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French Press: U.S. Consumers Ripe for Fleecing By Cable Magnates Like Altice’s Patrick Drahi

The French press continues to report, with some bewilderment, that U.S. consumers are being fleeced by the country’s biggest telecom companies while politicians do nothing to regulate a duopoly market or force more competition to stop the pick-pocketing. The Francophone press is responding to reports that cable baron Patrick Drahi is vacuuming up profits from his American subsidiary Altice USA — which owns Cablevision and Suddenlink — and is likely to get much bigger in 2017, all thanks to the U.S. regulatory landscape.

“Americans live under a corrupt politician-sanctioned broadband monopoly in many places, and this assures telecoms operators in the United States can earn astounding profit margins impossible in European markets,” notes Giga France.

Le Figaro reported this month Altice’s directors had an easy job figuring out where much of the global conglomerate’s future profits would come from: the United States.

“Given the structure of the telecom market, [Altice’s] margin for growth in France is low, whereas in the United States it is considerable,” the newspaper reported. The reason is a persistent lack of competition, made possible by politicians that accepted the recommendations of lobbyists and corporate special interest think tanks on how to structure the broadband market.

Drahi

In the United States, providers have won near-absolute control of their networks and need not share access with competitors. Large telecom companies argued that requiring shared access to their infrastructure would threaten investment and stall broadband network deployment. Ironically, some even argued it would lead to reduced competition. But the reverse turned out to be true and the United States has fallen far behind in competition and network quality, while more traditionally regulated markets in Europe now enjoy low prices, faster internet speeds, and a larger number of competitors vying for consumers’ business.

Wall Street indirectly conspires to keep the status quo by discouraging the entry of new fixed line providers, claiming it will destroy shareholder value and consume billions of investor dollars constructing competing networks that will be unlikely to attract enough subscribers fast enough to give shareholders a timely return on their investment.

With a provider-friendly Trump Administration in power, and more importantly the installation of Ajit Pai, a notorious telecoms-friendly regulator as chairman of the FCC, Altice’s directors consider 2017 to be one of the most inviting years for expansion in the United States.

Le Figaro reports there is plenty of opportunity for Altice’s empire to become more dominant in North America. In France, its SFR unit now holds a 25% share in the fixed line market, but that number is unlikely to grow much considering ongoing price wars that come from fierce competition in France. In the U.S., Altice only holds barely 3% of the market, and Drahi has made no secret he would like to become at least the second-largest provider in the United States.

Les Echos suggested Altice is quietly preparing a full-scale ambush on the U.S. market starting with a much-anticipated IPO expected this year. Wall Street doesn’t welcome Altice entering the U.S. cable business as a market disruptor. Instead, investment banks are willing to loan huge sums to Altice for the purpose of acquiring telecom companies, maintaining the existing duopoly of one cable and one phone company for the majority of Americans.

“In the past, every time he introduced a publicly traded asset, Drahi proceeded with acquisitions: Numericable, in 2013, SFR the following year; and by 2015 Cablevision and Suddenlink in the U.S.A.,” reports Les Echos.

In France, up to four providers compete head to head for fixed line telecom customers. In other parts of Europe, telecom networks are often forced open to competitors. Neither is the case in the States, and consumers are paying very high telecom bills as a result.

Les Echos notes the U.S. cable business is so lucrative, “never before has a French company made such an important investment in the country of Uncle Sam.”

Suddenlink and Cablevision: Consistent source for fat revenue growth for Altice.

Drahi told investors more than a year ago he wanted to eventually generate 50% of Altice’s business overseas, primarily in the profitable U.S.

Altice has so far only bought up smaller cable operators, but observers expect Drahi will aim for much larger targets, including the possibility of buying out a wireless provider or even targeting Comcast, AT&T, or Charter. Les Echos quotes Vincent Maulay, an analyst at Oddo who notes that Drahi may be able to collect future assets inexpensively if Verizon decides to move on an acquisition of Charter. Regulators will likely force the combined company to shed cable assets in New York State where Verizon and Charter currently compete. That would allow Drahi’s Cablevision to pick up divested service areas, perhaps even in Manhattan.

