What a great way to introduce U-verse to Chattanooga — headline news that an AT&T technician pepper-sprayed three dogs owned by a Chattanooga woman with a repellent known to be stronger than police pepper spray.

The nightmare for Janelle Lawrence began last week when an AT&T technician came on her property unannounced and began working in her fenced-in yard.

Janelle greeted the technician and asked him if her dogs, who were sharing her yard with the AT&T employee bothered him.

“He said not anymore.  I pepper sprayed them,” Janelle told WRCB, a Chattanooga television station.

She also noticed her dogs reeling in pain.

“My pug had pepper spray all over her body and was having trouble breathing and it got all over my arms and I started burning,” Lawrence says.

Lawrence says the technician was rude to her and refused to show her I.D. or a work order.

She recorded his truck number off the back of his work truck and called the main office demanding to know why he was there when she doesn’t subscribe to any of the company’s services.

AT&T told WRCB they didn’t need Janelle’s permission to enter her property or spray her pets.

AT&T issued a statement to the station:

“An AT&T technician has been working on this street all week for this week’s U-verse launch in Chattanooga. This AT&T technician needed access to the easement area on this fenced-in property, which is in a public right of way.”

Janelle remains deeply upset at AT&T and the employee, who appears not to be suffering any ill-effects to his job from the incident.

“You can do something to me and I’ll take it all day, but if you touch my little angels,” Lawrence says that’s where she draws the line.

The pepper spray incident took a considerable amount of shine off AT&T’s U-verse launch event, particularly for potential customers who are also pet owners like Stop the Cap! reader Sam who pointed this incident out to us.

“The same quick-drawing AT&T technician that attacked this poor woman’s pets could be aiming for yours or mine next,” he writes. “As long as this guy is still employed by AT&T, I wouldn’t have U-verse in my house even if they gave it to me for free.”

As far as Sam as concerned, AT&T pepper sprays their customers with high bills and bad service on a daily basis anyway.

“These guys have no shame buying their way into Tennessee with another one of those statewide deregulation bills that brought lots of campaign cash for supporters and very little for consumers,” Sam writes. “I signed up for EPB Fiber service, which is owned by the city, costs me less than either the cable or phone company, and delivers real fiber optic service right to my house.”

Sam also notes the guy who installed it loved his two dogs and cat.

Click here to view the embedded video.

WRCB-TV was the only station in Chattanooga to spend more than a few seconds on U-verse’s introduction in the city this week, but it wasn’t the kind of PR AT&T was exactly hoping for.  [Warning-Content may upset sensitive viewers.]  (2 minutes)

All this during an underwhelming launch week for AT&T’s U-verse in the River City, which garnered almost no attention in the local broadcast media, except for the pepper spraying incident.  The local newspaper put the story in its Business section.

Chattanooga residents now enjoy a fifth choice for several traditional services offered by cable or satellite:

• Comcast — incumbent cable operator
• EPB — municipally owned power utility and fiber-to-the-home provider
• AT&T — U-verse brings better speeds and service than traditional DSL from the phone company
• DirecTV — Satellite TV
• DISH — Satellite TV

The biggest savings residents will find from Comcast and AT&T comes when bouncing back and forth between new customer promotions.  Or you can just stick with EPB, which seems to offer the same prices for new and old customers.  For broadband customers, EPB delivers (by far) the fastest Internet speeds — up to 100Mbps upstream and downstream.  Comcast comes in at second place, and AT&T U-verse tops out at around 24Mbps if you are lucky.

Once promotional pricing from Comcast and AT&T expire, savings are highly elusive.  Price comparisons are extremely difficult because of channel line-ups, bundled equipment, and different Internet speed tiers and phone calling plans.  Making the best choice means sitting down and exploring channel lineups, HD channel tiers, how much broadband speed you require, and what kind of phone service you want, if any.

Most of the triple-play bundled promotions including standard cable, Internet and phone service will run between $119-139 a month before taxes, fees, and equipment costs.  If you sign a contract, Comcast will throw in a free iPod Touch.  Providers will keep your package price-increase-free for the length of any contract you sign.  That could be important, because AT&T and Comcast have been increasing their rates at least annually.

Click here to view the embedded video.

Raw video from the Chattanooga Times Free Press captured the launch party for AT&T U-verse in the city.  (34 seconds)

McCormick - An AT&T Friend for Life

While AT&T was patting itself on the back for its wonderfulness, AT&T took special care to extend personal credit to Rep. Gerald McCormick (R-Hamilton County) for shepherding the Competitive Cable and Video Services Act of 2008 through the Tennessee General Assembly.  It helped deregulate the telecommunications industry in Tennessee and de-fang oversight agencies tasked with protecting consumer interests.  The result has been a myriad of customer service nightmares for Tennessee residents, particularly for those who are with AT&T and have faced repeatedly inaccurate bills and terrible customer service.

McCormick was right there in the press release to help celebrate the achievement:

“As Tennessee policymakers, our goal was to increase investment throughout the state and give consumers more choices and innovative new services, and I’m honored to help AT&T celebrate this launch,” Rep. McCormick said.

AT&T invested $180,000 in Tennessee lawmakers like McCormick to do the right thing by AT&T and pass the bill.  The Chattanooga Times Free Press delivered a breakdown in April 2009 summing up the spending as AT&T pushed forward its bill:

State Election Registry records show AT&T’s PAC gave almost $180,000 to candidates, usually incumbents, as well as PACs operated by legislative leaders and caucuses and parties in the two-year 2008 campaign cycle.

The PAC, funded by top executives, gave $2,000 to Lt. Gov. Ron Ramsey, R-Blountville, the Senate speaker, records show. The PAC gave another $8,000 to Mr. Ramsey’s leadership PAC, known as RAAMPAC, according to records.

The AT&T PAC contributed $5,000 to then-House Speaker Jimmy Naifeh, D-Covington, and another $4,000 went to Mr. Naifeh’s leadership PAC, the Speaker’s Fund, records show.

Rep. Gerald McCormick, R-Chattanooga, who is sponsoring the AT&T-backed deregulation bill, reported receiving $1,250 from AT&T’s PAC in 2007, records show.

“I don’t know how much money I’ve gotten from them,” Rep. McCormick said Tuesday. It is “up to each individual legislator whether they let that kind of thing influence them. I would hope that nobody would. I certainly don’t. I don’t need the campaign money that bad, to be honest with you.”

Janelle Lawrence and her beloved pets enjoyed none of this AT&T largesse — just the literal sting of the results.

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Hultquist

Hank Hultquist, AT&T’s federal regulatory vice president, is taking questions on broadband Internet policy in an upcoming Washington Post piece.

Here is your chance to question AT&T about broadband issues ranging from Internet Overcharging schemes like usage caps and rationing experiments, Net Neutrality, U-verse and DSL broadband expansion, and AT&T’s involvement in the public policy arena.

AT&T is currently seeking major changes to the $8 billion Universal Service Fund that helps subsidize phone service for rural Americans.  AT&T wants to see that fund expanded to subsidize broadband improvements, which will directly benefit AT&T as it is among the top recipients of USF funds.  With 16 million current broadband customers and a service area that extends into the often-rural midwest and southern parts of the country, AT&T could receive a windfall in federal funds to pay for broadband service it doesn’t provide many areas today.

But what kind of broadband service will AT&T offer?  The company recently concluded a trial limiting use of its AT&T DSL service to customers in Beaumont, Tex., and Reno, Nev.  AT&T claims it is currently analyzing the results of that trial, and could bring usage limits on all of its customers.  Feel free to pose your own questions in the comments section of the Washington Post article (reg required) or sending an e-mail to Cecilia Kang (kangc@washpost.com) no later than Friday morning.

Scott Cleland, who runs the dollar-a-holler, broadband-industry funded astroturf group Net Competition already has his question in:

Shouldn’t those broadband Internet users (consumers or big businesses), who use the most bandwidth and benefit the most from faster more ubiquitous broadband, contribute relatively more to the Universal Service fund than those consumers and businesses that use much less bandwidth? Isn’t that the basic fairness principle that has long undergirded the current Universal Service fund, which is based on long distance usage/minutes?

Scott Cleland
Chairman, NetCompetition.org an eforum supported by broadband interests

Do you want to pay the higher broadband bills that Cleland advocates?

Kang promises to include as many of your questions as possible and post the Q&A early next week.

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The days may be numbered for Sunflower Broadband

A Kansas cable system notorious for Internet Overcharging is nearing a deal to be acquired by a cable overbuilder that does not usage cap broadband customers.

Sunflower Broadband, an independent cable system providing cable, phone, and broadband service to 30,000 Lawrence residents, is expected to be acquired by Georgia-based cable overbuilder Knology, which has been on a buying spree of late.  The asking price – $127 million dollars, according to a report in the cable trade journal Multichannel News.

Sunflower has been overcharging their broadband customers for years with schemes like usage caps and a flat rate service plan that delivers speed throttled broadband service to customers.  Sunflower has remained a hot topic for Stop the Cap! because we hear so many complaints from their long-suffering customers.  In fact, no independent cable operator has generated more reader complaints than Sunflower Broadband, almost all targeting the company’s unjustified usage caps.

Broadband Reports reminds us Sunflower was among the first to implement the idea of low caps and high overages ($2 for each additional gigabyte).  Customers also routinely complain about Sunflower’s stingy upstream speeds, maxed out at just 1Mbps for their $60 Gold tier.

None of the details about Sunflower Broadband’s impending sale can be found in the local newspaper — the Lawrence Journal-World or the local “Channel 6″ news operation.  That’s ironic, considering the same parent company that owns Sunflower Broadband, The World Company, also happens to own the newspaper and Channel 6.  It took a cable trade publication based hundreds of miles away to break the story — not exactly a shining moment for journalism in Lawrence, especially considering an LJWorld reporter need not break a sweat to chase the story.

Part of the reason for the sale may have been AT&T bringing U-verse competition to Lawrence.  U-verse does not have customer unfriendly usage limits.  With AT&T ready to usher away many of Sunflower’s customers, management may have decided now was a good time to sell.

The good news for Lawrence residents is that none of Knology’s cable systems engage in Internet Overcharging schemes, so Sunflower’s usage caps may be gone after the sale.

Still, some Lawrence residents are concerned about the implications of a Knology takeover.  The Lawrence Broadband Observer is among them:

I browsed Knology’s corporate web site and was actually pretty unimpressed. To put it mildly, Knology is well behind Sunflower both geographically and technically. Knology offers service in rural areas much smaller then Lawrence, like Storm Lake, Iowa and Dothan, Alabama. They also offer service in a few towns that are equal or larger then Lawrence like Charleston, South Carolina.

Technically, Knology is well behind Sunflower in what they offer customers in other cities. Top internet speeds (albeit cap-free) are only in the 8-10 megabit range, five times slower then Sunflower’s new DOCSIS 3 offerings. On the television side, while it varies from city to city, Knology generally offers only 30 or so HD channels, which is less then half of what Sunflower offers. Knology offers a rudimentary DVR, but nothing like Sunflower’s multi-room options.

Perhaps Knology is interested in buying Sunflower to learn how to offer more advanced services, knowledge they can take to their other markets. I don’t know, but it seems like this is a case of a large buggy-whip manufacturer buying out a smaller company that makes automobiles.

Most of Knology’s network of systems have been acquired from other companies and providers.  Technically, they are a cable “overbuilder” because they do overlap other providers in some areas, such as Knoxville, Tenn., where they compete with Comcast.  In many communities, they are most common in rental parks and apartments.

Knology’s customers in other cities have usually suffered some transitional glitches (Knology uses a more “advanced e-mail system” they eventually forced their PrairieWave customers to join), but overall they have usually increased broadband speeds in their markets and add lots of new HD channels.  Knology is aggressively deploying DOCSIS 3, something Sunflower already has, so few changes should be expected there.  They do not have a history of downgrading customers.

Clues about the impact of a Knology buy can be found in communities like Rapid City, S.D., who saw their cable system switched from Black Hills FiberCom to PrairieWave to Knology.  Rapid City residents first saw changes to the cable system’s technology and billing.  That was followed by the introduction of new services and packages, and then finally the name change to Knology.

With the anticipated sale, existing Sunflower customers (and ex-customers) might want to impress on the new owner that Internet Overcharging schemes like usage caps and throttled speeds are unacceptable, and you want an immediate end to both.

Remember too it could be worse — Mediacom could have been the buyer.

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Tens of thousands of Oceanic Time Warner Cable customers across Hawaii were without Internet, cable, and phone service for up to 14 hours after an undersea TW Telecom fiber cable was cut near Lanai at around 1:10am Tuesday.

While broadband users on Kauai and Oahu managed to be rerouted after a two hour outage, residents on Maui and the Big Island endured more than a half-day outage for all of Time Warner Cable services.

The affected cable experienced an outage off Lanai Island

The impact of the fiber cut also disrupted over-the-air broadcasting — many feeds to Hawaii’s translator stations, which extend signals from Honolulu across the Hawaiian Islands, were also sent over the affected cable.

