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CenturyLink: Usage-Based Billing That Makes No Sense, But Will Earn Dollars

followthemoneyCenturyLink will begin a usage-based billing trial in Yakima, Wa., starting July 26 that will combine usage caps with an overlimit fee on customers that exceed their monthly usage allowance. The trial in Washington state may soon be a fact of life for most CenturyLink customers across the country, unless customers rebel.

Already at a speed disadvantage with its cable competitors, CenturyLink will likely alienate customers with a new 300GB usage cap on DSL customers who can manage speeds up to 7Mbps, and 600GB for those lucky enough to exceed 7Mbps. Customers will be given a browser-injected warning when they reach 65% and 85% of their allowance. If a customer exceeds it, they will have overlimit fees forgiven twice before the usual de facto industry overlimit penalty rate of $10 for 50 additional gigabytes will be added to their bill, not to exceed $50 in penalties for any billing cycle.

DSL Reports received word from readers in Yakima they had the unlucky privilege of serving as CenturyLink’s first test market for hard caps and overlimit fees, and was the first to bring the story to the rest of the country.

CenturyLink hasn’t wanted to draw much attention to the usage-based billing change, quietly adjusting their “excessive usage policy FAQ” that takes effect on July 26. But it has begun directly notifying customers who will be enrolled in the compulsory trial.

“Data usage limits encourage reasonable use of your CenturyLink High Speed Internet service so that all customers can receive the optimal internet experience they have purchased with their service plan,” states the FAQ.

But counterintuitively, CenturyLink will exempt those likely to consume even more of CenturyLink’s resources than its low-speed DSL service allows by keeping unlimited use policies in place for their commercial customers and those subscribed to gigabit speed broadband.

CenturyLink’s justification for usage caps with customers seems to suggest that “excessive usage” will create a degraded experience for other customers. But CenturyLink’s chief financial officer Stewart Ewing shines a light on a more plausible explanation for CenturyLink to slap the caps on — because their competitors already are.

“Regarding the metered data plans; we are considering that for second half of the year,” Ewing told investors on a conference call. “We think it is important and our competition is using the metered plans today and we think that exploring those starts and trials later this year is our expectation.”

CenturyLink's overlimit penalties (Image courtesy: DSL Reports)

CenturyLink’s new overlimit penalties (Image courtesy: DSL Reports)

In fact, CenturyLink has never acknowledged any capacity issues with their broadband network, and has claimed ongoing upgrades have kept up with customer usage demands. Until now. On the west coast, CenturyLink’s competitors are primarily Comcast (Pacific Northwest) and Cox Communications (California, Nevada, Arizona). Both cable operators are testing usage caps. In many CenturyLink markets further east, Comcast is also a common competitor, with Time Warner Cable/Charter present in the Carolinas. But in many of the rural markets CenturyLink serves, there is no significant cable competitor at all.

Usage Cap Man is back.

Usage Cap Man is back, protecting high profits and preserving the opportunity of charging more for less service.

As Karl Bode from DSL Reports points out, for years CenturyLink has already been collecting a sneaky surcharge from customers labeled an “internet cost recovery fee,” supposedly defraying broadband usage and expansion costs. But in the absence of significant competition, there is no reason CenturyLink cannot charge even more, and also enjoy protection from cord-cutting. Customers who use their CenturyLink DSL service to watch shows online will face the deterrent of a usage cap. Customers subscribed to CenturyLink’s Prism TV will be able to access many of those shows on-demand without making a dent in their usage allowance.

For years, American consumers have listened to cable and phone companies promote a “robust and competitive broadband marketplace,” providing the best internet service money can buy. But in reality, there is increasing evidence of a duopoly marketplace that offers plenty of opportunities to raise prices, cap usage, and deliver a substandard internet experience.

As Stop the Cap! has argued since 2008, the only true innovations many phone and cable companies are practicing these days are clever ways to raise prices, protect their markets, and cut costs. Consumers who have experienced broadband service in parts of Asia and Europe understand the difference between giving customers a truly cutting-edge experience and one that requires customers to cut other household expenses to afford increasingly expensive internet access.