Want the Best Deal from Charter/Spectrum? Cancel Your Service for a Few Days and Wait

Former Time Warner Cable and Bright House customers, listen up. A veteran Charter Communications customer who cut cable’s cord for good a few months ago reports Charter’s hard-line on extending retention deals to customers threatening to leave lasts only until you turn in your equipment and cancel your service.

DSL Reports reader mmainprize from Houghton Lake, Mich. wrote he dumped his $180/mo Charter Gold TV with Phone package for good after realizing just how much Charter was gouging him for service.

“I just went through my bills, and remember when internet was only $49 in mid-2015 before increasing to $52 in late 2015,” he writes. “So at the now current price of $65 you can see just how much it has gone up.”

When he called to tell them he was canceling service, they briefly tried to keep him as a customer by cutting back on his cable package for a lower price.

“Double play, Flex pack, you pick 20 channels, etc. At first the offer was internet and basic cable for $90 a month, then $74 a month for internet and “limited basic” (an unadvertised package of local channels, public access, educational and government channels, plus home shopping). I canceled all but internet.”

Within days the phone calls and letters started coming advertising discounts Charter wouldn’t dream of offering when he was still a TV customer.

“I get a call every day now (it is harassment) offering the same prices or lower than what I was offered when canceling,” he writes.

The first offer is $80 for a double play package of TV and internet service. But if you turn them down, they eventually pitch a triple play offer of $89 a month with TV, phone, and internet with free HD and DVD service (equipment extra).

The enticing offer on their website, promoting $29 a month for internet, $29 for TV, and $29 for phone service is available only to new customers. Existing Charter, Bright House, and Time Warner Cable customers cannot get those prices. You must pay more.

Those canceling service qualify as a new customer after a 30 day timeout period. Or skip that and sign up as a new customer under the name of another household member. If you are married, your spouse’s maiden name will suffice.

One thing is certain. Charter’s takeover of Time Warner Cable and Bright House is very unlikely to save most customers any money. Almost 90% of Time Warner Cable customers received discounts from a bundled service package or a retention deal. When those packages expire, your bill will skyrocket. This is exactly what Stop the Cap! told regulators in our opposition to the merger. Since 2008, we have shared one sage piece of advice with readers:

When a cable company comes calling promising you a great new deal, watch your wallet and run!

Earthlink Kills New Customer Promotion for Existing Charter/Spectrum Customers

Nine years after Earthlink began promoting its $29.99 six-month offer for alternative broadband service for Time Warner Cable customers, the completion of Charter Communication’s takeover of Time Warner Cable has eliminated a clever way for customers to get broadband rate relief.

For almost a decade, savvy broadband-only Time Warner Cable customers have been able to bounce between new customer promotions at Time Warner Cable and Earthlink. When a year-long promotion with Time Warner Cable ended, a customer could switch seamlessly to Earthlink for six months and pay just $29.99 a month — charged to their Time Warner Cable bill. When the Earthlink promotion ended, customers were entitled to enroll as a new Time Warner Cable broadband customer and pay a lower rate for up to one year. After that, back to Earthlink.

No more.

Charter Communications closed that loophole this month and now prohibits existing Charter/Spectrum customers from getting promotional rates from Earthlink.

Once Charter customers end a broadband-only new customer promotion, currently $44.95 a month for one year, the rate jumps to $64.99… and stays there indefinitely.

The new restrictions appear in fine print on Earthlink’s website:

Charter Communications eliminated lower-cost broadband options for its customers, but claims its single remaining advertised offer (60Mbps in non-Maxx areas, 100Mbps in former TWC Maxx cities) offers a greater value because it is faster than Time Warner Cable’s Standard Internet 15Mbps plan and ends Time Warner’s practice of charging a $10 modem rental fee.

But it also costs more than earlier promotions at Earthlink ($29.99) and Time Warner Cable ($34.95).

