Frontier Communications’ performance in West Virginia is starting to resemble northern New England’s never ending nightmare with FairPoint, the phone company that couldn’t manage landline service for customers in Maine, New Hampshire and Vermont and ended up in bankruptcy.  Things have gotten so bad, Frontier Communications now earns an “F” rating from the Better Business Bureau, called out specifically for failing to respond to complaints filed against the provider, failure to resolve the complaints they did acknowledge, and government action taken against the company for deceptive business practices.

Stop the Cap! reader Ralph in West Virginia drops us a line to share the latest progress the company is making in his part of West Virginia, or rather the lack thereof, starting with his own personal story:

The afternoon of  Thursday Sep. 2nd, our phones were out of order for awhile but were working by 4pm.  The DSL was still out so I waited to see if they’d get it fixed later that evening.  When it was still out Friday afternoon, I called to report it and asked if they had a reported outage for the area.  Their answer was no, and they proceeded to ask me to reset the modem and perform some additional diagnostic testing.

That didn’t “fix” it so they filed a trouble ticket and told me a technician would be out to check the outside wiring and, if needed, give me a new modem.  Frontier never showed up, so I called again and was left on hold for 30 of the 35 minutes that phone call lasted. I was finally told that it was a known outage affecting 12 people in the area.  No repairs were made on Sunday so I called on Monday and was told the problem now affected 16 people and they had no idea when it would be fixed.  It was finally fixed five days after initially reporting the outage, and nobody bothered to explain why it took so long.  I was later bemused to find an article in the weekly county paper that noted the outage was now up to impacting 20 people.

In your earlier report about Frontier, a spokesman for the company claimed the company follows a protocol about calling customers with service problems to see if the issues were resolved, but that call didn’t come until Sep. 8th, a full 24 hours after our DSL service was restored.  Keep up the good work, maybe Frontier and other providers will realize that the system is broken and we do want and need high speed Internet.

Ralph is not alone in having trouble with Frontier.  Just as Stop the Cap! reported with FairPoint’s failure in New England, service problems are just the beginning of the “fun” for transitioned customers.  Billing problems come next, and Frontier followed through in spades for one West Virginia family.

Meet Johna and Paul Snatchko, who are being billed $671.45 for dial-up Internet service calls by Frontier.  Not only did Frontier fail to deliver broadband service to the northwestern part of the state, now the Snatchko family has had to quit using dial-up Internet as well because the Snatchko’s claim Frontier made accessing the service a long distance call.

“When we switched from Verizon to Frontier, they said nothing will change,” Paul told WTOV News. “Well, there’s change.”

Despite selling the Snatchko family “unlimited long distance” service, Frontier still charged every call to their ISP at the regular long distance rate.  Why use dial-up in the first place?

“In this part of West Virginia, you’re very limited in your service,” Paul explained. “Dial-up is it for us. We’ve tried everything else. The only thing we could get was dial-up.”

The family also endured another Frontier specialty — the constantly changing promotional offers that are poorly explained by the company’s customer service representatives.

“They said it doesn’t include their package deal with the computer,” Johnna said, referring to a common Frontier promotion for a free netbook in return for a bundled package of services on a two year contract. “The first couple months it did and now it doesn’t include it.”

Frontier’s spokesman for the area, Bill Moon, made yet another TV appearance to try and explain it all away.

“There are billing problems that can happen anytime you have a switch over like that,” he told WTOV. “It’s probably a simple mistake on this particular customer’s bill, something that can be rectified pretty easy.”

Apparently not. Frontier told the family they have received two credits already and that is the last time the company is willing to provide them.

Despite the increasing frequency and seriousness of complaints now becoming a staple on the nightly news, Moon said incidents like this are rare.  He told the station out of more than 60,000 lines of service, they’ve had about 10 problems at most.

West Virginians are also waking up to the realization that Frontier’s promised “fiber upgrades” are little more than bait and switch, and they’ll never be able to directly access the fiber the company is installing.  As Stop the Cap! has reported previously, Frontier’s residential customers are more likely to encounter beneficial fiber in their morning breakfast cereal than from Frontier Communications.

The Charleston media is abuzz about the fact taxpayers are footing the bill for a $40 million fiber network that the company will own free and clear, and charge top dollar prices to access.  Citynet, one of Frontier’s competitors, blew the whistle over Frontier’s much-ballyhooed fiber expansion that is actually intended to serve public institutions, wholesale customers, and Frontier’s “middle-mile” network — not directly benefit consumers:

[…]Once Frontier spends the $40 million of taxpayer money to expand its network, it will be the sole owner of that network and the State will have no ownership rights. Thus, Frontier’s monopoly in the State of West Virginia will have been financed with taxpayer money.