We recommend CenturyLink customers share their dislike of CenturyLink’s style of “innovation” in the form of a complaint against usage caps and usage-based billing with the FCC. It takes just a few minutes, and adding your voice to tens of thousands of Americans that have already asked the FCC to ban usage caps and usage pricing will keep this issue on the front burner. It will help strengthen our case that providers must stop treating internet usage as a limited resource that has to be rationed to customers. Wall Street believes the FCC has given a green light to usage caps and usage pricing, and the risk of attracting regulator attention by imposing higher broadband prices on consumers is pretty low. We need to change that thinking so analysts warn providers against being too greedy, out of fear the FCC will impose a regulatory crackdown.

CenturyLink to Test Metered Billing (Comcast Already Is, and Wall Street Asked)

followthemoneyCenturyLink is planning to trial usage caps on its broadband service later this year, not to reduce congestion or to bank the extra money for service upgrades, but to boost revenue and profits.

Stewart Ewing, chief financial officer at CenturyLink, told Wall Street analysts the company was on board with usage caps and usage billing primarily because its biggest competitor (Comcast) is already implementing a similar program in many of its markets. It’s that kind of “competition” many customers say they could do without.

“Regarding the metered data plans; we are considering that for second half of the year,” Ewing told investors on a morning conference call. “We think it is important and our competition is using the metered plans today and we think that exploring those starts and trials later this year is our expectation.”

No details about the test markets or range of usage allowances were made available by Ewing, but CenturyLink is under pressure by Wall Street to improve its revenue after raising prices and tightening credit standards on its customers. The combined impact of rate hikes and a tighter credit qualification policy led CenturyLink to lose 22,000 broadband customers during the last quarter, many who simply stopped paying the bill.

CenturyLink has been under pressure by Wall Street to put usage caps and usage pricing on its broadband service for over a year.

David Barden from Bank of America called data caps “an opportunity” for CenturyLink to rake in more dollars from customers by using misleading pricing to trick customers.

Post

Post

“We have been seeing a lot of the cable companies experimenting with data caps and metering higher-end usage,” Barden told CenturyLink executives on the conference call. “It seems like the FCC is not pushing back on this and it feels like it could be a big opportunity for telcos to, if nothing else, price underneath the cable umbrella and start to raise rates from high-end users.”

In plain English, Barden wants companies like CenturyLink to make customers believe they are getting a better deal from a lower price, at least until customers actually use the service. Then, the rate increases from usage caps and overlimit fees begin.

Glen Post, CEO of CenturyLink, is still committed to believing CenturyLink is in a good position to add broadband customers, despite the forthcoming trials of usage caps and overlimit fees. He defines 40Mbps broadband from CenturyLink as the speed that will “address most of our customers’ actual needs.”

prism tvCenturyLink now has 940,000 households connected to its Gigabit Passive Optical Network (GPON), many for its Prism TV service. Another 490,000 businesses also have access to CenturyLink’s GPON network, primarily for broadband. Post claims more than 30% of the company’s service area is now served with broadband speeds of 40Mbps or greater.

In 2016, CenturyLink expects to spend $1.2 billion on upgrades for its broadband network and capacity. In comparison, in 2015 CenturyLink spent $1 billion repurchasing shares of its own stock and another $1 billion on dividend payouts – both to benefit shareholders.

At present, CenturyLink has around a 15% market share in its GPON-enabled markets (the company didn’t say what its market share was where legacy copper wire infrastructure still dominates). Post believes that gives the phone company enormous room to grow, assuming its customers can pass credit checks and do not mind their broadband service data-capped. Like many phone companies looking for the biggest return on investment, Post noted CenturyLink will pay extra attention to wiring Multiple Dwelling Units (MDUs) — apartment buildings, condos, etc. — where the company can bring fiber service at a lower cost than wiring each home and business.

Corporate Welfare: Congress Gives Big Telecom Accelerated and Bonus Depreciation Extensions

Phillip Dampier December 16, 2015 AT&T, CenturyLink, Consumer News, Public Policy & Gov't, Verizon 10 Comments

corporatewelfareIn the darkness of night, Congress on Tuesday handed some of America’s largest telecom companies a huge tax windfall allowing many to continue taking a special 50% depreciation bonus that slashes their tax bills on new equipment purchases, winning substantial reductions in their federal tax bills.

