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Deregulation Allows Lifeline/USF Fraud to Run Rampant; Tens of Millions Fund Lavish Lifestyles

Pinellas County Sheriff’s Office released this mug shot of Leonard I. Solt, 49, of Land O’Lakes, one of three people accused of defrauding the federal Lifeline program out of more than $32 million.

The Pinellas County Sheriff’s Office released this mug shot of Leonard I. Solt, 49, of Land O’Lakes, one of three people accused of defrauding the federal Lifeline program out of more than $32 million.

A lack of robust state oversight of independent contractors and resellers may have cost the Universal Service Fund and nationwide Lifeline program up to $1 billion in waste, fraud, and abuse.

This month, three men were accused of stealing more than $32 million in Universal Service Fund (USF) money that supported lavish lifestyles including the purchase of multiple luxury automobiles. The federal government wants the money back.

Leonard I. Solt, 49, of Land O’Lakes, Fla.,Thomas Biddix, 44, of Melbourne, Fla. and Kevin Brian Cox, 38, of Arlington, Tenn., all face federal criminal charges for allegedly padding the number of customers signed up for Lifeline phone service through five companies all connected to the men: American Dial Tone, Bellerud Communications, BLC Management, LifeConnex Telecom and Triarch Marketing.

In some cases, Lifeline cell phone service was completely subsidized by USF funding, allowing customers to sign up for free cell phone service. Average Americans cover the costs of the program through a surcharge on monthly phone bills.

The indictment charges the defendants with one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering.

In an 18-month period from 2009 to 2011, the phone companies obtained more than $46 million through the Lifeline program.

Regulators have been suspicious of the companies and the men who ran them since at least 2010 when the Florida Public Service Commission noticed a dramatic spike in Lifeline reimbursement requests from Associated Telecommunications Management Services, LLC., the parent company of the five entities. The Florida PSC accused AMTS of misrepresenting customer enrollment when claiming reimbursement. It was not until June 2011 that the Florida PSC approved a settlement of $4 million from AMTS and an agreement to stop doing business in the state.

bellerudThe case illustrated several ostensibly-independent companies were created to market service across Alabama, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Wisconsin. Many had ties back to AMTS management. Despite the Florida settlement, the firms continued to do business in multiple states. Many of the states involved have deregulated the telephone business and have cut staff at state agencies tasked with oversight issues.

By the time the federal government moved in to prosecute, the three men had used USF funds to buy a private jet, a 28-foot boat and six luxury cars, including an orange Lamborghini, a red-bronze Chevrolet Corvette, a black Cadillac Escalade, a Chevrolet Suburban limo, a black Mercedes Benz S63 and a blue Audi R8.

free planLast week, government agents seized the vehicles from Biddix’s Melbourne-based pawn shop, Outdoor Gun and Pawn.

The Wall Street Journal reported in 2013 that the FCC’s own data showed that more than 40% of the six million subscribers at five of the program’s top carriers were either ineligible or failed to show that they qualified for subsidized service. As more independent companies win authorization to start pitching Lifeline landline and mobile phone service to the poor, the cost of the program has skyrocketed to $2.2 billion last year, up from $819 million four years earlier.

The companies are reimbursed for providing service, providing an incentive to sign up as many as possible.

In Alaska, a GCI subsidiary, Alaska DigiTel hired a marketing company to help it sell Lifeline cell phone service. The company quickly began signing up patients in hospitals, using hospital addresses as their residence. It also encouraged applicants to list phony addresses. For four years, GCI profited from questionable  reimbursements filed with the FCC. GCI finally agreed to pay a $1.5 million settlement that includes no admission of liability.

Other providers simply used telephone directories to collect names and mailing addresses of “customers” and sent them unsolicited cell phones for which they requested reimbursement.

An Oklahoma provider that regulators suspect got exceptionally greedy allegedly signed up so many Oklahoma residents to Lifeline service, the state is likely to exhaust the supply of phone numbers remaining in the 405 area code sooner than expected.

Providers sometimes targeted customers disconnected for non-payment.

True Wireless received nearly $46 million under the program in 2012, bringing questions from Oklahoma’s Corporation Commission as to whether enrolling that many residents was mathematically possible. A cursory review found some customers had signed up multiple times in violation of federal rules.