When Time Warner customers in Hawaii woke up Tuesday morning, many were left with fewer than 20 cable signals still working — those delivered via satellite, and no phone or broadband service.

The affected fiber cable is laid in water 3,000 feet deep, which means it will take weeks to manage repairs.  The cable company managed to obtain alternate connections, and some criticized the operator for not having backup service available immediately.

Restoration of services were complete around noon Tuesday for the Big Island, with Maui County getting phone and Internet service back by 3pm.

Hawaiian Telcom, Hawaii’s largest telephone company, said it wasn’t affected by the outage.

The Star-Advertiser reports the fiber cable is rented by Oceanic to communicate with their other cable operations throughout Hawaii:

Oceanic Time Warner rents bandwidth (data transmission capacity) from the fiber-optic cable, co-owned by Colorado-based TW Telecom and Wavecom Solutions, formerly Pacific Lightnet. TW Telecom was part of Time Warner Cable but became an independent entity in 2008.

Oceanic Time Warner is among 144 Maui firms that rent bandwidth from that section of the cable. That section went online in 1997, Miyake said.

When the cable was cut, Internet protocol addresses did not know which route to take back to the mainland. Oceanic crews had to reroute connections through alternate cables connecting the islands.

“We have a daisy-chain fiber connection that connects all the islands together,” said Norman Santos, Oceanic’s vice president of operations. “The main transmission point for Oceanic Cable is here on Oahu.”

Oceanic promises they will be developing additional redundancy in their network in the future to make sure they can restore service more rapidly in the event of a future disruption.

Typically, Oceanic Time Warner Cable does not give refunds unless service is out for a full 24 hours -and- customers specifically requests credit, but the company is debating whether to grant an exception this time.

“We’re going to make a determination as to if and how blanket credits will be authorized, if individual credits will be authorized, but we’re going to do the right thing,” Norman Santos with Oceanic Time Warner Cable told KHON-TV.

Customers can be in a better position to receive that credit by contacting Oceanic today and asking for it before you (and perhaps they) forget.

Click here to view the embedded video.

Every major television station in Hawaii covered the extensive service outage.  Here is a compilation of reports from KGMB, KHNL, KHON, and KITV-TV regarding the outage, its cause and impact.  (14 minutes)

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In the financially difficult world of landline service, there has been one bright spot for Verizon — its state-of-the-art fiber optic service FiOS.  The cost of replacing obsolete copper phone with 21st century fiber optics has proved to be an expensive, but successful endeavor, at least in the eyes of customers.  Hated by Wall Street for its costs but loved by those who enjoy the service, FiOS has successfully proven traditional phone companies can earn money by providing the kinds of services consumers want, just so long as investors are willing to hang in there while the investment pays off over time.  But many investors aren’t.

Some of Verizon’s critics in the investment community complain the company is n0t earning enough from FiOS — in fact, for some critics who didn’t want Verizon spending money on a fiber-to-the-home network in the first place, financial returns provide the evidence used to claim they were right all along.

Despite the naysayers, revenue for Verizon FiOS is up by almost one-third each year, with average revenue per user now reaching $145 a month.  That’s well above the money Verizon earns on its legacy copper network phone customers keep leaving, especially outside of major cities where DSL service is spotty.  There is plenty of room for Verizon FiOS to grow in the limited communities it reaches.  Unfortunately, Verizon has stopped expanding its FiOS network to new communities, in part from pressure from investors who want to see cost cutting from the telecommunications giant.

Despite the positive reviews (subscription required) FiOS earns from consumer publications like Consumer Reports, Verizon slashed marketing and promotion expenses, resulting in second-quarter net additions for FiOS TV coming in at 174,000, compared with 300,000 a year earlier.

With Verizon now deploying service to communities on a reduced schedule, the results have been underwhelming according to the Wall Street Journal:

Verizon Communications may want to tweak the ad slogan for its TV and ultrafast Internet service to “This is FIOS. This is pretty small.”

Not catchy, but it would be more accurate than the current “This is Big” line.

[...]It eventually became clear that Verizon had slowed the time frame of the buildup, originally scheduled to be mostly done this year. Instead, it now expects to meet its target of passing 18 million homes with the network by 2012.

The slower timetable allows Verizon to trim capital spending this year. The problem is that FiOS’s expansion could stall with a less aggressive approach to growth. Already, Verizon has retreated from its target of adding one million subscribers a year, in favor of boosting penetration to 40% of homes passed. At June 30, its 3.2 million TV subscribers was about 20% of homes passed.

[...]And that can only reinforce questions about long-term returns on the $23 billion FIOS investment.

Evidence that Verizon is looking for more customers in its existing FiOS markets can be found in the news the company dropped its contract commitment for new customers.  The term contracts may have held some potential customers back out of fear of a lengthy term commitment with a $360 early cancellation fee.

Click here to view the embedded video.

Verizon started running this ad several weeks ago touting its new “no contract” FiOS service.  (15 seconds)

But a change in strategy isn’t enough for investors who demand immediate results through further cost cutting measures.

In Verizon’s second quarter earnings reports, company executives speak to this perception, proudly noting they have slashed costs through job-cutting and reduced spending on infrastructure and services.  Some of those services include DSL expansion for rural Verizon customers, many who are now left on hold waiting for broadband from Verizon indefinitely.

In many states, Verizon’s DSL expansion was incremental at best, with the company issuing press releases touting new service for literally hundreds of potential customers.

Verizon’s traditional landline business continues to lose customers year after year, and is abandoning millions of others through sell-off deals with companies like Frontier Communications.  Light Reading notes Verizon eliminated 11,000 jobs in its Mid-Atlantic and Eastern regions through early retirement incentive programs, an idea soon to spread to other regions, particularly California and Texas in the coming months.  This kind of cost cutting saves cash and allows companies to report positive financial results in quarterly reports.

According to John Killian, executive vice president and CFO of Verizon, the job cuts are just getting started.  As Verizon further alienates its non-FiOS landline customers who can find better service and lower prices elsewhere, the company expects “further force reductions” in the coming months.  Verizon is also slashing costs by selling off real estate, consolidating operations and vacating buildings.

The impact can become a vicious circle of deteriorating service, customer defections, and additional cost cutting, which starts the circle all over again.  In West Virginia, deteriorating Verizon phone lines reached the point of serious service outages whenever major storms hit the state.  Then Verizon simply sold off its network in West Virginia.  Those customers are now served by Frontier Communications.

Verizon previously declared the era of the landline dead, and is now seeking to prove its point, even as it demonstrates it can make money by spending money on FiOS, if only investors would give them the chance.

Click here to view the embedded video.

CNN took a behind the scenes tour of Verizon’s FiOS network in New York City, from the central offices to individual apartments.  (4 minutes)

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Qwest provides local service in 14 states in the Midwest and West.

Antitrust regulators have given the green light for CenturyLink to proceed with its buyout of Qwest Communications, but Qwest executives on their way out are hardly complaining about the deal.

Stop the Cap! has reviewed recent filings with the Securities and Exchange Commission and learned the proposed deal will bring almost $110 million in bonuses and golden parachutes for seven senior Qwest executives, some of whom will leave Qwest as a consequence of the merger.

Qwest CEO Ed Mueller will receive the largest amount: nearly $43 million — $10.8 million in cash he can spend now and $32 million in stock which he can sell later.  Mueller has already made a mint as CEO of Qwest, getting a five percent raise in his base salary to $12 million dollars in 2009, a nine percent boost in his performance bonus — $2.5 million, nearly $250,000 towards personal use of the Qwest corporate jet fleet, and $7.6 million in new stock awards.  While Mueller won, some 2,800 Qwest employees lost — their jobs.  As part of broad cost cutting moves, Qwest eliminated 8.5 percent of its workforce in 2009.  That helped the company achieve an increase in profits of 2 percent despite a 9 percent loss in revenue for the year.

Most of the generous compensation packages were part of the executives’ employment agreements which guaranteed golden parachute payouts and stock options in the event of a merger.  Those employee agreements were well-positioned to pay off for the executives, as Qwest’s “for-sale” sign had been public knowledge for years.

Last week, the Federal Trade Commission determined the deal between CenturyLink and Qwest did not bring any antitrust issues to the table.  But the deal still faces a review from state regulators and the Federal Communications Commission.  Qwest shareholders will have their say August 24th in a special shareholder meeting to vote on the deal.  Qwest has already been negotiating with significant shareholders who have sued the company, claiming the deal did not adequately compensate Qwest’s investors.  Sixteen of those lawsuits have since been quietly settled on undisclosed terms.

Meanwhile, opposition to the merger has come from smaller independent phone companies, consumer groups, labor unions, and some of Qwest’s competitors who rely on Qwest’s facilities to bring services to customers.  The Communications Workers of America is the largest union expressing concerns about the deal and has filed to intervene in public service commission proceedings regarding the merger in four states: Arizona, Colorado, Iowa and Minnesota.  Those are the only four states in Qwest’s 14 state territory receptive to hearing the union’s point of view, according to the CWA.  The others have oversight agencies that exist little beyond rubber-stamping the requests of the companies they oversee or have commission members who are openly hostile to unions.

Despite the opposition, most analysts believe the deal will win approval because CenturyLink only has a limited presence in most of Qwest’s service areas, which are in the mountain west and desert south.

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AT&T’s idea of “unlimited service” has its limits.  Five gigabytes to be exact, as some customers are now learning.

Weeks after promising AT&T customers enrolled in unlimited smartphone data plans that they could keep them, AT&T is now calling some subscribers of an earlier unlimited plan, telling them they need to limit their use of the “unlimited service.”

AT&T’s Data Connect Unlimited plan was discontinued by AT&T back in 2008, but the company promised current customers they could keep their unlimited plan.  But now, the company has started calling customers when they exceed 5GB of usage during a month.

The Washington Post reports AT&T has been sending mixed messages to customers, and is cracking down on those customers exceeding the company’s arbitrary limits.

“We’ve had a small group of customers on a DataConnect 5GB plan who were not being charged for overage when they went beyond that limit,” she wrote. “We’re now working to bring their accounts in line with the policy for the other DataConnect 5GB plan subscribers.”

Clark added that users who had signed up for AT&T’s earlier Data Connect Unlimited plans (which it stopped selling in 2008) could keep using them, but if they made “certain changes to their account” — for instance, transferring it to a new line — they would have to sign up for a new $60 plan with a 5-gigabyte usage cap.

That comes as news to several AT&T customers who have been in touch with the Post, who were switched, without permission, to limited service plans when they made minor changes to their account or were told AT&T was going to end unlimited service for all AT&T customers.

Rob Pegoraro, who writes the Fast Forward column for the Post, notes AT&T’s customer-care staff seems a little confused about these matters. He advises users with old, unlimited-data plans should be prepared for lengthy calls to customer service — and keep careful records of their interactions with the company.

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Rogers Cable: Setting the Bar Lower Than Ever

Just a day after Netflix announced they are coming to Canada, Rogers Cable has responded by announcing it is lowering the usage allowances of its customers.  Stop the Cap! reader Munly writes to inform us Rogers Lite service plan, intended for occasional users, has dropped its 25GB usage allowance to 15GB per month, making it suitable for even less usage.

New customers on Rogers’ popular Extreme plan will find their usage limit cut from 95GB to just 80GB per month.  But if you accept the cut in your allowance, Rogers will increase the speed on that tier from 10Mbps to 15Mbps, allowing customers to blow through that usage limit that much quicker.

Existing customers may be grandfathered in, at least temporarily, but Rogers is notorious for eventually terminating grandfathered plans and moving customers to higher-priced alternatives.

All this from a company that claims it offers its customers “abundant usage.”

Rogers buries in the fine print the fact customers can stay with their current higher allowance if they forego the speed increase.

AND AN EVER INCREASING BILL

With the new lowered usage allowances, Rogers offers tips for customers to reduce their usage, including our favorites:

Use medium quality photos when sending them through e-mail. Your family’s cherished memories don’t deserve high resolution, even if you want to send them to a digital photo lab for printing.  Maybe you could get the kids together and have them draw copies of those vacation pictures with crayons.  At least they won’t be online using up your Rogers Internet ration.

Be aware of how others in your home use your Internet connection.  If you are not spying on your family’s online usage, it’s your own fault if we send you an enormous bill.  In the time it took you to read these tips, your kids could have downloaded over 20 e-mails, looked at more than three web pages, or watched almost a minute of online video.  Don’t make us bill you for that.

Turn off Peer-to-peer programs when you’re not downloading. Better yet, since we know you are using them to steal the content we’d like to sell or rent you, stop using them altogether… or else.

Try the tools. No, we’re not talking about us, silly.  If you are doing more than reading your e-mail or browsing web pages, look out because we’re coming for your wallet.  You can try and outwit our overcharging ways by using our usage notifications service, which will flash messages to you that we’re about to cash in on your over-usage.  Hey, don’t say we didn’t warn you!  Remember, if you use Rogers Internet to download files, stream video or music or play online games, we own you.

