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AT&T: We Know What You Did Last Summer and We Profited Selling It

Phillip Dampier October 26, 2016 AT&T, Public Policy & Gov't No Comments

knowwhatyoudidAT&T made a fortune spying on average Americans and sold what they learned to law enforcement agencies who only needed a paid account to access the data, not a subpoena signed by a judge.

The newest revelations of AT&T’s Project Atmosphere by the Daily Beast sucked the oxygen out of the room from collective gasps of those learning the enormity of private information AT&T is selling to any government agency willing to pay. The first news story about the program came in a 2013 New York Times report. But new evidence suggests AT&T’s project may represent the most extensive private surveillance program ever uncovered.

“The for-profit spying program that these documents detail is more terrifying than the illegal NSA surveillance programs that Edward Snowden exposed… If companies are allowed to operate in this manner without repercussions, our democracy has no future,” Evan Greer, campaign director at Fight for the Future, told Newsweek.

AT&T stores details for every call, text message, Skype chat, or any other form of communication that passes through its infrastructure, and has kept that data as far back as 1987, according to the Times 2013 Hemisphere report. The scope and length of the collection has accumulated trillions of records and is believed to be larger than any phone record database collected by the NSA under the Patriot Act.

AT&T’s Hemisphere program operates in the shadows and does not require compliance with the kinds of federal privacy laws and constitutional protections required to be honored by the nation’s law enforcement agencies. AT&T’s database allows anyone with a procedural administrative warrant (no judge’s signature required) to search through trillions of call records and obtain precise cellular location data to discover where a person is located, who he speaks to, and often why.

A suspect claiming to be in one location at the time of a crime can be challenged when AT&T’s data reveals a subject’s cell phone was actually located somewhere else. If a prosecutor wants to know who a suspect has called for the last five years, he can order a report from AT&T showing every call, every number dialed, how long the call lasted, and details about the person called (and who they, in turn, called).

Privacy advocates call the revelations “chilling” and claim AT&T goes well beyond the kind of surveillance practiced by federal government agencies revealed by Edward Snowden.

AT&T customers have it worst, because the company has direct access to any type of communication made over AT&T’s network. But customers of other telecommunications companies are also affected because communications regularly travel over networks owned and operated by AT&T. The spying program involves cell phone lines, landlines, and internet connections.

The secretive project also turns out to be extremely profitable for AT&T.


Spying is profitable.

“AT&T customers are outraged but this affects everyone,” Greer told Newsweek. “AT&T went far beyond complying with legal government requests and actually built a powerful data mining product to sell our private information to as many government agencies and police departments as they could.”

Taxpayers cover almost all the costs because AT&T Hemisphere clients are government agencies. Small rural police departments pay at least $100,000 for access to AT&T’s data, but significant-sized suburbs and cities can pay AT&T well into the millions.

The 2013 Times report mischaracterized AT&T’s effort as a “partnership” between AT&T and the U.S. government. The Obama Administration’s Justice Department defended AT&T’s efforts calling Hemisphere “an essential, and prudently deployed, counter-narcotics tool.”

But the Justice Department may have been smoking some of the contraband they seized when they made that claim, because this week’s revelations show the program was used for far more than fighting the War on Drugs. Law enforcement agencies have accessed AT&T’s database as part of investigations of everything from Medicaid fraud to homicide.

AT&T’s pay-per-spy program was developed independent of law enforcement agencies and was designed, packaged, and marketed to make AT&T a fortune from American taxpayers. It has raked in millions of dollars annually, according to the Daily Beast.

No pesky warrants are required, only a solemn promise to keep Hemisphere a secret if an investigation that uses the data ever becomes public. AT&T specifically engineered an “end run” that may ultimately prove illegal because law enforcement agencies may have created phony or misleading evidence to cover up for AT&T:

“The Government agency agrees not to use the data as evidence in any judicial or administrative proceedings unless there is no other available and admissible probative evidence,” it says.

But those charged with a crime are entitled to know the evidence against them come trial. Adam Schwartz, staff attorney for activist group Electronic Frontier Foundation, said that means AT&T may leave investigators no choice but to construct a false investigative narrative to hide how they use Hemisphere if they plan to prosecute anyone.

Once AT&T provides a lead through Hemisphere, then investigators use routine police work, like getting a court order for a wiretap or following a suspect around, to provide the same evidence for the purpose of prosecution. This is known as “parallel construction.”

“This document here is striking,” Schwartz told The Daily Beast. “I’ve seen documents produced by the government regarding Hemisphere, but this is the first time I’ve seen an AT&T document which requires parallel construction in a service to government. It’s very troubling and not the way law enforcement should work in this country.”

The federal government reimburses municipalities for the expense of Hemisphere through the same grant program that is blamed for police militarization by paying for military gear like Bearcat vehicles.

“At a minimum there is a very serious question whether they should be doing it without a warrant. A benefit to the parallel construction is they never have to face that crucible. Then the judge, the defendant, the general public, the media, and elected officials never know that AT&T and police across America funded by the White House are using the world’s largest metadata database to surveil people,” Schwartz said.

AT&T isn’t feeling threatened by this week’s revelations or their implications, releasing a lukewarm statement implying Hemisphere is just a way for AT&T to efficiently respond to law enforcement subpoenas:

“Like other communications companies, if a government agency seeks customer call records through a subpoena, court order or other mandatory legal process, we are required by law to provide this non-content information, such as the phone numbers and the date and time of calls.”

AT&T is being misleading, according to ACLU technology policy analyst Christopher Soghoian.

“They say they only cooperate with law enforcement as required, and frankly, that’s offensive when they are mining the data of millions of innocent people, and really built a business and services around the needs of law enforcement,” Soghoian told the Daily Beast.

