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Investigation: Spectrum’s Best Discounts Go Only to Areas With Robust Competition

Spectrum customers living in areas wired for fiber optics get substantially better discounts for longer periods of time than those living in areas where anemic phone company DSL service is the only competition.

Charter Communications, like many cable operators, asks all prospective customers to enter their complete mailing address, claiming prices “vary per location.” What the company does not say is that it maintains a database of addresses where fiber-fast competition is currently available and only offers the best deals to those locations.

In Rochester, N.Y., Spectrum competitor Greenlight Networks has made headway installing fiber to the home service in select neighborhoods in the city and suburbs. As fiber service becomes available, some Spectrum customers start switching to Greenlight, which markets 100/20 Mbps service for $50/mo, 500/50 Mbps for $75/mo, or 1,000/100 Mbps for $100/mo. In response, to keep customers, Spectrum offers 24 months of reduced pricing on its internet package. But your address must match Spectrum’s database as being within a competitive service area. Otherwise, the deals will not be so good.

Stop the Cap! found dramatic differences in prices between addresses nearly across a street from one another – one wired for Greenlight Fiber, the other not.

Competitive Area (Spectrum, Frontier DSL, Greenlight fiber-to-the-home service)

Spectrum Ultra (400 Mbps): $44.99/month for 24 months (free upgrade from Standard 100 Mbps package)

All promotions last 24 months

Free Wi-Fi Service

No installation or set up fee*

Non-Competitive Area (Spectrum, Frontier DSL)

Spectrum Standard (100 Mbps): $44.99/month for 12 months (for Ultra 400 Mbps, add $25/mo)

All promotions last 12 months

Wi-Fi Service is $5/month

$49.99 professional installation fee required for Ultra 400 Mbps service*

In Greenlight service areas, Spectrum now undercuts Greenlight’s pricing by offering Spectrum Ultra 400 Mbps service for $5 less than what Greenlight charges for 100 Mbps.

“Racerbob,” a DSL Reports reader in Webster, N.Y., discovered the same “enhanced offers” as an ex-Spectrum customer. He switched to Greenlight three months ago. He discovered if he added a Spectrum cable TV package, the price for 400 Mbps Ultra internet service dropped even lower, to $39.99 a month for two years.

In all, a sample package he assembled delivered dramatic savings, but only if a robust competitor like Greenlight was also offering service to his address:

Addresses used for comparison were in zip code 14618, with verified access to Greenlight at a street address to represent the “competitive” service area and verification Greenlight was not available at the address used for “non-competitive” service area. *-Although a setup fee was found on the final checkout page in both competitive and non-competitive service areas, it was only actually charged in non-competitive service areas during our investigation.

AT&T Upgrades Home Internet Plans – 5, 100, 300, and 1,000 Mbps Now Available

AT&T quietly changed their home internet plans this week, dramatically boosting speeds for some of their lower-priced offerings in areas served by fiber, while boosting gigabit pricing by $10 a month in some instances.

Last week, AT&T was selling 5, 50, 100, and 1000 Mbps plans in AT&T Fiber areas. This week, customers can choose 5, 100, 300, or 1000 Mbps. Existing customers will likely have to switch plans to get the speed upgrades.

Prices shown reflect a bundled discount in the Chicago area. Prices vary in different service areas and are higher for broadband-only service. Basic 5 Mbps pricing can range from $30-60 a month depending on area and available discounts.

If you are a new AT&T customer, the company is offering a $50 Reward Card rebate (expires 7/31/2018) and a free Smart Wi-Fi Extender (new or existing customers switching to gigabit service only) (expires 6/28/2018). Here are some other important terms and conditions to be aware of:

  • There is a 1 TB data cap on all plans except Gigabit Internet 1,000, which is unlimited. But you can avoid the cap for $30 extra a month (not worth it) or by maintaining a bundle of TV and internet service on a combined bill.
  • All internet offers require a 12 month agreement ($180 pro-rated early termination fee applies).
  • Prices reflect bundled service combining internet with at least one other AT&T product (TV/AT&T Phone/Wireless).