CenturyLink had been heavily lobbying House Speaker Paul Ryan (R-Wis.) and other House leaders to extend a “temporary tax provision” that was designed to stimulate corporate spending on capital investments during the height of the Great Recession. Stimulus programs like these have allowed corporations like AT&T and Verizon to pay virtually no federal taxes at all for multiple years in a row. AT&T was the second biggest tax provision/corporate welfare recipient in the country, Verizon was fifth according to Citizens for Tax Justice. Between 2008-2012 taxpayers effectively covered the $19.2 billion in federal tax not paid by AT&T and $11.1 billion not paid by Verizon.

The two words that make it possible are: Accelerated Depreciation

Telecom companies, particularly those with wireless assets, are benefiting from the “temporary” stimulus program introduced by President George W. Bush in the last year of his second term because most are capital-intensive, spending regularly to expand, maintain, and upgrade their networks. CenturyLink has taken advantage of accelerated depreciation to invest billions in fiber network expansions to reach cell towers and businesses and on residential broadband speed upgrades the company claims would not have come so quickly without the tax savings.

Mobile companies like AT&T and Verizon Wireless are some of the largest beneficiaries of the stimulus program, using accelerated depreciation to write off expenses for cell tower expansion, network densificiation, and deployment of services like 4G LTE. In most cases, “accelerated depreciation” is technically a tax deferral, but because these companies maintain constant investment in network development and upkeep, the tax man never actually arrives at the door to collect.

Heavy lobbying from beneficiaries not only succeeded in getting the program’s expiration date extended, the Obama Administration agreed to expand it at the end of 2013. Companies slashed tens of billions off their tax bills as a result. A report from the Congressional Research Service, reviewing efforts to quantify the impact of depreciation breaks, found that “the studies concluded that accelerated depreciation in general is a relatively ineffective tool for stimulating the economy.”

Citizens for Tax Justice added:

Combined with rules allowing corporations to deduct interest expenses, accelerated depreciation can result in very low, or even negative, tax rates on profits from particular investments. A corporation can borrow money to purchase equipment or a building, deduct the interest expenses on the debt and quickly deduct the cost of the equipment or building thanks to accelerated depreciation. The total deductions can then make the investments more profitable after-tax than before-tax.

The latest budget bill, passed Dec 15-16, extends the tax breaks until 2018 when the bonus drops to 40%, 30% in 2019, and zero in 2020.

ConnectHome: President Obama Announces Affordable Broadband Options for the Poor

google fiberWASHINGTON/DURANT, Okla. (Reuters) – U.S. President Barack Obama announced a pilot project on Wednesday aimed at expanding broadband access for people who live in public housing, part of an effort to close what Obama called the “digital divide” between rich and poor.

Eight Internet service providers, including Google Inc and Sprint Corp, have signed on to make the Internet cheaper and more accessible in 27 cities and the Choctaw Tribal Nation in Durant, Oklahoma.

Private and public institutions have pledged to invest $70 million in the plan. The federal government is only contributing $50,000, Julian Castro, the secretary of Housing and Urban Development, told reporters on a conference call.

The initiative will reach 275,000 households with almost 200,000 children.

centurylink“While high-speed Internet access is given for millions of Americans, it’s out of reach for far too many,” Obama said at Durant High School to a crowd that included many children in traditional tribal garb.

The Choctaw Tribal Nation is working with four local providers to bring the Internet to 425 homes.

In Atlanta, Durham, Kansas City and Nashville, Google will provide free Internet connections in some public housing areas.

COX_RES_RGBIn select markets, Sprint will offer free wireless broadband access to families with kids in public housing. In Seattle, CenturyLink Inc will provide broadband service for public housing residents for $9.95 a month for the first year.

Cox Communications Inc [COXC.UL] is offering home Internet for $9.95 a month to families with kids in school in four cities in Georgia, Louisiana and Connecticut.

The program also includes free training and technical support. Best Buy Co Inc will offer free training to the Choctaw Tribal Nation and in some cities, the White House said.