Google Fiber’s CEO Out of a Job; Fiber Expansion on Hold Indefinitely in Many Cities

Down the rabbit hole

Down the rabbit hole

Google has quietly announced an indefinite suspension of further fiber expansion as it prepares to downsize fiber division employees and re-evaluate its fiber business model.

In a blog post tonight from Craig Barratt, senior vice president of Alphabet and CEO of Google’s Access division, it becomes clear Google is rethinking its entire fiber strategy and is likely moving towards fixed wireless technology going forward:

Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet. We have refined our plan going forward to achieve these objectives. It entails us making changes to focus our business and product strategy. Importantly, the plan enhances our focus on new technology and deployment methods to make superfast Internet more abundant than it is today.

Barratt outlines the immediate implications of Google’s dramatic shift:

  • In the cities where we’ve launched or are under construction, our work will continue;
  • For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches. In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base.


Barratt himself is jumping ship (or was pushed). He announced in his blog entry he is “stepping away” from his CEO role, but will remain as an “adviser.”

Observing Google’s recent fiber efforts and acquisitions, it seems clear Google no longer thinks fiber-to-the-home service is an economically viable solution in light of competitors like AT&T rolling out increasing amounts of fiber and the cable industry is on the cusp of launching DOCSIS 3.1, which will dramatically boost internet speeds without a substantial capital investment.

Google’s investors have been lukewarm about the company’s economic commitments relating to its fiber broadband networks. Often built from the ground up, Google’s fiber construction complexities also include trying to navigate costly roadblocks established by their competitors (notably Comcast and AT&T), dealing with bureaucracies and red tape even in states where near-total-deregulation was supposed to make competition easy. Google Fiber has also not proved to be a runaway economic success, and now faces more challenges in light of upgrades from their competitors. Cable companies have slashed prices for customers threatening to cancel and have added free services or upgrades to persuade customers to stay, and Google’s proposition of selling consumers $70 gigabit access has proved tougher than expected.

It is highly likely the future of Google’s Access business will be deploying wireless broadband solutions powered by Webpass, a company Google acquired earlier this year. Webpass uses a high-speed point to point wireless transmission system the company claims can deliver gigabit broadband access to customers in multi-dwelling buildings and other urban areas. Webpass sells access for $60 a month (discounted to $550/yr if paid in advance) for 100Mbps-1,000Mbps speed depending on network density and capacity in the customer’s building. So far, Webpass has not been able to guarantee speed levels, and some customers report significant variability depending on their location and network demand.

Webpass’ wireless infrastructure costs a fraction of what Google has coped with building fiber to the home networks, and the installation of point-to-point wireless antennas on participating buildings has been less of a regulatory nightmare than digging up streets and yards to lay optical fiber.

webpassBut despite Webpass’ claim its performance is comparable to fiber, its inability to guarantee customers a certain speed level and its tremendous performance variability from 100 to 1,000Mbps exposes one of the weaknesses of fixed wireless networks. At a time when capacity is king, only fiber optic networks have shown a consistent ability to deliver synchronous broadband speeds that do not suffer the variability of shared networks, poor antenna placement/signal levels, or harmful interference.

There is room for wireless technology to grow and develop, as evidenced by the wireless industry’s excitement surrounding future 5G networks and their ability to offer a home broadband replacement. The emergence of 5G competition is almost certainly also a factor in Google’s decision. But even AT&T and Verizon acknowledge a robust 5G network will require a robust fiber backhaul network to support both speed and user demand. The more users sharing a network, the slower the speed for all users. No doubt Webpass has made the same assumption that cable operators did in the early days of DOCSIS 1 — current internet applications won’t tax a network enough to create a traffic logjam that would be noticed by most customers. The phone companies also learned a similar lesson trying to serve too many DSL customers from inadequate middle mile networks or traffic concentration points. (Some phone companies are still learning.)

Whether it was yesterday’s peer-to-peer file sharing or today’s online video, capacity matters. That is why fiber broadband remains the gold standard of broadband technology. Fiber is infinitely upgradable, reliable, and robust. Wireless is not, at least not yet. But technology arguments rarely matter at publicly-traded corporations that answer to Wall Street and investors, and it appears Google’s backers have had enough of Google Fiber.

Stop the Cap!’s View

tollAt Stop the Cap!, we believe these developments further the argument broadband is an essential utility best administered for the public good and not solely as a profit-motivated venture. The path to fiber to the home service in rural, suburban, and urban communities has and will continue to come from a mix of private and public utilities, just as local public and private gas and electric companies have served this country for the last century. Where there is a business model for fiber to the home service that investors support, there is a for-profit fiber provider. Where there isn’t, now there is often no service at all. So far, the FCC in conjunction with Congress has seen fit to solve broadband availability problems by bribing private providers into offering service (usually low-speed DSL that does not even meet the FCC’s definition of broadband) with cash subsidies, tax write-offs, or occasional tax abatement schemes. Imagine if we followed that model with the nation’s public roads and highways. We would today be paying tolls or a subscription to travel down roads built and owned by a private company often financed by tax dollars.

Not every product or service needs to earn Wall Street-sized profits. Nobody needs to get rich selling water, gas, and electricity… or broadband. Public broadband networks can and should be established wherever they are needed, and they should be priced to recover their costs as well as expenses that come from support, billing, and ongoing upgrades. Naysayers like to claim municipal broadband is socialism run wild or an instant economic failure, yet the same model has provided Americans with reliable and affordable gas, electricity, and clean water for over 100 years.

Maine was made for municipal broadband.

Maine was made for municipal broadband.