Does this mean I should use the Internet less to avoid paying more? Is Sarah Palin American?  You betcha.  We want to get the most out of our customers who use their Internet service too much, which is why we expose them to up to $5.00 per gigabyte if they exceed our ever-dwindling usage allowances.  Our goal is for you to feel free to use the Internet as you always have, just so long as you recognize it’s not free and that you’ll need to pay us for every web page your read, more if you dare to watch cable programming online you should be watching on our cable TV service.  The only surprise you’ll have about your bill is that we haven’t found a way to charge you even more… yet.

What About Netflix? Seriously? You weren’t really thinking of using that service on Rogers were you?  A word to the wise — we can cut your allowance down even further.  Go outside.  Read a book.  Rent a movie from Rogers Plus or enjoy some great Rogers Cable TV.

Rogers Cable’s Internet Packages

A Before And After Comparison

Rogers Old Pricing and Usage Allowances

Rogers All-New Pricing and Usage Allowances, Effective July 21, 2010

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Verizon hopes to herd its smartphone owners onto limited use data plans

Engadget is speculating Verizon Wireless is planning to end its unlimited data plan for smartphone customers July 29th.  In a brief story published last night, the site claimed it had heard rumors of the impending demise of unlimited at the nation’s largest cell phone company:

We’re hearing that Big Red intends to move to some sort of tiered bucket strategy on July 29. We don’t have details on whether the pricing will be identical to AT&T’s ($25 for 2GB, $15 for 200MB), but we imagine it’ll be within shouting distance if not. Of course, Verizon has been sending this message for a long time — even before AT&T was — so it shouldn’t come as a surprise to anyone that this is going down. You might say that Droid Does Caps, eh?

Verizon and AT&T have followed each others’ relentless price increases, tricks and traps for the last few years — forcing customers to accept mandatory service “add-ons” when buying the latest phones, paying higher costs to terminate contracts early, and driving customers onto higher priced service plans bundling services and features many customers do not want.

It therefore comes as no surprise Verizon would follow AT&T’s lead on severely restricting customers’ data use, even though Verizon does not suffer from the level of congestion AT&T has.

We expect Verizon will announce data pricing identical to that offered by AT&T.

However, existing customers can be grandfathered into today’s unlimited plans, so if you think you’ll need unlimited data on Verizon’s network, you have until the end of the month to sign up for a plan should Engadget’s report turn out to be true.

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Lee, Massachusetts is located in broadband sparse western Massachusetts

Mark Williams is the kind of customer Time Warner Cable would normally love to have.  He wants the complete, super deluxe Time Warner triple play — cable, digital phone, and especially broadband service for his home-based business.

Time Warner wants Williams to have their service, too — but for a price.  Instead of charging the regular $35 installation fee, the cable company wants him to pay $12,000 to install his service, because, they claim, Williams’ driveway is 100 feet too long.  Time Warner says the $35 dollar installation fee is only for homes within 200 feet of the nearest utility pole.  Williams home is 300 feet away.  He doesn’t mind paying something extra to cover the additional 100 feet, but not $12,000.

The town of Lee, Berkshire County, in western Massachusetts, managed to wrangle a franchise agreement from Time Warner Cable that entitles every home and business to cable service if electric and telephone service are already available.  That’s unique for many smaller communities, who routinely have cable service available in town, but not in outlying areas.  Cable companies hate wiring rural density neighborhoods, where the costs to wire comparatively few homes takes too long to earn back from the few subscribers they can reach.

But Time Warner found themselves a loophole — a “long driveway” clause in the franchise agreement that allows them to charge more for installing service to homes set far back from the road.

Now, according to the Berkshire Eagle, Lee’s representative to the Five Town Cable Television Advisory Committee is calling out Time Warner, claiming they are misinterpreting the town’s franchise agreement and wants the Lee Board of Selectman to start imposing fines against the cable company if they don’t relent within 30 days.

Malcolm Chisholm says the real reason Time Warner wants to charge $12,000 is because Williams’ home is roughly a half-mile away from the closest Time Warner Cable subscriber, not because his driveway is too long.

“We just want to put pressure on them,” Chisholm said. “We’re just trying to get them to follow the agreement.”

Chisholm said Time Warner Cable “won’t talk to us” about Williams’ situation. The Eagle was also unable to get a response from officials at the company’s regional office in Albany, N.Y.

The newspaper decided that since Time Warner Cable wasn’t responding to its private inquiries, it would air its views on the editorial page.

If a Lee resident moved into a cave in October Mountain State Forest, Time Warner Cable might be justified in charging him $12,000 to run cable there so he watch the Red Sox on NESN and keep up with the Kardashians on VH-1. But the $12,000 the cable giant wants to charge a resident who lives near the Tyringham line is preposterous, and beyond that provides the latest evidence of the desperate need for expanded broadband service throughout the rural Berkshires.

Because Mark Williams lives roughly a half-mile away from the closest Time Warner subscriber, his installation fee escalates from the standard $35 to $12,000, which may as well be $120,000 it is so devoid of logic. Mr. Williams appears to be an eager customer too, one who wants the entire cable/Internet package Time Warner is regularly flogging.

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Greed is still good at Time Warner Cable

Time Warner Cable has tried every excuse in the book to justify their continued interest in Internet Overcharging schemes directed at residential Road Runner customers.  Over a year after Stop the Cap! and its readers helped bury an experiment in overpriced broadband, the notion of doubling or tripling Internet pricing for consumers is still alive and well at the nation’s second largest cable company.

Nate Anderson of Ars Technica explored the thinking of Time Warner Cable’s executives a year later and discovered their desires for overcharging remain as strong as ever, but the excuses they give for wanting to do so have changed.

TWC’s revenues from Internet access have soared in the last few years, surging from $2.7 billion in 2006 to $4.5 billion in 2009. Customer numbers have grown, too, from 7.6 million in 2007 to 8.9 million in 2009.

But this growth doesn’t translate into higher bandwidth costs for the company; in fact, bandwidth costs have dropped. TWC spent $164 million on data contracts in 2007, but only $132 million in 2009.

What about investing in its infrastructure? That’s down too as a percentage of revenue. TWC does spend billions each year building and improving its network ($3.2 billion in 2009), but the raw number alone is meaningless; what matters is relative investment, and it has declined even as subscribers increased and revenues surged. “Total CapEx [capital expenses] as a percentage of revenues for the year [2009] was 18.1 percent versus 20.5 percent in 2008,” said the company a few months ago.

In fact, CapEx has declined for the industry as a whole. As the National Broadband Plan noted, the big ISPs invested $48 billion in their networks in 2008 and $40 billion in 2009. (About half of this money can be chalked up to broadband; the rest of the improvements were done to aid cable or phone service.)

To recap: subscribers up, revenues up, bandwidth costs down, infrastructure costs down. This might seem like a textbook case of “viability”; what were execs like Britt and Hobbs talking about last year when data caps were held up as a necessary safeguard against doom?

Before moving to Time Warner’s Excuse-O-Matic, let’s pause for a moment and reflect on the fact this company has stalled more on Internet upgrades than virtually every other major cable operator.  Even bankrupt Charter Communications has been aggressively pursuing investment in the win-win DOCSIS 3 technology that allows cable operators to sell faster tiers of service -and- reduce congestion in heavy web-surfing neighborhoods.  By effectively “bonding” several cable channels devoted to its broadband service together, the pipeline into even the most hip college neighborhoods can sustain a full-scale assault by Hulu fans streaming high bandwidth video.  Comcast realized this more than two years ago and rolled out its super-fast 50Mbps tier to a dozen cities well over a year ago.  In contrast, Time Warner Cable managed to bring forth its “wideband” offering in just a handful of communities — New York City being the largest, last year.

Internet providers always try to awe an audience with claims about the billions of dollars they invest in improved technology, while forgetting to mention they earn tens of billions in profit on those investments.  The shock and awe of stacks of money piled high on a table is tempered when you see the warehouse holding the rest of the cash standing behind it.

Broadband is becoming the single biggest revenue source for cable operators, passing digital phone and well on the way to passing cable television service.  It’s the cash cow that can be milked forever, especially with the limited number of choices most Americans have to obtain the service.

Back to Nate’s story:

Several months ago, while on a business trip to Manhattan, I entered a nondescript building near the Flatiron building and rode the elevator to the top. Inside was one of TWC’s main New York operations centers, hosting an astonishing array of cable and Internet gear. But the real showpiece was the monitoring room, a darkened room with control hardware, computers, and a wall of TVs showing every cable channel currently running out over TWC’s network.

It looked brand new and obscenely expensive. Engineers slipped in and out in silence. A huge pile of boxes on the floor held a new set of replacement TVs. When I make my career shift from ink-stained wretch to Evil Genius, this is exactly the sort of room I will build in order to plot my world domination.

“It’s not a cheap endeavor to run a network like we do,” said TWC’s tweeting VP of Public Relations, Alex Dudley, when I had spoken to him the week before. Here was an obvious reminder of what he meant.

Time Warner Cable’s version of a command and control center, wall after wall fitted for television sets — the Time Warner Cable Sports Bar — impresses only until you realize the company could have paid for it out of the petty cash box.  It’s obvious nobody was watching those televisions last spring as wide-scale protests erupted in four of the cities Time Warner Cable chose for their experimental pricing project.  If they had, they would have apologized to their customers and buried the idea then and there.

At this point, Mr. Anderson began the useless attempt to debate Mr. Dudley, whose job is to sell the agenda of Time Warner Cable (and obfuscate when necessary).  Why has Time Warner Cable’s senior management held onto its dreams of Internet Overcharging like a pit bill, refusing to let go, Anderson asked.  Because of labor costs, Dudley replied.

As Internet use increases, TWC techs, engineers, and executives need to make adjustments such as DOCSIS upgrades at the cable company headend or “node splits” that divide a shared cable loop in two when bandwidth use hits certain metrics. Paying all of these people costs money, and those costs increase as the network is more heavily used.

Last April, when Time Warner Cable was relying on its tweeters like TWCAlex to spin a tale about how their Internet Overcharging schemes would benefit customers and help pay for DOCSIS 3 upgrades (which ended up bypassing cities like Rochester, N.Y., and went to New York City instead — where no such pricing scheme was tested), Alex’s bosses were just completing a layoff of some 1,250 Time Warner Cable employees.  As Internet use was increasing, Time Warner Cable was decreasing the number of its employees from coast to coast.

If Alex is telling the truth, Time Warner Cable needs an employment fund from 8.9 million customers.  Considering many Time Warner Cable cities raised the price on Road Runner service by $5 a month this year, that’s $240 million dollars a year to get the pot started and I’m only counting four million of those subscribers.  If Time Warner Cable hired back those 1,250 former employees, they could each get $192,000 a year from that kitty.  Implement Internet Overcharging schemes that could triple consumers’ rates for an equivalent level of service and they could earn as much as CEO Glenn Britt and then some.

I’m also uncertain how often Time Warner Cable executives are shimmying up phone poles or clearing out wasp nests inside those green cabinets positioned all over town while performing service upgrades and node splits.  It’s far more likely they are spending their time dreaming up new excuses to raise cable rates.

Please deposit 25 cents for the next megabyte of usage

This latest excuse, while certainly novel, is just another bit of nonsense.

Time Warner Cable actually spent more money last year dealing with HD channel rollouts and upgrading their cable systems to support Switched Digital Video to accommodate them.  The company did not exactly slap limits on how often cable viewers can leave their sets on, nor pitted their average TV viewers against viewing piggies who watched too much.  Maybe the coin slot on top of the cable box can be tried in 2011.

In fact, as broadband equipment continues to become more reliable and scaled to manage growing demand, it’s becoming easier than ever to keep broadband lines humming at the cable company.  That leaves Time Warner in the envious position of enjoying increasing profits on service that increases in price while decreasing in cost.  In fact the only thing growing at a faster pace than the company’s broadband profits is the level of incredulity informed consumers have towards cable companies with long lists of excuses to justify rape and pillage pricing.

No matter what Time Warner Cable executives want you to believe, the FCC noted in its broadband plan that international bandwidth has grown 66 percent each of the last five years, all while the costs have dropped by 22 percent per year to handle that traffic.

Consumers do not want these Internet Overcharging schemes.  Time Warner Cable should do itself a favor and drop them, once and for all, just as they have done for their Road Runner Mobile service.  If 3G/4G wireless broadband from Time Warner comes without usage caps, why in the world should cable broadband be any different?

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Comcast subscribers in cities across the country are getting as hot as the summer as they learn the cable company is jacking up prices again — for many the second time in a year.  This time, the rate hikes are blamed on the cost to deliver an expanded lineup of HD channels, increased programming costs, and new cable modems.  Yet on the eve of the European Union approving a proposed Comcast-NBC Universal merger, many Comcast cable customers are beginning to wonder if all of these rate hikes are going to pay for that deal.

