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Nationwide Class Action Lawsuit Filed Against Charter Claiming False Advertising, Deficient Equipment

Phillip Dampier April 3, 2017 Broadband Speed, Charter Spectrum, Consumer News 4 Comments

Charter Communications is facing a second lawsuit related to false advertising about its ability to provide fast internet service and allegations the company knowingly supplied customers with deficient equipment.

Hart et al. v. Charter Communications Inc., is seeking certification as a nationwide class action from a judge in the U.S. District Court for the Central District of California.

The suit claims that Charter’s subsidiary Time Warner Cable purposely leased out modems and wireless routers it knew were incapable of achieving Time Warner Cable Maxx broadband speeds, consistently oversold its broadband network — resulting in slower internet speeds and performance than the company advertised, and raised customers’ bills without adequate notice.

The California lawsuit closely mirrors one filed in February by New York Attorney General Eric Schneiderman, and focuses on similar claims that Charter is engaged in “false representations and other wrongful business practices.”

The complaint claims:

  • The company willfully and intentionally advertised internet service it could not provide, claiming customers would receive internet service that was “fast” with “no buffering,” “no slowdowns,” “no lag,” “without interruptions,” “without downtime,” and “without the wait.”
  • Charter leased older generation modems and wireless routers to many of their customers that were incapable of supporting the promised internet speeds. Older technology modems could not provide the full benefit of Time Warner Cable Maxx speeds of 100-300Mbps, and company-provided network gateways delivered Wi-Fi service at speeds considerably lower than advertised.
  • Charter regularly failed to manage their network in a manner that would give customers consistent broadband speeds. Instead, “Defendants included too many subscribers in the same service group and provided too few channels for such subscriber, thus causing an internet ‘traffic jam’ (particularly during peak hours) that slowed every subscriber’s connection to speeds substantially below what was promised and paid-for. Indeed, even when consumers resorted to using wired connections, their Internet speeds still fell short of the promised speeds.”
  • Defendants also have adopted an unlawful and unfair practice of adding new fees or other charges to consumers’ bills without adequate notice and outside of the terms promised upon sign-up. In 2016, one customer signed up for a promotional “Spectrum Internet with Wi-Fi” plan with a fixed rate of $64.99 and a $10.00 “Promotional Discount,” making her plan cost a total of $54.99 per month. This amount was reflected in her February 2017 bill. However, on her March 2017 bill, the customer was automatically charged $59.99, a $5.00 increase of which she was not given adequate notice and which was improperly charged to her credit card automatically.

The lawyers bringing the case propose to include as class members anyone who purchased internet service from Time Warner Cable/Charter Communications nationwide, those who believed the company’s advertising that claimed speeds were fast and reliable, and customers enrolled in auto-pay who were not properly informed of changes in price or the terms of service. If certified, the potential size of the class action case could involve millions of customers.

Cable Operators Impressed With DOCSIS 3.1 Speeds, Not So Much With Network Gateways

Phillip Dampier March 21, 2017 Broadband Speed, Consumer News 1 Comment

DOCSIS 3.1 is the latest standard for cable broadband. (Image courtesy: Diparth Patel)

DOCSIS 3.1 — the newest iteration of the standard that allows cable operators to deliver broadband over their hybrid fiber-coax networks — is performing better than expected, according to engineers at some of the largest cable companies in the country.

Multichannel News reports the new robust standard works “really well” even when cable infrastructure isn’t up to pristine standards.

“It [DOCSIS 3.1] works better than 3.0 in noisy plant,” said JR Walden, senior vice president of technology and chief technology officer of Mediacom. Walden adds it even performs well where cable operators oversell their network, packing too many customers on a congested node that would normally cause speeds to fall dramatically under the current DOCSIS 3.0 standard.

DOCSIS 3.1 is more efficient handling bandwidth available for broadband service and its ability to bond multiple channels together allows cable operators to boost internet speed tiers dramatically. Mediacom is currently deploying gigabit speeds across its entire network footprint, and the technology is backwards-compatible with DOCSIS 3.0 so cable networks can be upgraded without any disruption to customers.