In New York, publicly owned/municipal utilities often charge a fraction of the price charged by investor-owned utilities. In Rochester, where Stop the Cap! is headquartered, one need only ask a utility customer if they would prefer to pay the prices charged by for-profit Rochester Gas & Electric or live in a suburb where a municipal provider like Fairport Electric or Spencerport Electric offers service. RG&E has charged customers well over 10¢ a kilowatt-hour when demand peaks (along with a minimum connection charge of over $21/mo and a “bill issuance charge” of 72¢/mo). Spencerport Electric charges 2.9¢ a kilowatt-hour and a connection charge of $2.66 a month, and they issue their bills for free. There is a reason real estate listings entice potential buyers by promoting the availability of municipal utility service. The same has proven true with fiber-to-the-home broadband service.

The economic arguments predicting doom and gloom are far more wrong than right. Municipal utilities are often best positioned to offer broadband because they already have experience providing reliable service and billing and answer to the needs of their local communities. Incompetence is not an option when providing reliable clean water or electricity to millions of homes and customers have rated their public utilities far superior to private phone or cable companies.

Google’s wireless future may prove a success, but probably only in densely populated urban areas where a point-to-point wireless network can run efficiently and profitably. It offers no solution to suburban, exurban, or rural Americans still waiting for passable internet access. Clearly, Google is not the “free market” solution to America’s pervasive rural broadband problem. It’s time to redouble our efforts for public broadband solutions that don’t need a seal of approval from J.P. Morgan or Goldman Sachs.

AT&T Launching 100+ Channel Cable-TV Streaming Alternative: DirecTV Now ($35/Mo)

att directvAT&T will launch its anticipated DirecTV Now all-streaming cable television alternative next month at an unprecedented price of $35 a month for more than 100 channels, viewable for free without counting against your AT&T smartphone or tablet usage allowance.

Targeting cord-cutters, the new service will not require a satellite dish or expensive equipment — just a reasonably fast internet connection.

AT&T CEO Randall Stephenson used the announcement at a Wall Street Journal-sponsored event to claim the new service was an example of how AT&T won’t increase prices as a result of its proposed merger with Time Warner, Inc.

“That’s not a medium for raising prices,” Stephenson said, referring to AT&T’s new service. “Anybody who characterizes this as a means to raise prices is ignoring the basic premise of what we’re trying to do here.”

AT&T and Time Warner’s respective CEOs appeared together at the event as part of a week-long press blitz to promote their $85.4 billion merger deal, which is getting considerable blowback from politicians, consumer groups, and Wall Street.

Stephenson and Time Warner CEO Jeff Bewkes claim they are re-inventing the cable television business model and forcing innovation.

“If there was ever an environment that was begging for innovation, it was this environment,” Stephenson said. Bewkes added: “We would say and we’ve been saying it since 1995, every channel in the country should look like HBO or Netflix—there’s no reason we can’t.”

AT&T defends its $35 price point, which is half the price many cable companies charge for cable television, claiming it can afford to charge those prices by doing away with service calls, equipment, satellites, and infrastructure that traditional cable operators have to cover. DirecTV Now will rely on smartphone and desktop apps, and presumably third-party set-top boxes like Roku and Apple TV to provide its lineup.

AT&T hasn’t announced an official channel list for the service, but AT&T has been in serious negotiations with most of the major content conglomerates, so the lineup is likely to cover all the major cable networks, presumably local stations, and include an on-demand library. Customers may not get some of the secondary cable networks most cable systems bury on three or four digit channel numbers in Channel Siberia, but few viewers are expected to miss channels that attract fewer than 50,000 viewers nationwide.

Stephenson promised that future programming cost increases would be offset by developing “new ad models” that will cover most of the price increases.

One impediment to AT&T and Time Warner’s grand plan is the pervasive issue of data caps and usage-based billing, which could prove a lethal deterrent to customers ditching traditional cable TV in favor of online alternatives. AT&T itself imposes data caps on its DSL service, and has an unenforced cap on U-verse. Comcast continues to charge overlimit fees for customers exceeding 1TB of usage per month and smaller cable operators often include even smaller usage allowances.

Customers are highly skeptical of DirecTV Now because AT&T is involved. David Hill shared his prediction:

Undoubtedly you will get a $35 rate… for 6 months.  Then because you have been a good, paying customer, they will raise it to $75 a month.  But of course, new customers, can still get the $35 deal plus a $400 Amazon gift card.

When you call customer support (if you can actually get through to a living person) and ask for the same $35 rate the new guys get, why you will be told that you cannot get that rate because, well, you already ARE a customer.  So eat dirt.

Then when you work your way via the endless menu items to cancel the service about 2 weeks later and for years after you will be flooded with endless postcards and letters BEGGING you to come back.  You were a GREAT customer and WE want YOU BACK.  Right now!

Is this a stupid marketing policy or not?  In my MBA classes we were somehow mislead into believing exiting customers were your top A, number one priority.  Yet these internet companies cannot be bothered with keeping you.  Jerks, plain and simple.

AT&T CEO Randall Stephenson said the company’s deal with Time Warner will result in a new TV service that will offer more than 100 premium channels for $35 per month. He sat down with Time Warner’s Jeff Bewkes and WSJ’s Rebecca Blumenstein at the WSJDLive conference in Laguna Beach, Calif. (5:05)

Charter Raising Prices for Time Warner Cable Customers: New and Higher Fees

Phillip Dampier October 25, 2016 Consumer News, Time Warner Cable/Spectrum No Comments

twc logoCharter Communications has announced price changes and new fees for existing Time Warner Cable customers that will take effect Dec. 15, 2016:

  • Late payment fee increases from $8.50 to $8.95
  • If a live agent assists you with making a payment over the phone, there is a new fee of $5 for each transaction. Paying with an automated attendant should still be free.
  • Damaged/unreturned equipment charges are changed (some fees increasing, others decreasing): Traditional Set top box: $123, Wi-Fi Modem/Extender/Router/Gateway: $78, Access Point: $172

Another Mega Merger: AT&T Acquires Time Warner (Entertainment) for $85.4 Billion

att-twIt was a busy weekend for AT&T’s Randall Stephenson and Time Warner (Entertainment)’s Jeff Bewkes, culminating in an announcement from AT&T it was acquiring Time Warner in a deal worth $85.4 billion.