(By Alex Wilts and Julia Edwards; Reporting by Alex Wilts and Roberta Rampton; Editing by Alan Crosby and Lisa Shumaker)

Frontier Runs America’s Worst Website: Dead Last in 2015 Web Experience Ratings

frontier frankFrontier Communications scored dead last in a nationwide survey of websites run by 262 companies — ranked for their usability, helpfulness, and competence.

The “2015 Web Experience Ratings,” conducted by the Temkin Group, a customer experience research and consulting firm, looked at how customers feel about companies based on experiences visiting their websites. The firm wanted to know whether customers would forgive a company if its website proved less than satisfactory. The answer appears to be no, and phone and cable companies were the most likely to experience the wrath of dissatisfied customers.

“It’s ironic that many of the cable companies that provide Internet service earned such poor ratings,” Bruce Temkin, managing partner of Temkin Group, said.

Most household name cable companies did especially poor in the survey. Time Warner Cable, Comcast and CenturyLink all tied at 252nd place (out of 262 firms). But special hatred was reserved for the website run by Frontier Communications, repeatedly called “incompetent” by consumers, especially after the phone company disabled most of the website’s self-service functions in late April. A well-placed source inside Frontier told Stop the Cap! the company could not manage to get its website ordering functions working properly and simply decided to give up, forcing customers to call instead.

Only 29% of consumers were willing to forgive a telecommunications company for a lousy web experience, according to the findings. Other website disasters were run by: Cox Communications, Charter Communications, Spirit Airlines, Blue Shield of CA, and Haier.

Which websites do consumers love the most? Temkin says USAA (a bank) and Amazon.com have traded the #1 and #2 spots for the last five years.

After Seeing Broadband-a-Plenty in Longmont, Fort Collins, Colorado Wants Public Broadband Too

nextlightIt’s an acute case of broadband envy.

Residents of Fort Collins, Colo., that have an excuse to take an hour’s drive south on U.S. Route 87 to visit Longmont and experience the Internet over the community’s public broadband service can’t believe their eyes. It’s so fast… and cheap. Back home it is a choice between Comcast and CenturyLink, and neither will win any popularity contests. While large parts of Colorado have gotten some upgrades out of Comcast, Fort Collins is one of the communities that typically gets the cable company’s attention last.

The city of Longmont took control of its digital destiny after years of anemic and expensive service from Comcast and CenturyLink. Longmont Power & Communications’ NextLight Internet service delivers gigabit fiber to the home service to the community of 90,000. The service was funded with a $40.3 million bond the city issued in 2014, to be paid back by NextLight customers, not taxpayers, over time. It remains a work in progress, but is expected to start construction to reach the last parts of Longmont by next spring.

chart memberNextLight delivers a mortal blow to competitors by charging a fair price for fast service. Instead of spending to upgrade their networks to compete, the incumbents demagogued the public project and Comcast spent $300,000 of its subscribers’ money in a campaign to kill the service before it even got started. Perhaps they had a right to be worried considering NextLight customers pay $49.95 a month for unlimited 1,000/1,000Mbps service. NextLight offers 20 times the download speed and 100 times the upload speed of Comcast’s Blast! package for nearly $30 less a month.

 

After NextLight was rated America’s fastest performing Internet service by Ookla in May, residents in Fort Collins began to wonder why they were still putting up with poor service from Comcast and lousy DSL from CenturyLink.

Fort Collins is about a one hour and fifteen minute drive north of Denver.

Fort Collins is about a one hour, fifteen minute drive north of Denver.

At the same time, city officials were doing their best to leverage some modest improvements from Comcast in return for a renewed franchise agreement. All they got was a vague commitment permitting the city to monitor Comcast’s notorious customer service and two HD channels set aside for Public, Educational, and Government use, along with a $20,000 grant to help the public access channel with online streaming.

The Coloradoan urged Fort Collins officials to think big and establish public fiber optic broadband in the city.

To manage this, they will have to overcome a 2005 state law backed by Comcast and Qwest (now CenturyLink) that bans municipal telecommunications services. A local vote or federal waiver can sidestep a law that was always designed to restrict competition and make life easier for the two telecom giants.

