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Verizon Wireless to Customers Looking for a Better Deal: Goodbye and Good Luck With Competitors’ Inferior Service

Verizon Wireless: The Neiman Marcus of mobile providers

Verizon Wireless: The Neiman Marcus of mobile providers

A customer retention call with Verizon Wireless is short and to the point: enjoy the coverage you get from us now at the prices we charge or cancel and live with inferior cell phone service from one of our competitors.

Verizon chief financial officer Fran Shammo waved goodbye to 138,000 Verizon Wireless customers in the last three months and he could care less.

“If the customer who is just price-sensitive and does not care about the quality of the network—or is sufficient with just paying a lower price—that’s probably the customer we’re not going to be able to keep,” he said in the company’s quarterly earnings call today.

The wireless industry’s price war has not yet inflicted much damage on Verizon, which considers itself above the fray.

Average revenue per customer has started to significantly decline for the first time in wireless industry history, despite efforts to bolster earnings with expensive data plans and bundling services, including unlimited voice calling most cell phone users no longer care about. Both T-Mobile and Sprint are resorting to slashing prices and reducing the fine print to pick up business, with T-Mobile being the more successful of the two pulling it off. But the combined market share of Sprint and T-Mobile remains a fraction of what AT&T and Verizon Wireless have captured.

verizon greedVerizon believes it has a premium product and expects to be paid for it. Like a Neiman Marcus of the wireless industry, customers can expect a superior level of service, if they can afford to pay for it.

To keep customers dazzled, this summer Verizon Wireless is planning a new wireless video service featuring content from the NFL and likely more. Verizon hopes customers without unlimited data plans will be willing to pay several dollars extra for the new streaming service. But perhaps not too many extra dollars. Verizon executives have discovered a loophole in the FCC’s new Net Neutrality regulations allowing video content to be sponsored by Verizon or its advertising partners and exempt from usage allowances or caps.

Known as “zero-rating,” the practice is much more common overseas, where content providers pay for customer’s usage of their applications. Critics call the practice an end run around Net Neutrality. The FCC has continued to avoid the issue of broadband usage caps and usage-based billing, which ISPs have interpreted to mean a green light on the practice. In fact, some earlier comments from the FCC suggest the agency believes subsidized Internet traffic might be beneficial to consumers. Verizon pockets the money in either case.

Tim Berners-Lee, who created of the World Wide Web, called zero-rating “positive discrimination,” giving too much power to Internet providers.

“Zero-rated mobile traffic is blunt anti-competitive price discrimination designed to favor telcos’ own or their partners’ apps while placing competing apps at a disadvantage,” added Antonios Drossos, managing partner of Rewheel. “A zero-rated app is an offer consumers can’t refuse.”

Verizon Wireless has not yet priced its forthcoming video offering, but it could be marketed as a monthly add-on feature or as a pay-per-view option.

http://www.phillipdampier.com/video/Bloomberg Verizon Bids Good Riddance to Customers Leaving for a Cheaper Deal 4-21-15.flv

Bloomberg reporters talk about Verizon’s disinterest in competing with other carriers in the ongoing price war, and is fine with letting price-sensitive customers leave. It won’t be cutting prices anytime soon. (2:01)

Justice Department Nearing Decision to Block Comcast-Time Warner Cable Merger

Phillip Dampier April 17, 2015 Competition, Consumer News, Public Policy & Gov't 5 Comments

comcast twcStaff attorneys that have reviewed details of the Time Warner Cable/Comcast merger proposal are prepared to make a recommendation as early as next week that the Department of Justice should block the deal because it is anti-competitive and anti-consumer.

The staff in the Justice Department’s antitrust division have spent more than a year reviewing documents submitted by both cable companies to determine what impact the merger would have on the cable television and broadband landscape.

Bloomberg News today reported the attorneys did not like what they saw and believe the merger would harm consumers. For the first time, a cable company merger deal was reviewed not so much for its impact on cable television programming, but on broadband.

When the Federal Communications Commission redefined broadband as an Internet connection of at least 25Mbps, Comcast suddenly found itself the largest broadband provider in the country. If the merger with Time Warner Cable is approved, Comcast will have a 56.8 percent market share of U.S. broadband customers, far exceeding any other provider.

In upstate New York, Comcast would have more than a 75% market share — nearly 9o% if you just consider non-Verizon FiOS areas. In California, Comcast would control more than 80% of the market, not only picking up Time Warner Cable customers, but Charter customers in Southern California as well. 