AT&T CEO Stephenson will remain as CEO while Bewkes stays temporarily to help oversee the transition of the merged company.

The deal has sparked confusion among some consumers who associate Time Warner with Time Warner Cable, but in fact the two entities are independent companies. Time Warner, Inc., is the entertainment and content provider that owns HBO, Warner Bros., CNN, TNT, and other networks. Time Warner Cable was spun-off in 2009 as an independent cable operator that was purchased by Charter Communications earlier this year.

AT&T’s interest in Time Warner is entirely about its video content. By owning Time Warner, AT&T can win deals to place its video programming on U-verse, DirecTV, and AT&T wireless smartphones and tablets without running into heated contract renewal negotiations, spiraling prices, and restrictions on how that content is viewed.

AT&T is hoping its acquisition will generate more revenue to make up for stalled wireless revenue growth. AT&T customers already can view DirecTV content on their smartphones without it counting against one’s usage allowance. AT&T could offer a similar usage cap exemption for Time Warner-owned programming, although it would raise the ire of consumer groups fighting for Net Neutrality, which prohibits preferential treatment of internet content.



Stephenson hopes the addition of Time Warner to the AT&T family will strengthen his existing plan to compete nationwide with cable television providers, offering a streamed bundle of cable channels under the DirecTV brand starting as early as this winter.

Stephenson has talked to Bewkes about a merger of the two companies since August, but Time Warner has always proved an elusive seller, having earlier rebuffed a buyout attempt from 21st Century Fox. Stephenson was talking to a man who pushed Time Warner Cable out of its corporate family nest back in 2009, and the reasons for doing so were ironic considering this weekend’s acquisition announcement:

Time Warner’s management believed that the separation was the right step for Time Warner based on the changes in Time Warner Cable’s business over time. […] Time Warner’s management believed that there were a number of potential benefits from the separation transaction:

  • Time Warner would become a more streamlined portfolio of businesses focused on creating, packaging and distributing branded content.
  • Time Warner and Time Warner Cable would each have greater strategic flexibility and each would have a capital structure that better suits their respective needs.
  • The separation would provide investors with greater choice in deciding whether to own shares of Time Warner or Time Warner Cable or both companies based on their separate portfolios of businesses and assets.

What regulators ultimately think about the deal will probably take at least a year to learn, but reaction from Wall Street and both political parties was decidedly negative. AT&T’s decision to pay half the purchase price in cash worries investors more than the remainder of the cost paid in stock. AT&T’s stock price is falling, upsetting investors concerned about AT&T’s dividend, and the market may be signaling concern the merger might be a mistake of epic proportions similar to the disastrous $164 billion AOL-Time Warner merger in 2000.



Tom Eagan, an analyst with Telsey Advisory Group, said owning Time Warner for its content didn’t make much financial sense when it could license it for considerably less, as it does now.

“Why buy the cow when you get the milk for free?” Eagan wrote his clients.

Many analysts are wondering what changed Bewkes’ thinking that led to him spinning off Time Warner Cable in 2009, with his decision to sell in 2016. Time Warner got rid of its video distribution business because consumers were increasingly looking for alternatives to cable television. In 2000, that came primarily from satellite providers. Today it’s cord cutting.

Combining AT&T and Time Warner would create a mega-corporation that would own or control many of the largest cable networks and a major Hollywood studio and allow AT&T to maintain absolute control over how that content was distributed. Shareholders were concerned about the price tag of the deal, driving shares down in both companies. Combining AT&T’s existing debt with Time Warner will leave the combined company saddled with $175 billion in debt — a massive amount of money that may not be financed at near zero percent interest for long, if the Federal Reserve boosts interest rates. Moody’s has put AT&T’s credit ratings up for review for a possible downgrade as a result.

Both Republicans and Democrats reacted with unease about the prospect of creating another Comcast/NBCUniversal-sized entertainment company. Almost all were skeptical about the benefits to consumers. AT&T’s competitors seemed even more chilled, fearing AT&T’s control of both the content and the means to distribute it would give the juggernaut an unfair advantage. For example, AT&T could give itself a discount to carry Time Warner programming on U-verse and DirecTV that would be unavailable to competitors. It might also take a harder line on competing providers at contract renewal time.

Some regulators and politicians believe bigger has not proved better for consumers in the telecom space, particularly after seeing the results of Comcast merging with NBCUniversal. Critics contend Comcast has never taken the deal’s approving consent decree seriously, and have dragged their feet on adhering to the deal’s many conditions. Consumers have gotten almost nothing from the merger except higher cable bills.


Analysts predict AT&T will do everything possible to minimize regulator review of its deal. The first step will be to eliminate the FCC from the deal review process, which is a very real possibility considering Time Warner and AT&T have few deal-related FCC-issued licenses beyond a single independent television station in Georgia owned by Time Warner. That station could be sold or transferred to a separate entity within months. The deal will get a mandatory review by the Justice Department, looking for evidence of antitrust. AT&T plans to claim the merger combines two entirely different companies and won’t have any implications on competition.

Critics of the deal think otherwise, pointing to the potential of favoring AT&T over cable companies with lower programming rates. Net Neutrality proponents are also concerned about AT&T’s practice of zero rating its own content, which gives AT&T a competitive advantage in the wireless space.

New Update/Upgrade Scam Hits Cable Customers; Beware of Phishing E-Mails

Phillip Dampier October 19, 2016 Consumer News, Cox, Public Policy & Gov't No Comments

scamSeveral Arizona residents have reported receiving e-mail allegedly from Cox Communications requiring customers to update or upgrade their account, but in reality, the e-mail comes from a group of fraudsters trying to commit identity theft. The Pima County Sheriff’s Office has sent an open warning alerting cable customers in Arizona and beyond that if you receive an e-mail claiming you need to update or upgrade your account, disregard it, especially if it carries a deadline that warns your service will be disconnected if you don’t respond within a matter of days.