Frontier will then sell services to state entities such as schools and government offices at the existing exorbitant prices. Those prices will never decrease, because no competitor can afford to spend $40 million or more of its own capital to build out its network.

Citynet, however, has provided the state with a plan for the expenditure of the taxpayer money that will expand broadband access in the state while at the same time lowering the cost of broadband access by 70 percent to 90 percent.

It is true that competitors, like Citynet, have existing contracts with Frontier for access to fiber facilities, but given that Frontier’s new network will be built with your money, it is Citynet’s position that those facilities should be made available to competitors at a nominal cost so that competitors can make their services available to the public at large at much lower prices.

Frontier has flatly refused Citynet’s proposal and intends to require competitors to pay inflated prices for access to fiber facilities it built for free.

As currently structured, the state’s plan for expanding broadband will do nothing more than expand Frontier’s monopoly, and will not address the fundamental problem of the high cost of broadband access.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTOV Steubenville Speaking Too Soon – Frontier’s Customers Still Complaining 9-15 and 9-28-10.flv[/flv]

WTOV-TV thought Frontier’s problems were behind them when they ran the first of two stories about the company Sep. 15th.  But then they met the Snatchko family and learned they spoke too soon.  Last night, they tried to determine how a West Virginia family could be charged nearly $700 for dial-up Internet service.  (4 minutes)

While Federal Communications Chairman Julius Genachowski continues his indecisive dawdling over whether to enforce Net Neutrality in the United States, the United Kingdom’s two largest Internet Service Providers have openly admitted without such protections they would openly discriminate against content providers’ traffic.  In fact, discriminating against providers based on who paid and who didn’t would be a perfectly normal business practice for any ISP, they declared.

Senior executives of both BT and TalkTalk let the truth spill from their lips at a Westminster eForum on Net Neutrality, something companies like Verizon, Comcast, and AT&T surely wish they hadn’t done.

The surprisingly open dialogue was covered in detail by PCPro, and sent on to us by our reader “PreventCAPS”:

Asked specifically if TalkTalk would afford more bandwidth to YouTube than the BBC’s iPlayer if Google was prepared to pay, the company’s executive director of strategy and regulation, Andrew Heaney, argued it would be “perfectly normal business practice to discriminate between them”.

“We would do a deal and look at YouTube and look at the BBC, and decide,” he added.

When asked the same question, BT’s director of group industry policy, Simon Milner, replied: “We absolutely could see a situation when content or app providers may want to pay BT for quality of service above best efforts,” although he added BT had never received such an approach.

TalkTalk’s Heaney declared Net Neutrality a mythical concept, saying they already discriminate against traffic now that they have their foot in the door with “traffic management” policies.

“It’s a myth we have Net Neutrality today – we don’t,” he said. “There are huge levels of discrimination over traffic type. We prioritize voice traffic over our network. We shape peer-to-peer traffic and de-prioritize it during the busy hour.”

If British ISP’s are willing to discriminate against non-paying traffic on its networks, are American ISP’s going to act any differently?

Verizon CEO Ivan Seidenberg has sent the strongest hints yet that Verizon’s interest in going the extra mile to acquire the Apple iPhone is waning, and the company is increasingly unlikely to make major concessions to carry it.

Seidenberg’s comments came during last week’s Goldman Sachs Communacopia Conference.

Verizon’s position as America’s leading wireless carrier does not appear to be threatened by AT&T’s exclusive American agreement with Apple.  While AT&T customers desperate for an alternative carrier may be fueling “wishful thinking”-rumors that Verizon is about the obtain the rights to sell the phone, there is no evidence any deal with Apple is imminent.

In fact, Seidenberg’s remarks were clearly interpreted by Wall Street that Verizon won’t jump through Apple’s hoops to win an agreement, especially as Android-based phones are nipping at the iPhone’s heels:

“We have worked hard at building a franchise out of Droid, which proves that if there is an acceptable alternative to the iPhone, and a great network, and a great distribution channel, the market will go there for it. We don’t feel like we have an iPhone deficit. We would love to carry it when we get there, but we have to earn it. We have to show all the suppliers that we have equal treatment, and we have a network for people to put all of their equipment on.  […]Hopefully, at some point Apple will get with the program.”

Apple’s reputation and market power are also on the line, and many analysts think the company’s terms and exclusive agreements are now doing more harm than good.  Earlier this month, Bernstein Research analysts Pierre Ferragu and Toni Sacconaghi concluded Apple must make the iPhone available to all carriers if it wants to compete with Android.