The newspaper opines that Fort Collins is in no way ready for the digital economy of the 21st century relying on Comcast and CenturyLink.

The cable company’s attention is focused on bigger cities in the state and CenturyLink remains hobbled by its copper legacy infrastructure. While some upgrades have been forthcoming, both Comcast and CenturyLink are also testing usage caps or usage-based billing — just another way to raise the price of the service. And speaking of service, neither Comcast or CenturyLink are answerable to the communities they serve – a community owned broadband alternative would be.

As the Coloradoan writes:

We’ve got to lay the groundwork now. Society took huge steps forward when automobiles replaced the horse and carriage. And no, installing municipal broadband isn’t adopting a new mode of transportation, but it is symbolic of laying an entirely new road.

Look at it another way. The city provides needed services such as water and electricity. Internet access is a needed service.

One thing Fort Collins doesn’t absolutely need Comcast or CenturyLink. But nobody is asking them to leave. They have a choice to use their massive buying power and resources to upgrade their networks to compete. But Fort Collins residents should not have to wait for that day to come when there is a better alternative in their grasp today: public broadband.

 

CenturyLink Threatens to Pull Plug on Idaho Schools Broadband Network, Cutting Off High Schools Statewide

Phillip Dampier February 17, 2015 CenturyLink, Community Networks, Consumer News, Public Policy & Gov't, Video Comments Off on CenturyLink Threatens to Pull Plug on Idaho Schools Broadband Network, Cutting Off High Schools Statewide
Broadband... by Boss Hogg.

Broadband… by Boss Hogg.

CenturyLink has given the state of Idaho until Sunday to come up with as much as $4.2 million or it will cut off Internet access to more than 200 Idaho public high schools, potentially leaving some without Internet access for the rest of the school year.

State officials in Boise warned school officials they are on their own if the statewide Idaho Education Network (IEN) goes dark on Sunday, leaving administrators scrambling for alternative Internet Service Providers in a state dominated by CenturyLink.

Senate President Pro Tem Brent Hill told nearly 200 Idaho public school trustees Monday that the state’s broadband project will go dark Feb. 22. Districts will need to carry out their own emergency plan immediately if they want broadband access for the rest of the school year.

“This is terrible. We apologize,” said Senate president pro tem Brent Hill, speaking to nearly 200 public school trustees on Monday.

“You need to have a plan in case Internet is shut off on Sunday,” added Will Goodman, technology chief for the state Department of Education. “You need to be prepared if that plan goes into place for the rest of the school year.”

Syringa Networks sued Idaho in late 2009, arguing the state illegally blocked it from the $60 million broadband contract to favor the politically connected Education Networks of America and CenturyLink. Gov. C.L. “Butch” Otter’s administration made certain the request for bids was tailored towards the ultimate winners — close friends of Otter and Idaho’s political class. The cronyism did not extend into the courtroom, however, and after several years of legal back and forth, a judge affirmed what many suspected: the contract was illegal and declared void.

followthemoneyState law prohibits using taxpayer dollars to pay for illegal contracts, and CenturyLink has kept the network running without payment in hopes their friends in the state legislature will bail IEN out. But after months of inaction, CenturyLink announced that without immediate payment, it will cut off the network this weekend.

The prospect of hundreds of high schools losing all Internet connectivity led to seething editorials in some state newspapers.

“Students were faux poster-children on what turned out to be just another example of putting the well-connected on the public dole, while simultaneously lauding the result,” wrote the editors of the Twin Falls Times-Union. “Contracting is broken in Idaho. Corruption is too easily accepted as day-to-day business.”

The newspaper advocates writing off IEN and starting over by giving control of broadband connectivity back to local communities across Idaho, where corruption does not predominate:

The IEN is a pile of rubble. It can’t be salvaged. Only a total rebuild will suffice.

Tell the districts that rely on IEN to go find a provider. Take that $4 million sitting in the bank, targeted for the providers, and start a reimbursement fund for schools. Let local officials run it. The courts will figure out what the providers are owed for the past service. Idaho has failed and, with its culture of corruption, can’t be trusted.