Customers who click on a link in the email will be taken to a phony Cox Communications website, where you will be prompted to provide your username, password and birth date. The sheriff’s office warns providing this information could start a series of criminal events that will not end well:

Why does this company need your birthdate? They want to steal from you. Do not provide any information to the purveyors of this scam.

Two vital pieces of information the fraudsters are always looking for are your date of birth and Social Security number. Anytime you are asked for this information over the phone in a call you did not initiate, or in an email from an unknown source, stop and ask, “Why?” Who wants to use this information?

If you receive requests that you have not initiated or you have not placed the call — a red flag should appear. Do not provide this information unless you know for a fact to whom you are speaking.

Your date of birth and/or Social Security number give the fraudsters have all the information they need to begin identity theft. The scammers can now open accounts in your name, make high-volume charges and ruin your credit. They are capable of doing this without your knowledge.

If they were to attack your established accounts first, your bank or credit card company may notify you of possible unauthorized activity. However, we have knowledge of unauthorized accounts operating for long periods of time while making large-dollar purchases. The scammers make minimal payments until the account is maxed out. Since the statement comes to a phony address established by them, the credit card company has to make a concerted effort to locate you because you no longer are making payments on this “zombie” account. When the company finally calls you, you are in shock! You had no knowledge of this account.

The Pima County Sheriff’s Office recommends consumers obtain a free credit report every four months by staggering requests for a free annual credit report from the three major credit reporting agencies. This will identify any new accounts you might be unaware of and prevent identity thieves from causing catastrophic damage to your credit score and reputation.

  • EQUIFAX: P.O. Box 740241, Atlanta, GA. 30371, 1-888-766-0008.
  • EXPERIAN: 701 Experian Pkwy. Allen, TX. 75013 1-888 EXPERIAN (397-3742)
  • TRANSUNION: Fraud Victim Assistance Div., P.O. Box 679, Fullerton, CA. 92834-6790. 1-800-680-7289.

A yearly report including credit reports from all three agencies is also obtainable at no cost by calling 1-877-322-8228 or visiting www.annualcreditreport.com.

Charter’s New Hard Line on Promotions for Time Warner Cable/Bright House Will Drive Customers to the Exit

charter-twc-bhCharter Communications is taking a hard line against extending promotional pricing for Time Warner Cable and Bright House Networks customers and Wall Street predicts a major exodus of customers as a result.

UBS analyst John Hodulik predicts Charter’s new ‘Just Say No to Discounts’-attitude will result in customers saying ‘Cancel’ and he estimates a massive loss of at least 75,000 Time Warner Cable television customers in the third quarter as a result, with many more to follow.

Charter Communications’ executives have ordered a hard line against giving existing customers discounts and perpetually renewing promotional pricing, a practice Time Warner Cable has continued since the days of the Great Recession to keep customers happy.

Time Warner Cable and to a lesser extent Bright House have learned antagonized, price-sensitive customers were increasingly serious about cutting cable’s TV cord for good when the cost becomes too high to justify. Time Warner Cable dealt with this problem by giving complaining customers better deals, often repeatedly. That mitigated the problem of customer loss, allowed the company to retain and grow cable television customers and even helped minimize the practice of promotion shopping common in competitive service areas.

For years, Time Warner and Bright House customers learned they could enroll in a year-long promotion with the cable operator and then switch to a year-long new customer promotion from AT&T U-verse or Verizon FiOS and then jump back to the cable company with a new promotion. In many cases, they even got a gift card worth up to $300 for their trouble. Charter Communications thinks their new “pro-consumer policies” of not charging rapacious equipment fees and sticking to “simplified” prices will delight customers enough to keep their loyalty. Good luck.

Licensed to print money

Licensed to print money

Wall Street doesn’t believe Charter’s reputation or their ‘New Deal’ for TWC and BH customers will be perceived as making things better, especially for cable television and its cost. As customers roll off promotions at Time Warner Cable, the bill shock of watching rates rise up to $65 a month will speak for itself. The higher the price hike, the more likely it will provoke a family discussion about dropping cable television service for good.

In Los Angeles and Texas, where Charter premiered its new “simplified pricing” for Time Warner Cable customers, the response has been underwhelming, with many customers deriding it as “simply a price hike.”

David Lazarus, a reporter for the Los Angeles Times, characterized the transition from TWC to Charter this way: “Meet the new cable company. Same as the old cable company.”

Culver City resident Jack Cohen provides good evidence of what happens when customers get their first bill from Charter, and it is higher than expected. Cohen received his first bill for $162, $22 more than his last Time Warner Cable bill of $140 a month, because his promotion with TWC expired. As a result, he canceled cable television after Charter wouldn’t budge on pricing. Cohen said “cancel” and never looked back. He now pays the new cable company $40 less than he gave Time Warner Cable, because he now only subscribes to broadband and phone service. Charter’s ‘simplified pricing’ cost the cable company more than the $22 extra they were originally seeking.

Lazarus learned when his own TWC promotional package expires in December, Charter had a great Christmas present waiting… for themselves. Lazarus’ $65 promotion will rise to $120 a month — almost double what he used to pay. But Charter also offered Lazarus a better deal he can refuse, a new Charter-Spectrum package of the same services for the low, low price of $85 a month — still a 30% rate hike.

In Texas, customers coming off promotions are learning first hand how Charter intends to motivate customers to abandon the Time Warner Cable packages Charter promised they could keep — by making them as unaffordable as possible and offering slightly less expensive Charter/Spectrum packages as an alternative.