Mediacom expects its costs to provision customers with broadband service across all speed tiers to drop because of DOCSIS 3.1, delivering the company “better economics.” Customer upgrades can also deliver additional revenue, and Walden claimed between 3-10% of Mediacom customers have already upgraded to gigabit speeds.

The Comcast XB6, one of the first DOCSIS 3.1 network gateways.

The biggest challenge found by early adopters of DOCSIS 3.1 isn’t the technology — it is the network gateways that connect cable modem service to in-home wired and wireless networks. DOCSIS 3.1-compatible gateways are still in short supply, and is essential if the customer is going to get the broadband speed they are paying for. The biggest bottleneck of all comes from in-home Wi-Fi.

Multichannel News:

“Having a very powerful WiFi device is critical” for DOCSIS 3.1, agreed Damian Poltz, VP of technology strategy and networks at Shaw Communications.

Comcast is trying to address this with the XB6, a full-featured DOCSIS 3.1 gateway that will also integrate speedy WiFi, ZigBee and other connectivity technologies.

For its initial D3.1 deployments, Comcast has been pairing stand-alone modems with a separate gateway to serve “thousands of customers.”

While acknowledging that such a set-up is not ideal, Jorge Salinger, VP of access architecture at Comcast, confirmed that Comcast is building versions of the XB6 that use Broadcom and Intel chipsets. He said Comcast is completing employee trials shifting toward customer trials and on to commercial deployments, which are expected to begin in the next month or so.

Customers without DOCSIS 3.1-compatible equipment will find speed tests reporting slower speeds than advertised. Several vendors are working on expanding the supply of network gateways and are making sure those devices can deliver robust Wi-Fi.

The cable companies most aggressive about DOCSIS 3.1 deployment have been Comcast and a variety of smaller national and regional operators like MidCo and Mediacom. Altice is upgrading Suddenlink customers to gigabit speeds using the current DOCSIS 3.0 standard and is scrapping its existing coax network for Cablevision customers, to be replaced with fiber-to-the-home service. Lagging behind will be Charter Communications, expected to be among the last cable operators to upgrade to DOCSIS 3.1 as it remains preoccupied with integrating Time Warner Cable and Bright House into its existing operations. Charter’s first priority is to complete all-digital upgrades for TWC and BH customers, expected to take up to two years to complete.

Frontier CEO Blames Employees for Company’s Poor Performance; Bonuses Cut, Investigations Begin

The second half of 2016 shows losses in broadband and television customers.

Frontier Communications CEO is blaming employees for the company’s deteriorating financial condition and operating performance and has allegedly dropped bonuses and merit pay increases for lower-level employees.

Sources inside Frontier Communications tell Stop the Cap! Frontier CEO Dan McCarthy notified employees in email on March 2 — one week before employees were expecting to receive their annual bonus — the company would no longer be providing bonus compensation for “lower banded management employees.”

“He implied that he too was affected but I highly doubt that is the case,” one source tells us. “We weren’t notified via a ‘Town Hall’, no conference call, no face to face with our managers, only a cowardly e-mail sent from behind a desk thousands of miles away. Keep in mind that people use that to pay house taxes, medical bills, pay off other bills, pay college tuition, etc, and a week before we were slated to get it we’re told that it isn’t coming.”

McCarthy has been on the hot seat with Wall Street for weeks after reporting yet another quarter where many of Frontier’s most profitable customers are fleeing faster than the company can replace them with new ones. McCarthy also told investors that many of Frontier’s losses in the last quarter were due to the company finally disconnecting service and writing off customers who haven’t paid their Frontier phone bills for as long as a year in acquired former Verizon territories in Florida, Texas, and California.

McCarthy

“There was certainly no suggestion that the big acquisition would pay off in the company’s Q4 earning report when subscriber counts, average revenue per residential user, and quarter-over-quarter revenue all fell,” wrote Daniel B. Kline of TMFDankline. “That has been the pattern in all three quarters since the Verizon deal closed, and while McCarthy has done an excellent job controlling expenses, his excuses for the drop in subscribers have started to sound a bit hollow.”

That effort to “control expenses” may be coming at the expense of customers that Frontier is depending on to stay in business.

New York Attorney General Eric Schneiderman last month announced the state was reviewing Frontier’s performance in western New York. A Rochester television station has aired more than a half-dozen stories about deteriorating service quality at Frontier since last summer. After airing the first few stories, the station was inundated with hundreds of complaints about Frontier’s spotty broadband and phone service.

