Two Copps phone calls = 500,000 fewer unserved
Written by Dave Burstein   
adelstein_copps_south_dakota_school_of_mines-technology_panelMichael Copps (second from right) can make two phone calls and make DSL available to 500,000 more homes. The first is to fellow Commissioner Adelstein (middle,) to make sure he has the votes. The second is to Glen Post of Century Tel, who will make $millions if his merger with Embarq is approved. He's a businessman who will find a way to say yes to the Chairman's request, despite his lawyers' objections. Adelstein simply needs to ask “Can we do something meaningful for the CenturyLink unserved?” If Adelstein's vote isn't assured, Post will have little choice.

Post will agree because it won't cost that much to offer more DSL. Only a small fraction of the nearly 1M Century/Embarq homes that can't get DSL actually are so distant the costs are prohibitive. Below, a story on how rural carrier Madison River reached 99% in 2006, just before they became part of Century. 99% might be tough, but going from the current 87% to 95%-96% in practical and affordable.

CenturyLink could easily reach almost all of those homes simply by restoring the $237M Embarq cut from capital spending the last few years. CenturyLink will be an $18B company with nearly $2B in profits; they can easily afford the additional buildout. Embarq is in harvest mode, with capital spending 30% below depreciation.

The Century deal should at least match the AT&T/BellSouth promise of “broadband for all” in 2007 and a $10 offer to encourage new users  but with substance.

CenturyLink: Can Copps Bring DSL To a Million More Homes?
Transparency? Noglen_postt yet. Mike Copps (normally a hero) and the head of CenturyTel sat down Tuesday to privately settle a $12B merger. Nearly 1M Century and Embarq homes can't get DSL, and the best guess they will get only hollow promises. Copps won't discuss the merger with any reporter until after the decision is final, while Century is breaking at least the spirit of the FCC rules as they keep everything secret.

The Century deal should at least match the AT&T/BellSouth promise of “broadband for all” in 2007 and a $10 offer to encourage new users  but with substance. If Copps makes details public before it’s too late, perhaps they won’t be fooled as they were in AT&T-Bellsouth. Despite the fine words, AT&T virtually stopped deploying to their 7-8M unserved right after the BellSouth merger.

CenturyLink could easily reach almost all of those homes simply by restoring the $237M Embarq cut from capital spending the last few years. CenturyLink will be an $18B company with nearly $2B in profits; they can easily afford the additional buildout. Embarq is in harvest mode, with capital spending 30% below depreciation. Century's capex to depreciation ratio looks even worse, but may be part amortization.

AT&T's original promise: "By December 31, 2007, AT&T/BellSouth will offer broadband ... to 100 percent of the residential living units in the AT&T BellSouth in-region territory." AT&T also promised a $10/month offer to encourage people to take broadband.

Transparency can make a difference

Michael Copps or Jonathan Adelstein should immediately announce a press conference to discuss their thoughts on this merger. Instead, I hear they are rushing it through before Jules comes in.
  • A billion dollar giveaway to Verizon was blocked after Saul Hansell wrote it up in the Times. Apparently, the Senate Finance staffers who put the tax credit in the bill didn't realize they were going to give Verizon money for what they were going to build anyway. I spotted it immediately when I read the draft, as did two other folks who track the industry.
  • I recently discovered that California is subsidizing a $500/home AT&T DSL upgrade based on costs of $5,000-$10,000/home. (No construction required, AT&T said in the public part of the proposal.) Commissioners Chong and Peevey, as well as AT&T, are currently stonewalling me on the actual details. With luck, someone in California will pick that up and get an investigation started.
  • The FCC was snookered by AT&T on the BellSouth deal. They virtually froze the planned broadband deployments to their 7-8M unserved. "This condition was met," AT&T now tells Karl Bode, including satellite resale. If you include satellite, they met the requirement before the merger, as well. Karl adds "AT&T's promises, and the merger conditions, were utterly meaningless.” They also promised 85% coverage with DSL, which I believe BellSouth had already achieved before the "concession."

Putting the CenturyTel offer out in public would expose that kind of nonsense, which is why I'm fighting so hard on this. Copps is a hero to me for his many stands for the consumer and freedom of expression. He's fought for decades for things I believe in. He presumably hates me for pushing on the issue, but that's my job.

“For many years, we've had a policy of not discussing this kind of decision,” is a terrible reason for not answering questions. Is that change?

Century's Filings are a Good Reason To Examine Things More Closely

There's an easy and obvious reason to continue the merger proceedings if Copps chooses. FCC rules require Century and Embarq to report the substance of what they said in an ex parte filing. Sam Feder's and Gregory Vogt's filings say almost nothing, clearly violating the spirit of the rules.  

“In this meeting, CenturyTel and Embarq (collectively, the "Applicants") discussed the public interest benefits of this transaction, the Applicants' provision of broadband service, and the commitments they have offered, as set forth in more detail in the Applicants' comments and ex parte letters. The Applicants also urged the Commission to approve the transaction promptly.”

That's it. Nothing about what they actually said. In particular, nothing about any deployment to the folks who can't get DSL,  an obvious omission after BellSouth. I went on to read 40 different filings to see if they had offered anything in DSL. Nada. They will probably throw in a token gesture. The FCC is going to look very silly speaking eloquently of broadband while regressing from two years ago in substance. Copps holds all the trumps, so he should insist on doing right by Century's customers.

Century's merger filing has some errors, enough to justify holding this over for Julius.  There's no significant public benefits proposed, because both companies already achieve most economies of scale.

Century's lawyer, Sam Feder, was recently FCC General Counsel. If Century were in violation of the rules, that would provide the Commission a good excuse for their delay in approval. I think he'd have corrected things immediately when I pointed this out if the rules applied, because any dispute over procedure would give the Commission a good reason for delay. So I assume he's looked closely and believes for some reason his client is not obligated to publicly say what they have offered - or not.

The FCC rules are at http://bit.ly/QPkmf; my previous comments at http://bit.ly/p5fqY. http://bit.ly/YvZGr


AT&T's Promise in 2006


"By December 31, 2007, AT&T/BellSouth will offer broadband Internet access service (i.e., Internet access service at speeds in excess of 200 kbps in at least one direction) to 100 percent of the residential living units in the AT&T BellSouth in-region territory. 2 To meet this commitment, AT&T/BellSouth will offer broadband Internet access services to at least 85 percent of such living units using wireline technologies. ... Within six months of the Merger Closing Date, and continuing for at least 30 months from the inception of the offer, AT&T/BellSouth will offer to retail consumers in the Wireline Buildout Area, who have not previously subscribed to AT&T's or BellSouth's ADSL service, a broadband Internet access service at a speed of up to 768 Kbps at a monthly rate (exclusive of any applicable taxes and regulatory fees) of $10 per month."