As of this afternoon, it seems the state legislature is preparing to force taxpayers to cover the costs of schools switching to alternative providers. Idaho officials have approved a nearly $3.6 million stopgap measure to maintain broadband connectivity for the rest of the school year by using other providers, assuming they can be found.

KTVB in Boise reports Idaho taxpayers will be on the hook to cover public school Internet costs after CenturyLink pulls the plug on a statewide educational broadband network this weekend. (2:28)

Missouri Representative Introduces Community Broadband Ban Bill to Protect AT&T, CenturyLink

Rep. Rocky Miller (R-Lake Ozark)

Rep. Rocky Miller (R-Lake Ozark)

A Missouri state representative with a track record of supporting AT&T and other telecommunications companies has introduced a bill that would effectively prohibit community broadband competition in a bid to protect incumbent phone and cable companies.

Rep. Rocky Miller’s (R-Lake Ozark) House Bill 437 would strictly prohibit the construction of public broadband networks in any part of Missouri served by a private provider, regardless of the quality of service available or its cost, without a referendum that includes a mandated question observers consider slanted in favor of existing providers.

HB437 would banish community broadband networks as early as September unless services were already up and running. The bill would effectively stop any public broadband network intending to compete against an existing phone or cable company within the boundaries of a city, town, or village offering any level of broadband service. It would also require communities to schedule a referendum on any project budgeted above $100,000, and includes ballot language that implies public broadband projects would duplicate existing services, even if a private provider offers substantially slower broadband at a considerably higher price. (Emphasis below is ours):

“Shall [Anytown] offer [broadband], despite such service being currently offered within Anytown by x private businesses at an estimated cost of (insert cost estimate) to Anytown over the following five-year period?”

Miller’s proposal would also require voters to approve a specific and detailed “revenue stream” for public broadband projects and if the referendum fails to garner majority support, would prohibit the idea from coming up for a second vote until after two years have passed, allowing cable and phone companies to plan future countermeasures.

yay attThe proposed bill also carefully protects existing providers from pressure to upgrade their networks.

Miller’s bill defines “substantially similar” in a way that would treat DSL service as functionally equivalent to gigabit broadband as both could be “used for the same purpose as the good or service it is being compared to, irrespective of how the good or service is delivered.”

In other words, if you can reach Rep. Miller’s campaign website on a CenturyLink 1.5Mbps DSL connection and over a co-op gigabit fiber to the home connection, that means they are functionally equivalent in the eyes of Miller’s bill. Residents voting in a referendum would be asked if it is worthwhile constructing fiber to the home service when CenturyLink is offering substantially similar DSL.

Among the telecom companies that had no trouble connecting to Rep. Miller to hand him campaign contributions: AT&T, CenturyLink, Comcast, and Charter Communications

The Coalition for Local Internet Choice was unhappy to see yet another state bill introduced designed to limit competition and take away the right of local communities to plan their own broadband future.

“The state of Missouri is the latest legislature to attempt to erect barriers to the deployment of broadband networks that are critical to the future of its local economies and the nation, via House Bill 437,” said a statement released by the group. “High-bandwidth communications networks are the electricity of the 21st century and no community should be stymied or hampered in its efforts to deploy new future-proof communications infrastructure for its citizens – either by itself or with willing private partners.”

cell_towerThe group urged the Missouri legislature to reject the bill.

In 2013, Miller hit the ground running in his freshman year to achieve his campaign pledge of “getting the government out of the way of economic development.” In the Missouri state legislature, Miller strongly supported AT&T’s other state legislative priority: deregulation of cell tower placement. Miller traveled around Missouri promoting HB650, an AT&T inspired bill that would strip away local oversight powers of cell sites.

The issue became a hot topic, particularly in rural and scenic areas of Missouri, where local officials complained the bill would allow haphazard placement of cell towers within their communities.

“[The] bill inhibits a city’s ability to regulate cell towers as we have in the past,” Osage Beach city attorney Ed Rucker said. “The process we have in place has worked, and has worked well.”

Had HB650 become law, Osage Beach residents would today be surrounded by six new cell towers around the city, with little say in where they ended up. The bill Miller supported would have also eliminated a requirement that providers repair, replace, or remove damaged or abandoned cell towers, potentially leaving local taxpayers to pick up the tab.