Here is a sampling of press reports from across the country on the latest round of increases:

San Francisco Chronicle: Comcast Corp. said it is raising rates for California cable and Internet customers by an average of 3.8 percent starting Aug. 1. The average video customer will see their monthly bill increase by $2.49 from $60.76 to $63.25 a month. Internet service will also increase for the first time in five years from $44.72 to $46.67 a month, a $1.95 increase. Andrew Johnson, regional vice president for Comcast California, said the increase is necessary to pay for more programming choices, new features, faster Internet speeds and improvements to customer service.  The last rate increase came October 15, 2009 when rates went up just over 1 percent.

The Record (Stockton, Calif.): For the second time in less than 10 months, Comcast Corp. customers in San Joaquin County face price increases for cable television service and, for the first time in five years a boost in charges for a cable Internet connection, the company announced recently. Customers in Stockton, Manteca, Lathrop and San Joaquin County served by Comcast will see an increase of nearly 4 percent in their cable bills beginning Sept. 1. Notices began going out to subscribers late last week. Other Northern California areas served by the cable giant will see prices change Aug. 1.

“They’ve got you tied in,” said Art Hickey of Stockton, who has five television sets in his home and subscribes to the highest tier of digital service. “They tease you with those six-month deals and 12-month deals and they don’t say what it’s going to be after that. People buy into it and then they’re just stuck with it,” he said.

So why not try another source of television?

“I haven’t compared, and I don’t want to because it’s a nuisance,” Hickey said.

The Spokesman-Review (Spokane, Wash.): Most of Spokane’s Comcast subscribers will see price increases in their Internet and video services effective in August, the cable company announced. Comcast’s last price increase went into effect October 2009. According to Comcast spokesman Walter Neary, most Spokane cable television subscribers will see an average monthly increase of about $3.21, or 4.9 percent. Customers who subscribe to Limited Basic, the least expensive package of Comcast TV channels, will have no increase in their monthly bill. Limited Basic includes all over-the-air local stations and the public, education and government channels.

Customers who pay for Comcast cable Internet will see two increases – a modem rental fee that will rise to $7 from $5 per month, and a $3 hike for monthly Web service. Subscribers who bundle Internet with either Comcast voice or TV service won’t pay the $3 hike, but will still see the modem fee increase, Neary said. Subscribers can eliminate the modem fee by buying their own modem. The Internet price hike reflects increased investment by Comcast in additional security services for subscribers and technology upgrades, Neary said. Another price increase, not reflected in Comcast’s stated 4.9 percent average monthly hike, is a $2 hike in the “HD technology fee.” TV subscribers who see HD Comcast channels will pay $8 per month for that technology fee, said Neary.

York Daily Record (York, Penn.): Comcast Cable is about three weeks away from putting into effect its second price increase in less than one year. On Aug. 1, the company will boost the average York County customer’s bill by roughly 3.5 percent, said Bob Grove , a spokesman for Comcast Cable’s Keystone Region. That increase is on top of a 1.9 percent price hike for the average Comcast customer that took effect Nov.1. The current rate increase is rooted in Comcast’s company-wide digital upgrade that calls for a jump in the number of high-definition channels to climb from 50 to 100, Grove said. Also, Comcast’s on-demand video menu will increase from 18,000 choices, 4,000 of which are HD, to 20,000 selections with 5,000 of those coming in as high-definition, he said.

“We’ve continually invested in next-generation technology to support new product features, more programming choices and improvements to customer service,” according to a statement released by Comcast concerning the increase. However, for those currently enrolled in a Comcast promotion, your bill will remain unchanged until that particular deal ends, Grove said. “Nearly half of all Comcast customers are on some kind of promotion,” he said.

Public Opinion (Chambersburg, Penn.): Many Comcast customers will see an increase in their monthly bills starting next month. The average customer bill in the Chambersburg area will increase by about 3.5 percent, according to a company spokesperson. The new rates take effect Aug. 1. A customer with standard cable or digital starter service will now pay $63.50 a month, or $3.50 more. Expanded basic, digital preferred, digital premier and total premium services are also increasing by $3.50 a month. Limited basic service, digital economy and family tier services are not affected. Economy, Performance and Blast! tiers of high-speed Internet will be increasing $2 a month. Monthly prices for the Ultra and Extreme 50 tiers will not change. Digital voice services will also cost $1.95 more a month.

Centre Daily Times (State College, Penn.): Comcast this week started sending out another round of mailings notifying customers of another change. But this time around the mailing isn’t warning of an impending digital conversion, or announcing the addition of more high definition television channels. This time around, it’s a notification of a rate increase. Effective Aug. 1, the average price for Comcast in the State College area will go up about 3.5 percent.

The company cited technology and infrastructure investments when contacted for comment. “These investments make it possible to deliver continued innovations, such as more HD and On Demand choices, converged services, faster Internet speeds, multi-platform content and new services consumers want and value,” said Bob Grove, director of public relations for the Keystone region of Comcast. Grove said the recent digital conversion by the company was one of the cost factors, as well as other programs that have included increasing Internet speeds for customers in the area. He noted that bills for customers whose service operates under one of the company’s promotions will not be affected until the promotion period expires.

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"Without limits" is ironic from Time Warner Cable, whose CEO still believes in Internet Overcharging schemes, even if customers don't.

Time Warner Cable has stopped promoting three different service plans for its Road Runner Mobile wireless broadband service.  The company’s new promotional literature and website now promotes just one mobile plan  — National Elite, with three different prices depending on what kind of business you do with the cable company.  It also does away with Internet Overcharging schemes, promoting an “unlimited data allowance” regardless of whether you access the service over 3G or 4G networks.  That’s ironic, because Time Warner Cable’s CEO Glenn Britt is still a big believer in consumption billing schemes and usage limits.  Should Time Warner Cable ever return with new overcharging schemes, we’ll be sure to remind them about the implications of providing unlimited wireless service while trying to restrict the much larger wired pipeline Road Runner’s cable-based network provides.

As we reported last year, when Time Warner Cable introduced Road Runner Mobile last winter in North Carolina, the company offered three different service plans for customers considering signing up:

• National Elite: Unlimited access to Clear WiMax and Sprint’s 3G EVDO Rev. A network for $79.95 per month to customers who also take the Road Runner Standard or Turbo cable modem service. Time Warner promises further discounts if customers subscribe to the cable provider’s double or triple-play cable service bundle which includes cable internet access and digital phone service.
• Mobile Elite: Unlimited access to mobile WiMax for $49.95 per month and pricing also applies when bundled with the Standard or Turbo cable modem service with an additional bundle discount available.
• Mobile 4G Choice: Caps mobile WiMax use at 2 gigabytes per month and will sell for $39.95 per month if customers add at least one other Time Warner cable service.

Now, as the company introduces the service in upstate New York, customers are getting promotions online and off for only one plan – National Elite.

Pricing appears to be standardized in most regions of the country, depending on what kinds of services you already receive from Time Warner Cable:

• Current Road Runner subscribers will pay $54.99 per month for National Elite;
• Current Time Warner Cable subscribers and those without cable or broadband service will pay up to $69.99 per month.

(Several cities in Texas can obtain special pricing promotions reducing the cost to $49.99 per month for 12 months.  Ask about special promotional pricing if you intend to sign up.)

Customers can select a plan that includes a two year service agreement with a $175 early termination fee (reduced by $7.50 for each month you remain a customer) and receive a substantial discount on a wireless modem and get the $35 activation charge waived.  Non-contract customers will have to buy their equipment at full price and pay the activation fee.  4G network speeds are up to 6 Mbps for downloads, and up to 1 Mbps for uploads. 3G network speeds are up to 1400 Kbps for downloads, and up to 500 Kbps for uploads, according to the Time Warner Cable website.

Plans directly available from Clear, which actually provides the Road Runner Mobile service are different:

• Clear On-the-Go provides 4G-only service for $40 a month.  No 3G service.
• Clear On-the-Go 3G Upgrade includes unlimited 4G service and up to 5GB of 3G usage for $55 a month.
• Get Two: Home + On-the-Go includes service for one home computer and one portable computer, with no 6Mbps download speed cap, for $55 a month (add $15 for 3G service)
• Get Two: On-the-Go includes service for two portable computers, with no download speed cap, for $65 a month (add $15 for 3G service for one computer, $30 for two)

A $35 activation fee applies to non-contract customers.  If you agree to a two-year contract, you can lease your equipment from Clear starting at around $5 per month and have the activation fee waived.

Now the fine print.

Although Clear markets its 4G service as “unlimited,” the fine print suggests they can make life difficult for customers they consider “disrupting or degrading” the service for others (underlining ours):

Excessive Utilization of Network Resources. Wireless networks have capacity limits and all customers can suffer from degraded or denied service when one or a small group of users consumes disproportionate amounts of a wireless network’s resources. Clearwire, therefore, will monitor both overall network performance and individual resource consumption to determine if any user is consuming a disproportionate amount of available resources and creating the potential to disrupt or degrade the Clearwire network or network usage by others. This process of monitoring both overall network performance and individual resource consumption is consistent with the description of the nature of the Service previously described in this AUP. Clearwire reserves the right to engage in reasonable network management to protect the overall network, including analyzing traffic patterns and preventing the distribution of viruses or other malicious code.

During periods of congestion, Clearwire uses various techniques such as reducing the data rate of individual bandwidth intensive users whose use is negatively impacting other users. This temporarily limits the amount of bandwidth available to the bandwidth intensive users until the congestion has diminished, at which point Clearwire will endeavor to lift any limits it may have imposed on bandwidth intensive users during the period of congestion. Clearwire may also consider historical usage patterns when temporarily reducing the data rate of bandwidth intensive users during periods of congestion. When feasible, upon observation of an excessive use pattern, Clearwire will attempt to contact you by telephone at the telephone number you gave to us or otherwise to alert you to your excessive use of bandwidth and to help you determine the cause. Clearwire representatives also are available to explain this AUP and to help you avoid excessive use incidents. If you are unavailable or do not respond to Clearwire’s attempt to contact you regarding excessive use, or if excessive use is ongoing or recurring and repeatedly having negative effects on other subscribers of the Service, Clearwire reserves the right to immediately restrict, suspend or terminate your Service without further notice in order to protect the network and minimize congestion caused by the excessive use. While the determination of what constitutes excessive use depends on the specific state of the network at any given time, excessive use is determined by resource consumption relative to that of a typical individual user of the Service and not by the use of any particular application.

Unlimited Use Plans.If you subscribe to a service plan that does not impose limits on the amount of data you may download or upload during a month, you should be aware that such “unlimited” plans are nevertheless subject to the provisions of this AUP. What this means is that all of the provisions described in this AUP, including those that describe how Clearwire may perform reasonable network management such as reducing the data rate of bandwidth intensive users during periods of congestion, will apply to your use of the Service. The term “unlimited” means that we will not place a limit on how much data you upload or download during a month or other particular period, however, it does not mean that we will not take steps to reduce your data rate during periods of congestion or take other actions described in this AUP when your usage is negatively impacting other subscribers to our Service.

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A major owner of apartment complexes in 13 states in the southeast and south-central United States has a deal for you, whether you like it or not.

Mid America Apartment Communities, which maintains a portfolio of 42,252 apartments, is requiring its residents to purchase cable television from providers like Comcast or they’ll find the $40 month cable fee tacked on their rent, water, or refuse collection bill.  They call it a wonderful savings opportunity for their residents.  But a Stop the Cap! investigation followed the money and discovered the real benefits are in kickbacks paid to Mid America by participating cable companies.

Mid America is extending the policy to all of its apartment complexes over the coming months, notifying residents about its new CableSaver program through flyers.  Enrollment in the program is automatic for new residents, and will take effect for existing residents upon the renewal of their annual lease agreement.

Known as “bulk buying,” apartment complexes can receive preferential discounts for their residents if they commit to mandatory cable service for each apartment.  In Chattanooga, residents of Mid America’s Hamilton Pointe, Hidden Creek, Steeplechase, and Windridge Apartments were notified this month they’ll be compelled to spend $40 a month for Comcast’s Digital Starter Package.

Mid America owns apartment complexes in 13 states. All of them will find the CableSaver program coming their way sooner or later.

The mandating of cable service is not going down well with every resident, particularly those who purchased satellite TV equipment or who have service with other providers like AT&T’s U-verse or Verizon FiOS.  While Mid America isn’t banning competing cable services from serving its complexes, residents will still be forced to pay for cable service in addition to whatever their current provider charges.

Lydia Ramirez of Chattanooga lives in a Mid America Apartment Communities property.  She told WDEF-TV News, ”We told them that we are not interested in this but they say it’s mandatory. And so here we are.”

Ramirez just had Dish Network installed but says she’s been told she will have to pay for Comcast cable, too, if she renews her lease.  She said, ”We don’t want Comcast and we feel that should be our choice instead of them making it mandatory.”

Instead of being allowed to choose satellite or other cable providers, Ramirez says being forced to go with Comcast is kind of like being told you can only grocery shop at Food Lion.  Ramirez adds, “I don’t see how they can do that. I think we as tenants have an option to choose what cable company we want to go with.”