Altice Raising Rates Across the Board for Optimum/Cablevision Customers

Altice, which operates Cablevision’s Optimum brand cable service in New York, New Jersey, and Connecticut, has informed regulators of a broad-based “rate event” that will take effect on June 1, 2018. Unless a customer is currently enrolled in a price-locked promotion, these new rates generally affect all customers, except as noted.

Altice told Connecticut regulators the rate changes “reflect the rising cost of programming and our significant investment in the customer experience. Optimum pricing is competitive when compared with other providers, and the Company continues to offer a wide array of products to meet all consumer needs and budgets.”

Altice has told Wall Street a different story, noting it is prioritizing a reduction of the company’s massive debts that came from aggressive acquisitions of other cable systems. Altice also told investors in February Altice USA will distribute a special cash dividend to shareholders of $1.5 billion to celebrate Altice USA’s split from its Netherlands-based parent company Altice NV. The company also told shareholders it was happy with its latest profitable results, showing Altice’s residential business growing to just over 80% of total revenue, up 2.9% in 2017 and 1.8% in the fourth quarter of 2017. Business services is growing in mid single digits.

Altice also plans to continue increasing marketing on its advanced all-in-one-box solution — Altice One, which costs $25 a month.

Changes effective June 1, 2018:

Set-Top Box: For customers who elect to receive a traditional set-top box from Optimum, the monthly rate will increase from $10.00 to $11.00. Does not apply to existing commercial customers.

CableCARD: For customers who request a CableCARD from Optimum, the monthly rate will increase from $2.00 to $2.50.

Sports Surcharge: To partially cover the continually increasing costs that programmers charge Altice to carry sports, the Sports Surcharge will increase from $6.97 to $7.97, for customers subscribing to the Optimum Core or higher tiers. (Broadcast Basic & Economy customers are not charged the Sports Surcharge.)

Broadcast TV Surcharge: New residential Broadcast Basic and above customers currently pay a $3.99 monthly “Broadcast TV Surcharge” to partially offset the high costs that broadcasters charge. This fee will increase to $4.99 a month and will also be applied to existing Broadcast Basic residential customers and new commercial customers.

Broadcast Basic Tier: New residential customers currently pay $19.99 per month for Broadcast Basic. To align basic tier rates, this same rate will apply to existing residential Broadcast Basic customers currently paying a monthly rate over $13.95. As an accommodation to existing Basic Tier customers currently paying $13.95/month, the new monthly Basic rate will be $14.95.

Sports and Entertainment Package: This a la carte subscription will increase from $8.95 to $10.00.

Residential Service Protection Plan: In addition to the free 24/7 technical support that Optimum offers all customers, the optional Service Protection plan covers any fees assessed for service visits. To align our rates, existing customers who currently pay $4.99/month will pay the same $6.99 fee currently applicable to new customers.

Restoration Fee: Optimum customers who do not pay their bill within 30 days of the due date, despite multiple reminder notices, are currently subject to a $4.99 per service fee to restore their service. Effective June 1, the minimum service restoration fee will be $10.00 for single and double product customers and $15.00 for triple product customers.

Installation Fee: Starting June 1, the prices paid by customers for standard and premium installations will increase from $69.00 to $99.00 and $99.00 to $129.00, respectively. Customers are being notified 30 days in advance for each of these changes through bill messages or inserts. In addition, rate information will be available on our website at www.optimum.net.

Strong Evidence T-Mobile/Sprint Merger Will Cause Prices to Rise, Innovation to Sink

Despite rosy predictions from Sprint and T-Mobile executives that the two companies joining forces will result in plentiful competition, lower prices, and more advanced service, the results of prior mergers in the wireless industry over the last 20 years delivered increasing prices, reduced innovation, and a lower customer service experience instead.