In Wisconsin, the state Public Service Commission eventually revoked Midwestern Telecommunications Inc.’s ability to receive Lifeline funding after its overworked staff discovered MTI was mailing phones to customer that never requested them, billing the USF Fund for reimbursement. Some turned out to be children.

The scheme eventually began to unravel when a former Public Service Commission staffer received an unsolicited Lifeline phone. The alleged fraud was so great, MTI went from receiving 1% of Lifeline reimbursements in Wisconsin during the second quarter of 2010 to 33% of disbursements in the same quarter the following year.

The fraud also extends to Lifeline recipients, some who have bilked the program for free phones. A review of the Lifeline customer database revealed many customers had multiple Lifeline accounts, including some sent more than 10 free phones that were later reportedly resold on street corners.

Nationally, the $1.8 billion Lifeline Program subsidized phone service last year for 14.5 million low-income customers.

Customers are usually eligible if they are already enrolled in income-based programs such as Medicaid, food assistance or public housing, or if household income falls below 150 percent of federal poverty guidelines.

http://www.phillipdampier.com/video/WSJ Lifeline Fraud 2-18-13.flv

WSJ’s Spencer Ante has details of a $2.2 billion government program to give cell phones to poor people that resulted in phones winding up in the hands of people ineligible for the program. (1:13)

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Amazon Introduces Fire TV: $99 for Voice Searchable Set-Top Box

Phillip Dampier April 2, 2014 Consumer News, Online Video, Video No Comments

amazonAmazon.com today introduced Fire TV, its entry in the increasingly crowded online video set-top box marketplace.

Fire TV is among the first boxes that supports voice search. The old way of dealing with scroll-and-click searching from an on-screen keyboard is replaced with a microphone on the remote that allows users to speak the title, actor, or genre and quickly find results.

Amazon.com is selling Fire TV for $99 — the same price as Apple TV — but considerably more expensive than Google’s Chromecast or entry-level Roku boxes.

Amazon’s box supports Certified Dolby Digital Plus surround sound and up to 1080p HDMI video. It offers access to Netflix, Prime Instant Video, Hulu Plus, WatchESPN, and many other TV Everywhere services (but not HBO Go). Fire TV is also a game console, with access to an online store selling more than 100 games at prices averaging $1.85 each.

“It has a powerful quad-core processor, dedicated GPU, 2 GB of memory, and dual-band, dual-antenna Wi-Fi,” says Amazon. “With a fast, fluid interface, high definition 1080p video, and Dolby Digital Plus surround sound, Fire TV looks—and sounds—amazing. We also added an exclusive new feature called ASAP that predicts what movies and TV episodes you’ll want to watch and gets them ready to stream instantly. No one likes waiting for videos to buffer.”

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amazon fire

http://www.phillipdampier.com/video/Amazon Fire TV 4-2-14.flv

Gary Busey is featured in this humorous introductory advertisement for Amazon Fire TV. (1:00)

http://www.phillipdampier.com/video/Amazon Fire TV Voice Search 4-2-14.flv

Amazon elaborates further on its voice search feature for Fire TV in this video. (0:27)

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Viacom Demands 100% Rate Increases for Hundreds of Small Cable Systems, Military Bases

viacom networksSmall cable systems across the country and on overseas military bases are being granted hourly reprieves that are keeping up to 24 Viacom-owned cable channels on the air after negotiations to extend an agreement with their program buyer stalled.

Cable operators belonging to the National Cable TV Cooperative, which represents independent cable systems on cable programming matters, report Viacom is demanding an unprecedented 100 percent rate increase for its networks and a guaranteed rate hike of 10% annually on each of its channels.

Viacom’s demands would cost each subscriber at least $4 a month, noted Jack Capparell, general manager of Service Electric’s cable system in the Lehigh Valley of Pennsylvania. Service Electric is a private, family owned cable business with 250,000 subscribers in central and northeastern Pennsylvania and northwestern New Jersey.