News10NBC (WHEC-TV) reported it can take weeks for a Frontier technician to show up on a service call. Customer service is no help and customers are not getting the services they paid to receive.

Frontier was also implicated last month in knocking a Rochester area radio station off the air. After the company first blamed the radio station’s equipment for the problem, Frontier eventually admitted its own “old infrastructure” was responsible for outages that interrupted broadcasts for hours at a time.

Frontier’s stock continues its descent.

Schneiderman has been focused on keeping New York’s ISPs honest about their speed claims and performance, but service reliability is also increasingly an issue, especially after high winds in a recent storm in western New York left nearly half of the Rochester metro area without essential utilities for several days. Infrastructure upkeep, particularly aging utility poles, is now under investigation by the state’s Public Service Commission. Early evidence revealed local utilities may have underinvested in pole maintenance for years due to cost cutting. Some utility poles in western New York are well over 50 years old, originally placed in the 1950s and 1960s. Hundreds failed in the high winds.

Frontier’s track record of blaming others for their own problems has not been well-received by employees.

“Maggie Wilderotter [former CEO of Frontier Communications] was bad but McCarthy’s leadership is erratic and catastrophic,” shares another Frontier middle management employee wishing to stay anonymous. “McCarthy was defending the regional management autonomy approach as a unique strength for Frontier last summer, now he’s declared that is inefficient and is centralizing management decisions at corporate headquarters. He was selling Wall Street on Frontier’s IPTV project in 2016 by promoting expanded service territories. Now that project is on hold and there are signs Frontier is pulling back on meaningful and long overdue broadband speed upgrades. He recently announced he was reorganizing residential and commercial sales units, something our competitors did long ago and will only disrupt things at Frontier even more. Poor customer service was the result of “on-shoring” our call centers? Not exactly. Poor training and inadequate support have left our call center employees unable to properly handle customer concerns. He also consistently downplayed how nightmarish the Verizon conversion was for our new customers in Florida, Texas, and California. It was bad planning, bad vision, and poor execution and the buck stops with our CEO.”

Another source tells us:

“We worked 60-80 weeks, late nights, weekends, countless hours away from our families to push forward with projects that were horrible for our customers and senior leadership was told to get the job done regardless any way they could. We worked through the AT&T and Verizon conversions. We performed as employees of Frontier. Who did not perform? Those making these horrible financial and planning decisions that caused major outages to former Verizon customers when they finally cut over. Some problems were so severe that many customers decided to leave.”

Frontier insiders tell us the company is on a mission to slash expenses across the board to turn in better financial results that can protect the company’s dividend payout to shareholders and, in turn, executive pay and bonuses. The company is reportedly considering allowing more employees to work from home to cut facilities costs, utilities, and maintenance expenses.

“There have been numerous resignations over this and morale is at an all-time low within the company,” a source tells us.

One of the employees sharing the latest developments reports he has turned in his resignation this month and accepted a position in middle management at the area’s cable competitor Charter Communications.

“I figure I should follow so many of our customers to a company that isn’t great, but at least makes an effort delivering what it promises.”

Frontier’s Problems Afflict Hundreds of Customers in Western N.Y.

WHEC-TV Rochester has been following problems with Frontier Communications since last summer. Until the acquisition of former Verizon customers in Texas, Florida, and California, the Rochester, N.Y. metropolitan area was considered Frontier’s largest legacy city service area. But just like in smaller rural communities, service problems have plagued Frontier, with complaints rolling in about slow or non-existent broadband, landline outages, poor billing and customer service practices, and service calls that take weeks before anyone shows up.