Few markets show the stark results of consolidation more than the telecom industry. Monopoly cable rates, barely competitive wireless domination by AT&T and Verizon — both with a long history of adjusting wireless rates and plans to closely match one another (usually to the detriment of the consumer), and politicians and regulators that acquiesce to the wishes of the telecom industry have been around even before Stop the Cap! got started in 2008.

When a market disruptor begins to challenge predictable and stable marketplaces, Wall Street and investors quickly get uncomfortable. So do company executives, whose compensation packages are often dependent on their ability to keep the company’s stock price rising. That is why T-Mobile USA’s “Uncarrier” campaign, which directly challenged long-established wireless industry practices, created considerable irritation for other wireless companies, especially AT&T and Verizon.

The two wireless industry giants initially ignored T-Mobile, suggesting CEO John Legere’s noisy and confrontational PR campaign had no material impact on AT&T and Verizon’s subscriber base and revenue. Ironically, Legere was named CEO one year after AT&T’s 2011 failed attempt to further consolidate the wireless industry with its acquisition of T-Mobile. A very generous deal breakup fee and accompanying wireless spectrum provided by AT&T after the deal collapsed gave T-Mobile some room to navigate and transform the company’s position — long the nation’s fourth largest national wireless carrier behind Sprint. It is now in third place, poaching customers from the other three, and has repeatedly forced other carriers to change their plans and pricing in response.

T-Mobile’s “Uncarrier” promotion.

T-Mobile invested in its network and delivered upgrades, but the real inroads for subscriber growth were made by throwing out the typical wireless carrier business plan. T-Mobile brought back unlimited data and made it a key feature of their wireless plans starting in 2016, a feature AT&T and Verizon had successfully banished, ended the traditional two-year contract, scrapped junk fees and surcharges that customers hated, and ran regular specials that dramatically cut family plan rates. If you lived in an area with solid T-Mobile coverage, the scrappy carrier quickly became a viable option among those contemplating ditching Verizon or AT&T. T-Mobile also benefited enormously from disaffected Sprint subscribers that spent years riding out frequent promises of an in improved network experience that frankly never matched the hype in many areas. Price conscious customers that could not afford a plan with AT&T or Verizon moved even more readily to T-Mobile’s network.

In contrast, AT&T and Verizon have spent the last 20 years consolidating the wireless industry by acquiring regional carriers that had a reputation for good service at a fair price, with the promise that the acquisition by a richer and larger competitor would accelerate network upgrades and improve service. But customers of long-gone or diminished carriers like Alltel, Leap Wireless’ Cricket, MetroPCS, and Centennial Wireless (there are others) that either no longer exist or remain alive only as a brand name on a larger company’s network, noticed higher bills and eliminated coveted features that helped them manage their data and voice plans and costs.

In Europe, recent industry consolidation in some countries has reduced major carriers from four to three, similar to what T-Mobile and Sprint would do in the United States. Pal Zarandy at Rewheel compared consolidated markets in Germany and Austria and discovered gigabyte data pricing where consumers had three options almost doubled in price in Germany and Austria. Austria was 30% less expensive than a control group of six neutral countries when it had three competitors. Today, with two, it is 74% more expensive than its European counterparts. In Germany, prices went from 60% more expensive to nearly triple the rates charged by control group countries.

The merger of Sprint and T-Mobile will dramatically reduce competition in several ways:

  1. It will end the pervasive price war for lower-income consumers on postpaid plans. Sprint and T-Mobile directly compete with each other to secure customers that skip AT&T and Verizon Wireless because of their more expensive plans and accompanying higher-standard credit check.
  2. Each of the four current national carriers have had to respond to aggressive price promotions for hardware (Sprint, T-Mobile), plans (T-Mobile, Sprint), and loyalty-building rewards (T-Mobile Tuesday). With a merger, those promotions can be scaled back.
  3. AT&T and Verizon have been forced to reintroduce unlimited data plans as a direct result of competition from Sprint and T-Mobile. Incidentally, Sprint and T-Mobile’s unlimited data features are different. T-Mobile offers zero rating of lower-resolution videos from selected websites while Sprint offers unlimited access to HD video. In fact, Sprint’s unlimited plan marketing campaign casts T-Mobile’s version in a negative light and was designed to beat T-Mobile’s plan to attract new customers.
  4. Since Sprint and T-Mobile are market disruptors, merging them means no new aggressive campaigns to out-disrupt each other to the consumer’s benefit. Instead, they will target the conservative plans of AT&T and Verizon, which requires less innovative marketing and less significant price cuts.