The impasse also affects cable systems serving American military bases. Americable has notified subscribers in Yokosuka, Atsugi, Iwakuni, and Sasebo, Japan Viacom was likely to cut off 10 of its cable channels to military families sometime today. Allied Telesis, which offers service to Air Force bases in Japan is also expected to lose programming.

cableoneNCTC members complain Viacom requires cable systems to carry nearly all of its lineup, including lesser-known channels few customers have even heard of, much less want. Even if a cable system chooses not to air a Viacom channel, Viacom’s contracts require cable providers to pay for them if they want to carry Viacom’s most popular networks.

Some cable systems are breaking away from NCTC’s negotiations and opening one on one talks with Viacom. Metrocast secured an agreement for its customers earlier today by negotiating directly with Viacom.

viacomFor most affected cable operators, there is a ‘wait and see what happens’ approach. Others, including Cable ONE, have already moved to replace the Viacom networks with other channels.

“Viacom asked for a rate increase greater than 100%, despite the fact that viewing is down on 12 of their 15 networks – some by more than 30% since 2010,” said Cable ONE. “We asked Viacom to either reduce their rates or allow us to drop some of their less popular networks to reduce the total cost. They refused these reasonable requests.”

Logo_Service-ElectricEarlier today, Cable ONE didn’t wait for Viacom to pull the plug. They pulled it themselves.

“Cable ONE has let these networks go and expects to add many top-rated networks you’ve requested and expand several other highly requested networks to our most popular level of service. Some of the new networks include BBC America, Sprout, Investigation Discovery, the Blaze, Hallmark Channel, National Geographic, TV One, Sundance, and more,” said the company, which expects to publish a full list of the new networks on Wednesday.

Viacom responded with a news release tailored for each affected provider:

GCI_Color_LogoWe are offering Service Electric a double-digit discount off of our standard rate card. It is a better deal than HUNDREDS of other TV providers in the country have agreed to. We have been actively trying to get a deal done with Service Electric for months and they have refused to negotiate in any meaningful way. And now, on top of this, Service Electric is throwing out numbers which simply aren’t true. Our expiring deal with Service Electric is nearly five years old. In that time, we have been great partners and given Service Electric more channels, more on demand content and access to our content beyond the TV – at no additional cost. We don’t understand why Service Electric has chosen to negotiate in this manner. And now, as a result of their lack of interest in coming to a mutually beneficial agreement, you are at risk of losing 19 Viacom networks. We are serious about getting a deal done.

Virtually the entire state of Alaska is also affected.

“We’ve unified to fight for Alaskans and to work toward a fair, long-term agreement that keeps prices stable for our customers,” said Paul Landes, GCI senior vice president. “Viacom wants a rate increase that is 40 times that of the rate of inflation. Alaska pay TV providers, along with 700 small to mid-sized operators nationally, are saying ‘no’ to Viacom’s take all 26 channels or nothing demands.”

GCI is joined by Alaskan providers MTA and KPU in the dispute.

http://www.phillipdampier.com/video/Cable ONE Viacom Channels Removed New Channels Added 4-1-14.mp4

Cable ONE released this video earlier today informing customers they were dropping Viacom networks. (1:00)

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Time Warner Cable Releases Video Showing Broadband Upgrades Underway in LA, NYC

twcmaxDespite its pending merger with Comcast, Time Warner Cable is still promising to boost broadband speeds by the end of this year in New York City and Los Angeles.

The TWC Maxx program was announced before the merger, but Time Warner says it is still going ahead with upgrades and produced a video showing some of the behind-the-scenes work in Los Angeles.

Although the video doesn’t show much more than people pointing at equipment displays and maintaining equipment racks, it does include an interview about what Time Warner is doing to prepare for infrastructure upgrades serious enough to need a bigger air conditioner for the building.

Time Warner does warn customers they may experience brief service interruptions as a result of the work.

When complete, Time Warner Cable customers in both cities will have all-digital television service and major broadband speed upgrades:

 

Current Mbps Speeds Up to

New Mbps Speeds Up to

Everyday Low Price   Customers

2/1

3/1

Basic Customers

3/1

10/1

Standard Customers

15/1

50/5

Turbo Customers

20/2

100/10

Extreme Customers

30/5

200/20

Ultimate Customers

50/5

300/20

These upgrades may be modified if/when Comcast takes over, and Time Warner has not disclosed which cities will get the upgrades next.

http://www.phillipdampier.com/video/TWC Behind The Scenes at a Los Angeles Hub Time Warner Cable 3-26-14.flv

Jay Gormley, a former reporter for KTVT in Dallas now working for Time Warner Cable takes customers on a tour of a Los Angeles Time Warner Cable hub slated to get service upgrades. (2:01)

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Charter’s Rebranded “Spectrum” Service Arrives in Fort Worth; New Name, New Reputation?