Some renters in Houston, Texas have been there and done that.  Late last year, KPRC-TV reported residents at The Reserve at Woodwind Lakes got a deal they couldn’t refuse.  A letter from the front office promoted an exciting new offer: It reads the complex “has teamed up with a cable company to bring you an exclusive offer that will allow you to enjoy expanded basic service at a greatly reduced rate.”  Sounds great until you get to the second line of the letter, which uses language only a credit card company could love:

“If you have not yet chosen to opt in, the reduced rate of $40 will be added to your water and trash bill once your renewal takes effect.”

Text of a flyer delivered to Houston-area renters at a Mid America complex

In other words, your “choice” to “opt in” is neither.

Mid America is selling this mandatory cable program as a real money-saver.  But we discovered it’s actually a real moneymaker for Mid America, who earns compensation from kickbacks paid by cable companies in return for cramming cable service down renters’ throats.

Kickbacks for cable is nothing new in the rental business.  Complex owners used to routinely make exclusive deals with providers to deliver service to residents, often through contracts that kept competitors out.  But a 2007 FCC ruling made such exclusive arrangements illegal.  A Federal Court of Appeals agreed: cable companies cannot have exclusive rights to provide service in apartment buildings that they wire.  But complex owners and cable operators discovered an enormous loophole — complex owners can force residents to pay mandatory cable fees as part of their rent so long as they did not bar would-be competitors from also providing service.  But given that renters would already be paying for service, it is unlikely they’d choose another and pay double or more for duplicated cable service.

Cable companies like Comcast enter into these agreements because they provide guaranteed revenue for minimal cost, thanks to “install it once” cable wiring and bulk billing.  Since many renters are also young — renting their first apartment after leaving home — establishing a relationship with those customers may make them customers for life.  Cable companies can also use the program as an opportunity to sell add-on services to renters, such as broadband, digital phone, and premium channel packages.

But why would a company like Mid America want to alienate at least some of their renters who do not want to be forced to pay for cable service?  The answer is easily found in Mid America’s publicly disclosed financial reports — Mid America makes a healthy profit from the CableSaver program.

Mid America owns apartment complexes in these states

Mid America’s quarterly 10-K filing with the Securities and Exchange Commission shows the company is earning so much money from cable companies like Comcast, it has broken the revenue out into a new section of its financial report.

In the first quarter of 2010, as Mid America introduced its CableSaver program, the company reported earning $1.3 million dollars in revenue from cable kickbacks.  The company tells investors its new mandatory cable program will become an important source of new revenue for the complex owner:

“We continue to develop improved products, operating systems and procedures that enable us to capture more revenues. The continued roll-out of ancillary services (such as re-selling cable television), improved collections, and utility reimbursements enable us to capture increased revenue dollars.”

It’s all a part of a profit-making strategy to increase shareholder value and stick residents with increasing costs to deliver fatter profits.  Renters might be interested to know the company has more in store for them in the coming months:

Our goal is to maximize our return on investment collectively and in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

• [...] developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which we generate revenue;
• implementing programs to control expenses through investment in cost-saving initiatives, including measuring and passing on to residents the cost of various expenses, including water and other utility costs.

Unfortunately for residents, short of moving, there is no escaping these fees. Some residents have contacted their member of Congress or the FCC to complain about the loophole that allows a complex owner to charge for cable service residents don’t always want. Another way to send a message is to tell Mid America you will not do business with them until they make the CableSaver program truly optional. If the company stands to lose more money than it receives from cable company kickbacks, it may choose to amend its policies.

Click here to view the embedded video.

We have four reports on this story, courtesy of WDEF-TV Chattanooga, Tenn., and KPRC-TV in Houston, Texas  (10 minutes):

1. The FCC bans exclusive cable contracts forcing renters to buy service from one provider.  (KPRC-TV 10/31/2007)
2. Can Complex Choose Your Cable Company? In Houston, Mid America Forcing Renters to Buy Comcast Cable.  (KPRC-TV 1/7/2010)
3. Four Chattanooga Area Apartment Complexes Make Comcast Cable Mandatory for Renters. (WDEF-TV 7/12/2010)
4. AT&T U-verse Arrives in Chattanooga (But Won’t Be Too Attractive to Mid America Residents). (WDEF-TV 4/30/2010)

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Craig E. Moffett joined Sanford C. Bernstein & Co. as the Senior Analyst for U.S. Cable and Satellite Broadcasting in 2002.

Craig Moffett, a Wall Street analyst with Sanford Bernstein, is sounding the warning bells that if AT&T and Verizon assign usage caps to their forthcoming LTE wireless broadband services, they will never provide suitable competition for American consumers.

The implications of Internet Overcharging schemes in wireless broadband go well beyond the two companies’ broadband offerings.  Investors expect either AT&T or Verizon to attempt a buyout of DirecTV in the coming months, hoping to pair the satellite service with broadband packages delivered by DSL, fiber, or wireless broadband.  Because many DirecTV subscribers are located in rural areas where even DSL service is often not available, wireless broadband networks would be the most likely means of reaching customers, but not with onerous usage caps.

“If LTE networks are going to be usage-capped, then the last pretense that LTE networks can be positioned as a substitute for terrestrial broadband would seem to be gone,” Bernstein told his clients. “And if LTE can’t be offered as a replacement for wired broadband, then the notion of an out-of-region bundle of DirecTV and LTE is no more.”

Unlike earlier broadband technologies, WiMax, LTE, and other 4G broadband platforms can deliver far more data to subscribers at reduced costs.  With the increased efficiencies offered by the faster networks, carriers can provide customers with considerably more wireless broadband service, unlike heavily capped 3G networks, most of which are limited to 2-5GB of monthly usage before the penalty rates or speed throttles kick in.  While completely unlimited service is unlikely until capacity increases, there is plenty of room to allow customers to access 4G networks without thinking twice about everything they do on them.

Sprint is betting its comeback on its virtually-unlimited Clear WiMax 4G service, now becoming available in an increasing number of cities across the country.  Marketed as a replacement for wired broadband, Sprint is hoping customers will flock back to the carrier, especially if AT&T and Verizon’s 4G LTE offerings are capped.

But AT&T and Verizon have both made noises about usage capping their LTE offerings, if only to increase revenue.  These profit raising Internet Overcharging schemes come despite efforts by the Obama Administration to dramatically increase wireless spectrum available for wireless broadband services.  Dave Burstein from DSL Prime says Federal Communications Commission chairman Julius Genachowski is betting the farm on wireless broadband being the best chance for increased broadband competition.

“The heart of the U.S. broadband plan is to release more spectrum – enough for 10-20 networks like Verizon’s LTE now building – and pray that will be enough competition in five to seven years to check price increases,” Burstein writes.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.

Dave Burstein, DSL Prime

While wireless broadband can deliver access to many Americans who have never had broadband service before, it’s not well-positioned to compete for customers seeking to use the next generation of high bandwidth Internet applications.

None of the current wireless services are suitable for high quality video streaming of HD TV shows and movies, a crucial application for many broadband users. Burstein also notes large uploads are painfully slow on Clear’s WiMax network because of limited upstream speeds, but he expects improvements in time, assuming carriers expand with demand.  If not, as more users pile on the next generation wireless networks, their suitability for high bandwidth services becomes even more questionable.

“How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan,” Burstein writes. “The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.”

As for AT&T and Verizon, Moffett suspects both may have to take a pass on DirecTV, consumed with fighting against broadband reclassification and Net Neutrality policies in Washington.  Taking on a second battle to run another dog and pony circus to gain regulatory approval for a buyout of DirecTV may be more than they’re willing to deal with at the moment.

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AT&T was sending 156 page cell phone bills in Linda Drussel's name to her son in Texas

All Linda Drussel tried to do was add her son and daughter-in-law to her AT&T FamilyTalk calling plan, adding a phone to Drussel’s account for $10 per month.  But instead of a $10 monthly fee added to her bill, Drussel got a past due notice from a collection agency demanding $1,182, threatening to ruin her credit if she didn’t pay.

Drussel told WDAF-TV she doesn’t pay her bills late, and had no idea what AT&T was talking about, having never received a past due bill from AT&T.  The collections agency was unimpressed, telling Drussel, “Oh come on, Ms. Dressel, you have to know about this — your name is on this.”

Drussel made multiple calls to AT&T trying to get someone to resolve this, but even company supervisors refused to provide any straight answers.  WDAF-TV felt Drussel’s pain when they got the AT&T runaround themselves.  At one point, a reporter was surprised when AT&T asked her for Drussel’s AT&T cell phone number.

It turns out AT&T didn’t establish service for her son under her own account — instead opening one under her name and charging full price for service, delivering the bill to her son’s home in Texas.  When her son and daughter-in-law divorced, nobody paid the bill and AT&T’s collections department decided to pursue Linda Drussel for the past due bill, claiming it was her responsibility.

With a local station’s newscast following the story, AT&T finally determined Linda didn’t ultimately owe the company a cent and has resumed pursuing her son for the past due balance.

Click here to view the embedded video.

WDAF-TV’s ‘Problem Solvers’ had to be called in to try and get through to AT&T that a Kansas City-area woman didn’t owe the company $1,182 it claimed she did.  (3 minutes)

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Rural Alltel wireless broadband customers are getting the axe as the company’s new owners have started pulling the plug on customers caught roaming too much with their service.

Not all of Alltel customers have become Verizon Wireless customers after Verizon bought Alltel in 2008.  In areas where Verizon Wireless already provided service, FCC rules required Alltel to sell its assets to other cell phone companies like AT&T or several regional providers.  One such company, Allied Wireless, bought the rights to use the Alltel name for its service.  But it’s not the same Alltel customers in southern Illinois remember.

Scott Sneddon, who lives near Benton, discovered that for himself when trying to log in using his Alltel Aircard.  When the service wouldn’t work, he called Alltel to learn they had unilaterally canceled his wireless broadband service because he was roaming off Alltel’s original network too often.  For the Sneddon family, that meant the Internet itself would no longer be available to them as they have no access to DSL or cable broadband service.  Sneddon received no warning and no second chance.

Sneddon is concerned because Alltel’s unlimited service plan did not carry the typical 5GB monthly usage allowance other providers enforce.  Despite having a two year contract, Alltel was able to pull the rug out from under his service because the company wanted to cut its roaming costs.  Although the Sneddon initially faced a $400 early cancellation penalty to switch providers, the media attention Alltel received made them relent — Alltel customers in similar positions who find themselves out in the wireless broadband cold will not have to pay a penalty to cancel all of their Alltel services.  Additionally, the company has promised to refund one month of service and refund all wireless broadband equipment charges incurred by dropped customers.

For rural America, incumbent wireless providers disconnecting service for customers they don’t want to serve is just another broken broadband promise.

Click here to view the embedded video.

WSIL-TV in Harrisburg, Ill., shares the stories of two Illinois families left without Internet service when Alltel suddenly canceled their service “for roaming too much.”  (4 minutes)

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No Cable? No DSL from FairPoint Communications on those phone lines either.

Ossipee (Carroll County), New Hampshire

Some residents of Ossipee, New Hampshire have gotten so desperate for broadband service, they’ve planted lawn signs begging Time Warner Cable to provide it.  Ossipee, population 4,211, is located in the western half of New Hampshire.  Its decidedly rural charm has made it popular for vacationers and those seeking a quiet New England lifestyle.

Unfortunately, for those on Water Village Road, it’s too quiet.  There is no broadband service available.

FairPoint doesn’t offer DSL service in the immediate area and Time Warner Cable, although willing to wire neighbors 1/2 mile away, will not provide service to Water Village Road residents.

Time Warner Cable says it provides service where there are 15 or more homes per mile.  Water Village Road only has 13.95 homes per mile.  The company says it will cost about $100,000 to extend service, and has offered to pay $15,000 towards the cost, with the rest coming from the pockets of residents.

So far, they have refused.

Residents do have one way to get cable and Internet service from Time Warner Cable — commit a crime that lands them at the Carroll County Jail, less than a mile down the road.  It has cable.

As for the signs, Time Warner told WMUR-TV it appreciated the interest, but it still doesn’t make economic sense to provide Water Village Road residents with service.

(See more pictures of the lawn signs below the jump.)

Click here to view the embedded video.

WMUR-TV reports on the campaign by several Ossipee, N.H., residents to embarrass Time Warner Cable into bringing them cable and broadband service.  (2 minutes)

Here are some other examples of lawn signs seen on Water Village Road:

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Alltel's logo, in use before 2006

Alltel Wireless is back.  Two years after Alltel was bought by Verizon Wireless, some 900,000 customers in Georgia, Illinois, North and South Carolina, Ohio and Idaho not included in the transition to Verizon will remain Alltel customers under new management.

For many customers, that suits them just fine.  In fact, with an increasing number of complaints from the 13.2 million former Alltel customers forced into a shotgun cellular wedding with Verizon or AT&T, many wish they could have the choice to return to Alltel themselves.