Sprint’s marketing points to differences between its plans and those from T-Mobile, Verizon, and AT&T.

In 2015, the OECD released a definitive study demonstrating the impact of consolidating telecom mergers among top industrialized countries, including the United States. The results were indisputable. If you reduce the number of national carriers to fewer than four, prices rise, service deteriorates — along with innovation and investment, and consumers are harmed. In Canada, where three national carriers dominate, the former Conservative government made finding a fourth national wireless competitor a national policy priority. While Americans gripe about their cell phone bills, many Canadians are envious because they often pay more and live with more restricted, less innovative plans.

This February, market research firm PwC published its own findings, “Commoditization in the wireless telecom industry,” showing that North America remained the most “comfortable” region in the world for wireless carriers looking for big revenue and profits, but that was starting to change because of disruptive marketplace changes by companies like T-Mobile and Sprint.

“In this zone, there is a greater than 50 percent spread in market share and ARPU between highest and lowest market players indicating that commoditization is far off,” PwC notes. For wireless carriers, “commoditization” is bad news. It means the amount of money a carrier can charge for its services is highly constrained because multiple competitors are ready to undercut another carrier’s prices or engage in all-out vicious price wars. In these areas, commoditization also means consumers treat each competitor as a viable player for their business.

In France, four national providers —  OrangeSFRBouygues Telecom and Free, have been in a price war for years, keeping France’s wireless prices shockingly low in comparison to North America. The price war in the United States is just beginning. PwC notes as the U.S. market becomes saturated — meaning everyone who wants a cellphone already has one — companies will have to compete more on price and service. T-Mobile and Sprint have been the most aggressive, and the effect is “meaningful competition.” In Canada, where three national carriers exist, competition is constrained by the domination of three large national companies and some regional players. Instead of cutting prices and expanding plan features, many Canadian providers are now trying to bundle their cable, phone, and wireless customers into a single package to “protect [market] share and increase stickiness.” In other words, Canadian wireless carriers are designing plans to hold the line on pricing while keeping customers loyal at the same time.

While average revenue per customer is now around $30 a month in North America, it is less than half that amount in virtually every other region in the world. PwC shows the direct impact of competition starting around 2014, when T-Mobile and Sprint got particularly aggressive about pricing. Wireless carrier ARPU was no longer a nearly flat line from 2009-2013. Now it is dropping faster than every other region in the world as AT&T and Verizon have to change their pricing to respond to competition pressures.

Sprint and T-Mobile’s CEOs launch their PR blitz. (Image: Cheddar)

While reports are likely to surface arguing the alleged pro-consumer benefits of the Sprint/T-Mobile merger, it will be critical to determine who or what entities funded that research. We expect a full-scale PR campaign to sell this merger, using industry-funded astroturf groups, industry-sponsored research, and industry-connected analysis and cheerleading.

In 2011, the Justice Department definitively crushed the proposed merger of AT&T and T-Mobile. It cited strong and convincing evidence that removing a competitor from the wireless market will lead to consumer harm from reduced competition and higher prices. If one substitutes Sprint for AT&T, the evidence still shows Sprint’s own aggressive marketing and promotions (and its competitors’ willingness to match or beat them) will be missing from a marketplace where Sprint no longer exists. That cannot and should not be allowed to happen.

Spectrum Launches Gigabit Upgrades Across Upstate New York, Dozens of Other Cities

Charter Communications today launched gigabit broadband upgrades across dozens of U.S. cities, including almost all of upstate New York (excluding Buffalo) and large parts of Texas, Ohio, California, and Virginia.

