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Charter Watch: Goodbye TWC’s $10 Modem Rental Fee, Hello Spectrum’s $5 Wi-Fi Fee

Former Time Warner Cable and Bright House Networks customers in Florida, Ohio, Michigan, and Wisconsin were glad to see the end of modem rental fees, something promoted as a tangible deal benefit of the merger by new owner Charter Communications. But many of those same customers are now upset to discover that up to $10 modem rental fee has been replaced with a $5 monthly fee for “Wi-Fi service.”

LuAnn Summers, a Bright House customer in Tampa, wrote Stop the Cap! in February to complain her new bill from Charter/Spectrum included a $9.99 activation fee and $5 a month for something called “Wi-Fi Service.” The same fees have since appeared on bills for some customers recently switching away from their old Time Warner Cable service plans to new Spectrum pricing and plans.

Rich D’Angelo in Wisconsin recently took Charter up on its offer to switch away from his legacy TWC plan when his promotion expired in January.

“I was able to get a big speed boost and bundle it with Spectrum’s Silver TV package, which includes two of the premium movie channels I was paying TWC $15 each for every month, and my bill was only supposed to go up $10,” D’Angelo tells Stop the Cap! “Instead, it went up $25 and I feel lied to.”

Wi-Fi sticker shock.

D’Angelo retired his old owned Motorola SB6121 modem in favor of a new network gateway supplied free of charge by Charter because his new package didn’t work with his old modem.

“My 6121 modem was a real workhorse and I bought it right after Time Warner started charging modem fees, but it cannot support Spectrum’s fastest speeds in Wisconsin and I didn’t feel like buying a new modem when Spectrum gives them to customers for free,” D’Angelo explained. “This was the device they handed me and I was not offered any other option.”

Champagne Johnson in Columbus, Ohio also took advantage of Spectrum’s new pricing plans thinking she could save her family money and get better internet speeds from the cable operator that advertises it’s a “new day” for Time Warner Cable subscribers.

“New day but the same old lies and deceit,” Johnson writes Stop the Cap! “Do these cable companies only hire thieves? I was told the cable modem was included, but now I am suddenly getting charged for Wi-Fi, which is crazy. I called Spectrum up and they told me there is a charge if I use their modem for my Wi-Fi. I told them I don’t need their Wi-Fi because I have my own router that works fine and they told me it was included inside their modem and I had to pay for something I won’t use.”

Charter assumes if you use Wi-Fi, you want their Wi-Fi Service

We contacted Charter to learn more about this new charge and what customers can do about it.

It turns out the Wi-Fi charge and activation fee applies when you use a network gateway device provided by the cable company. We learned the reason so many customers are finding this charge on their bill comes as a result of slightly deceptive sales practices when customers choose a Spectrum internet service plan.

“Do you use Wi-Fi at home?” a Charter representative asked us when we inquired about pricing for a new Spectrum service plan to replace our existing Time Warner Cable plan. When we answered yes, the representative said they would send our “free equipment” and noted we would no longer pay a modem rental charge (despite the fact we had owned our own modem at Stop the Cap! HQ for years). “You can either pick it up in a cable store or we can ship it direct to you in a self-install kit.” That equipment was a “network gateway,” which bundles a cable modem and router into a single device.

Our readers confirm that Charter representatives did not ask them if they have an existing in-home router, which probably already provides Wi-Fi access in the home. Nor do they disclose that accepting a network gateway, which was also interchangeably referred to as “a modem” means they are agreeing to pay a $9.99 activation fee and $5/mo ongoing fee for “Wi-Fi service.”

We called three times this afternoon as were given identical information, and no disclosure of any Wi-Fi fees.

On the fourth call, we specifically asked about Wi-Fi fees and the representative told us they did not know the answer and left us on hold for 10 minutes before finally disclosing that Charter does charge both fees. When we asked how to avoid them, we were first told we could not waive the fee if we used Wi-Fi in the home, but a supervisor later clarified that it only applied to their gateway and we could specifically request a “basic modem” or have Wi-Fi disabled on a network gateway, and neither charge would apply.

“How are we supposed to know and understand that in advance?” Johnson asked us.

“Considering more than 90% of Time Warner Cable customers were paying $10 a month for a modem without ever realizing or understanding they could buy their own and avoid that charge, how many Spectrum customers are proficient enough to tell Spectrum they want their network gateway set to bridge mode or want a traditional cable modem without router functionality? It’s clear Charter is going to make $5 a month from a whole lot of customers, and it should be disclosed up front. It even got me and I am a network engineer.”