Comcast and Time Warner Cable have argued competition is not affected because the two companies never compete with each other. But a de facto broadband monopoly could allow Comcast to raise rates at will and bring a return to usage-related billing. It would also discourage new competitors from entering the market – particularly those relying on broadband to deliver video services, and hand Comcast more leverage to force compensation from online content companies like Netflix.

justiceUnder consideration by the Justice Department:

  • Whether the combined entity would have too much control over nationwide broadband Internet delivery;
  • whether Comcast could use its financial influence to strike exclusive cable deals that could keep programming off other platforms;
  • whether Comcast could limit how programming is delivered through video streaming services (usage caps, etc.);
  • if Comcast complied with terms under a previous merger deal with NBCUniversal.

Renata Hesse, a deputy assistant attorney general for antitrust, will take the analysis and ultimately decide, along with the division’s top officials, whether to file a federal lawsuit to block the deal. Bloomberg reports lawyers at the Justice Department have contacted outside parties to collect evidence to strengthen their potential case against the merger.

Another clear sign the merger is not being received well inside the Justice Department and the Federal Communications Commission is a complete lack of negotiations with Comcast over possible concessions to make the deal less anti-competitive. That also happened with the AT&T/T-Mobile merger where negotiations to ease anticompetitive concerns never seriously got off the ground before the Justice Department sued to block the deal. The FCC quickly announced its own opposition later that same day.

A lawsuit does not necessarily kill the merger deal. Comcast could take its case to federal court to win approval over the objections of the Justice Department. The company might also counter-propose new concessions to address concerns raised by the lawsuit. 

After learning of today’s Bloomberg News story, spokespeople at both Comcast and Time Warner Cable are either confident or in denial:

“There is no basis for a lawsuit to block the transaction,” said Sena Fitzmaurice, a Comcast spokeswoman. The merger “will result in significant consumer benefits — faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings.”

Time Warner Cable spokesman Bobby Amirshahi said “we have been working productively with both DOJ and FCC and believe that there is no basis for DOJ to block the deal.”

Cox Boosting Its Economy Class Broadband Speeds in Arizona: 5Mbps is Now the Minimum

COX_RES_RGBCox Communications has raised Internet speeds for its economy class customers in Arizona as it continues network enhancements across the state.

One-third of Cox customers in Arizona subscribe to the company’s two cheapest tiers — Internet Starter and Internet Essential. Both packages are getting free speed upgrades that began in late March. Now all Cox customers in the state should have the higher speeds:

  • Cox High Speed Internet Starter was 1Mbps and is now 5Mbps;
  • Cox High Speed Internet Essential was 5Mbps and is now 15Mbps.

Speed increases in one state often eventually turn up in other states where Cox provides service.

Last July, Cox doubled speeds for its Preferred tier (increased from 25 to 50Mbps) and Premiere tier (increased from 50 to 100Mbps).

Usage caps are still in place on Cox broadband packages, but they are widely ignored by most customers because Cox rarely cracks down on offenders, and usually backs off if a customer threatens to cancel service over the issue.

Windstream Introduces Kinetic IPTV Triple Play in Lincoln, Neb.; Includes Wireless Set-Top Boxes, Whole House DVR

kinetic logoWindstream this week introduced its fiber to the neighborhood service Kinetic – its attempt to bring a competitive triple-play package of broadband, home phone, and television service to about 50,000 homes initially in Lincoln, Neb.

“We’re extremely excited to launch Kinetic in Lincoln,” said David Redmond, president of small business and consumer at Windstream. “Over the last year, we have heard loudly and clearly that this community is excited and eager for an alternative TV service. Windstream is confident that residents that sign up for Kinetic will find a highly interactive experience and a smarter way to watch TV than cable or satellite.”

The project in Lincoln will test consumer reaction and help the company plan if or how it plans to expand the service across many of its other service areas across the country.

Powered by the Ericsson Mediaroom platform, Kinetic is Windstream’s effort to squeeze about as much use of its existing copper wire infrastructure as possible. Like AT&T U-verse, Kinetic requires a fiber connection part of the way to customers, but continues to rely on existing copper telephone wiring already in the subscriber’s neighborhood. In effect, it’s an enhanced DSL platform that will split available bandwidth between television, Internet access and home phone service.

One unique aspect of Kinetic is its use of a next generation, compact whole home DVR that can record four shows at the same time, supplemented with wireless set-top boxes ($7/mo each), that allow subscribers to take the service to any television in the home without wiring. A subscriber can even move a television out into the yard and not lose service.

Remarkably, Windstream — an independent telephone company — completely de-emphasizes its own phone service in its up front promotions. Unless customers dig deeper into the Kinetic website, they will find prominently featured double play packages of television and Internet service starting at $59.98 a month. Telephone service is offered (and priced) almost as an afterthought, bundled into various packages for $5 extra a month. Phone customers get unlimited nationwide local and long distance calling.

http://www.phillipdampier.com/video/Windstream Kinetic TV 4-2015.flv

Windstream produced this introductory video to its new Kinetic TV service, offered initially to 50,000 homes in Lincoln, Neb. (1:20)

kinetic

We added the pricing details for Home Phone service.