WHEC-TV Rochester began covering problems with Frontier on Aug. 22, 2016 with an investigation into internet woes at a Geneseo insurance agency. (2:21)

One day later (Aug. 23, 2016) complaints from other Frontier customers poured into WHEC-TV’s newsroom because of outages and bad service. (2:54)

In September, 2016 WHEC-TV was back with another story from frustrated and angry customers who can’t get suitable service from Frontier Communications, but found a $200 early termination fee on their bills when they tried to cancel. Now the Attorney General is getting involved. (3:18)

In late December, WHEC reported it had asked the N.Y. Public Service Commission to start an investigation into Frontier Communications over its broadband service. (2:20)

In February, when N.Y. Attorney General Eric Schneiderman came to town to discuss the honesty of ISP speed claims, WHEC reporter Jennifer Lewke instead questioned him about the hundreds of complaints the station had received about Frontier Communications. (3:03)

About one week after the Attorney General visited Rochester, WHEC reported Frontier Communications’ “old and outdated” equipment was directly responsible for taking a local radio station off the air for hours at a time. (1:10)

Several days after a windstorm in the Rochester area took away power to nearly half the metropolitan area, WHEC reports residents are frustrated waiting for cable and phone service to be restored. An investigation into utility infrastructure is now underway. (3:17)

FCC’s Ajit Pai on Mission to Sabotage Charter-Bright House-Time Warner Cable Deal Conditions

Pai

As a result of the multibillion dollar cable merger between Charter Communications, Bright House Networks, and Time Warner Cable, the three companies involved freely admitted: your cable bill was unlikely to decrease, you won’t have any new competitive options, there was no guarantee your service would improve, or that you would get faster broadband service than what Time Warner Cable Maxx was already delivering to about half its customer base.

While shareholders and Wall Street bankers made substantial gains, top Time Warner Cable executives walked away with multimillion dollar golden parachute packages, and Charter took control of what is now the country’s supersized, second most powerful cable operator, regulators also required the dealmakers share at least a tiny portion of the spoils with customers.

Then President Donald Trump’s FCC chairman — Ajit Pai — took leadership of the telecom regulator. Now all bets are off.

Pai is reconsidering the settled deal conditions imposed by the FCC under the last administration, and wants to give Charter Communications a free pass to let them out of their commitment to compete. Last week, Pai circulated a petition among his fellow commissioners to roll back the commitment Charter acknowledged to expand its service area to at least one million new homes that already get broadband service from another cable or telephone company.

Former FCC chairman Thomas Wheeler sought the competition requirement to prove that cable operators can successfully run their businesses in direct competition with each other, potentially inspiring other cable companies to face off with incumbent operators outside of their own territories. A paradigm shift worked for Google, which inspired ISPs to boost speeds in light of its gigabit Google Fiber service, which reset customer expectations.

The FCC order approving the merger deal was hardly onerous, requiring Charter to compete head-to-head for customers in places the company can choose itself. Lawmakers eliminated exclusive cable franchise agreements years ago, but established major cable operators like Charter have gone out of their way to avoid competing in areas that already receive cable service. While Wheeler may have hoped some of that competition would be directed against fellow cable companies, Charter CEO Thomas Rutledge quickly made clear to investors and the FCC Charter would continue to avoid direct cable competition, instead promising to expand service into non-cable areas that already get DSL service from the phone company or no broadband at all.

“When I talked to the FCC, I said I can’t overbuild another cable company, because then I could never buy it, because you always block those,” Rutledge said. “It’s really about overbuilding telephone companies.”

Charter’s CEO believes most phone companies are not competing on the same level as cable operators and are unwilling to make the necessary investments to upgrade their aging wired infrastructure to offer faster internet speeds. That makes competing with telephone companies like Windstream, Frontier, and Verizon’s DSL-only service areas a much better proposition than trying to compete head-to-head with Comcast, Cox, or Cablevision.

Rutledge’s clear views about Charter’s expansion plans apparently never made it to the American Cable Association, a cable industry lobbying group that defends the interests of independent and smaller cable operators. Despite Rutledge’s public statements, the ACA and its members are afraid Charter could expand on their turf anyway, potentially forcing small cable operators to compete with the same level of service Charter offers. The horror.

The ACA’s arguments found a sympathetic audience in Mr. Pai and now he wants to let Charter off the hook, at the expense of competition and better service for consumers.

Under the proposal circulated by Pai, Charter would still be required to expand its cable broadband service by at least one million new homes, but those homes would no longer have to be in areas outside of Charter’s existing service footprint. In practical terms, this would mean Charter would focus on wiring areas not far from where it provides service today — ‘DSL or nothing’-country. Charter would also be able to fritter away the number of expansions required by counting newly constructed neighborhood developments it would have likely wired anyway, as well as upgrading its remaining shoddy legacy cable systems — some still incapable of offering broadband or phone service.