“But it’s still $45 more than what I was paying Time Warner Cable for the same damn thing,” complained Ty Rogers to a Charter retention specialist, after his Time Warner Cable shot up once Charter took over. He is waiting for Google Fiber to arrive and then plans to cancel everything with Charter.

Charter’s billing practices also are dubbed the weirdest in the cable industry by The Consumerist, because Charter loves to hide taxes, surcharges, and fees by rolling them into other charges on the bill and cannot be accurately accounted for:

Charter breaks out federal, state, or local taxes and fees for some services (TV) but not for others (voice). Also, depending where you live and when you signed up for services, the taxes, fees, and surcharges that do appear may be listed under different sections of the bill or not at all.

While their procedure does result in many fewer line items for consumers, it does produce more confusing bills overall, and make it harder to compare against other providers in a truly apples-to-apples kind of way.

‘No, no, no,’ counters Charter/Spectrum to FierceCable.

“Our internet packages are competitively priced, but we offer faster starting speeds and don’t charge an additional modem lease fee on top of the cost of service (that is an additional $10 at legacy TWC),” Charter spokesman Justin Venech said. “That pricing is better and more attractive to customers. Our video packages are simpler and more robust. For example, our Spectrum Silver package includes over 175 channels plus premium channels HBO, Showtime and Cinemax while a comparable TWC package would have charged extra for premiums.  We don’t add on additional fees and taxes to our voice product that our competitors do, and our equipment pricing for video set-top boxes are much lower with Spectrum than our competitors or legacy TWC or BHN.  Our new Spectrum pricing is $4.99 for a receiver vs over $11 at legacy TWC.”

“That assumes, like every cable company always does, that we want HBO, Showtime, and Cinemax, don’t already own our own cable modem, and are not dancing in the streets over an even bigger television package filled with crap we don’t want,” said Rogers. “Charter also takes away Time Warner’s excellent long distance phone service, which let me call almost all of Europe without any toll charges or an extra cost calling package. I paid Time Warner $10 a month and could talk to someone in France all night long if I wanted. With Charter, it’s more for less.”

Rogers’ promotion included his DVR in the promotion, so comparing Charter’s $4.99 vs. TWC’s $11 for a DVR made no difference to him either.

“You can argue all day about the ‘value’ you are offering, but you can’t argue your way out of a bill that is $45 higher than last month,” Rogers complained.

Overall, the latest spate of cable mergers and AT&T’s acquisition of DirecTV has been bad news for consumers, who face fewer competitive prospects and a new, harder line on promotional pricing. AT&T customers are discovering AT&T is more motivated to get U-verse TV customers to switch to DirecTV and less interested in providing discounts. The cable competition knows that, making fighting for a better deal much tougher if Charter’s only competitor in an area is AT&T. Cable operators also understand there is a built-in reluctance to switch to satellite by a significant percentage of their customers.

Charter’s pre-existing customers not a part of the TWC/BH merger are not too happy with Charter’s Spectrum offers either. At least 152,000 video customers said goodbye for good to the cable operator’s television packages.

Hodulik predicts there are more where that came from as the rest of the country gradually discovers what Charter has in store for them.

Three More Frustrated Frontier Employees Speak Out: Our Customers Deserve Better

lilyFrustration at Frontier Communications doesn’t stop with customers. Employees are also speaking out about the company’s inability to manage their growing acquisitions and offer good service to customers. Others are confused about major company priorities and initiatives that suddenly get dropped, and customer service representatives feel like they are cheating customers selling them products and services that are better in name only.

Three employees this month provided unsolicited letters asking Stop the Cap! to publicize the problems at Frontier because their managers are not listening and they want corporate management to step in and make necessary changes.

“Sally” (we have chosen pseudonyms to protect the authors’ identities) is a customer service representative at a major Frontier call center in Florida. She is saddened by the company’s “Wells Fargo” culture — pushing customers to buy products and services they don’t need just to make their sales numbers.

“Frontier has been pushing us hard to sell customers on our Frontier Secure suite of products, which adds anything from $5 to $25 to your bill and is supposed to protect you from identity theft, damaged devices, viruses, and provide technical support for your electronics,” Sally tells Stop the Cap! “Unfortunately, it sounds much better than it actually is because there are so many exclusions and restrictions. I’ve heard complaints from customers who bought into the program thinking it would protect their home computer, but then after a lightning strike did its damage, it turns out Frontier doesn’t cover “home-made” computers which means anything other than a computer you buy in a store and never upgrade.”

Sally recounts stories about her managers pushing Frontier Secure at every opportunity, because the profits that come from providing services many customers will never use are astounding.

Frontier has a plain jane blog.

Frontier has a plain jane blog.

“They even push us to sell virus protection on tablets and smartphones like the iPhone, which is generally ridiculous,” Sally wrote. “What is horrifying to me is that the people most likely to say yes to our sales pitches are our elderly customers who have simple landlines and we’re not even sure they have a computer to protect. But they like the identity protection, which is supposed to monitor your credit and cancel your credit cards if your identity is stolen. What we don’t tell you is you can do most of that yourself for free and if you call a bank to report identify theft, they can notify every bank to either put a hold on your credit or reissue new cards. It costs nothing.”

Sally says Frontier’s “Premium Technical Support” often relies on employees Googling for instruction manuals and then reading them back to customers. That service starts at $12.99 a month.

“Instead of selling people better internet access or more reliable phone service, we’ve gone into gimmicks and it’s embarrassing,” reports Sally.