Miller claimed the legislation would allow expansion of wireless broadband across rural Missouri and remove objectionable fees. HB650 would limit municipal fees to $500 for co-locating an antenna on a pre-existing tower and $1,500 for an application to build a new tower. Local communities complained those limits were below their costs to research the impact and placement of cell towers.

“That cost is an inhibitor to broadband,” Miller countered. “It’s beginning to look like the fees are an impediment to the expansion of broadband.”

Miller did not mention AT&T’s interest in cell tower expansion is also connected to its plan to retire rural landline service in favor of its wireless network, saving the company billions while earning billions more in new revenue from selling wireless landline replacement service over its more costly wireless network. The cell tower bill was eventually caught up in a legal dispute after a court ruled the broader bill that included the cell tower deregulation language was unconstitutional on a procedural matter.

J.D. Power & Associates Tie Vote! Hemorrhagic Fever vs. Comcast vs. Time Warner Cable

Phillip Dampier October 13, 2014 AT&T, CenturyLink, Charter, Comcast/Xfinity, Cox, DirecTV, Dish Network, Editorial & Site News, Frontier, Time Warner Cable, Verizon, WOW! Comments Off on J.D. Power & Associates Tie Vote! Hemorrhagic Fever vs. Comcast vs. Time Warner Cable

jd powerLove can be a fickle thing.

Take Comcast’s affair with J.D. Power & Associates, for example. In Comcast’s filings with regulators, it is very proud that J.D. Power cited Comcast for the most improvement of any cable operator scored by the survey firm. Comcast touted the fact it had managed to increase its TV satisfaction score by a whopping 92 points and Internet satisfaction was up a respectable 77 points. (Comcast didn’t mention the fact J.D. Power rates companies on a 1,000 point scale or that it took the cable company four years to eke out those improvements.)

Last month, J.D. Power issued its latest ranking of telecommunications companies and… well, the love is gone.

If customer alienation was an Olympic event, J.D. Power awarded tie gold medals to both Comcast and Time Warner Cable for their Kafkaesque race to the bottom.

The survey of customer satisfaction largely found only dissatisfaction everywhere in the country J.D. Power looked. While Comcast likes to cite its “customer-oopsies-gone-viral” blunders as “isolated incidents,” J.D. Power finds them epidemic nationwide.

skunkThe highest rating across television and broadband categories achieved by either cable company was ‘Meh.’ J.D. Power diplomatically scored both cable companies on a scale that started with “among the best” as simply “the rest.” Customers in the west were the most charitable, those in the south and eastern U.S. indicated they were worked to their last nerve.

“The ability to provide a high-quality experience with all wireline services is paramount as performance and reliability is the most critical driver of overall satisfaction,” said Kirk Parsons, senior director of telecommunications, in a statement.

Having competition available from a high-scoring provider also demonstrates what is possible when a company actually tries to care about customer service. In the same regions Comcast fared about as popular as hemorrhagic fever, WOW! Cable and Verizon FiOS easily took top honors. Even AT&T U-verse scored far higher than either cable company, primarily because AT&T offers very aggressive promotional packages that include a lot for a comparatively low price.

Other cable and smaller phone companies didn’t do particularly well either. Frontier and CenturyLink both earned dismal scores and Charter Cable only managed modest improvement. The two satellite television companies did fine in customer satisfaction for television service, but it was the two biggest phone companies that managed the best scores for Internet service. Among cable operators, only independents like WOW! (and to a lesser extent Cox) did well in the survey.

If J.D. Power is the arbiter of good service Comcast seems to claim it to be, the ratings company just sent a very clear message that when it comes to merging Comcast and Time Warner Cable, anything multiplied by zero is still zero.

J.D. Power ranking (Image courtesy: Reviewed.com)

J.D. Power ranking (Image courtesy: Reviewed.com)

CenturyLink Unfazed by AT&T/Verizon’s Rural Wireless Broadband; ‘Caps Too Low, Prices Too High’

centurylinkCenturyLink does not believe it will face much of a competitive threat from AT&T and Verizon’s plans to decommission rural landline service in favor of fixed wireless broadband because the two companies’ offers are too expensive, overly usage-capped and too slow.