The demise of Alltel is another classic example of a telecommunications deal that made sense (and dollars) for Wall Street and a handful of Alltel executives, but left thousands of employees out in the cold in the unemployment line and customers coping with broken promises and higher bills.

It’s a story familiar to most of our readers, because the game plan for most telecom mergers and acquisitions delivers all of the benefits to a select few and ends up costing consumers plenty.  That these deals get almost routine approval from the Federal Communications Commission is ironic, considering that same agency commissioned studies that unsurprisingly found increased consolidation and lack of competition in the wireless marketplace.

The end of Alltel is a great example of what happens when an industry achieves near-total deregulation. Lobbyists sell deregulation as directly benefiting consumers with increased competition, more innovation, and lower prices.  In reality, from broadcasting to broadband, deregulation sparks escalating rounds of mergers, acquisitions, and buyouts.  Wall Street doesn’t want increased competition — it wants fewer options, less costly innovation, and higher prices to sustain profits.  When Wall Street speaks, most of these companies listen.

Since 1996, when the Telecommunications Act was passed, more than two dozen telecommunications companies have been swallowed up in mergers and buyouts.  Consumers find themselves with new providers and higher bills.  But not everyone is hurting from laissez-faire tele-economics.  For a handful of top executives, the result has been riches beyond their wildest dreams.  Even when they are forced out through merger deals, the golden parachutes that follow brings tears of joy.  Just ask Alltel’s last CEO — Scott T. Ford — he said goodbye to Alltel in 2007 with a parting bonus of nearly $150 million dollars.

Alltel’s History — Keeping It In the Family

Alltel’s history in the telephone business traces all the way back to 1943, with the formation of the Allied Telephone Company of Little Rock, Arkansas.  Back then, telephone service in the U.S. was mostly a monopoly of AT&T and several smaller independent phone companies. Allied’s business began as a pole and wiring provider for those phone companies.  In 1983, Alltel – the traditional phone company – was created from a merger between Allied Telephone and Mid-Continent Telephone.  In 1985, Alltel Wireless service began from its first cellular system in Charlotte, N.C.  In less than a decade, the wireless division would expand service in smaller cities and towns across mid-America and the south, often where larger carriers didn’t want to provide service.

Just about everything in the telecommunications industry changed with the passage of the 1996 Telecommunications Act, signed into law by President Bill Clinton.  The law that promised to open the doors to better service and more competition actually deregulated most of the industry into an “anything-goes” circus of money-fueled mergers, buyouts, and consolidation.  Important consumer protections were discarded along the way.

The implications of the Act were well understood by corporate executives in the industry, and companies spent millions to lobby for its passage.  They considered it a down-payment for better days to come.  The biography of Alltel’s then-CEO Joe T. Ford noted the passage of the law changed everything, even leading to a violation of an agreement he made with his son when he was only 12 years old:

Scott T. Ford, the president and chief executive officer of the Alltel Corporation, made his first business deal at the age of 12 with his father, Joe T. Ford. The two agreed that Scott would never work at Alltel. Joe wanted to spare his son what he himself had endured since coming to work for his father-inlaw, Hugh Wilbourne Jr., in 1959. After the passage of the Telecommunications Act of 1996, however, the Fords rethought their agreement, and, at age 35, Scott Ford became executive vice president of Alltel. Within two years he was appointed CEO, following in the footsteps of his grandfather Wilbourne, who formed Allied Telephone Company in 1943 in Little Rock, Arkansas.

All that hard work by earlier generations was about to pay some serious dividends in a laissez-faire telecommunications world.

Beebe literally drew his own road map depicting his idea of success - remaining on top after a flurry of mergers and ongoing industry consolidation

The Dot.com Boom… for Some

At the end of the 20th century, the telecommunications industry was in the middle of the dot.com boom.

The impact of the 1996 Telecom Act did fuel change among traditional telecom companies.  While some new players were wildly upgrading networks and building fiber optic networks to sustain the dot.com book, most of the traditional phone and cable companies were spending their time and attention on mergers and leveraged buyouts.  The Baby Bell-AT&T empire that was broken up in the mid-1980s was nearly restored to its former glory with super-sized Verizon and AT&T.  Independent phone companies which operated for a century were suddenly the targets of buyouts, now consolidated by regional players like CenturyTel, Embarq, Alltel and Citizens.

Alltel didn’t just buy up other independent phone companies.  It also bought wireless providers and soon merged its landline and wireless divisions into a single company.  This was the era when the “full service phone company” was trendy — capable of delivering local, long distance, and wireless service all from one company, usually on one bill.

Alltel’s executives, like then-Alltel group president Kevin Beebe, delivered presentations to Wall Street bankers like Credit Suisse/First Boston promoting Alltel and its made-for-consolidation balance sheet.  He literally drew his own road map showing his route to success, depicting himself on top after successive mergers with smaller players.

Unfortunately, the high-powered, cash rich days of the dot.com deal were about to end.  By the start of the new century, it was all over.  An oversupply of infrastructure was built to support web-based businesses that would never launch.  Many of those already in business shuttered their virtual doors.  Venture capital for telecommunications projects dried up.  But there was still plenty of money to be made in wireless, and Alltel did obtain financing to launch mergers and buyouts with as many small cell phone providers as possible.  By the early 2000s, the mentality in the telecommunications business was “small is bad.”  The only path to success was to buy your competition, or be bought by them.

The business of mergers and acquisitions earned countless millions for Wall Street banks, who charged fees to help structure the deals and usually helped finance them.  Executives always won, even if a merger brought an end to their career at the company.  Golden parachutes kept the top floor happy.  The only losers were the soon-to-be-ex-employees and middle management declared redundant and escorted from the building.  They were the “cost savings” promoted as a benefit of the merger months earlier.  Meanwhile, customers were stuck dealing with the transition changes, service interruptions, and the eventually higher bill that always result from reduced competition.

During the first half of this decade, it was Alltel doing the acquiring — spending fortunes to acquire other regional wireless phone companies:

• 2002: Alltel acquires 700,000 wireless customers from CenturyTel Inc. in Arkansas, Louisiana, Michigan, Mississippi, Texas and Wisconsin for $1.5 billion.
• 2003: Alltel purchases wireless properties in Mississippi from Cellular XL.
• 2004: Alltel acquires wireless properties from MobileTel, U.S. Cellular and TDS Telecom.
• 2005: Alltel merges with Western Wireless Corp., acquires wireless properties from Public Service Cellular, certain wireless assets from Cingular and exchanges properties with U.S. Cellular of Chicago to meet divestiture requirements related to Alltel’s merger with Western Wireless Corp. Alltel agrees to purchase Midwest Wireless for $1 billion in cash.

Despite the shopping spree, Alltel’s executives like Beebe continued to let it be known Alltel itself was “well-positioned for wireless consolidation” — available for a buyout… for the right price.  By 2006, Alltel had become the fifth largest telecommunications company in the country, with operations in 34 states.  Thanks to lengthy roaming agreements with Sprint and Verizon Wireless, Alltel could deliver national service even from a regional network.

Alltel also enjoyed a satisfied customer base, thanks to innovative calling plans and services that were unheard of from other cell companies.  In 2006, it introduced the popular My Circle calling plan, which allowed customers to make unlimited wireless calls to up to ten numbers, regardless of whether they were landlines or other Alltel wireless customers.  That same year, U Prepaid was introduced, which included unlimited calling and text messaging to a pre-designated number — perfect for those needing to call home.  Alltel prepaid customers could also roam on many other carrier’s networks without paying enormous roaming fees.

Alltel Sells Out Its Landlines

Until the 1996 Telecom Act, most publicly-owned telephone companies were considered a safe utility stock.  In rural communities, many of the phone companies that established service where AT&T’s Bell System did not have been around since the 1890s.  Often owned by a family or cooperative, these independent phone companies popped up when Alexander Graham Bell’s telephone patents expired.  The companies were hardly growth hotbeds, traditionally serving communities that saw little growth and lots of expenses from the wide-open country they had to wire.

After deregulation, venture capital moved aggressively into the wireless and cable sectors.  For the first time, many rural phone companies faced competition from rural cellular providers and cable companies experimenting with “digital phone” service delivered over cable television lines.  But unlike the phone company, these providers were not required to deliver service to everyone.  Most of these services would only challenge the phone company in population centers within towns and villages, that also happened to be where most of their customers lived and worked.

The business model was changing.  As rural phone companies began losing customers to cable and wireless providers, some of them looked to mergers and acquisitions to reduce costs and improve revenues to keep revenue stable, even as customers disconnected.  To maintain interest and  investment from stockholders, many traditional publicly-held phone companies began paying shareholders increased dividends, which attracted attention from Wall Street.

On July 11, 2004, one independent phone company set a new bar for dividends and probably changed the long term business models of rural phone companies for years to come.  Citizens Communications Corporation, as part of a corporate re-shuffle, announced the resignation of its then-CEO Leonard Tow, changed its name to Frontier Communications, and announced an incredible one-time payout of a $2 dividend for every share of common stock, and an ongoing annual $1 dividend, payable every quarter.

With a payout like that, investors began demanding increasing dividends from other phone companies, Alltel included.  To pay that kind of dividend, you need revenue, and slow-growth rural phone companies cannot just generate millions in new revenue selling voicemail, long distance plans, and caller-ID.  That kind of money comes from new lines of business, such as broadband, or from cash-generating mergers and buyouts.

Broadband required millions of dollars in new investments, increasing short term costs and having to wait several years to see a return.  Mergers and acquisitions delivered fast cash and instant results — short term benefits Wall Street loves to see.

So while phone companies continued to lose landline customers at rates up to 7 percent per year, another round of frenzied consolidation through mergers and buyouts erupted.

For Alltel, already established with a strong wireless division, seeing the long term prospects of trying to sustain its landline business as it lost customers seemed pointless.  In December 2005, Alltel announced it was dumping its 3,000,000 landline customers, combining them with another 500,000 customers of Irving, Texas-based Valor Communications in a $9.1 billion dollar tax-free deal to create a new independent landline company — Windstream Communications.

Alltel would henceforth be a wireless phone company-only, and a much richer one at that.  Unfortunately, despite its ranking as America’s fifth largest wireless provider, Alltel still remained a regional player, far behind its fourth largest rival T-Mobile.  With a dwindling number of wireless companies to acquire, speculation grew Alltel itself would soon become a takeover target.

Click here to view the embedded video.

KLRT-TV in Little Rock covered the announced acquisition of Alltel by Goldman Sachs on May 20, 2007 in these three reports.  (15 minutes)

Goldman Sachs Moves In

Within two years, Alltel’s independence would come to an end.  In 2007, Alltel formally opened an auction to sell the company’s wireless assets to the highest bidder.  But in a surprise move, company executives suddenly canceled the auction and accepted a $26 billion leveraged buyout takeover offer from TPG Capital and the buyout arm of Goldman Sachs.  Now, Wall Street investment bankers would own and control Alltel outright.

Speculation in the financial press about why Alltel canceled the auction and didn’t even entertain other bidders for the company raised eyebrows at the time.  The windfall payouts to Alltel’s executives disclosed in later Securities & Exchange Commission filings may have had something to do with it.  Company executives won the equivalent of the Powerball Lotto:

• CEO Scott T. Ford received nearly $150 million dollars.
• Richard Massey, former chief strategy officer and general counsel walked away with almost $50 million.
• Alltel Chief Operating Officer Jeff Fox cleared more than $70 million.
• C.J. Duvall, who was EVP of human resources earned nearly $10 million.
• Kevin Beebe, group president of operations went home with more than $60 million.

That’s quite a haul for the top floor executives at Alltel heading for the exits.

But Goldman Sachs had no intention of running its own phone company for long.  Analysts predicted the investment bank would hold onto Alltel for a year or two in hopes of selling it at a premium to one of the other wireless carriers, probably AT&T or Verizon.

That’s exactly what happened, except it only took seven months.

Click here to view the embedded video.

Bloomberg News took an in-depth look at the 2007 Alltel acquisition by Goldman Sachs and ongoing wireless consolidation. (Corrected Video) (5 minutes)

Verizon Takes Over – The Dog & Pony Approval Circus

With the collapse of the banking sector in 2007 and 2008, Goldman Sachs needed to get rid of assets to raise money.  The subprime mortgage mess left banks with $386 billion in asset writedowns and credit losses.  By putting Alltel up for sale, Goldman would earn $28.1 billion, enough to pay off the loans financing Alltel’s buyout months earlier, and even come out ahead.

The buyer, Verizon Wireless, sought to combine Alltel’s rural cell tower network with its own to expand coverage and pick up a stronger presence in middle America.

In the high stakes, high cost consolidation of telecommunications in the United States, what few regulatory hurdles Verizon would face getting the deal approved meant bringing forth the dog and pony show from Verizon’s lobbyists.  The Federal Communications Commission could alter or even kill its deal.  To make sure that didn’t happen, Verizon counted on the usual assortment of “dollar a holler” advocacy groups, heavy lobbying in Congress, and other friendly allies to help get the deal approved.

