Verizon FiOS is off limits to rural customers. Wireless voice and satellite broadband is in your future.

Verizon Communications has big plans for its “miraculous” wireless home phone replacement which will soon find itself in rural homes across Verizon’s service area as part of a larger plan to dismantle rural America’s wired telephone network.

Just as company executives promised more than a year ago, Verizon wants to transition rural customers to fixed wireless phone service that could mean the end of wired broadband for millions of Verizon customers still using DSL.

Verizon senior vice president Tom Maguire told Communications Daily Voice Link is Verizon’s answer for customers it cannot easily transition to fiber optics. He is thrilled about the prospects of getting rid of deteriorating copper networks in favor of an inexpensive wireless alternative.

“I’m super jazzed about this because I think it will be good for everybody,” he said. “I think it’ll change a lot.”

For rural Verizon customers, the changes could be profound, dramatic, and not exactly a win-win scenario:

• No more wired phone service, which means medical monitoring, many home security systems, and inexpensive dial-up service that all rely on landline technology will be rendered unusable;
• No more unlimited use DSL service, no business broadband service, no credit card processing or other electronic business transactions that depend on a wired connection;
• No enforced quality of service standards, rate oversight, or guarantee of access to quality voice service;
• No prospect of advanced fiber optic FiOS services, including high bandwidth video and broadband.

Verizon is making it clear Fire Island and the New Jersey Barrier Island are just the first steps towards the retirement of copper, either in favor of fiber optics in high profit/low-cost areas or wireless in rural areas not worth upgrading.

Maguire claims Fire Island residents did not want the company to tear up yards or streets to replace its damaged copper wire network with newer technology like fiber. But Fire Island residents and administrators tell Stop the Cap! they were never asked. Instead, residents are being told Voice Link is likely their only option for traditional phone service on the western half of the island, and some customers are unhappy they will never get FiOS broadband upgrades Verizon says are financially untenable to provide.

Verizon has quietly tested Voice Link in Florida, giving customers the option of keeping their wired service or switching to the wireless alternative. But the test may have been stacked in Voice Link’s favor, as the choice was given to voice-only customers having chronic service problems with Verizon’s deteriorating copper wire network.

Going forward, many rural customers may not have a choice. For those who want Internet access, Verizon isn’t promising its wireless network is up to the task. Their suggested alternative?

Verizon’s solution for rural broadband.

Get a satellite dish.

Maguire acknowledged Voice Link customers won’t be able to fax or do certain activities, but he said the telco never pretended they would. Verizon won’t be offering data services with Voice Link, but if Fire Island customers want more options, they can potentially choose satellite, he said.

Maguire believes that customers living with a deteriorating copper landline network will gravitate quickly towards a wireless phone replacement.

Verizon arranged a blind test of Voice Link for 40,000 customers in another company’s territory with unbranded devices. When the copper wire network performed normally, customers preferred the quality of traditional landline service. But after it rained, the poorly maintained network made all the difference.

“The copper sounded like hell, it was noisy and static-y,” Maguire said.

Maguire did not say if Verizon blind tested whether customers preferred traditional landline service, Voice Link, or its fiber optic FiOS network.

Verizon hopes to begin introducing its Voice Link service in other markets as early as June.

Other stories of interest:

1. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
2. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
3. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
4. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please
5. Verizon Ending DSL Service in FiOS Fiber-Wired Service Areas

Former Insight Cable customers in Evansville, Ind. are fuming after the company’s new owner temporarily left them without phone or Internet service, with nobody available to explain why.

Time Warner Cable attempted to convert Insight customers to its own platform last week, interrupting service in the process. Affected customers quickly jammed customer service lines, leading some to visit local cable offices to straighten things out.

Time Warner Cable will convert former Insight customers in Kentucky and Ohio to its own platform starting in June.

“Right now, I have no Internet,” said Insight customer Claudia Congleton. “I tried to call them three or four times today. No one answers. You’re waiting for over 30 minutes and so that’s why I’m down here. I’m just going to come down here and talk to them about it.”

“It’s so frustrating,” Congleton told Tristate News.

Time Warner blamed the problems on “minor glitches” during the customer conversion process, which began in Evansville on April 29. A larger transition is planned in Kentucky in mid-June, with former Insight customers in Columbus, Ohio moved later that same month.