“Jim” is a former Verizon senior technician who is now working for Frontier Communications in Texas. He says he spends several hours a day navigating confusion between Verizon’s long-standing processes for managing network issues and his new supervisors who are dealing with Frontier’s completely different corporate culture.

frontier new logo“If you ever wondered why it takes so long to get something done with Frontier, I can tell you — it’s the bureaucracy and a culture clash between the two companies,” writes Jim. “Working for Verizon’s wireline division was already stressful over the years because they were not investing very much in wired services and we’d learn to manage that by hoarding things and trying to keep issues as local as possible, but Frontier is a giant headache. When a customer needs something from us, often we cannot give the customer a good estimate of when he or she will get what they need because we don’t know ourselves. But we are told to ‘be optimistic’ or ‘be vague’ which is why there are a lot of broken deadlines or disappointments. They never tell us to lie, but we cannot level with customers either because many will bolt to Time Warner Cable or Charter if we told them the God honest truth. We have business and residential customers promised certain broadband performance by sales that we cannot give them because they are not FiOS-enabled. If you were promised 75Mbps and got 6Mbps, you’d start shopping around, too.”

Jim writes the cutover between Verizon and Frontier would have gone much smoother if the company culture of “not in my job description” was not so pervasive.

Who cares if the fine print is in English.

Who cares if the fine print is in English.

“Frontier was given old data from Verizon because we haven’t spent serious money on certifying the accuracy of our databases in years and nobody bothered to verify it before acting on it, and that is why a lot of customers lost their service,” writes Jim. “Verizon is at fault here too because when you work at a giant company like this you learn the company culture is to know your job responsibilities and don’t exceed them. Frontier people seem to be more flexible to a point, but they are also real good at avoiding getting caught holding the bag when something goes wrong, so important tasks or ongoing problems can be neglected because nobody wants to get the blame or feel like they are exposed when management shows up wondering why things aren’t working right.”

“It can be a career and promotion death sentence to be someone willing to stick their neck out and solve problems if your manager or their manager doesn’t like what you’ve done, actually helped create the problem you are trying to solve, or if you are perceived as ‘too negative.'”

Paul, a Frontier Communications employee in the mid-Atlantic region, echoes Jim’s concerns that managers don’t really appreciate hearing criticism. Paul is one of the many workers tasked with keeping Frontier’s website and e-commerce functions up and running. A former Verizon worker, Paul has been shocked by the ineptness of management that has resulted in some serious embarrassments at Frontier.

Frontier’s website is unique among significantly sized telecom companies because one cannot actually place an online order for service or even provide accurate speed and pricing information because the company gave up on trying to make sure those features were reliable. Paul reports managers were warned about the functionality problems but refused to listen.

“[They tell] employees to take ownership of issues, yet when we try to do that very thing we are overruled and our opinions are discounted at every turn,” writes Paul. “Prior to the very first rollout of [Frontier’s redesigned] website I informed [management] that the site had severe performance issues, but was told […] I needed to keep my opinions to myself and the vice president decided to launch the site anyway.”

As a result, Frontier’s website crashed and remained offline and/or disabled for a week, reports Paul.

Another satisfied customer in Texas?

Another satisfied customer in Texas?

Out of the blue “priorities” also suddenly arise that require workers to scramble, with less than excellent results. One day, managers told the software team there was an urgent need to launch Spanish language functionality for the website. But because of the rush, employees not well-versed in the language produced a Spanish-language website that has been derided by customers for its frequent use of “Spanglish” and lack of professionalism.

“They pushed Spanish language very hard and told us that it HAD to be in production before the April 1st cutover with Verizon because of the high frequency of Verizon customers that were used to this feature,” writes Paul. “Once we put it out there, every time there is an issue with Spanish on our site they tell us that it’s only one percent of traffic so they aren’t all the that concerned with it. Then when there is an issue with it they ask us why we didn’t test it. But they refused to give us the needed time to test it because they just wanted to push it out the door and move on to the next project.”

Paul also echoes what Sally in Florida is concerned about — a lack of integrity in Frontier’s marketing department.

“I have never worked for a more unethical company and I used to work for Verizon so that is saying something,” writes Paul. “[Frontier charges] customers for ‘Digital Phone Service,’ but it’s really just copper facilities. They call it “Digital” because it is working out of a digital switch. They change verbiage to make something sound better than what it really is. They say we have a 100% U.S.-based company but then hire IT folks overseas to do some of the work. They spend more money on sponsoring football teams than they do upgrading equipment and infrastructure.”

Charter Watch: Slashing Time Warner Cable’s Accounting Office in Charlotte

charter-watchCharter Communications is wasting no time looking for increased shareholder value by slashing jobs in states where regulators placed few, if any conditions on the acquisition of Time Warner Cable and Bright House Networks.

The Charlotte Agenda reports North Carolina-based Time Warner Cable employees are just starting to feel the pain of the multi-billion corporate cable merger, with the elimination of 258 jobs in Time Warner Cable’s accounting department in Charlotte. Nearly 20% of the workforce, including 70 senior accountants, 45 staff accountants, 44 accounting supervisors or managers, and an even larger number of finance analysts and accounts payable specialists will be collecting unemployment starting Nov. 1 and extending through the second quarter of 2017.

Company officials claim affected employees can seek employment with Charter Communications at other office locations around the country.

North Carolina regulators effectively rubber-stamped the acquisition of Time Warner Cable in granting its approval. The only condition Charter Communications has to meet is notifying North Carolina’s Department of State Commerce at least 30 days before those unlucky employees are out of a job.


Time Warner Cable’s Dirty Little Secret: Cable TV Copy Protection

Time Warner's Enhanced DVR works fine, but those avoiding TWC equipment run into DRM problems.

Time Warner’s Enhanced DVR works fine, but those avoiding TWC equipment run into DRM problems.

If you’re accustomed to using Time Warner Cable’s DVR box, you probably don’t realize how heavy-handed Time Warner Cable can be with copy protection, but as set-top box alternatives proliferate, more customers are encountering the frustration of digital rights restrictions.