Google has tripled its growth to 200,000 activations per day in just seven months, and with Android being the dominant smartphone technology on major carriers like Verizon, O2 (UK), Vodafone (Germany), China Mobile and NTTDoCoMo (Japan), Android’s total installed base is expected to overtake the Apple iPhone within 15 months.

Apple’s reputation has also suffered from a year of missteps, ranging from the loss of a beta iPhone, “AntennaGate,” occasional outbursts from CEO Steve Jobs, and growing revelations of a new firmware issue that is dramatically stunting battery life on many iPhone and iPod units.

Marilyn Castro decided she did not need her landline phone any longer.  The Virginia Beach resident learned her provider would be happy to oblige her request to disconnect service, but she is still required to pay her phone bill, even without the service, for at least the next 25 years.

Woodland Park, Virginia resident Allan Pineda got a similar story when he wanted out of Cox Cable’s landline service.  Yes, Cox will schedule a visit to disconnect service at his convenience, but he’ll still have to pay his cable bill, including landline charges, every month.

Frederic Martin, who lives at a Mid-America Apartment Communities-owned complex in Dallas, learned he was on the hook for cable-TV service, even though he has not owned a television set for more than a decade.

In Weston, Florida, some 15,000 homeowners pay for cable television whether they want it or not and if they don’t pay, their homes are at risk from foreclosure.

It’s all thanks to the concept of “bulk billing,” a practice growing in popularity that delivers mandatory cable, phone, and broadband service to renters and homeowners whether they want the services or not.  It’s a multi-million dollar racket, and thanks to the Federal Communications Commission, it may be coming to your community or apartment complex soon.

For almost five years, mandating cable service has become a growing problem in many parts of the country, especially in Florida and Virginia.  Most of the controversy comes when large housing management and homeowner associations, builders, and corporately-owned apartment complexes cut “discount deals” with a cable company to wire a community or complex for service.  Their mission is not always altruistic.  Many builders receive generous signing bonuses and ongoing kickbacks earned from condemning residents to mandatory cable service contracts that may not expire in their lifetime.

Some apartment complexes have added charges for cable-TV service to the rent. Many earn ongoing compensation from grateful cable companies who pay 3-5 percent of revenue back to the complex.  Even homeowner associations have gotten into the act, adding cable-TV costs to required association dues for upkeep and maintenance.  For those who can’t or won’t pay, liens and even foreclosure can soon follow.

LM Sandler of Virginia Beach, a Virginia builder, is a typical player.

Sandler has built entire neighborhoods of new homes across Virginia, most of which are covered by a “bulk billing” contract with Cox.  When residents buy or rent a Sandler-built property, a triple-play package of phone, cable, and Internet service comes along with the deal.  It’s not cheap, running $146 a month.  Even worse, your grandchildren could still be paying Cox Cable if they stayed in the family home, because Sandler’s contract with Cox runs up to 75 years.

Although residents are not required to take service from Cox, they are required to pay for it, in full, every month.

It gets worse for residents in Florida.  Most contracts with cable operators include provisions that can terminate service for entire communities if even a single homeowner is 60 days past due.  To keep that from happening, homeowner associations aggressively pursue slow-paying residents.  JMB Partners, who built much the residential housing in Weston, and the governing bodies in Weston committed residents to an agreement that has enormous implications if they miss a payment:

Between Jan. 1 and Dec. 17, 2004, the Town Foundation, Weston’s homeowner association, filed liens against more than 200 homes in the city. Most of these, according to Broward County court records, are for unpaid cable TV bills, which until 2003 were collected by the foundation. The city utilities department now handles that task.

One of the upset residents is Vincent Andreano, whose mother, Lita Andreano, was faced with the predicament of losing her Weston Country Club Home for a $109 cable bill that he said had been left outstanding by the previous owner.  The Andreanos said that when closing on the home about a year and a half ago, they came upon the outstanding debt and sent a check.

”No one ever contacted me or my mother afterwards to tell us they had not gotten the check or that the debt was still outstanding,” said Andreano, an attorney. “Then a year and a half later, they slap my mother with a foreclosure lawsuit. It’s legal brutality.”

Andreano said he tried to reason with Town Foundation attorney Douglas Gonzales, whose signature appears in the lawsuit paperwork, to no avail. He said he was told to pay the debt, plus legal fees billed at a little more than $200 per hour, in addition to court filing fees and other miscellaneous charges. The final tab: more than $1,500.