When Time Warner Cable launched the conversion in Indiana, broadband customers whose names ended in letters “A” through “K” were redirected to a web page that required them to re-register broadband service and select a new twc.com e-mail address to replace their existing Insight e-mail account. Customers who either failed to complete the registration process or who tried during peak usage times often found their Internet service interrupted. Similar problems occurred with phone customers.

Some customers were unhappy with the cable company’s optimistic predictions of a quick fix.

“They lied to me,” said Insight customer Mary Jackson.  “I am so upset because they lied to me.”

Jackson visited the Evansville cable office to report her phone and Internet service were out and the company promised a same-day fix. A day later it was still out.

Here is how the transition was supposed to take place between Insight Cable and Time Warner. WTVW in Evansville walks customers through the conversion process.  (2 minutes)

 http://www.phillipdampier.com/video/WFIE Evansville Broadband Problems 5-1-13.mp4

WFIE in Evansville reports how things actually went. Not so good, reported a number of customers.  (1 minute)

http://www.phillipdampier.com/video/WTVW Evansville Time Warner Cable Customers Look For Answers 5-1-13.flv

The next day, Time Warner Cable customers who could not get through to the company by phone were down at this Time Warner Cable office in Evansville looking for answers, as WTVW reports.  (2 minutes)

http://www.phillipdampier.com/video/WFIE Evansville Insight Switch 5-3-13.mp4

The following day, some customers were still without service. WFIE talks to one Time Warner Cable customer upset she still did not have phone service.  (1 minute)

Other stories of interest:

1. Time Warner Cable Reviewing Its Newest Acquisition: Insight Communications
2. Say Goodbye to Insight Cable, Time Warner Cable Has Arrived
3. Time Warner Cable Acquires Insight Communications for $3 Billion – $1B Below Asking Price
4. Cable Flipping: Insight Communications On Sales Block, Time Warner Cable Says Price Too High
5. Time Warner Customers Upset by Surprise Modem Fees Starting Nov. 1st With No Formal Notice

West Virginia’s broadband future is up for hot debate in the state legislature as Internet haves and have nots fight over whether the state should spend money to bring broadband to those lacking it or improve service for those that do.

House Bill 2979, a bill to expand the broadband purview of the West Virginia Infrastructure and Jobs Development Council, has turned into one of the most contentious bills before the legislature this term. An amendment to redefine what speeds represent “broadband” and requiring the council to prioritize efforts on unserved areas has sparked the most debate.

Sen. Robert Plymale (D-Cabell) introduced and won support for an amendment that would discard the current provider-favored standard defining a community as “served” if customers can buy at least 200kbps service. Plymale favors adopting the federal broadband speed standard — 4/1Mbps as the bare minimum. Plymale also wants the state to devote most of its resources to getting broadband to rural areas that do not have the service today.

“If you’re going to compete in this world today, you have to have access,” Plymale told lawmakers. “Access has to be the number one item, and this amendment allows access to be the priority.”

Plymale

But other lawmakers representing constituents in communities that already have broadband, but receive inadequate speed and service, objected to Plymale’s amendment.

Sen. Herb Snyder (D-Jefferson) claims Plymale’s amendment would restrict the council’s ability to manage broadband resources and require it to spend most of its funding on wiring smaller communities at the cost of service upgrades that could reach more people. Approximately 85,000 West Virginians still have no broadband access other than satellite.

“It’s entirely appropriate to use taxpayer dollars to help and assist people to get broadband service and get on the information superhighway rather than upgrading those already on it,” argued Sen. Mitch Carmichael (R-Jackson), who also happens to also be an employee of Frontier Communications.

Much of the state’s broadband infrastructure spending has been devoted to institutional and middle mile networks that consumers and small businesses cannot directly access. Spending on “last mile” infrastructure makes the difference between getting broadband service or being told it is unavailable.

But Sen. Snyder argues satellite broadband already offers access to the entire state, so broadband speed improvements were more important.

“As we speak the entirety of West Virginia is bathed in 5Mbps satellite broadband service,” Snyder said. “So we’re already surpassing that standard in the entire state, unless you’re in a cave where you can’t get the signal.”