Phillip Dampier March 25, 2014 Broadband Speed, Charter, Competition, Consumer News, Video 1 Comment

charter spectrum logoCharter Communications’ latest attempt to rehabilitate its reputation with customers in Fort Worth, Tex. arrived this week in area mailboxes, as Charter reintroduced itself as “Charter Spectrum.”

Fort Worth is the first major city to get Charter’s broad-based service upgrade that began more than a year ago with a switch to all digital television service.

The newly available bandwidth no longer needed to support analog television has allowed Charter to expand its video service to more than 200 HD channels, up from fewer than 100.

Customers also start their Spectrum experience with a free broadband speed bump — from 30Mbps to 60/4Mbps (with a barely enforced monthly usage cap of 250GB), and an improved cable telephone service with nationwide calling.

Charter Spectrum's mailer is now arriving in Ft. Worth mailboxes. (Courtesy: TheTechGuru)

Charter Spectrum’s mailer is now arriving in Ft. Worth mailboxes. (Courtesy: TheTechGuru)

Charter CEO Thomas Rutledge openly admitted last year Charter had an inferior product compared against the competition. Upgrading Charter’s cable systems was designed to correct that and the company hopes its rebranding will deliver a marketplace reset, but some Charter customers remain skeptical.

“Same pig, fresh lipstick,” wrote one Charter customer in Missouri.

Others complain Charter’s upload speeds remain anemic at just 4Mbps.

Charter’s new pricing promotions were designed to simplify the shopping experience. There are now just three heavily promoted Spectrum triple play packages:

spectrum packages

A customer taking advantage of the Triple Play Gold promotion will pay a one-year promotional price of $129.97 a month. (Customers can also select individual services or build their own double-play bundle). The fine print mentions the price rises to $149.97 the second year and then reverts to an undisclosed “standard rate” after that. TV set-top boxes are required on every cable-connected television ($7 a month each – not included in the price). The Internet modem carries no additional charge. Phone taxes, fees and surcharges are also covered, but other taxes, fees, and surcharges are not.

Offers are valid for new customers only, and those who have not subscribed within the last 30 days and have no outstanding debt obligation to Charter.

http://www.phillipdampier.com/video/WLOS Asheville Charter Going Digital 11-11-13.flv

Charter Spectrum arrives only after your local Charter system moves to all-digital television service. That happened last fall in Asheville, N.C., where customers were told they needed a digital set-top box on every television in the home. WLOS-TV covered the story back on Nov. 11, 2013. (1:44)

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Your Online Privacy — Invaded; AT&T and Verizon Among List of Offenders

http://www.phillipdampier.com/video/CBS The Data Brokers -- Selling your personal information 3-9-14.flv

This weekend, 60 Minutes profiled how marketing companies invade your privacy, track your personal life and locations, and sell the lucrative information with little notice to you to third parties. Among the offenders are AT&T and Verizon, which both have special divisions devoted to pitching your personal details to advertisers of all kinds. Although they claim the information they sell does not include your real identity, third-party marketers make a living putting this kind of “aggregate” information together with other data to discover your name and address. At least with AT&T and Verizon, there are easy ways to opt out. (13:56)

http://www.phillipdampier.com/video/CBS How to defend your privacy online 3-9-14.flv

Looking to protect your privacy? 60 Minutes Overtime provides some advice and some examples of the lengths you’d have to go to be completely “off the grid.” (5:52)

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German Chancellor Mocks British Prime Minister Over State of UK’s Broadband

Chancellor Angela Merkel and Prime Minister David Cameron

Chancellor Angela Merkel and Prime Minister David Cameron

The slow pace of rolling out superfast broadband across the United Kingdom did not escape the notice of German Chancellor Angela Merkel, who stung Prime Minister David Cameron with a joke comparing the two countries’ progress to provide Internet access to every home.