In the Tampa area, mandatory cable service bills for some neighborhoods and planned communities have increased by an eye-popping 44 percent because of the foreclosure crisis.  That’s because of mandatory payment clauses many have with providers like Bright House that demand full payment even when homes are unoccupied.  When a resident’s home is in foreclosure or a resident refuses to pay, all of the remaining area residents pick up the tab for unpaid cable bills.  This wreaks havoc with homeowner association budgets, who must find the money to pay the cable company, in full, every month.  Many have slashed security, road maintenance, refuse collection, landscaping, and other quality-of-life expenses just to keep the cable company happy.

Back in 2008, when Florida first began a downward housing spiral, the impact was already being felt:

The Chapel Pines subdivision in Wesley Chapel found itself stuck in a cable contract that requires $15,000 a month payment to Bright House, and is seeing the strain of foreclosed homes no longer paying their fees. That payment represents nearly half their total association budget.

The South Fork 1 development in Riverview has a 15-year contract with Bright House that requires a $9,700 a month payment, roughly one-third of the neighborhood’s total budget.

“We still have to foot the bill whether people live in those homes or not,” said Fred Perez, the former president of the South Fork association. “You end up with a big, bad debt line item on the budget.”

With the problem worsening, that homeowner’s association even contemplated bankrupting itself just to free it from obligations to Bright House.

Other communities are levying “special assessments” on homeowners to cover cable bills in high foreclosure areas:

To cement a good deal, the community, South Bay Lakes in Gibsonton, years ago signed a bulk contract with Bright House Networks to provide cable TV in the neighborhood, in exchange for a regular fixed payment.

That arrangement worked out fine when the neighborhoods filled up and residents paid their association fees – and the association turned over the cable TV payments to Bright House. The problem occurs when neighbors go into foreclosure and stop paying their fees.

The South Bay Lakes homeowners association still must pay about $140,000 a year to Bright House, even though there’s less money coming in from homeowners.

Because about numerous homes in the 300-home development are in foreclosure, South Bay Lakes had to issue “special assessments” on residents.

Fees rose from $150 a quarter to $216, and that probably won’t cover the shortfall, according to association officials. The Bright House bill represents almost half of the association’s annual budget of $261,000.

To make matters tougher, the community is locked into that deal with Bright House until 2019, with cable rates that rise “from time to time” according to the contract.

Earlier this year, Stop the Cap! covered the story of residents in Tennessee and Texas who discovered the corporate owners of their apartment complexes were making cable-TV mandatory and adding the resulting charges to lease agreements.

Defenders of these bulk billing arrangements claim they deliver savings residential customers could not obtain on their own and ensure that complexes and planned living communities are fully wired for service.  Besides, they claim, there is no obligation to use the services provided and customers can obtain service from another provider.

But they still face paying for service they don’t use.  In some communities, it is service many don’t want to use.

John Carter, who lives in Weston, told the FCC as a senior on a fixed income he cannot afford to pay a second cable bill, even though his existing service is terrible.

“I am stuck with poor programming options, outages during stormy weather, slow Internet speeds of 15kbps and poor customer service,” he wrote the agency.

In other instances, sweetheart deals fuel incentives for builders to sign lucrative contracts with providers even before a homeowner’s association is formed.  In some cases, the provider turns out to be a family member or associate of the developer.  In many others, perpetual kickbacks through “royalties” and fees are paid to the builder or complex owner as long as the agreement remains in place, even long after the builder is no longer on scene.

For impacted residents like Castro stuck with landline service she didn’t want, it was time to fight back.  She launched Ban Bulk Billing, an online forum for those who oppose mandated cable-TV service. Castro asked consumers to join her in protesting the fees with the FCC.  But it’s hard to keep a movement going when giant corporate providers and other special interests have the resources to shout down consumers.

In March, the FCC collected its thoughts and submissions from property owners, apartment complex management companies, cable and phone companies, and consumers and rendered its decision — which threw consumers under the bus:

We conclude that the benefits of bulk billing outweigh its harms. A key consideration for us is that bulk billing, unlike building exclusivity, does not hinder significantly the entry into an MDU by a second MVPD and does not prevent consumers from choosing the new entrant. Indeed, many commenters indicate that second MVPD providers wire MDUs for video service even in the presence of bulk billing arrangements and that many consumers choose to subscribe to those second video services. We find it especially significant that Verizon, which more than any other commenter in the earlier proceedings argued that building exclusivity clauses deterred competition and other proconsumer effects, makes no claim in its filings herein that bulk billing hinders significantly or, as a practical matter, prevents it from introducing its service into MDUs. Bulk billing, accordingly, does not have nearly the harmful entry-barring or -hindering effect on consumers that exists in the case of building exclusivity.