Summers learned about the controversy of the Wi-Fi charge after googling the fee and discovered a Tampa Bay Times story about the fee.

Spectrum spokesman Joe Durkin told the newspaper the fee should not apply to customers Charter inherited from Bright House who already had internet service. He said Spectrum is reviewing cases the Times has brought to its attention to see if the charges were appropriate.

But that isn’t always the case for customers placing orders on Charter’s website or contacting customer service by phone. In both cases, Charter implied if you want to use Wi-Fi at home, you owe them an extra $5 a month:

Charter’s website suggests that you have to pay $5 a month if you intend to use Wi-Fi at home.

Getting the charges off your bill

Luckily, Charter is readily agreeing to customer requests to remove the charge(s) from customer bills and will supply equipment with Wi-Fi disabled (or not present when using a traditional cable modem). You may need to exchange equipment, however. If either charge appears on your bill, call and complain. While we no longer recommend customers invest in their own cable modems as long as Charter is providing them without a rental fee, we do suggest customers buy their own router and avoid ongoing fees for Wi-Fi service.

Also be aware that if you are still on a legacy Time Warner Cable internet plan, Charter will keep collecting that $10 monthly modem fee until you abandon your Time Warner plan for a Spectrum internet plan. You can still avoid the rental fee by buying your own modem. Charter’s list of supported modems is here.

Wall Street Panic Attack: Verizon’s Unlimited Plan Will Destroy Profits, Network Reliability

Verizon Wireless’ new unlimited data plan threatens to destroy everything, fear Wall Street analysts in an open panic attack over the prospects of value destruction and network reliability damage.

“An unlimited offer is dangerous,” Roger Entner, an analyst at Recon Analytics LLC, told Bloomberg News. “If they sign up a lot of people, it will congest the network, and they run the risk of people saying ‘the network sucks’.”

The return of unlimited data at Verizon (with a protective right to throttle customer speeds after they consume 22GB of data during the month) seems to have triggered anxiety on Wall Street because Verizon was the most adamant about never offering unlimited plans again after dropping them in July, 2011. Part of that fear may have come from Verizon’s own former chief financial officer Fran Shammo who warned investors last fall:

“The majority of people don’t need unlimited plans. But the people who use unlimited plans can be abusive, they can really wreak havoc to your network. And at the end of the day, I continue to say you cannot make money in an unlimited video world. You just can’t do it because you need to generate the cash flow to keep up with your demand.”

What also concerns Wall Street is the increasing evidence an all-out price war provoked by T-Mobile and Sprint will threaten to close some doors on network monetization. Charging customers for data consumption has a growth prospect that would have guaranteed increasing average revenue per customer indefinitely. But unlimited plans mean consumers pay one flat price for data no matter how much they consume. Consumers love it. Wall Street analysts generally don’t.

Other analysts are concerned that Verizon, deemed the Cadillac Network because of its premium price and reputation, also happens to have the least amount of deployed wireless spectrum of all the four national carriers. As the nation’s largest carrier with 114 million users, a big spike in data consumption could affect Verizon’s network performance, some speculate.

Unlimited data plans promote usage and total wireless traffic is expected to grow between 70-80% annually, up from 50-60% under today’s tiered data plans, according to wireless analyst Chetan Sharma.

In response Verizon has rushed out executives to reassure Wall Street and investors Verizon’s network was built to take it.

“Our goal is to always offer a better performance, and I see a path to that,” Mike Haberman, Verizon’s vice president of network support, said in an interview with Bloomberg:

“Spectrum is only one element of a network,” he added. “How you put the network together is far more important.” In advance of its decision to start selling an unlimited data package, Verizon was busy with upgrades. The company just boosted network capacity by 50 percent with new systems that take separate radio frequencies and combine them into one large pathway, Haberman said. The company has also been adding more cell sites and transmitters in cities and connecting those sites with high-capacity fiber-optic lines.

CNBC reported Verizon’s new unlimited data plan is a “sign of weakness” for Verizon, which is facing challenges to its core wireless business. (4:30)

Sprint a Pawn in Masayoshi Son’s U.S. Investment Scheme

President Trump met with Softbank’s Masayoshi Son in December, 2016.