Both AT&T and Verizon have proposed mothballing traditional landline service in rural areas because both companies claim wireline financial returns are too low and ongoing maintenance costs are too high. In its place, both companies are developing rural fixed wireless solutions for voice and broadband service that will rely on 4G LTE networks.

CenturyLink does not traditionally compete against either AT&T or Verizon because their landline service areas do not overlap. But as both AT&T and Verizon Wireless continue to emphasize their nationwide wireless networks, independent phone companies are likely to face increased competition from wireless phone and broadband services.

CenturyLink isn’t worried.

“About two-thirds of our customers can get access to 10Mbps or higher [from us and] that continues to increase year by year,” CenturyLink chief financial officer Stewart Ewing told attendees at Bank of America Merrill Lynch’s 2014 Global Telecom & Media Conference. “Our belief is that with the increasing demands customers have for bandwidth — the Netflix bandwidth requirement — just the increasing amount of video that customers are watching and downloading over their Internet pipes, we believe will drive customers to using a provider that basically has a wire in their home because we believe you will get generally higher bandwidth and a much better experience at lower cost.”

Ewing

Ewing

CenturyLink customers consume an average of slightly less than 50GB of Internet usage per month, and that number is growing. Ewing said that CenturyLink has long believed that as bandwidth demand increases, wireless becomes less and less capable of providing a good customer experience.

“At this point, we don’t really have any concerns because people on the margin — the folks that don’t use much bandwidth — probably use a wireless connection today to download,” Ewing said. “But as the bandwidth demands grow, the wireless connection becomes more and more expensive and that could tend to drive people our way. So as long as we have 10Mbps or better to the customers, we don’t really think there is that much exposure.”

CenturyLink does not measure the difference in Internet usage between urban and rural residential customers, but the company suspects rural customers might naturally use more because alternative outlets are fewer in number outside of urban America.

“Folks in rural areas might actually can use Internet more for buying things that they can’t source [easily], but it’s hard to really count,” said Ewing. “I think our customers in the rural areas probably are not that much different from folks in urban areas.”

Prism is CenturyLink's fiber to the neighborhood service, similar to AT&T U-verse. It is getting only a modest expansion in 2014.

Prism is CenturyLink’s fiber to the neighborhood service, similar to AT&T U-verse. It is getting only a modest expansion in 2014.

CenturyLink’s largest competitor remains Comcast, which co-exists in about 40% of CenturyLink’s markets. The merger with Time Warner Cable won’t have much impact on CenturyLink, increasing Comcast’s footprint in CenturyLink territory by only about only 6-7%. CenturyLink believes most of any new competition will come in the small business market segment. Comcast’s residential pricing is unlikely to attract current CenturyLink customers in Time Warner Cable territory to consider a switch to Comcast if the merger is approved.

Ewing also shared his thinking about several other CenturyLink initiatives that customers might see sometime this year:

  • Don’t expect CenturyLink to expand Wi-Fi hotspot networks. The company found they are difficult to monetize and is unlikely to expand them further;
  • Any change in the FCC’s definition of minimum broadband speed to qualify for federal broadband expansion funds would slow rural broadband expansion. Ewing admitted a 10Mbps speed minimum is considerably more difficult to achieve over DSL than a 4 or 6Mbps minimum;
  • Don’t expect any more merger/acquisition activity from CenturyLink in the Competitive Local Exchange Carrier business. CenturyLink shows no sign of pursuing Frontier, Windstream, FairPoint, or other independent phone companies. It is focused on expanding business services, where 60% of CenturyLink’s revenue now comes;
  • CenturyLink fiber expansion will primarily be focused on reaching business offices and commercial customers in 2014;
  • CenturyLink will only modestly expand PrismTV, its fiber-to-the-neighborhood service, to an additional 300,000 homes this year. The company now offers the service to two million of its customers, with 200,000 signed up nationwide. Last year, CenturyLink expanded PrismTV availability to 800,000 homes.

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  • Josh: Wow, great article! I'm feeling nostalgic, and kind of weirded out by VHS going away, and the realization we're (once again) likely to lose a giganti...
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