Getting the best broadband bang for the buck was a priority for Sen. Clark Barnes (R-Randolph). He wanted to make sure any amendment would not prevent the council from spending money in areas where satellite service was available.

“If we have 10 folks up in Possum Hollow that have no access to broadband, would they receive priority over the thousand people who only have 2Mbps service?” he said.

The answer would seem to be yes under Plymale’s amendment.

Other stories of interest:

1. Frontier Stymies Broadband Grants to Independent ISPs; Complains They Duplicate Service
2. W.V. Does Broadband Mapping With Volunteers; No More Well-Connected Nation Money Flush
3. Frontier’s Wilderotter Claims W.V. Among Top-5 Broadband States; Facts Say Otherwise
4. West Virginia Upset With Current State of Broadband; Companies Losing Business Over Lack of Service
5. West Virginia’s Conundrum Proves Inflexible Broadband Grants, Poor Planning Wastes Taxpayer Money

AT&T is giving new U-verse customers their choice of a Kindle Fire HD, Nexus 7 Tablet, SONOS PLAY:3 or Xbox 360 game console when signing up for a double-play package of Internet and either phone or television service.

The company is targeting customers planning to switch more than one service away from an existing provider. Most will likely choose U-verse broadband and television service, but any combination of telephone or TV service will qualify a customer for the gift promotion, valued at up to $350.

But customers could wait more than a year before the gift shows up.

The fine print states that customers must wait up to 34 weeks (more than half a year) after signing up before a “reward notification” arrives. At that point, customers must complete an online redemption submission and wait an extra 23 weeks for the tablet or game console to arrive, assuming the customer kept service for at least 30 days.

Customers must sign up before  July 27, 2013 to qualify.

[Updated 3/19: One of our readers in the comment section quotes from an AT&T representative that their press release contained two major "typos": It should have said 3-4 weeks and 2-3 weeks, but someone forgot to proofread.]

Other stories of interest:

1. Time Warner Cable Offers Triple Play Customers Free Xbox 360 & $150-500 Best Buy Gift Card
2. AT&T U-verse Introduced in Central Illinois & Corpus Christi, Texas
3. AT&T Forces Texas Customers With DSL to Take “Free U-verse” Upgrade That Costs $337
4. AT&T and Verizon Cutting Off DSL Customers Without Warning for Phantom U-verse/FiOS Upgrades
5. AT&T U-verse Celebrates 2 Million Customers With New 24Mbps Speed Tier in Austin, San Antonio, and St. Louis

Windstream Communications is under investigation by the Governor’s Office of Consumer Protection because of allegations the company is advertising broadband speeds and performance the company simply cannot deliver its customers in Georgia.

A Windstream employee in a company retail office in Dawsonville told an undercover CBS Atlanta photographer that the company can offer Internet speeds up to 24Mbps. He guaranteed service no slower than 6 to 12Mbps. But Mark Creekmore, who lives in Dawsonville, reports his speeds sometimes barely reach 1Mbps during the afternoons.

Duane Hartness, a Windstream customer, says Windstream has oversubscribed their service by continuing to sell broadband on a network that is overcrowded as-is, which slows speeds for every customer.

“Every customer they add to their oversubscribed DSLAM increases their revenue while further degrading your bandwidth,” Hartness said. “Lacking competition, they can ignore any and all complaints.”

Creekmore wants every Windstream customer in Georgia that is dissatisfied with their broadband service to file complaints with the state agency.

“The more complaints, the more likely the Office of Consumer Protection is to take action,” Creekmore said. “Please make sure to include that you are not getting what you are paying for and any other personal detail that would help them understand what you have gone through. If you have had multiple communications with Windstream, please include those details as well. In short, the more detail the better.”

WGCL — CBS Atlanta reports there are new developments in Georgia regarding Windstream: It is under investigation by the governor’s office for misleading subscribers with broadband speeds the company cannot actually deliver.  (3 minutes)

The FCC finds Windstream is the worst of the worst among DSL providers, only giving customers advertised speeds 81 percent of the time. AT&T, Georgia’s largest phone company, doesn’t do much better.

Windstream is the worst-performing DSL provider in the country according to the Federal Communications Commission, with just 81 percent of customers getting the broadband speeds marketed.