Japan’s Softbank has a deal tailor-made for President Donald Trump’s desire to inspire companies to invest more in the United States and hire more workers, and all the president has to do is get Washington regulators concerned with mergers, acquisitions, and competition out of Softbank’s way.

Softbank’s Masayoshi Son has delivered a lot of speeches and made a lot of promises since acquiring Sprint in 2013 for $21.6 billion, originally promising to rebuild the struggling wireless company into a potential competitive juggernaut, capable of beating Verizon and AT&T and even take on cable operators. Now he’s offering to invest another $50 billion in the U.S., and create 50,000 new jobs, assuming the business climate is right.

Before accepting such a deal, one should take a closer look at how Sprint is doing three years under Softbank’s ownership. Few would argue with the fact Sprint has languished and fallen to last place among the four national carriers, now behind T-Mobile. Despite Son’s commitment to Donald Trump to invest and hire, Sprint has severely cut investment by more than 60% between 2014 and 2016 and has laid off more than 4,000 employees, most in the United States. Customers continue to complain about the perpetual ‘massive upgrade’ undertaking the company embarked on years ago that never seems to be finished and hasn’t helped service quality as much as customers expected.

In January 2016, BusinessWeek reported SoftBank has “plowed more than $22 billion into Sprint, and yet all of Sprint is now valued at $11.8 billion. The company’s $2.2 billion in cash is about the same as its 2016 debt obligations.”

Ten years earlier, Sprint was worth $69 billion and was prepared to dominate the U.S. wireless industry, but drove customers off with very poor customer service and inadequate investment in its network, allowing competitors like AT&T and Verizon Wireless to leap ahead. Sprint also embarked on an executive-inspired fantasy: a disastrous merger with Nextel that preoccupied the company for years. Softbank taking the lead has done little to change customer perceptions, nor those of some Wall Street analysts who fear Sprint is a bottomless money pit that always promises better times and profits are coming, but never seems to get there.

“You’ve watched a once-great institution deteriorate to the point that it is now a badly, badly compromised asset,” said Craig Moffett, an analyst at MoffettNathanson. “They’ve been living from hand-to-mouth for years, constantly making short-term decisions in order to live to fight another day.”

It calls into question Softbank’s vision to use technology “to reduce loneliness and ease the sadness of people as much as possible.” There are a lot of sad Sprint customers, churning away into the arms of competitors like T-Mobile faster than Sprint can sign new customers up.

Son’s dream depended on his business plan that reduced the number of U.S. competitors to three by merging Sprint and T-Mobile together, something federal regulators under the Obama Administration failed to accept despite Son’s argument the combined resources of the two companies would theoretically make a super-sized Sprint more competitive with AT&T and Verizon.

In contrast to Son’s plan to consolidate the wireless industry to improve Sprint’s financial health, T-Mobile instead decided to boost investments in network upgrades and improved coverage to attract new customers. Ironically, some of the money to pay for those upgrades came from AT&T after it paid a reverse breakup fee of $3 billion in cash and $1–3 billion in wireless spectrum after its merger proposal with T-Mobile collapsed.

While Son promises he will invest billions in the United States, he is already spending much less on Sprint. In 2017, Verizon planned to spend $9.12 per subscriber (adjusted spending per monthly phone-equivalent subscriber), AT&T will spend $9.67 and T-Mobile will spend $9.04. Sprint will lag behind with $6.78 per subscriber in network investments. Moffett predicted of the $22 billion Verizon has committed for capital spending this year, about $11.3 billion will go toward wireless. By contrast, Sprint will spend $2.97 billion, excluding costs of leased phones. T-Mobile is spending just over $5 billion.

In the last two years, customers have delivered a new paradigm to wireless companies: bigger isn’t necessarily better. The only bright spot among all four national carriers in 2016 was the scrappy T-Mobile, once destined for a fire sale by owner Deutsche Telekom. But under the “Uncarrier” leadership of CEO John Legere, T-Mobile USA is worth pure gold in Deutsche Telekom’s global wireless portfolio. The turnaround came not from trying to consolidate the industry but rather giving customers what they have asked for — more data, unlimited data, better deals, and better service. T-Mobile’s network investments paid off, giving the company very competitive 4G LTE speeds and comparable urban and suburban coverage to its larger competitors. Legere has been so successful, the German owners of T-Mobile no longer seem to be interested in selling T-Mobile USA.

Softbank’s record of achievement with Sprint in the last two years has been much less of a success story.

