model legislations that various – mostly Republican — elected officials, “water carriers,” aggressively promote in state legislatures across the country.

With the Tea Party victories of 2010, it came out of the proverbial closet, gaining national prominence in drawn out battles in Wisconsin and Indiana over the union rights of state employees. In the wake of the Sanford, FL, killing of Treyvon Martin in February, ALEC’s role (along with the National Rifle Association) in fashioning and promoting Florida’s “Stand Your Ground” gun law became front-page news.

ALEC’S telecom policy is managed through its Telecommunications & Information Technology task force and is in the pocket AT&T and Verizon. It has promoted cookie-cutter bills in California, New Jersey and other states intended to close down the Public Switched Telephone Networks (PSTN), the underlying telecom infrastructure, and end telecom’s traditional “utility” requirements.

Now, with President Obama’s reelection victory, there might be an opportunity to focus a spotlight on the FCC and its role facilitating the deregulation and privatization of the communications system. Failure to do so will only further erode telecom in ways that will make Hurricane Sandy look like a walk in the park.

David Rosen writes the “Media Current” blog for Filmmaker and regularly contributes to AlterNet, Huffington Post and the Brooklyn Rail.  For more information, check out www.DavidRosenWrites.com; he can be reached at drosennyc@verizon.net.