While traveling to Hanover to visit the CeBIT trade fair, Carmeron sought to promote Great Britain’s economic relationship with Germany. But Merkel wanted to know when Britain would finally complete the rollout of high-speed Internet access to every house in the country.

Cameron’s government has faced criticism over its decision to roll out an advanced form of DSL using fiber to the neighborhood technology similar to AT&T U-verse. Some critics accuse the government of allowing BT and other vendors to overspend public resources on a network that some fear will not prove fast enough to compete in the long-term.

Cameron told Merkel the government had earmarked hundreds of millions of pounds on the project. In response, Merkel dryly replied that Germany’s network would successfully reach every citizen in Germany by 2018.

btUK Communications Minister Ed Vaizey has also faced criticism from communities learning they are not on the upgrade list as well as those promised improved service but still waiting to receive it. Vaizey repeated his claim that 95 percent of the United Kingdom would have faster Internet access by 2017. The British regulatory agency Ofcom’s statistics show the government has a long way to go, with only 73 per cent of the country able to get access to high-speed broadband as of this month.

While in Hanover, Cameron suggested the world was nearing a new industrial revolution dependent on a speedy Internet. Cameron noted the future includes “The Internet of Things,” where technology would enable devices of all kinds to interact over wireless networks. Robust broadband infrastructure was therefore essential to the economies of both countries.

As part of that effort, the two leaders announced a joint effort between British and German universities to develop the next generation of Wi-Fi dubbed “5G” that would be fast enough to download a typical movie in less than one second.

http://www.phillipdampier.com/video/UK Superfast Broadband 2014.flv

Although BT likes to advertise “superfast broadband” as coming from a fiber network, in fact most homes will receive an advanced form of DSL service delivered over a hybrid fiber-copper network. (2:38)

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Comcast Considers What to Do With 3 Million Time Warner Customers It Plans to Toss Away

comcast twcShould regulators bless the coupling of Comcast and Time Warner Cable, some TWC customers will not be invited to the wedding.

In an effort to appease Washington, Comcast is voluntarily abiding by a 30% market share cap the company itself successfully sued to overturn in federal court. That means Comcast plans to voluntarily shed the three million Time Warner Cable customers that would put the company over its self-imposed limit.

Comcast is so confident its merger will win approval, the company is already contemplating what to do with the orphaned customers. Bloomberg News reports Comcast is considering launching a new publicly traded independent cable company to manage the ex-Time Warner customers. It would automatically be the fourth largest cable company in the country, behind the super-sized Comcast, Cox Communications, and Charter Cable. Comcast would use the new entity to claim it was creating a new “cable competitor” in the industry, despite the fact it would almost certainly never compete in markets where other cable companies already offer service.

Other cable companies are already expressing interest in picking up the stranded TWC customers. Among the suitors:

  • Charter Communications, which lost its original bid to take over Time Warner Cable;
  • Bright House Networks, which now serves markets in the southern U.S.;
  • Suddenlink Communications, which primarily serves rural communities and small cities ignored by larger providers.

Comcast hasn’t announced what cities will not be included in the Comcast-TWC merger, and does not plan to decide until at least late spring. Financial strategists are recommending Comcast “spinout” the subscribers to a new entity that would be loaded up with debt to win significant tax savings from the transaction. The new cable company would likely be worth at least $17 billion.

http://www.phillipdampier.com/video/Bloomberg Comcast Might Spin Off TWC Subs 2-28-14.flv

Bloomberg News reports Comcast would be in the enviable position of creating its own “competitor” by spinning off certain Time Warner Cable customers into a new company Comcast would launch. (2:45)

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Comcast/Time Warner Cable Now Hated More Than Bird Flu

Now that Comcast plans to consume Time Warner Cable in a $45 billion dollar deal, customers hate both companies more than ever.

Time Warner Cable’s consumer perception ratings only slightly recovered since their damaging fist fight with CBS last summer that darkened CBS-owned stations in several large cities and took Showtime and The Movie Channel off subscriber screens nationwide.

But the devil you know is apparently better than the one you don’t, because once consumers learned two of the most loathed cable companies in the country were hooking up, it was all downhill from there.