Unsurprisingly, Verizon can always count on help from free market allies and alleged community service groups with whom it has a financial relationship or contributes executive talent to serve on their boards.  Most of these have no involvement in telecommunications matters, except when it interests or impacts Verizon.  Suddenly they spring to action, conveniently submitting similar comments supporting whatever Verizon had on the agenda before the FCC.

Click here to view the embedded video.

KLRT and KTHV-TV in Little Rock, Ark., where Alltel was headquartered, ran a series of reports explaining the impact the Verizon-Alltel merger would have on Alltel’s service and jobs in Little Rock. (23 minutes)

Selected Members of the Verizon Friendship Crew Filing Comments Supporting the Verizon Purchase of Alltel (click the names to read their letters to the FCC):

• Institute for Policy Innovation
• Communications Consumers United
• Native American Television
• ASPIRA Association
• Organization of Rural Education
• The Free State Foundation (Political)
• U.S. Hispanic Chamber of Commerce
• U.S. Pan Asian American Chamber of Commerce
• Pacific Research Institute
• Small Business and Entrepreneurship Council
• National Hispanic Council on Aging
• Women Impacting Public Policy
• American GI Forum
• U.S.-Mexico Chamber of Commerce
• Hispanic Alliance for Prosperity Institute
• Latino Coalition
• Consumers for Competitive Choice (Astroturf)
• Dominican American National Roundtable
• National Black Chamber of Commerce
• National Indian Council on Age
• Freedom Works Foundation (Political and Associated With Corporate Lobbying)
• American Association of Peoples with Disabilities
• U.S. Cattlemen’s Association
• League of United Latin American Citizens

Alltel's service areas were carved up between three major providers - Verizon, AT&T, and ATN

Click here to view the embedded video.

Bloomberg News considered the business/industry implications of the Verizon-Alltel merger in these reports. (9 minutes)

Consumers Get Broken Promises & More Expensive Service

The benefits list of what Verizon promised to bring Alltel customers was heavily redacted in FCC filings as “highly confidential.”  What was promised, in public, was that Verizon would deliver improved service to Alltel customers who could continue with their existing service plans..

What consumers really got were major headaches, bad service, and much higher bills.  Former Alltel customers continue to tear up Verizon Wireless’ support forums with page after page of complaints.  As one former Alltel customer puts it, “we are the abandoned children of the redheaded stepchild.”

Some readers of Stop the Cap! shared their own experiences with the Alltel sale. Penny writes:

I first had Midwest Wireless that was bought out by Alltel which was just bought out by Verizon. With each switch I had to change my phone because something on the new system would not work on my old “previous provider” cell phone. Verizon has yet again said that for the “data charges” I can not block anything as my cell phone is too old and that I need to get a “Verizon” phone. My phone is not even a year old.

Enough about phones, data charges, rude customer service. You want to talk about dishonesty and unfair practices…just say Verizon.

In May I called and asked what I should do about leaving for a trip in which I would go out of my phone zone. The customer assistant that I talked to informed me that to avoid roaming charges I should temporarily switch to a national plan. I asked several times if I would be able to go back to my previous plan and was promised that I could set the start and end date for the new national plan. Well can you guess what they did? Yep they did the old bait and switch and from what I know about law….or what I thought about law was that this practice is illegal. Verizon started the new plan almost after I got back from my trip and plus would not set me back to my old plan. So now I had over 2 times the old bill plus roaming charges and less minutes. All I can say is my last call to Verizon was asking when my contract was up and what the termination fee is. By the way the $200 might be well spent.

Penny was switched away from her grandfathered Alltel plan to a new Verizon service plan, and potentially also ended up with a brand new two year contract, without new phones to accompany it.  Any Verizon customer on a grandfathered service plan should never consider allowing a customer service representative to make substantial plan changes — you could lose your old plan.  Grandfathered customers can make certain changes from the Verizon website (adding text plans, changing calling features on phones, etc.) without terminating their existing plan, but be cautious.  Once you lose an old plan, you may never get it back.

Steve, another Stop the Cap! reader, writes:

I was with Alltel for 15 to 20 years and a very happy customer — never a problem. Then Verizon took over and it has been a problem ever since. First off let me tell you that we are truck drivers and travel all over the US. We were in Texas when our laptop died so we went and bought a new one.  Our Alltel air card would not work in the new computer. This was at the time when Verizon was taking over, so we had to go to Verizon and get a new air card. By the way we had unlimited with Alltel. The sales person in Verizon sold us a new card and got us on the road again. From that day forward we have had to visit a Verizon store about our bill every month. Last month was the final straw. We did not like the 5 gig limit to begin with and did not trust it so we were watching it closely so we thought. When the MB’s got up near 4100 we called Verizon and they said you are no where near your 5 gig. Well when the bill came in it said we used over 8 gig and instead of our bill being 200.00 it was over 400.00 for the month . Since this has happened we have already dropped their phone service and may have to drop the Internet and pay the penalties.

Verizon's wireless modem

Steve ran into the problem former Alltel customers frequently encounter when traveling or moving outside of their old Alltel service area.  Many Verizon representatives are not well trained about their new Alltel customers.  Until the transition is complete, many Alltel customers still use equipment that gives priority to Alltel’s network first.  If not correctly provisioned, equipment may not work properly outside of areas where Alltel had service.

Click here to view the embedded video.

Alltel and Verizon were accused of bill cramming in the state of Florida — subjecting customers to monthly charges for “free” ringtones and other services.  The Florida Attorney General’s office ordered refunds for all affected Floridians.  Cell phone companies have an incentive to allow these services to get away with loading up customers’ bills with unauthorized charges — they receive a cut of the action.  WTVT-TV in Tampa reports.  (3 minutes)

Verizon’s 5GB usage cap also includes a steep overlimit penalty.  We’ve seen reports that customers who use service around the country do not immediately see correct numbers for data usage.  That can cause a sudden traffic spike as usage from other areas finally shows up on one’s account.  Verizon customers should have the ability to opt-out from overlimit penalties.  When their 5GB is used up, they should be presented with a screen that requires them to acknowledge they wish to continue using the service and face the consequences on their bill.

Verizon’s tricks and traps for Alltel customers always pay off for Verizon, almost never for customers:

1. Verizon is doing everything possible to get Alltel customers to “upgrade” their service to Verizon plans so they can get them away from Alltel’s legacy plans offering more features for less money.  Once a customer renews a contract with a new Verizon phone or makes a significant change to their service plan, they are switched to a new Verizon plan… often including tricks and traps.  Unlimited texting costs extra on Verizon, as do many other features.  Customers who mistakenly buy what they thought was a comparable service plan learn the errors of their ways when the $1,100 Verizon bill arrives a month later.  Forgetting to add text and data plans can be an expensive mistake on Verizon’s network.
2. Dangling a free or discounted phone upgrade for former Alltel customers often also requires an “upgraded” service plan… from Verizon.  If you want a new subsidized phone, you may lose your old Alltel plan.
3. In many areas, Alltel phones gravitate towards Alltel’s legacy cell network.  That means the phone will choose a weaker cell tower formerly operated by Alltel instead of a closer Verizon cell site.  A roaming/software upgrade normally would correct this and help route calls to the best possible cell site, but customers overwhelmingly complain that doesn’t happen with Alltel-provided phones.  Customers are encouraged to choose a new Verizon phone instead… with a new Verizon service plan.

Click here to view the embedded video.

This former Alltel customer in North Carolina was charged $400 for an unjustified early termination fee when his service switched to Verizon Wireless as part of the merger.  Despite repeated calls, Verizon-owned Alltel turned his account over to a collection agency. Verizon told him to pay off the Alltel collection agency account and they’d credit him $400.  He paid and then Verizon refused to credit his account and turned him over to their collection agency who started calling him at work.  They also ruined his credit.  It took WTKR-TV in Hampton Roads, Virginia airing this story on the 6 o’clock news to get Verizon’s attention after seven months.  (2 minutes)

Things are even more complicated in areas where the FCC has forced Alltel to divest its wireless assets and not transfer them to Verizon.  In most areas, those customers will shortly discover they are becoming part of AT&T’s wireless family, as AT&T bought the majority of those divested markets.  AT&T, however, does not operate with the same wireless standard Alltel and Verizon do.  AT&T phones work on the GSM standard while Alltel and Verizon work on CDMA.  For the time being, AT&T will simply operate the existing CDMA network Alltel used to own, but eventually every affected customer will get a free upgrade to a new GSM phone.  That upgrade better come quick for frequent travelers who are former Alltel customers switched to AT&T.  They’ll find getting service from AT&T outside of their home areas difficult on a network that uses an entirely different standard.  AT&T will likely have to maintain roaming agreements with Verizon for former Alltel customers until conversion is complete.

Click here to view the embedded video.

KELO and KSFY-TV, both in Sioux Falls, South Dakota, informed South Dakota’s former Alltel customers they’d soon have AT&T as their cell phone company, making Apple’s iPod available in stores in the state for the first time. (3 minutes)

A handful of customers won’t end up with either Verizon or AT&T.  In parts of Wisconsin, Element Mobile will take control of their Alltel account. But nearly a million customers will find their former Alltel service is now provided by… Alltel?

The Return of Alltel Wireless

McGill

Allied Wireless Communications Corp., which is staffed by former Alltel employees, has acquired the remaining leftover pieces of Alltel’s network, including its name, for $223 million dollars.  The all-new Alltel will have the same logo and calling plan features the old Alltel offered, and for 900,000 customers, it will be as if they never left.

“We feel like it’s putting the bank back together here in Little Rock,” Wade McGill, chief administrative officer for Alltel Wireless and AWCC told RCR Wireless. The original Alltel Corp. was headquartered in Little Rock, Ark., before being acquired by Verizon Wireless for $28 billion in early 2009. As part of the acquisition, Verizon Wireless was forced to divest some markets, a majority of which were acquired by AT&T Mobility for $3 billion, with most of the rest picked up by what will remain Alltel.

The company will have extensive roaming agreements for nationwide coverage and will focus on maintaining high quality customer care.

“The ability to retain the brand was key in these markets and you can’t underestimate the value of that,” McGill noted, adding that more than 50% of its current customer base have been Alltel customers for more than six years.

“We need to have a laser focus on the customer experience and being local,” McGill explained, citing a common mantra of rural carriers forced to compete against large, nationwide operators. “That’s how we want to think about our plans moving forward. … I think our plan is to grow organically at first and just focus on providing excellent customer service and support.”

But that doesn’t preclude Alltel from starting to expand operations to other parts of the country, perhaps even in areas now taken over by Verizon.

The new Alltel will remain a CDMA provider with plans to move to the LTE standard, which will deliver a 4G-like experience.

Going Back to the Future

In the end, many of the 13 million former Alltel customers probably wish they could have their old Alltel back, too.

Instead, they got wheeled and dealed away, first by an investment bank/casino that later used taxpayer dollars to bail itself out of its own greed, then by Verizon and AT&T who promise a future of higher bills and poorer service for many trapped in two year contracts. Too often, what’s in the best interests of consumers are an afterthought in these kinds of transactions, even today. Despite the FCC’s own findings that wireless competition is shrinking in a consolidating wireless world, they still found a way to green light deals like this that reduce competition even further.

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Google today launched a new website which could become a major advocacy center to promote fiber broadband service across America.

Google Fiber for Communities opened with a thank you message for the enormous number of submissions it received for its experimental 1Gbps fiber broadband network.  Google expects to announce the winning application(s) for its experimental  network sometime this year.

But in the meantime, Google also acknowledges what big telecom companies keep trying to downplay and dismiss — “people across the country are hungry for better and faster broadband access.”  That is… better and faster service than their current provider is willing to supply.

The new website provides hints as to its greater purpose:

1. The name itself.  Notice “communities” is plural.
2. The site intends to mobilize for fiber networks across the country, starting with lobbying for pending federal legislation that would require installation of fiber conduit as part of federal transportation projects.
3. The site’s links heavily promotes municipal broadband advocates and organizations, including the National Association of Counties, the National Association of Telecommunications Officers and Advisors, the Fiber to the Home Council, the Baller Herbst Community Broadband Page, the Broadband Properties Municipal Fiber Portal, and Muni Networks.  Outside of the Fiber to the Home Council, which has some big telecom company members and isn’t above advocating for their interests, the rest of the list suggests Google advocates that communities do for themselves what their local phone and cable companies won’t do — deliver world class broadband service at non-duopoly prices.

Stop the Cap! shares many of these goals with Google, as we are strong advocates for community fiber-based broadband, and believe additional competition is highly needed in America’s broadband marketplace to break up an anti-consumer duopoly that delivers slow broadband service (or none at all) at the highest prices companies can get away with.  Thanks to Stop the Cap! reader Jerry here in Rochester for sending word.

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AT&T U-verse customers may have to do without these shows if an agreement cannot be reached with Rainbow Media

AT&T U-verse customers may lose access to three basic cable networks in less than two days if a dispute over how much money AT&T should pay for the networks isn’t settled.