After complaints about the company helped derail H.B. 282 — a bill Windstream heavily lobbied for that would have eliminated possible competition from community-owned providers — Windstream representatives quickly began promising upgrades.

“We’re asking our customers to be patient with us because we’re on it. We understand that they have issues and we’re working to upgrade their network,” Bettye Willis, a regional vice president at Windstream, told the CBS station in Atlanta.

Willis added Windstream was committed to solving its Internet speed problems, but not for everyone.

The company released this map showing planned service upgrades for “two-thirds of the communities it serves” in Georgia. But the company warned not everyone would receive improved service. For the remaining one-third, “take it or leave it” broadband service will continue.

Other stories of interest:

1. Windstream’s Lousy Performance in Georgia Sparks Facebook Protest Group, Media Scrutiny
2. Tech Companies, Consumers, Communities Push Back Against Georgia Anti-Broadband Bill
3. Anti-Competition, “1.5Mbps is Good Enough for You” Broadband Bill Before Georgia Legislators
4. Georgia’s Rural Towns Up in Arms Over Anti-Community Broadband Bill Pushed by Windstream
5. Call to Action Continues in Georgia: Here’s a Sample E-Mail You Can Use

Cogeco customers in Québec will find faster speeds and a larger usage allowance for most of the company’s broadband packages.

The changes took effect Feb. 1. Customers can get the new speeds by briefly unplugging their cable modem, resetting it.

• Express 5 now offers 5/1.5Mbps service with a 25GB monthly cap;
• Express 10 now offers 10/1.5Mbps service with a 60GB monthly cap;
• Turbo 14 now offers 14/2Mbps service with a 80GB monthly cap;
• Turbo 20 now offers 20/2Mbps service with a 100GB monthly cap;
• Ultimate 60 now offers 60/2Mbps service with a 300GB monthly cap.

“Internet needs are rapidly evolving,” said Ron Perrotta, vice president of marketing and strategic planning at Cogeco Cable. “We have taken into consideration the feedback received from our current residential customer base, and made the necessary changes in order to meet the needs of the vast majority of our customers and provide them with more competitive internet offerings.”

If Cogeco surveyed their customers regarding getting rid of usage caps altogether, the answer would likely be yes. But that is a question Cogeco does not seem willing to ask.

Cogeco offers different plans for customers in Ontario:

Other stories of interest:

1. Cogeco Unveils DOCSIS 3 Upgrades in Niagara Falls, St. Catherines, Ont.
2. Updated: Time Warner Cable Boosts Turbo Upload Speeds to 2Mbps in Rochester, N.Y.
3. Cogeco’s ‘Value Plan’ Doesn’t Offer Much Value: $19.95 for 4Mbps With 15GB Cap
4. Cogeco Follows Rogers: Introduces New “Ultimate HSI” Package for $149 a Month… With 150GB Cap
5. Telus Raises Usage Allowances and Speeds; Anti-Usage Billing Movement Scores Victory

A one-way street or Avoidant personality disorder?

Back in July we noticed Time Warner Cable’s Conversations website, engaged in two-way conversations with customers, began a “dialogue” on the issue of its new 5GB usage-capped “Internet Essentials” plan first unveiled in several Texas cities.

The company provided its view that broadband innovation required pricing flexibility with new usage-based broadband plans to offer customers “more choice” and a $5 discount on service if they agreed to limit monthly usage to 5GB or less.

Despite sharing our two cents (and several of our readers tried to add their own as well), we noted none of these views ever appeared online.

This week we checked back and discovered the dialogue had decidedly turned one-way: namely from Time Warner Cable to you. The company deleted the few views that were published on cable television programming costs and removed its comment section altogether.

Our reader Kevin even tried to be generous in his comments to the company last summer, but to no avail.

“I basically told them if usage meter billing is inevitable, then give us no less than 300 GB a month, at a rate of $40 a month,” he wrote. “Seeing how 1 GB of bandwidth and data costs you less than $1 to generate to me, this is more than fair. Doubt they will even read it since it isn’t a ‘wow this is awesome, OMG i luv you so much for this new plan TWC’-message.”

They might have read it, but elected to avoid the uncomfortable notion of sharing the actual costs to provide broadband service to customers. It is not the first time, either.