Customer Gains and Losses by Carrier – 2016-Q4 Phone Activators

Investments by Sprint in its wireless network have plummeted 62.7% under the leadership of Softbank from 2014-2016. (Chart: Hal Singer)

In 2015, Sprint’s capex was $3.958 billion. Last year, it was $1.421 billion — less than half the previous year. Mr. Son seems reticent about maintaining the kind of investment necessary to grow Sprint’s network over the long term to keep up with customer demand, instead willing to compete short term on price and promotions. Sprint’s past reputation for poor customer service, a slow data network, dropped calls, and coverage dead zones makes attracting former customers back to Sprint a hard sell, especially considering T-Mobile exists as a credible alternative to Sprint for those seeking cheaper service plans.

Son’s argument to the new administration depends on President Trump and FCC Chairman Ajit Pai being more friendly to the idea of less competition than the Obama Administration. Son may have an uphill battle, considering the former Obama Administration’s opposition to earlier mergers, including T-Mobile and AT&T and T-Mobile and Sprint seems to have paid off for consumers in the form of today’s fiercer competition and a price war.

Convincing President Trump to loosen merger standards to allow Softbank a stronger position in the U.S. market in return for vague and illusory investment and job creation promises is ridiculous considering Mr. Son’s performance with Sprint has not been as rosy as his rhetoric. No president should agree to a de facto bailout deal for Softbank that reduces competition and guarantees higher prices. Mr. Son should instead direct some of the $50 billion he apparently has stashed in waiting to improve Sprint’s network to more effectively compete. If he cannot or will not, the entire country should not pay for his investment mistake by watching more wireless competition get eliminated in yet another merger.

T-Mobile Literally Giving Away Free Line of Service in Price War Bonanza

T-Mobile continues to raise the stakes against AT&T, Verizon Wireless and Sprint with another improbable promotion that literally gives away an extra line of service for free.

“Today, I’m thanking customers by giving them one of the things they want the most – a way to connect more of their family or more of their devices all the time,” said John Legere, president and CEO of T-Mobile.  “That’s why we’re giving customers a free line to use any way they choose!”

The press release offers customers a variety of options:

Current T-Mobile customers with at least two voice lines can use that extra line however they want. Get an extra line of unlimited T-Mobile ONE. Or if you have Simple Choice, you’ll get an extra Simple Choice line with your same data plan. Or use your free line for a new tablet or smartwatch. Or turn your car into a 4G LTE hotspot and a lot more with SyncUp Drive. It’s your call!

The “2 Unlimited Lines for $100 All In” promotion that began this morning offers new or current customers a chance to score a free extra line of service (after bill credits). The discount continues indefinitely and is also good for customers with more than two lines on their T-Mobile account. Here are the details:

  • How do I get the free add a line promotion?
    • Starting March 1st, for a limited time only, anyone activating 2 unlimited lines on T-Mobile ONE, and existing customers with at least 2 voice lines on T-Mobile ONE or Simple Choice can get 1 additional line for FREE after bill credit.
    • All free lines must be activated during the promotional period and you can keep the promotional pricing as long as you maintain qualifying service and line count. Customers may take advantage of this offer in addition to other offers and promotions, including 2/$100 and Carrier Freedom.
  • Who’s eligible for this promotion?
    • New customers, current customers and employees are eligible to receive this offer as long as they are on a qualifying rate plan, have two paid voice lines, and an account in good standing.
    • Customers with one voice line will need to migrate to T-Mobile ONE and add a second paid voice line to qualify for the FREE Line. Qualifying new and existing @Work customers may add one additional qualifying line on us for a max of 12 lines total.
  • How does the offer work?
    • The free line will match your current paid voice line data, i.e. T-Mobile ONE customers will receive a FREE T-Mobile ONE line and similarly, Simple Choice customers will receive a FREE Simple Choice line.
    • If your lines have varying amounts of data, the free line will match the line with the least amount of data. Existing customers with two paid voice lines get a free line whether you’re adding a smartphone line, tablet line or wearable.
    • In most cases, you will see your free line credit on your first bill. If credit is not applied on the first bill, two credits will appear on the second bill.
    • For customer’s not on the new T-Mobile ONE taxes and fees included plan, taxes/fees may be applied to pre-bill credit price. A maximum of 1 free line can be added per account.
    • If you cancel service on one of your lines within 12 months or migrate to another plan, you will lose the monthly bill credit for the free line.
  • Where is this offer available?
    • Anywhere that T-Mobile offers new lines of service, including T-Mobile retail stores nationwide, and authorized postpaid dealers.