The ACA’s talking points prefer to emphasize the David vs. Goliath scenario of a big bully of a cable company like Charter being forced to compete (and likely obliterate) existing small cable operators:

“The overbuild condition imposed by the FCC on Charter is stunningly bad and inexplicable government policy,” said ACA president and CEO Matthew Polka, in a statement. “On the one hand, the FCC found that Charter will be too big and therefore it imposed a series of conditions to ensure it does not exercise any additional market power. At the same time, the FCC, out of the blue, is forcing Charter to get even bigger.”

The real goal here is to minimize direct competition at all costs. The FCC’s deal conditions already included the need for more rural broadband expansion. Wheeler’s second goal was to introduce a new model — cable company competing against cable company — fighting for new customers by offering consumers better service and pricing. The existence of such competition would belie the industry’s claim that cable overbuilds and head-to-head competition is uneconomical. Wildly profitable, perhaps not, but certainly possible. Historically, the traditional way cable operators dealt with the few instances of direct cable competition was to buy them out to put them out of business. Rutledge was certainly thinking along those lines when he complained that the FCC’s order to compete did not include permission to eventually devour its competitor, effectively making competition go away.

Had Charter chosen to compete with cable companies not afraid to spend money to upgrade service above and beyond the anemic broadband speeds Charter offers, it would likely find few takers for its maximum 300Mbps broadband service that comes with a $200 install fee.

“Why would we go where we could get killed?” Rutledge admitted.

Industry claims that the cable business is already fiercely competitive are also countered by Rutledge’s own statements making clear direct competition with brethren cable companies on the cusp of speed-boosting DOCSIS 3.1 upgrades was bad for business. Instead, he would focus on competing with inferior phone companies, which he characterized as mired in debt, still skeptical about the financial wisdom of fiber optic upgrades, and the only competitor where dismal 3-10Mbps DSL service presented a ripe opportunity to steal customers away.

Clyburn – A likely “no” vote.

Charter’s merger approval and its conditions are a sealed deal that was acceptable to Charter and its shareholders and at least offered small token treats to ordinary consumers. Mr. Pai’s willingness to reopen and undo those commitments is just one reason we’ve referred to his regulatory philosophy as irresponsible, nakedly anti-consumer, and anti-competitive. Mr. Pai’s willingness to embrace things as they are comes at the same time most consumers are paying the highest broadband bills ever while also facing an epidemic of usage caps, usage billing, and increasing service and equipment fees. Mr. Pai’s other actions, including ending an effort to introduce competition into the set-top box market, curtailing customer privacy, ending inquiries on usage caps/zero rating, threatening to eliminate Net Neutrality, and reducing the FCC’s already anemic focus on consumer protection makes it clear Mr. Pai is a company man, on a mission to defend the interests of Big Telecom companies and their lobbyists (that also have a history of hiring friendly regulators for high-paying positions once their government job ends.)

That conclusion seems apt considering what Mr. Pai said about Chairman Wheeler’s vision of improving broadband: “one more step down the path of micromanaging where, when, and how ISPs deploy infrastructure.” Missing from his statement are consumers who have spent the last 20 years watching ISPs govern themselves while waiting… waiting… waiting for broadband service that never comes.

Mr. Pai’s proposal needs just one additional vote to win passage. That extra vote is unlikely until President Trump appoints another Republican commissioner. Pai’s proposal isn’t likely to win support from the sole remaining Democrat commissioner still at the FCC — Mignon Clyburn.

AT&T Slowly Strangling U-verse TV to Reposition Bandwidth for Broadband

Phillip Dampier February 16, 2017 AT&T, Broadband Speed, Competition, Consumer News, Online Video No Comments

AT&T’s U-verse TV has been losing customers for over a year. (Image: Market Realist)

AT&T wants its U-verse TV video service dead, but is willing to watch it bleed customers for a while before likely downsizing or axing the service to make room for better broadband speeds.

The phone company has allowed U-verse TV to wither on the vine for more than a year, losing hundreds of thousands of customers every quarter since late 2015, and surprisingly has done almost nothing to stop the subscriber losses. In all, more than a million AT&T U-verse TV customers canceled service in 2016.