For several years, customers using alternatives to Time Warner’s set-top boxes or who wanted to store their DVR recordings on another hard drive quickly discovered the cable operator heavily enforces copy protection mechanisms designed to thwart digital archival copies of programs recorded from cable television.

Copy Control Information (CCI) is an invisible flag sent in digital television signals that is designed to give control to copyright owners over how their shows can be duplicated. Since at least 2007, Time Warner Cable and Bright House Networks customers have been frustrated if they use their own DVR or devices like TiVo. When customers attempt to copy their recorded shows to other devices or playback units in their home, the CCI flag often stops the copy cold.

ZatzNotFunny has covered this issue for years, noting Time Warner Cable, Bright House, and Cox have been particularly unfriendly to third-party set-top boxes like TiVo.

Among cable operators, the most common flags are Copy Freely and Copy Once. Many cable operators set their basic cable network CCI flags to “copy freely,” while premium pay movie channels like HBO are set to “copy once” — primarily to allow time-shifting devices like a DVR to record the show. Once your DVR has a copy of a show with a restricted flag, it cannot be copied again.

Digital Rights Management policies are part of the nation’s struggle between Hollywood-inspired copy protection and the public’s right to make and store recordings of programming for their own personal use. Some telecom companies like Verizon and Comcast have come down more in favor of consumers, while Time Warner Cable and Bright House (which have traditionally shared engineering practices and programming contracts for at least a decade) are far more responsive to Hollywood. The result for subscribers with $200 cable bills is endless frustration, especially if they choose not to use the pricey set-top boxes and DVRs supplied by the TWC or Bright House.

CableCARD and TiVo users, as well as those relying on Extenders for Windows Media Center like the Xbox 360 are often stymied by CCI flags, especially when a consumer tries to watch a show in one room and finish it in another using Multi-Room Viewing features.

ZatzNotFunny rates TWC, Bright House and Cox as unfriendly to alternative set top boxes like TiVo. (Image: ZatzNotFunny)

ZatzNotFunny rates TWC, Bright House and Cox as unfriendly to alternative set-top boxes like TiVo. (Image: ZatzNotFunny)

Wikipedia supplies insight into the available CCI options cable operators can choose to use for cable television channels:

  • 0x00 – Copy freely – Content is not copy protected.
  • 0x01 – Copy No More – A copy of the content has already occurred and no more copies are permitted.†
  • 0x02 – Copy Once – One recording can be made, but it cannot be copied to another device.†
  • 0x03 – Copy Never – the content can be recorded and viewed for 90 minutes after transmission, and is not transferable.†
  • 0x04 – Content is Copy Once for digital output, but would have Macrovision 7 Day Unlimited restriction applied on the analog outputs. This affects content viewed either on an HDTV with component cabling or on a standard definition TV. It also affects content saved to VCR or DVD when the recorder is connected to an analog output on the DVR.†
  • 0x07 – Content is Copy Never for digital content (deleted after 90 minutes) and Macrovision 7 day/24 hour for content recorded from analog channels. Content cannot be transferred via TiVoToGo transfers or MRV, and cannot be saved to VCR or DVD.†

† – Any live stream with a CCI flag set higher than 0x00 is to be encrypted or protected in a way that only trusted platforms that will obey the flag (Such as Microsoft’s PlayReady system used in Windows Media center) can access it.

A Time Warner Cable customer known as MachineShedFred noticed this problem first hand and wrote about it in a complaint to Time Warner Cable back in March, and Stop the Cap! reader Chris N. pointed us to this ongoing issue:

The only software that allows me to use the CableCARD hardware that you officially support and distribute is Windows Media Center, which Microsoft is no longer developing, and is no longer distributing.  All other DVR software available for every platform will not work, as they cannot decrypt the video stream due to the abuse of the CCI flag.

No other cable company in the US abuses the CCI flag in this manner, and every other cable subscriber in the US that isn’t on Time Warner has a wide choice of solutions for enjoying their service better than we can as your subscribers.  Why are you restricting the choices of your subscribers for no reason?  It’s clearly not contractual from the media networks, as they would have pushed for the same stipulations with at least one of your competitors.  Yet, anyone outside of TWC’s monopoly can use any other software they want.

When even Comcast allows their subscribers more subscriber-friendly choices, you know you’re doing it wrong.  Please revisit this ridiculous policy and cease the overuse of the CopyOnce CCI flag that unduly burdens your subscribers by forcing them to replace perfectly good hardware, or replace YOU.

word-saladSome believed this problem could eventually resolve itself with Charter Communications’ buyout of Time Warner Cable and Bright House Networks. Would Charter bring their own policies to affected TWC/BH customers, or will Charter customers soon have to contend with the CCI CopyOnce flag loved by Time Warner Cable as well.

An official complaint to the FCC brought a cryptic non-answer answer from William Wesselman, Time Warner Cable’s regulatory compliance counsel. Wesselman implied the liberal use of the CCI  CopyOnce flag was the result of restrictions in contracts with major programmers, which seems unlikely because other cable operators — larger and smaller — have successfully navigated around this issue. Wesselman’s answer implies as Time Warner Cable and Bright House are brought into the Charter hegemony, “the policies of the two companies will ultimately become the same.”

Of course, he never defines which policy Charter, TWC and BH customers across the country will eventually get by sometime in 2017.

Mr. Wesselman’s full response:

At this time, TWC and Charter continue to integrate their two systems into one. Both TWC and Charter, like other distributors of multichannel video programming, negotiate the distribution rights for the content it carries independently with individual rights holders. These bilateral commercial negotiations take into consideration many different factors, include the content protection and digital rights management requirements of the rights holder; applicable law, license and regulations; and the interests of subscribers. Each of these commercial negotiations, and the terms of the agreements that result, are unique to the specific distributor and programmer involved. As the integration of the two companies continues, Mr. X will notice that the policies of the two companies will ultimately become the same based on our agreements.


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