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Internet in the Boonies

Kim Hart

I wrote an article yesterday about some planned communities in Loudoun County that signed exclusive, long-term contracts with telecom companies to provide Internet, cable and phone service. The communities were built several years ago, when broadband services stopped short of the outer suburbs. So developers hired companies to build a fiber-optic network connecting each house to high-speed Internet.

In the past two days I've received an outpour of comments about the issue. Some readers sympathized with the suburban homeowners, saying they're at the mercy of the company hired by the developer. Others snickered in a that's-what-you-get kind of way, ridiculing the upper middle-class residents who complain about slow Internet speeds.

A few readers, however, asked for more specifics on the problems residents are having out in "the boonies." Since there wasn't room in the story to go into great detail, I thought I'd elaborate a bit more on what some of these Southern Walk residents told me.

OpenBand, the company who provides Internet, cable and phone services to SouthernWalk and Lansdowne, told customers to expect 100 mb Internet speeds. Residents told me they're getting anywhere between 3 and 15 mb. For a lot of homeowners, the lower-than-promised speeds wouldn't bother them if the cost of the service wasn't so pricey. Others, some of whom work from home or want higher speeds for gaming purposes, felt they're getting ripped off.

Problems with telephone service also came up. One resident called 911 for a health emergency several months after moving into the neighborhood. The ambulance took 45 minutes to arrive because the phone number was still registered to the resident's previous home. The resident claimed OpenBand hadn't officially transferred the number to the new address.

Others complained about low-quality cable reception and poor customer service when it came to replacing cable boxes, etc.

Of course, every company is going to have dissatisfied customers. But in most cases, customers can switch service providers when they get fed up. In these neighborhoods, residents feel trapped. The biggest complaint is that the contracts don't contain a provision to adjust service levels or packages to match what competitors are offering.

There's a lot of debate swirling around this story, judging by the number of comments I've received. But a lot of readers seem to agree that a 75-year contract for Internet services seems extreme at a time when technology is changing so quickly.

What do you think of these long-term contracts? Are you using an Internet/phone service through one of these contracts? If so, share your experience in the comments.

By Kim Hart  |  May 22, 2007; 5:00 PM ET  | Category:  Kim Hart
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Comments

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Well, in general signing just about any contract for that long is a bad idea-- but especially when dealing with anything that deals with technology. Would you sign a 75-year lease for a Ferrari? Probably not. How about a 75-year cell phone contract? Nope... so what in the world made the developer think that a 75-year exclusive contract is OK? Terrible idea, and for a guy who is reliant on his Internet connection for... well, just about everything... I shudder at the tought of signing a 2-year contract, let alone one 37.5 times longer.

Posted by: Justin | May 22, 2007 6:36 PM

I live in central New Jersey, 35 miles west of Manhattan and we've only got one cable and broadband Internet provider, and that's Cablevision. We do have satellite for TV as an alternative but only DSL/Verizon as one for the Net. I pay $45 a month for broadband, a whopping $5 break because I also have cable. There's no competition at all.

Surely this isn't what the cable act was meant to accomplish. So much for competition.

Posted by: Peter Tatiner | May 22, 2007 8:36 PM

The 75-year contract is what happens when business doesn't understand or appreciate an industry they don't know, in this case the rapid changes of technology. I'm sure the developers relied on the provider's expertise. That expertise assured the developer that nothing and nobody would be out in that area for years and this would be a good deal for the developers and their buyers. That expertise should have been viewed with skepticism--it's never as good as it sounds or cut and dry.

Posted by: DeanwoodCitizen | May 23, 2007 1:28 AM

WireDad lives in Utah, and his "broadband" is 256k. That's right, 1/4 mb.

Here's the info on his service:
http://www.infowest.com/Residential/Wireless/wireless

Posted by: wiredog | May 23, 2007 8:09 AM

Seems to me that if you are offered and buy a contract for internet service at 100Mb and instead you get 3 to 15Mb, you have at best breach of contract and at worst fraud. Regardless, sue the company to either provide the services as promised or recind the contract.