Other stories of interest:

1. Time Warner Cable’s One-Sided Conversation About Usage Caps Continues
2. Breaking News: Time Warner Cable Relaunching Usage Based Billing
3. Time Warner Cable Reintroduces Usage Caps in Austin; Tell Them ‘No Thanks!’
4. Is Time Warner Cable Really Listening? TWC’s One Way Conversation
5. Let’s Dialogue: Coping With Peer-2-Peer & Video Usage On Broadband Networks

Wyden

Sen. Ron Wyden (D-Ore.) has introduced legislation that would force Internet Service Providers to prove usage caps are designed to manage network congestion instead of monetizing consumer data usage.

The Data Cap Integrity Act would require the Federal Communications Commission to enact new rules forcing providers to justify their usage cap programs, create standards by how ISPs measure usage and to provide useful measurement tools to customers before they incur overlimit fees.

“Internet use is central to our lives and to our economy,” said Wyden. “Future innovation will undoubtedly require consumers to use more and more data — data caps should not impede this innovation and the jobs it creates.  This bill is intended to help consumers manage their data more effectively and ensure that data caps are used only to serve the legitimate purpose of addressing congestion.”

Wyden’s bill is an attempt to force providers to prove their contention that usage limits improve the user experience by preventing so-called “data hogs” from slowing down connections of other paying customers.

Wyden is also concerned that without uniform standards of data measurement, consumers could be blindsided with overlimit fees or even have their service cut off. In the past, providers have stuck customers with a variety of often inaccurate measurement tools that have under or over-reported usage, which can sometimes lead to higher bills. At present, no government agency has authority over the veracity of provider measurement tools, and most ISPs impose terms requiring subscribers to accept their word as final for the purpose of usage measurement.

The Oregon senator’s bill is the first measure regulating usage caps introduced in the Senate. In 2009, Rep. Eric Massa (D-N.Y.) introduced a measure in the House that would have banned most usage caps and usage-based billing without first applying a means test. Massa introduced the bill after Time Warner Cable attempted to impose a usage-billing scheme on customers in his district, which includes parts of the Rochester area.

Among the provisions in Wyden’s bill the FCC must enact and enforce within one year of its passage:

• A “truth in labeling requirement” that requires ISPs fully disclose the cost of their services, the true upload and download speed a customer will receive, and the presence of any speed throttles or usage limits;
• A ban on usage caps for any provider that cannot prove they are needed to control congestion and not simply discourage Internet usage;
• A penalty for providers that either do not provide suitable measurement tools or inaccurately measure usage leading to unjustified overlimit fees;
• A provider may not exempt certain content from its usage cap while imposing it on others.

Lyons

Wyden’s bill was introduced at the same time the nation’s largest cable lobbying group, the National Cable and Telecommunications Association, sponsored an event defending usage limits and consumption billing. Two of the three experts speaking at the event declared peak usage limits or congestion pricing ineffective.

In fact, Michael Weinberg from Public Knowledge took note of the fact the cable industry now seems to admit it does not have a congestion problem:

“The most refreshing section of the [NCTA's] study is the one that is not there,” Weinberg wrote. “There is no meaningful discussion of usage-based pricing as a tool to reduce network congestion or a suggestion that monthly data limits are a reasonable way to impact congestion. There is also no invocation of the mythical ‘data hog,’ a sinful creature that can only be punished with data caps. Hopefully, the omission is NCTA’s tacit admission of two things: that cable networks are not congested and, if they become so in the future, monthly caps will do little to address that congestion.

”

“I don’t think congestion is as big a problem in fixed broadband,” said Professor David M. Lyons of Boston College Law School at the NCTA event. “The latest broadband speed surveys that the FCC has come out suggests that there is not a whole lot of slowdown at peak periods on the fixed side.”

Other stories of interest:

1. Suddenlink’s Thumb on the Scale That Measures Your Usage
2. A Challenge Providers Will Never Accept: Turn Over Usage Data to Justify Usage Cap Schemes
3. Syracuse Technology Columnist Falls Into Trap Believing Usage Caps Represent “Fairness”
4. Netgear Will Help Internet Subscribers Independently Measure Broadband Use
5. A Week of Hearings On Usage-Based Billing: The Death Rattle of the “Congestion” Excuse

Ford, Jr. (D-The Green Room)

Harold Ford, Jr., a former Democratic congressman from Tennessee and John Sununu, former governor of New Hampshire, are unhappy with an Op-Ed piece written by David Cay Johnston in the New York Times that calls out the telecom industry for high prices and and an uncompetitive marketplace.