Rainbow Media’s AMC, We TV, and the Independent Film Channel are all threatened with removal from AT&T’s nationwide U-verse lineup as a two week extension of carriage negotiations appears to be going nowhere.

In an ironic “now the shoe is on the other foot” twist, Rainbow Media is a wholly-owned subsidiary of Cablevision Industries — the cable system serving parts of downstate New York, New Jersey and Connecticut.  AT&T is using some of the same language Cablevision used earlier this year in a dispute over fees charged by Scripps’ Food Network and HGTV, as well as Disney-owned WABC-TV in New York.  Rainbow even borrowed a page from Scripps and launched an AT&T protest site, Facebook page and Twitter account.

“AT&T is acting in an aggressive manner that puts their corporate interests ahead of their customers,” AMC said in a statement. “We are negotiating in good faith with AT&T and are hopeful that we can reach an agreement as soon as possible so that our viewers don’t lose out.”

Meanwhile, AT&T is publicly insulting Rainbow’s cable networks.

“Based on aggregate data we obtained from third party industry sources and our own subscribers, some of the Rainbow channels are among the least-watched and most overpriced per viewer compared to other major programming providers,” an AT&T spokeswoman told Deadline. “They’re also trying to force the renegotiation of a contract for one of their other channels that is not yet expired and force us to carry a new channel that wasn’t even formally presented to us until after the recent July 1 contract extension. We want our customers to know that we can’t and won’t give in to unreasonable deals that unfairly disadvantage our customers.”

Despite AT&T’s bravado, Rainbow may have the upper hand with a more aggressive outreach campaign.  AT&T’s website for U-verse has not mentioned the dispute — a potential PR mistake if it wants to argue its position about programming costs.

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Earthlink, which depends on phone and cable companies to deliver its broadband service, has imposed a monthly usage limit of 250 gigabytes on its customers obtaining service from Comcast.

Customers began receiving postcards in May notifying them about the change in service terms which took effect July 1st.  Earthlink blamed the usage limits solely on Comcast, noting they were dependent on other companies to provide the infrastructure necessary to reach customers:

Comcast and other cable providers provide portions of the network that EarthLink High Speed Cable service uses to deliver broadband Internet access. EarthLink provides the other portions of the network and services like Webmail and the myEarthLink Start Page®.  EarthLink works with its business partners, like Comcast, to manage the network infrastructure.  [...]Because Comcast is EarthLink’s business partner in providing the EarthLink Powered by Comcast Service, EarthLink is working closely with Comcast in implementing this Usage Cap.

Internet providers routinely sell the benefits of their broadband accounts to better accomplish data-heavy activities like online video using their service, even though in some cases all of that "heavy use" is being used as an excuse to implement usage limits on customers.

In reality, Earthlink offers little more than a handful of its own services to customers.  Most of its network connectivity, billing, and other services are handled by the providing cable or phone company.  Customer support with many technical issues is handled by Earthlink’s own off-shore technical support staff.

Still, Earthlink had offered an alternative to those threatened with Internet Overcharging schemes by Time Warner Cable and Comcast because the company had not adopted those usage limits until Comcast insisted they follow suit.  Presumably with this precedent in place, any other Overcharging schemes imposed by these providers would also impact their respective Earthlink customers.

For those violating the usage limits, enforcement won’t come from Earthlink.  Instead, the provider warns, Comcast will be the entity that comes down on your head.

For now, Earthlink customers will have to call the company (888-327-8454) to determine how much data they’ve used during the month as the Comcast data usage meter is apparently only for Comcast customers.

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I’d like to hear your impressions of Clear’s 4G wireless broadband service, which is also known as Road Runner Mobile in Time Warner Cable territories or Comcast High Speed 2Go where Comcast provides cable service.

I am specifically looking for speed results, coverage impressions — whether the coverage maps reflect reality or not, and what type of wireless modem you’ve chosen with the service.  Also, customer service impressions are welcomed.  Feel free to leave your comments in our comment section or use the Contact Us link above if you’d prefer to remain anonymous.  Please remember to include your city and state.

YouTube is littered with negative reviews and complaints about the service, but I’d like to hear from our readers.

Here is one annoyed customer who literally attached her USB modem to a broom handle and mounted it halfway up the side of her home and still could not connect. (Warning: Profanity) (3 minutes)

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Frontier Communications rented a conference room at the Charleston Embassy Suites, calling it a "command center" for the transition. (Courtesy: Charleston Gazette/Lawrence Pierce)

No state faces a larger impact from Verizon’s exit than West Virginia.  The epitome of the kind of market Verizon doesn’t want to serve any longer, West Virginia suffered through several years of Verizon not keeping up with required investments in the aging landline network, and service had markedly deteriorated as a result.  West Virginia is mountainous — expensive to maintain infrastructure, often rural — reducing potential revenues, and economically-challenged — killing the chances of making “triple-play” sales (and profits) in communities where customers have to watch every penny.

West Virginia was also the epicenter of the loudest controversy over the sale, as unions and consumer groups opposed the transaction because of its enormous threat to an entire state’s landline network.  A failure by Frontier would result in the kind of drama experienced by northern New England customers of FairPoint Communications, who suffered with more than a year of horrible service and inaccurate billing.

So news that Frontier has run into problems in the state just one week in, despite sending 250 extra employees into the area for the conversion, has raised concerns with the Public Service Commission, as well as those impacted by problems and outages.  Frontier has tried to put its best face forward, with employees holed up in a self-described “command center” in a conference room at the local Embassy Suites in Charleston.  On the day before the handover, press photographers were able to snap pictures of Frontier employees seated at long conference tables facing one another, with laptops open.  A digital projector showed PowerPoint slides that promoted the “new Frontier” while a temporary company banner tacked to a corner wall rippled over a stand.  A high tech glitz and glamor presentation this was not.

David Armentrout, president and chief operating officer of FiberNet was underwhelmed by all of it.  His company requires connections with West Virginia’s landline provider to deliver full service to his clients.  Prior to the handover, Armentrout said FiberNet had 43 outstanding trouble tickets on file with Verizon.  But Verizon apparently never handed over those support tickets to Frontier, effectively losing them after the transition.  Now that Frontier has taken over, Armentrout’s company has had to open 113 trouble tickets for problems old and new.

Armentrout complained about the lack of results from Frontier in the pages of the Charleston Daily Mail:

Armentrout said that after consistently being put on hold for more than an hour when trying to reach Frontier to talk about outstanding trouble tickets, “we had a meeting with their senior team on Saturday. We said this was not acceptable. Since then they’ve given us a work-around with two dedicated Frontier employees. When we get an hour hold time, we contact these dedicated employees.

“Another issue we’ve had is, we’ve had to contact our customers directly to verify the status of their trouble tickets because the (Frontier) system doesn’t tell us the status,” he said. “As a result of having to contact our customers directly and working with Frontier on all of these issues since July 1, our dedicated team has spent over 200 man-hours working on these issues.

“When you look at the results: six of 43 completed and three of 113 completed, we’re doing a lot of work and spending a lot of man hours but not really seeing a lot of service issues being resolved.

“Unfortunately on Friday the Public Service Commission was closed,” Armentrout said. “We made attempts to get in touch with them because we recognized we would have the problems we’re continuing to have today. I want our customers to know we’re doing everything we can to get these issues resolved.

“Several individuals within Frontier have exhibited good-faith efforts to resolve these issues,” he said. “We commend them for their efforts. But what we’re looking for is results. We need to get these issues fixed. They’ve made efforts but at the end of the day we’re still not getting where we need to be.

“Come Tuesday when business gets back to normal we can expect these numbers to increase unless we get these issues resolved,” Armentrout said. “Our intention is to go to the Public Service Commission on Tuesday and get them involved to make sure these issues are getting resolved as quickly as possible. It has been a long weekend.”

Ken Arndt, president of Frontier’s Southeast Region, issued a statement Sunday that unconvincingly blamed some of the delayed fixes on the recent death of West Virginia Senator Robert Byrd:

“We are doing the necessary work needed to correct old and current issues. It’s Day 4 and overall this has been a very successful conversion. That is especially true when you remember that Day 2 was marked by the presence of the President and Vice President of the United States and many members of Congress at the memorial for Sen. Robert Byrd. We made sure Frontier’s system performed flawlessly.”

The newspaper notes Verizon’s landline network in the state is notorious for having problems when there are storms, and since the July 1st transition there have not been any.  Armentrout agrees, hoping that Frontier’s outstanding issues get resolved before the first major storm hits the state, which could come as early as Friday.  Armentrout calls the first severe weather challenge Frontier faces “the mid-term exam.”

Taking the longer view, Frontier promises it will spend millions in West Virginia to update the state’s landline infrastructure and expand broadband availability.  Frontier announced the hiring of nine regional managers to oversee operations across the state, including Mitch Carmichael, a delegate in the West Virginian legislature representing Jackson.  Carmichael is a former computer salesman who will now manage Frontier’s Parkersburg office.

Customers are less impressed.  Many have experienced lengthy outages with their DSL service since the transition — a bad omen for many Charleston residents who immediately called Suddenlink, the area’s cable company, to switch service providers.  Another Charleston customer called Frontier’s continued reliance on a Yahoo!-provided “front end” “really low class.”  In nearby Huntington, a few customers couldn’t say much about what changed after Frontier took over because their phone service went out on the 1st and was still out a week later.

“I hope they don’t raise the bill since we have not had any phone service at all since 11:00am on July 1st when Frontier took over,” wrote one customer. “With my phone service out since Saturday and a new promise of repairs to be made by Tuesday July 6th, I am waiting to see where Frontier improves service in rural West Virginia. The Verizon employees would just as soon as to tell you anything — same people, just a different company. Frontier needs to have a major house cleaning, as their tales haven’t changed along with the service,” writes another.

A handful also complained that their Frontier phone service cost plenty more than what Verizon charged:

“My parents have Frontier and their bill is twice as high as my Verizon. We have the DSL and the freedom package (unlimited long distance, call waiting, voicemail and caller ID) and my bill is $78 a month.  My parents only have local calling, call waiting, voicemail, caller ID, and DSL and their bill is over $120 with no long distance,” he writes.  “How is this take over going to help anyone other than Frontier? I’m going to cable for Internet and phone.”

Click here to view the embedded video.

WSAZ-TV in Charleston says some companies are experiencing minor problems in the West Virginian conversion from Verizon to Frontier.  (2 minutes)

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Talk about bad timing.  Just as the transition between Verizon and Frontier Communications was about to get underway, a fiber cable cut in Virginia June 29th caused a multi-state outage for Frontier DSL’s service.  In downstate New York, tens of thousands of customers lost service.

News of the outage was picked up by the Times Herald-Record, which reported nearly 30,000 customers in Orange and Rockland counties without service from 2-11am.  A Times reader named Steve observed, “I thought this outage was just the typical monthly DSL outage I suffer every month with Frontier. Think service is bad now? God help us when they get their hands on that chunk of Verizon territory. I suspect it will be overwhelming for them, from financial and technical viewpoints.”

Several thousand customers near Rhinebeck and Hopewell Junction were also impacted, according to a story in the Poughkeepsie Journal.  Reader MarienneV noted this wasn’t the first Frontier DSL outage she’s dealt with:

We noticed that there was no Internet at my house at around 5am yesterday. It was after 8pm when we were finally able to get online. This is not the first time it happened either, about a week or two ago Frontier had an outage that lasted at least five hours. Since there is no local television news up here, I felt kind of cut off from the world. I hope the Internet stays on now.

A similar service outage hit Frontier customers in the Middletown area, according to the Mid-Hudson News.

Since the transition, now even former Verizon customers are being exposed to Frontier DSL outages, especially in West Virginia where widespread problems are attracting the attention of the state Public Service Commission.

The Charleston Daily Mail today reports more than 500 customers in Martinsburg alone seem to have had problems with Internet service since Saturday:

The commission, in its May 13 order approving Frontier’s acquisition of Verizon’s landline network, required Frontier to spend millions of dollars to increase broadband deployment and subscriptions in what was Verizon’s service territory. However, the commission does not regulate Internet service.

On Tuesday Doug Stone said he and his brother-in-law, who both live outside of Martinsburg, hadn’t had Internet service since Saturday morning. Stone said a Frontier customer service representative in Texas told him the company had over 500 calls from the Martinsburg area about Internet service.

Tuesday evening Frontier spokeswoman Brigid Smith said, “The outage in Martinsburg seems to be the direct result of faulty workmanship by Verizon two weeks prior to the completion of the acquisition,” and was directly related to Verizon’s movement of a switch from Maryland to West Virginia. She added, “The cooling equipment Verizon installed was insufficient for the additional data equipment associated with this project.

“My partners at Frontier are working incredible hours to make right many things that have been too long ignored,” Smith said.

A Marmet resident who asked to not be identified said Wednesday that she and a friend, who also lives in Marmet, were without Internet service. “They tell us it will be 24 to 48 hours before they fix it,” she said. “I want you to know the problems aren’t just in Martinsburg.”

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