The biggest limitation Windstream faces marketing the service is its legacy network of copper wires. Customers can only qualify for the service if the connection between their home and Windstream’s central office is good enough to sustain the speeds required to handle all three services at the same time. The company is focusing Kinetic squarely on customers looking for a cable television alternative to Lincoln’s only other provider — Time Warner Cable. That may be because Kinetic remains disadvantaged in the broadband department.

The highest Internet speed a Kinetic customer can buy is 15Mbps, which is the speed Time Warner Cable offers in its “Standard” package. Time Warner currently sells up to 50/5Mbps in Lincoln — more than three times faster than Windstream’s Kinetic. Many Windstream DSL customers have complained they don’t come close to the speeds they are paying for, particularly during peak usage periods. A Facebook group with over 500 customers exists to discuss exactly that issue. Whether it will be different for Kinetic customers is not yet known, but the company’s lawyers are prepared for that possibility.

Windstream's Whole House DVR is only about the length of its remote control.

Windstream’s Whole House DVR is only about the length of its remote control.

“Windstream cannot guarantee speeds or uninterrupted, error-free service,” the company says in its terms and conditions. “Internet speed claims represent maximum network service capability speeds.  Actual customer speeds may vary based on factors including simultaneous use of multiple devices, use of other Windstream services, customer device capabilities, Internet and Network congestion, website traffic, content provider service capacity, customer location, network conditions, and bandwidth devoted to carriage or protocol and network information.”

At least there are no usage caps.

Kinetic subscribers are also warned that just like DSL broadband, line quality will impact the kind of television service received.

“Kinetic TV includes digital channels (including local channels), one receiver and up to four standard direct video streams to the customer residence,” Windstream notes. “Of the four standard direct video streams per residence, customer’s location will determine both high definition (“HD”) availability and the maximum number of HD video streams (between one and four) a customer can view and record in HD at any one time, regardless of the number of receivers in the residence.  The remaining streams will be standard definition.”

Kinetic’s channel lineup is comparable to that of Time Warner Cable, with some minor exceptions. Time Warner imports some regional over the air channels from adjacent cities, Windstream does not. Certain channels like Turner Classic Movies are available on Kinetic, but only for customers subscribing to the most expensive tier. Time Warner offers that channel on its less expensive Standard tier.

Limited bandwidth may limit your broadband speeds and the number of HD channels you can watch at any one time.

Limited bandwidth may limit your broadband speeds and the number of HD channels you can watch at any one time.

Time Warner Cable spokesman Mike Hogan took indirect shots at both the City of Lincoln and Windstream in response to the introduction of Kinetic.

“Lincoln residents can count on the fact that Time Warner Cable will offer the best choices for TV, Internet, home phone and home security to the entire city — in sharp contrast to competitors who only serve select areas, or won’t even say where they will or won’t serve,” Hogan said in an email to the Journal-Star.

That’s a reference to Windstream’s refusal to specify exactly where in Lincoln Kinetic is available.

Stop the Cap! surveyed more than 100 Lincoln-area addresses this morning and found Kinetic available primarily in wealthy and newer neighborhoods south and southeast of the city center, including zip codes such as 68516. A review of real estate transactions across the city of Lincoln showed home prices in this area are well above other parts of the city. That suggests Windstream is targeting the service to higher-income neighborhoods during its initial rollout, which plans to reach up to 45 percent of city households.

Although Windstream officials expect to bring Kinetic to about 80% of Lincoln, the city has given the company 15 years to complete the project. Further expansion may also depend on how customers respond to Kinetic.

With plenty of time, Windstream may choose to turn its attention elsewhere, eventually introducing the service in other cities across its 18-state service area of Alabama, Arkansas, Florida, Georgia, Iowa, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina and Texas, before it gets around to wiring urban poor neighborhoods in Lincoln.

Cable industry defenders believe Time Warner Cable and Windstream are being treated differently by city officials. Hogan notes the cable company is required to serve the entire metropolitan area, unlike Windstream that critics contend may be interested only in cherry-picking the low-hanging fruit.

Windstream’s announcement leaves just two significant independent telephone companies without IPTV offerings: FairPoint and Frontier Communications.

http://www.phillipdampier.com/video/KLKN Lincoln New television service in Lincoln 4-16-15.mp4

KLKN in Lincoln covered the Windstream event introducing Kinetic TV to Lincoln and talked with company officials about what the new service offers Lincoln and how much it costs in comparison to Time Warner Cable, the area’s incumbent cable company. (2:29)

AT&T Barely Launches GigaPower U-verse in Houston… Another Fiber to the Press Release Irritates Locals

gigapower-600x315Houston residents excited by this week’s launch of AT&T U-verse with GigaPower have been quickly disappointed after learning the service is available practically nowhere in Houston and likely won’t be for some time.