Ford, who can usually be found in the green room of various cable news networks waiting to deliver his pro-industry messages on behalf of front groups like Broadband for America, says that 93 percent of Americans are happy as can be with their broadband Internet service.

Sununu joined Ford in some less-than-factual arguments about the state of American broadband:

Second, nearly 90 percent of all Americans can choose from two or more wireline competitors and at least three wireless broadband providers, most of whom now provide some of the fastest 4G LTE broadband networks in the world. Meanwhile, new fiber optic, satellite and wireless choices keep emerging.

Third, during the past four years, broadband providers invested $250 billion in the nation’s broadband infrastructure, while other industries sat on their cash.

Fourth, unlike many other consumer products, the monthly prices for broadband Internet have remained relatively constant, while average speeds have increased by 900 percent or more. Free-standing broadband service is now routinely available for $20 to $30 a month.

That is playing fast and loose with the truth. In reality:

• Most Americans have one cable and one phone company to choose from, not “two or more.” Wireless broadband providers offer service with a cap so low, it can almost never provide a suitable replacement for wired broadband service. Although AT&T and Verizon Wireless have growing 4G LTE networks, neither carrier has provided universal access to LTE speeds. T-Mobile and Sprint are only getting started. The fiber optic choices that are emerging these days are primarily from community-owned providers Ford’s industry friends vehemently oppose. AT&T does not offer fiber to the home service and Verizon effectively suspended expansion of its FiOS fiber network several years ago.  Wireless choices are now shrinking because of mergers and acquisitions and satellite broadband remains a painful experience regardless of the provider;
• Most that the investment made in “broadband” is focused on expanding wireless 4G service. That investment allowed both AT&T and Verizon to pay Uncle Sam dramatically lower tax bills — AT&T even collected a refund. Home broadband expansion has been far less expansive;
• Monthly broadband bills have not remained constant — they are rising, and more rapidly than ever. Speeds enjoyed by average customers have not increased by 900 percent, only some top speeds that are priced well out of range for most Americans. The price both quote for free-standing broadband is for “lite” service, often so slow it no longer even qualifies as “broadband.” Often, that budget service also comes with usage caps, sometimes as low as 5GB per month.

Sununu and Ford close:

Fortunately, very few policy makers in either party have endorsed the kind of heavy-handed regulations that Mr. Johnston’s arguments seem to imply — regulations that would only stifle investment and truly put America at risk of falling behind.

America has already fallen behind, and will remain in decline as long as regulators and Congress listen to a handful of telecommunications companies speaking from their sock puppet front groups and handing out campaign contributions to elected officials to keep things exactly as they are today.

Other stories of interest:

1. Dollar-a-Holler News: Former Congressmen-Turned-Industry-Hacks Attack Unlimited Internet
2. Analyst Tells Phone Companies To Forget About Fiber – Copper Delivered DSL Good Enough for You
3. World Wide Wait: DSL = (D)ead, (S)low and (L)ousy — the Dial-Up of the 2010s, Says Analyst
4. Broadband for (Corporate Interests) America Astroturfs the Airwaves
5. Russia Passes USA in Fiber Deployment; Lithuania Leads Europe With Fiber-Fast Speeds

Major cable and phone companies are rolling out new bundled packages and promotions designed to protect their cable television packages from cord cutting.

Verizon, Comcast and Time Warner Cable have all run promotions that carry a clear message: cancel your cable television and your wallet gets it.

The Wall Street Journal shared the story of Comcast subscriber Cathy Vu, who decided she no longer wanted cable TV and tried to downgrade to a broadband-only account.

Comcast gave her an offer she could not afford to refuse when the representative explained canceling cable television would increase her monthly bill $20. As a result, Vu decided she would save more money keeping her cable television turned on.

Welcome to the new world of double and triple play bundled pricing promotions that bring downgrade penalties customers cannot ignore.