With the latest upgrades, customers in these cities are also getting speed bumps for Spectrum’s Internet Ultra package, which will now offer speeds of 400/20 Mbps. Customers can visit Spectrum.com to review their local speed options. Upgrades to the Ultra tier usually carry no service charges, but moving to gigabit speed will come at a cost — a mandatory $199 installation fee, with a service call required.

Some customers may need to swap out or replace their existing cable modems to take full advantage of 400+ Mbps speeds. A list of modems authorized for use on Spectrum’s network along with the speeds they support can be found here.

In other cities where Charter has already launched gigabit service, customers with Standard 100 Mbps internet plans also received a free upgrade to 200/10 Mbps, but readers report that speed upgrade has not yet taken place in areas launching gigabit service today:

  • Arizona: Yuma
  • California: Los Angeles, Palm Springs, San Diego, El Centro
  • Kentucky: Louisville, Bowling Green, and Paducah
  • Massachusetts: Boston (Suburbs)
  • Nebraska: Lincoln, Omaha
  • New York: Binghamton, Albany, Syracuse, Rochester, Elmira/Corning, Utica, and Watertown
  • North Carolina: Greensboro, Wilmington, and Greenville
  • Ohio: Dayton, Cincinnati, Youngstown, Lima
  • Pennsylvania: Wilkes-Barre and Pittsburgh
  • Tennessee: Tri-Cities, Chattanooga, and Knoxville
  • Texas: Dallas/Fort Worth, Waco, El Paso, Beaumont/Port Arthur, and Wichita Falls
  • Virginia: Roanoke/Lynchburg, Norfolk (Suburbs) and Tri-Cities
  • Wisconsin: Milwaukee, Green Bay/Appleton

For most customers, here is Spectrum’s current broadband pricing (new customer promotions may offer significantly lower rates and bundled pricing may differ):

  • $64.99 Spectrum Internet Standard 100/10 Mbps (will eventually be upgraded to 200/10 Mbps)
  • $54.99 Spectrum Internet Standard 100/10 Mbps with Spectrum TV (will eventually be upgraded to 200/10 Mbps)
  • $89.99 Spectrum Internet Ultra (400/20 Mbps)
  • $79.99 Spectrum Internet Ultra (400/20 Mbps)
  • $124.99 Spectrum Internet Gig (940/35 Mbps)
  • $114.99 Spectrum Internet Gig (940/35 Mbps) with Spectrum TV

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  • john doe: The market is kind of saturated. Whoever wanted internet have already subscribed to Comcast/Charter. Beside this Verizon strategy is doomed to failure...
  • Coin: While its possible the connections are being throttled, I think its more likely that the cell network is overwhelmed. I live in a hurricane prone are...
  • Dylan: Just isn’t that nice? I would drop them quickly if they told me that my plan was too “low” and I needed to upgrade and pay more for better service. Wh...
  • Dan: Nice job Verizon first throttle first responders then hurricane victims. Fcc step in oh wait. Ajuit pia is worse than useless he is anti consumer....
  • LG: I didn't hear these speeches, and really don't know if what he said was incendiary or hateful, but I do know the left-wing media cannot be trusted to ...
  • Dylan: 20gigs? Abysmal. I would use that in a couple of hours. Even 50. I’m certainly fortunate to have unlimited internet with Spectrum....
  • EJ: I wonder if they are going to extend service based on demand. That system is used by many telecommunication companies that are coming into a new area ...
  • Phillip Dampier: Just to clarify, I think they are throwing in a free or discounted dish, which isn't such a big deal if you can find a promotion that does the same. I...
  • EJ: Well I guess I should of scrolled down first lol. Question answered by the Verizon article. Good job Phillip. Note to self scroll down a few articles ...
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  • Mark Wilkinson: This is a nightmare. Life was good until Verizon sold us to Frontier. Our service has been cut off twice for non-payment of an "non-returned equipme...
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