The upgrade, offering up to 1,000/1,000Mbps broadband, was launched Monday with an announcement “select residents” in Bellaire, Pasadena, and northwest Harris County, Tex. will be the first to get the service.

Bellaire, known as the “City of Homes,” is a primarily residential community of 6,000 houses surrounded by the city of Houston. AT&T’s Houston headquarters are located in Bellaire, and the company maintains good relations with the local government. Larry Evans, AT&T’s vice president and general manager for South Texas told the Houston Chronicle that is a key factor for getting GigaPower upgrades. Evans said Bellaire, Pasadena and northwest Harris County have been very cooperative in clearing red tape and letting AT&T install fiber infrastructure for GigaPower with a minimum of fuss from permitting and zoning authorities.

Bellaire is a mostly residential community surrounded by Houston.

Bellaire is a mostly residential community surrounded by Houston.

The larger city of Pasadena, with a population approaching 150,000 is another case where close cooperation with the city government made the difference. The city council contracts with AT&T to supply telecom services to the local government as well.

As in other AT&T service areas, actual availability of GigaPower is extremely limited. A search of prospective addresses in Pasadena found service available in only a few neighborhoods. In Bellaire, only a few streets now qualify for service. We were unable to find a single address in “northwest Harris County” that qualified for U-verse with GigaPower, but AT&T claims that “surrounding communities” would also have access, without disclosing the names of any of them. That makes it extremely difficult to accurately use AT&T’s service qualification tool to verify coverage.

Jim Cale found he pre-qualified on the website for U-verse with GigaPower service, but his hopes were dashed when a representative informed him his order was canceled because, in fact, GigaPower was not actually available on his street.

“My neighborhood was wired with fiber to the home when it [was built] a few years ago,” shared “Ed From Texas.” “AT&T is the provider and that was one of its advertised features. Who do I need to harass at AT&T to get Gigapower turned on for us?”

Gene R. is in a similar predicament:

“I can’t even get U-Verse and I am two blocks from loop 610,” he said. “AT&T says they don’t know when it will be available. I suspect…never.”

Richard dumped AT&T in the past for not meeting the speeds U-verse advertises, but is hopeful an all-fiber network might finally bring better speeds.

pasadena“I dropped AT&T’s MaxPlus because I never got anything approaching the 18Mbps speed I was being billed for,” he wrote.

AT&T will sell several U-verse with GigaPower plans in Houston. The packages below include waivers of equipment, installation and activation fees, if you agree to allow AT&T to monitor your browsing activity:

  • U-verse High Speed Internet Premier: Internet speeds up to 1Gbps starting as low as $110 a month, or speeds at 300Mbps as low as $80 a month, with a one year price guarantee;
  • U-verse High Speed Internet Premier + TV: Internet speeds up to 1Gbps and qualifying TV service starting as low as $150 a month, or speeds at 300Mbps and qualifying TV service as low as $120 a month, with a one year price guarantee;
  • U-verse High Speed Internet Premier + TV + Voice: Internet speeds up to 1Gbps with qualifying TV service and Unlimited U-verse Voice starting as low as $180 a month, or speeds at 300Mbps with qualifying TV service and Unlimited U-verse Voice as low as $150 a month, with a two-year price guarantee.

These offers all include a provision in the service agreement allowing AT&T to spy on your browsing habits ostensibly to supply “targeted advertising.” But the terms and conditions do not limit AT&T from broadening its monitoring of your usage for other purposes. If you opt out, the price goes up to $109 monthly for 300Mbps service and $139 monthly for 1Gbps broadband and you will pay installation and activation fees.

AT&T says the monitoring is done purely to power its targeted ads. Some examples:

  • If you search for concert tickets, you may receive offers and ads related to restaurants near the concert venue;
  • After you browse hotels in Miami, you may be offered discounts for rental cars there;
  • If you search for a car online, you may receive an email notifying you of a local dealership’s sale;
  • If you are exploring a new home appliance at one retailer, you may be presented with similar appliance options from other retailers.

“You might receive these offers or ads online, via email or through direct mail,” says AT&T on their Internet Preferences page.

The “price guarantee” provision is actually a contract obligating you to stay with U-verse for 1-2 years or face an early termination fee of $180. AT&T also warns your Internet speeds will deteriorate “if two or more HD shows [are] viewed at same time.” Usage caps apply, as usual. GigaPower customers signed up for the fastest speeds receive 1 terabyte, or 1,000 gigabytes, of data per month. Customers will get warnings if they exceed the cap twice. The third time, and going forward after that, they’ll pay a $10 fee for each 50GB over the cap.

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