AT&T has admitted it has abandoned aggressively marketing its U-verse TV platform and has put its marketing muscle into selling DirecTV, the satellite provider AT&T acquired two years ago. DirecTV has added customers at a remarkably similar rate that AT&T has been losing U-verse TV customers. AT&T is even willing to watch customers walk into the arms of their competitors, a clear sign AT&T hopes their U-verse TV customers churn away.

Customers report U-verse TV-related promotions and retention plans have gotten worse in the last 14 months and some tell Stop the Cap! they were steered to DirecTV when they contacted AT&T to discuss their options.

Even the U-verse brand is being gradually discontinued. AT&T recently rebranded its fiber to the home service AT&T Fiber, dropping the AT&T U-verse with GigaPower brand the company had used since first announcing gigabit speed access.

AT&T U-verse as a brand is slowly disappearing in favor of AT&T Fiber.

Market Realist reports AT&T doesn’t necessarily want to spend a lot of money upgrading its legacy U-verse fiber to the neighborhood network across its entire landline service area, but needs to boost broadband speeds to stay competitive with cable broadband. When U-verse was originally launched, the service reserved much of its available bandwidth for television service, limiting broadband speeds to a maximum of around 24Mbps. That is no longer seen as competitively adequate and that leaves AT&T with only two options: upgrade its legacy infrastructure to support fiber-fed gigabit speed or reduce the amount of bandwidth devoted to television services and use it to expand broadband speeds.

AT&T is doing a little of both, expanding its gigabit broadband service in very limited areas in 46 cities with 23 more to come sometime this year. An indication of just how few customers can actually buy AT&T’s gigabit speeds was revealed indirectly by AT&T. Only four million homes and businesses, including 650,000 apartment and condo units can buy 1,000Mbps broadband from AT&T nationwide. Los Angeles and Chicago — both AT&T Fiber service areas, combined have more than five million potential customers alone.

In many cases, fewer than 10% of AT&T’s customers in AT&T Fiber cities can actually buy the service. In Knoxville, Tenn., AT&T admitted its gigabit service was only available in about 30 apartment and condominium complexes.

AT&T is promising to expand its fiber service to reach at least 12.5 million customers in 67 metro areas by the summer of 2019. But that will still likely leave more than half of AT&T’s customers out of reach of the service.

AT&T has told investors it plans no blockbuster budget increases to aggressively roll out fiber service across its footprint, which includes much of the south and midwest and large sections of California. Instead, it will likely offer fiber service to new housing developments, multi-dwelling units, and higher income areas. That decision still requires AT&T to do something for customers not on a near-term upgrade list, and that will likely be a gradual transformation of legacy U-verse into broadband-only service with speeds closer to 50-75Mbps, where video streaming from services like DirecTV Now can travel over the top to customers.

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  • Sam: Hello, I'm Thomas Rutledge CEO Of Charter Cable. My Shareholders in NYC-NJ are on strike. I'm made a whopping $98.5 million dollars. My Union IBEW 3 S...
  • Anthony: Perfect timing with this video. On the day that Canada upholds net neutrality, we get a nice reminder of how horrible the outlook is for the Internet...
  • Tony: Time Warner/ Spectrum would shut off my service , kept billing me ,, I called to ask why and they said they wouldn't stop billing me the full monthly ...
  • John: CSPAN is paid for by cable and sat. operators, it's their organization, and they pay dues per customer....
  • Sandy: I have been with Dish Network entirely too long to keep going through this crap almost every 6 months. I'm not getting quality service like this. If I...
  • Chuck: Hello all we are going through the same type of problems. Ever since Frontier took over Verizon we've had to call every month to get bill changed. Has...
  • Roger: If I'm not mistaken, they don't pay for C-SPAN and may not pay for the religious and shopping channels. If they do, it is a nominal fee. In additi...
  • Limboaz: It's a shame that Google has thrown in the towel with their fiber network expansion, and it's also a shame that Telco's like Centurylink are just so p...
  • Thomas: What is even more amazing is how difficult ATT really is, they are a slow moving beast a snail leaving behind wreckage and a slimly trail. They give n...
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