The idea of repricing cable service to protect vulnerable cable television and phone service began in earnest after analysts like Sanford Bernstein’s Craig Moffett began noticing customers were no longer addicted to keeping cable television, no matter the cost. He proposed a solution: price broadband service higher and cut the cost of cable television.

The result: carefully constructed promotional and bundled package offers that entice customers to purchase services they might not even want, to get the best (and sometimes lowest) price. Gone were promotions that offered phone, broadband, and television service for $33 each. In their place, new pricing that charges $60-70 for the first service, and heavily discounted prices for each additional service.

You know the pitch:

“Yes, I am calling to sign up for broadband service,” you say.

“Certainly, I would be glad to help you with that. But did you know that for just $20 more a month, you can also get cable television?”

“Really, it’s only $20 more? Sure.”

“I am thrilled to hear you say that. But I hope you are sitting down because I have more good news. For just $10 more, we can give you a phone line with unlimited local and long distance calling. How much do you pay the phone company now?”

“Too much, that sounds like an amazing deal, so I get everything together for $99 a month?”

“You sure do, for the first 12 months anyway.”

One year later when the promotion ends, you call to begin downgrading service to lower your bill. But cable and phone companies are increasingly ready for you.

First they will offer you a slightly less attractive promotional retention offer to keep your business. If you accept, the company gets to book the extra revenue and probably locked you into an annual service agreement.

If you don’t bite and insist on a downgrade, they have some bad news for you — that broadband service you still want will now cost you $60-70 a month, including the modem fee.

If you bail early on a promotional discount offer, the bite on your wallet can be significant.

The Journal found unbundling just does not pay:

• Comcast: TV + Internet for about $50/month for the first 6 months vs. standalone same speed Internet for about $70/month.
• Verizon FiOS: TV + Internet for about $85/month (two-year contract) vs. standalone Internet for about $80/month.
• Time Warner Cable: TV + Internet for about $50/month for 12 months vs. standalone Internet for about $45/month for 12 months, then up to $60 after that.

At the end of the day, Moffett and the rest of Wall Street get their wish — preservation of the all-important growing average revenue (ARPU) collected from each customer. Downgrades lower ARPU, so they must be discouraged at all costs.

Cable operators “recognize that their most advantaged product is broadband,” said Moffett. “They don’t want to sacrifice that advantage by giving the opportunity for customers to cherry pick their best product at a low price and take the rest of your services from somebody else. In effect, they are pricing the broadband at a price that discourages you from taking broadband only.”

Customers primed for cord cutting (or who have never bought cable TV) are likely to receive targeted mailings from Verizon, Comcast and Time Warner Cable encouraging subscriptions to cable TV and prices that nearly give the service away.

Comcast’s Blast Plus promotion in selected markets delivers 30Mbps broadband with Digital Economy television service, both for $50 a month for six months. Internet-only customers would pay $70 per month for the same speeds without television.

Time Warner Cable in New York City wants to be your cable TV supplier so much, it offers a package of broadband and throws in Broadcast Basic service for just $5 more per month. Combined, Turbo Internet and television will cost $49.99 a month for a year. Standalone Internet on a promotion runs $45 a month for 12 months.

On a strict cost basis, charging more for Internet does not make sense. The Journal reports that about 90% of your monthly broadband bill is pure profit for cable operators, because the cost of delivering the service has continued to plummet to all-time lows. Cable television is no longer the cash cow it used to be for cable operators because programmers increasingly demand a piece of the profit pie. Today, cable operators only get to book about 35% of your monthly cable television payment as profit.

The Wall Street Journal examines the trend towards repricing broadband service so that customers feel compelled to keep their cable television package or face even higher bills.  (5 minutes)

Other stories of interest:

1. Time Warner Cable Pitching “Free TV” Service When Upgrading Broadband
2. Comcast Internet Service Promotions: Experiences With the Retention Department
3. Big Cable Running Scared: Comcast/Time Warner Cable Promotions Can Save Customers A Fortune
4. Competition Breather: Verizon FiOS Rate Hikes Ease Pressure on Cablevision, TWC
5. “Increased Programming Costs” Cause Comcast to Jack Up Broadband Rates 6.1% in Oregon