Legere

For most customers, signing up with a T-Mobile ONE plan with unlimited phone, texting, and data will offer the best value and simplify the promotion by matching the same kinds of service on all three (or more) lines. This also guarantees your new line will cost absolutely nothing because T-Mobile ONE bundles all taxes and fees into the cost of service, which in this case is free. On similar promotions at other carriers, customers are on the hook for up to $10 a month in taxes, fees, and various surcharges on that “free” line.

You can bring a device to this plan or buy one from T-Mobile. A new SIM card is required, and T-Mobile charges an outrageous $25 to get one through their website or in stores. But many customers report if you call T-Mobile customer service from a T-Mobile phone on 611, a discounted SIM card for 99 cents is usually available if you ask.

T-Mobile has not put an expiration date on the offer. Judging from customer buzz, there is considerably interest in this offer and a lot of disbelief it comes free of charge.

T-Mobile acknowledges there are some billing issues going on at the wireless carrier as it continues to add customers. At present, customers will see a charge for the service followed by a bill credit, which may take up to two bill cycles to appear (but is retroactive back to your signup date.). It appears T-Mobile bills customers for the free line of service several days before a corresponding credit is issued, which has confused some customers being billed for a service and credited for it on the following month’s invoice. But many on autopay say T-Mobile actually deducts the correct amount (with the credit applied) no matter what the bill indicates. Customer service is also on hand to issue on the spot credits for concerned customers, and T-Mobile claims it is working through this billing issue and should have it resolved.

To take advantage of this offer, customers must not have canceled a line after Jan. 1, 2017. T-Mobile wants this offer to encourage customers to add lines, not convert existing lines from one plan to another.

11 Cities Getting Verizon 5G Beta Test; No Details on Speed or Pricing Yet

Verizon will invite several thousand customers in 11 cities to participate in a “pre-commercial” beta test of its newly built 5G wireless network during the first half of 2017.

The fixed wireless, home broadband replacement will be provided over a limited coverage area in these cities: Ann Arbor, Atlanta, Bernardsville, N.J., Brockton, Mass., Dallas, Denver, Houston, Miami, Sacramento, Seattle and Washington, D.C.

Verizon’s announcement only generally promotes the future potential of 5G service without being too specific about what it intends to offer. We expect the service will be marketed as a wireless home broadband service, not for those on the go. There is no finalized standard for 5G service yet, so Verizon’s adaptation isn’t necessarily going to be the final standard and could change before the wireless provider expands the service to other customers.

“The 5G systems we are deploying will soon provide wireless broadband service to homes, enabling customers to experience cost-competitive, gigabit speeds that were previously only deliverable via fiber,” said Woojune Kim, vice president, Next Generation Business Team, Samsung Electronics.

Verizon’s ability to offer gigabit speeds will depend on several factors:

  • Backhaul connectivity: Verizon will likely choose areas where fiber connectivity is already installed, either as part of its FiOS project or through its fiber connections to cell towers. Because of the very high frequencies involved, 5G connectivity will be line-of-sight and the coverage area will be very limited, within a mile or less of the tower or small cell infrastructure Verizon will depend on to provide service to each neighborhood.
  • Distance and signal quality: 5G service will be distance sensitive and fixed wireless will require the installation of an antenna either pointed out a window or installed externally on a building. The further away, the slower the speed.
  • Shared network: Total available bandwidth on a 5G tower or small cell is shared among all users connected to it. During the initial beta test, speeds are likely to be very high. That may not stay the case as Verizon adds customers to its service.

Verizon has avoided mentioning specific speed tiers, pricing, whether service is unlimited or usage capped, equipment costs, and contract terms. We are also not aware if the service will be marketed by Verizon Communications, the wireline company that also markets FiOS or Verizon Wireless, the mobile operator side of Verizon.

Several of the test cities represent Verizon’s first home broadband invasion on other providers’ turf. Frontier Communications is likely unhappy to learn it faces direct competition from Verizon in Dallas. Verizon sold its landline and FiOS network in Texas to Frontier. Most of the other test cities seem to avoid direct competition with Charter Communications, as almost all are serviced by Comcast. The new 5G service will also compete directly with AT&T in Michigan, Georgia, Texas, Florida, and California.

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