Posted by: James | May 23, 2007 11:01 AM

re: 100Mb vs 3 to 15Mb

The promoters of these systems hide behind the fact that most buyers don't read the fine print or understand it if they do. While these communities typically have a 100 Mbs connection to their local fiber loop, that is NOT the Internet connection speed.

In other words the marketing material typically prominently advertises 100 Mbs connections, but does not make clear that is the speed of the local loop, not out to the public Internet, a major difference!

Posted by: Sasha | May 23, 2007 11:18 AM

And as far as trying to sue for breach of contract, forget it. These types of contracts are specifically developed and written to favor the developer and incumbent telco provider. Totally one sided with no specific QoS terms for the telco.

Plus, tie in the fact that your telco payments are tied to the hip with your HOA payment due every month. Stop your payment, loose your home to court lien.

Put those 2 issues together and you can see how difficult these contracts will be to challenge.

Posted by: Sasha | May 23, 2007 11:30 AM

Keep in mind, the existence of the 25-to-75-year contract was not disclosed to the homebuyers in Southern Walk. Nor was the fact that the builder would pocket a portion of our dues every month while enjoying sole authority to raise those dues.

A Van Metre rep recently stated that the contract was structured that way in order to assure OpenBand some return on their investment. This is ridiculous; if your business model potentially requires 75 years to recoup your initial investment, you're in the wrong business.

Of course, they probably won't be in business that long. Their agreement with Van Metre requires them to keep their price 10% below other providers' fees for comparable services. Not that they won't keep trying to raise their price anyway.

Committing to keep your price 10% below market while offering a comparable product in a high-tech industry for 25 to 75 years is pretty silly.

Unfortunately, when OpenBand folds, Van Metre will be richer, but the homeowners will be left holding the bag.

Posted by: no-sweets | May 23, 2007 2:33 PM

I must be missing something Between 3 and 15 MB is bad? Comcast promises 6 MB per second, and Verizon FIOS offers 15.

Granted it's not 100 MB per second, but it's not like they're being stuck with crummy dial-up either.

I understand getting less than you thought you were paying for, and the lengthy contract is just dumb, but anyone who is consistently getting 4-5 MBps or better has good service.

Posted by: SteveG | May 23, 2007 3:42 PM

75 year contract for Internet Services! Something is suspect about that. I find it hard to believe the communities of SouthernWalk and Lansdowne will even be a shell of there former selves in 75 years.

The Internet contract should be for 3 years with the option of renewal to coincide with the average life of computer equipment which is 3 years.

How "cozy" is the relationship between government officials and the ISP?


Posted by: Crank | May 24, 2007 11:54 AM

For years the cable and telephone companies have bribed their way into keeping their obsolete tech. WiMax is used in 3rd world countries who have no such influences because it's fast and cheap. I have no money invested but sure wish I could and could WiMax in Fairfax County.http://en.wikipedia.org/wiki/Wimax

Posted by: Rob Irwin | May 25, 2007 1:26 PM

Internet services in America or so lame! If you get fibre optic internet service in Japan you get the REAL 100Mbs service. The SLOWEST DSL service you can get is 8Mbs. Average DSL speeds are more like 30-50Mbs (of course dependant on your distance from the office/distribution building).

Americans need to be educated about the fact that 256k and 512k services are NOT broadband and that they deserve better. ISPs want all the money, but don't want to put the work in to invest in the current technology.

Posted by: Matt | May 27, 2007 8:11 PM

How "cozy"... well let's see

Van Metre (the builder) hired Larry Beardman (who is part of Federal probe)concerning corrupt behavior of the Loudoun Co BoS and large homebuilders/land developers in Loudoun Co.

Spvr Steve Snow annouced that Van Metre has been tapped to build a multi million $ Recreation center and a library...

When I email Spvr Snow about the SW HOA/Openband and contract - his response was "this is a matter with you HOA"...amazing Spvr Snow would say that during an election year.

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