No cable company rated by YouGov’s BrandIndex has ever scored high enough to get out of the ratings gutter, but once consumers found out about the merger, both Comcast and Time Warner Cable’s ratings plummeted, even though nothing has changed yet at either company as the deal awaits regulator approval:

The American cable industry is notoriously unpopular. But it’s worth noting that other providers have not suffered similar since hits to their brands since the blockbuster deal was announced (including Charter Communications, which was originally expected to buy Time Warner Cable, but missed out).

consumer-perception-comcast-time-warner-cable_chartbuilder-2

us-cable-industry-consumer-perception-cablevision-charter-comcast-cox-time-warner-cable_chartbuilder

http://www.phillipdampier.com/video/Funny or Die Comcast Doesnt Give A FCK censored 3-2-14.mp4

The folks at Funny or Die created this (censored) short explaining what Comcast thinks about its own customers and those joining the company from Time Warner Cable. (1:45)

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Time Warner Cable Adds Free Calls to Mexico to its Nationwide Calling Plan; Sock Puppets Approve

MexicoPhoneTime Warner Cable phone customers with Unlimited Home Phone calling can now place toll-free calls to Mexico, the company announced today.

Most Time Warner Cable phone customers are already signed up with the Unlimited Home Phone plan, which provides free-calling to the U.S., Canada, Puerto Rico, Guam, and the U.S. Virgin Islands.

“The expansion of our most popular Phone plan to include unlimited calls to Mexico will bring huge value to the millions of TWC Home Phone users who have friends and family in Mexico,” said Jeff Lindsay, general manager for Home Phone at TWC. “We’re excited to offer truly unlimited calling to Mexico as part of our main calling plan.”

Customers can make unlimited toll-free calls to both Mexican landline and cellular numbers.

The cable company also gave room in its press release to congratulatory comments from the League of United Latin American Citizens (LULAC) and The National Hispanic Caucus of State Legislators (NHCSL) — two Latino organizations that receive financial support from large cable and phone companies and often appeal to regulators on behalf of the telecom industry.

LULAC counts Time Warner Cable as a member of its Corporate Alliance and partner organization.

The NHCSL receives support and assistance from a variety of cable and phone companies including Comcast, Verizon, and AT&T and regularly appeals to federal regulators advocating the public policy agenda of Big Telecom companies.

http://www.phillipdampier.com/video/TWC TWC Free Calls to Mexico 3-3-14.mp4

Ray de los Santos, director of LULAC in Dallas delivered this jumbled word salad about Time Warner Cable’s addition of free-calling to Mexico. (0:36)

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Recent Comments:

  • Phillip Dampier: The Lifeline program is a regulated program, regardless of the technology, because it provides a government subsidy. You are correct the wireless serv...
  • txpatriot: Phillip, you blame this mess on deregulation, but deregulation actually has very little to do with it. First of all, the primary vehicle for this fra...
  • paul houle: If you go to nyc you see there are four starbucks on every block south of central park and that is a plot to fool the decision making class. Investor...
  • txpatriot: At this stage, participation for current customers is voluntary; see page 88 of the FCC Order authorizing the IP Transition trial: http://transitio...
  • txpatriot: What exactly does AT&T (or google, for that matter) hope to accomplish with these pre-launch press releases? I assume they are meant to build a...
  • Chuck Willy: What does the service agreement say? I can charge any amount rent I want on something on my property. I'll send them a bill for $1mil if my box isn't...
  • B: RST is deploying fiber across NC, and Wake Forest was promised to become the first town in the county for beta testing gigabit internet service....
  • Kerry: I actually asked that question directly to my Comcast account rep yesterday....
  • A,: Really wish North State would expand their fiber service beyond High Point into Greensboro- no one seems to want to go into Greensboro, which is madde...
  • Phillip Dampier: If you scratch millimeters below the surface, their lies and nonsense are easy to expose. Unfortunately, a lot of these senators don't have a clue abo...
  • Phillip Dampier: This is another case where I'd just ask for the $150 to be applied to your Comcast account as a service credit. They can do that over the phone the sa...
  • Phillip Dampier: Call the rep back and tell him/her there problems should not get in the way of your getting a great customer service experience, and that they should ...

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