Charter has junked Earthlink’s former promotion for Time Warner Cable customers.

“My broadband bill is now double what it used to be because I cannot switch to a broadband promotion with Charter as my Earthlink promotion ends this month,” reports Jim Deneck, a former Time Warner Cable customer in South Carolina. “I was paying $30 a month and now Spectrum wants to charge me $65 a month. The modem fee savings is irrelevant to me because I bought my modem years ago.”

Charter/Spectrum customers hoping for a better promotion from Earthlink are now also out of luck.

“After Spectrum pricing took effect in my area, my bill went up $30 a month,” writes Stop the Cap! reader Gennifer in Maine. “I was hoping to switch back to Earthlink but after placing an order with Earthlink, a representative from Charter/Spectrum called me and denied my request. It’s false competition. Since when is it okay to sign up with one company and then get a call from another telling me I am not allowed to take my business elsewhere. It’s monopoly abuse!”

Earthlink is entirely dependent on Charter Communications allowing them to resell service over Charter’s cable lines. Earthlink has been cautious not to outcompete either Charter or its predecessor Time Warner Cable, and charges roughly the same rates as a customer would get direct from either cable operator. The only benefit of the arrangement for customers was the ability to bounce between new customer promotions to pay the new customer rate indefinitely, but Charter has made sure that practice stops.

Gennifer did manage to ultimately outwit Charter, but at the cost of time and inconvenience.

“I called Spectrum and canceled my service and we signed up as a new customer under my husband’s name,” Gennifer writes. “Unfortunately, Charter won’t process an order at an address with existing service so you have to cancel and turn in equipment first and then place an order under a different name to qualify for a promotion. They really don’t want to give their customers a break or a discount. I wish we had other options.”

Competition: UK Sees Broadband, TV, and Phone Costs Decline 9% While Prices Way Up in USA

Phillip Dampier March 20, 2017 Competition, Consumer News No Comments

The average household in the United Kingdom pays 9% less for broadband, phone, and television service than a decade ago, even though data usage has exploded and the country is embarked on a massive broadband upgrade effort. Contrast that with reports the average household in the United States is facing rate increases averaging 8-10% annually, even though the costs to deliver service have been declining for years.

According to a Ofcom report reviewing price trends, the average British resident today pays an average of $164.35 a month for broadband, television, landline and mobile phone services. Many U.S. households spend close to that amount before including their mobile phone bill.

In Great Britain, where competing companies have open access to the country’s telephone network, the average price of an entry-level broadband and landline package dropped at least 25% to $42 a month. A similar package from Charter Communications costs $64.98 a month for the first year, before prices rise to over $80 a month in year two. In the United Kingdom, a triple play package of phone, TV, and internet access now averages $53.14 a month. In the United States, it averages well over $100 a month.

The British, like their North American counterparts, are voracious consumers of internet data, consuming 132GB per household in 2016, up from 8GB in 2008. But despite increased usage, the cost of internet service in Britain has dropped, even with heavy investment in fiber optic network upgrades.

In Great Britain, multiple providers compete by offering services over existing telecom networks. In the last three years, customers have been able to choose from 551 different dual and triple play offers from several different companies, up from 294 just three years ago. Most now choose discounted bundles of multiple services under a single provider. But customers can still choose a plan that most closely fits their needs. In the United States, some providers like Charter Communications are eliminating most ions for customers, preferring to sell a more-costly, one-size fits all broadband and phone option.

Verizon’s Broken Promise to Wire All of NYC With FiOS Results in Lawsuit

Two years after Verizon promised its FiOS fiber to the home service would be available to every resident of New York City, the city sued Verizon Communications on Monday, alleging Verizon failed to meet its commitment.

The 19-page lawsuit, filed in New York’s Supreme Court, contrasts the city’s interpretation of Verizon’s commitments laid out in a 2008 franchise agreement against Verizon’s claim it has met its obligations. Central to the case is the city’s claim tens of thousands of New Yorkers cannot get FiOS service from Verizon, even though Verizon’s fiber network may be running down the street.

“Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers,” Mayor Bill de Blasio said in a statement. He added that, “It’s 2017 and we’re done waiting. No corporation — no matter how large or powerful — can break a promise to New Yorkers and get away with it.”

A 2015 audit conducted by the city and testimony given in public hearings confirmed Verizon had failed to wire every building for service, despite what the city believed was Verizon’s promise to do so.

Verizon defended its actions, claiming it had met its obligations to New York City by providing FiOS fiber-to-the-home infrastructure throughout the five boroughs. The problem, according to Verizon, is intransigent building owners that have obstructed Verizon’s entry to get service to tenants. Verizon’s defense does come with some evidence. The company has filed numerous complaints with New York’s Public Service Commission to gain entry to properties in the city that have either ignored Verizon’s efforts to wire their buildings or actively opposed it.

Some landlords claimed no tenants in their building wanted Verizon FiOS and the telephone company wasn’t welcome. Others accused Verizon installers of damaging buildings or performing shoddy work and sought assurances Verizon will meet the building owner’s installation standards. Some live-in building managers have even demanded kickbacks or free service in return for entry. New York State law gives Verizon a right of entry and the company has followed legal channels to eventually gain admittance.

Difficulties with landlords alone cannot account for many other instances where willing customers were told service was not available. In some cases, even city officials seeking FiOS were themselves told repeatedly it was unavailable.

Verizon’s defense is likely to come down to a single industry phrase — “homes passed.”

The former Bloomberg Administration signed an agreement with Verizon that committed Verizon to wire its fiber network citywide. Verizon interpreted the contract to mean installing fiber infrastructure that passes every major property in New York, but not wiring every property for the service. The current de Blasio administration argues the contract means Verizon should be able to reach every customer that wants FiOS service within 7-14 days of receiving an order.

Verizon’s lawyer indirectly conceded Verizon has not made the service available to every household that might want the service.

In a letter sent last week to Anne M. Roest, the commissioner of the city’s Department of Information Technology and Telecommunications, Craig Silliman, Verizon’s general counsel, wrote:

“[…]We now pass all households in the city and can provide service to over 2.2 million households within seven to 14 days of receiving a service request.”

According to data from Baruch College, New York City had 3,129,147 households as of 2015, leaving at least 900,000 households unaccounted for.

Verizon’s fiber network may run down the street of each of those homes, but the lawsuit contends Verizon has been unwilling or unable to wire them for service.

“Although Verizon claims it ‘passed’ all residential premises, Verizon still does not accept orders from all city residents,” the city audit concluded. “In fact, it still informs residents that service is ‘unavailable’ at an address if their network has not been created on the block.”

The city and several consumer and civic groups have implored Verizon to ‘speed it up’ for the last two years but contend Verizon’s response has been inadequate, which led to the lawsuit.

McConville

Common Cause New York has been pushing for more FiOS service for years and reports consumers are frustrated with Verizon’s inability to deliver service. They now suspect Verizon’s unwillingness to expand FiOS comes from a lack of investment to complete its fiber network.

“People continue to be very frustrated because it appears that Verizon is motivated by what will be most profitable for them — what buildings to wire and what buildings to ignore,” Common Cause New York’s executive director Susan Lerner told the New York Times. “This really is about undertaking an ambitious obligation and then deciding halfway through that it’s not worth it. We are very happy to see the city holding the vendor’s feet to the fire. This is absolutely what should be done.”

Verizon appeared frustrated for another reason, shared by company spokesman Raymond McConville.

“On a day where the city is preparing for the biggest blizzard of the season, it’s sad that the mayor’s focus is on pursuing a frivolous lawsuit,” McConville wrote in an email to the Times. “The de Blasio administration is disingenuously attempting to rewrite the terms of an agreement made with its predecessor and is acting in its own political self-interests that are completely at odds with what’s best for New Yorkers. We plan to vigorously fight the city’s allegations.”

And if that doesn’t work, McConville threatened Verizon may not seek a franchise renewal when the current one ends in three years.

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