In other words, because Verizon didn’t have a problem with these bulk billing arrangements, they’re fine by the FCC.  Verizon wants into this arrangement themselves, so it’s hardly a surprise they are not objecting.  The significance of Verizon’s change in position is hardly a mystery — the earlier barriers the FCC wrote about were designed to keep Verizon out of apartment complexes and condos.

The incentives for providers earned from these bulk billing contracts are enormous:

• The cost of collections and billing are passed on to local government, homeowner associations, rental companies, or other agents.  The risk of non-payment by a homeowner’s association or city government is nearly non-existent;
• Marketing expenses and customer promotions can be slashed because customers already have the service when they move in;
• Competition is diminished, especially from capital-intensive wired competitors.  Would you contemplate wiring a community for competitive service knowing existing residents are held captive by mandatory cable contracts?;
• Innovation expenses can be curtailed because the customer is already captive to the existing level of service;
• Rate increases are built-in, allowing companies to raise rates and still keep all of their existing customers.

Residents of Staples Mills Townhomes in Richmond, Virginia understand this only too well.  When the new corporate owner, PRG Real Estate moved in a few years ago, they brought Comcast with them, mandating every resident pay for basic cable service as part of their rent.

PRG’s website highlights Staples Mills as an example of “an institutional equity partnership:” (underlining ours)

The PRG model for improvement is two-pronged — pay close attention to the details of management with a well thought out capital improvement plan. Imbedding [sic] PRG’s professional management structure would mean the implementation of aggressive PRG policies and procedures, taking virtually all contract services in-house to save the profit margin being captured by contractors. The upgrade to PRG-trained site personnel would particularly enhance the marketing effort. Although the property was 97% occupied we anticipated that, after the capital improvements, the same occupancy rate would be maintained with significantly higher rents.

[…]It was crucial that we succeed, not only in terms of return to our investor, but in terms of building our relationships and profile with other institutional investors. We needed to hit this one out of the ballpark.

Residents called a foul ball, one writing, “Residents were slapped in the face with the news that they will be forced to pay for mandatory cable (an extra $34 per month on the rent) from Comcast regardless if they don’t want it, already have satellite, or don’t even have a TV under the guise of ‘lowering cable rates.’ It’s called subsidizing the people who want it by juicing those who don’t.”

PRG may have succeeded in making their investors happy, but they alienated a number of tenants in the process, most of whom assumed Comcast was their only choice and wouldn’t contemplate paying another cable bill from a competitor.

The FCC’s decision recognized that competitors could enter a bulk-billed service area, but ignored the reality most won’t.

Indeed, the FCC itself recognized the impact of these bulk-billing arrangements on the competitive landscape in their own decision, quoting from a submission:

One bulk billing cable operator states that fewer than 5% of an MDU’s residents subscribe to another video provider. It estimates that if it lost its bulk billing contract, it would raise its prices substantially for the remaining 95% because of higher programming and labor costs per customer. The combined savings for 5% of the MDU’s residents would be dwarfed by the increased expenses for the 95%, making the MDU’s residents significantly worse off than they were before as a whole.

This proves two points:

1. The FCC still cowers in fear from threats issued by providers that any attempt to rein them in will do everything from raising prices to killing jobs and innovation, despite the fact only five percent of customers in the cited case took service from a competitor.  A five percent loss of customers would create conditions for a “substantial” rate hike only in their minds.  AT&T U-verse has captured far more than 5 percent of cable customers in markets where it competes with cable, yet somehow cable manages to keep the lights on and their doors open;
2. The FCC pretends that these agreements don’t impact the marketplace when the 95 percent “take rate” for service plainly indicates otherwise.  Do 95 percent of residents in non-bulk-billed neighborhoods also take cable service?  Of course not.

Despite the FCC’s industry-friendly ruling, many impacted consumers are not giving up.

Martin, the Dallas renter paying for cable-TV even though he doesn’t own a television, is taking the fight to state Attorneys General, hoping a group effort on the state level will dislodge at least some consumers from being forced to pay for something they don’t want or need.

Martin believes it’s manifestly unfair to deliver mandated “discounted service” to some on the backs of others who don’t want a cable bill at all.

“No one should have the right to force you to buy what you don’t want from someone you don’t like,” Martin says.

He points out under Mid-America’s terms, even blind and deaf residents are forced for pay for cable service.

The only thing cheaper than a discounted cable bill is no cable bill at all.  Now that represents real savings.

Martin’s vociferous objections and intervention from his Texas state representative eventually managed to get him off the hook with Mid-America’s mandatory cable bill.  His rent was lowered by an amount equal to the monthly cable fee, but the cable company is still getting paid on his behalf.

For Martin, that’s just plain wrong.

“I am still subsidizing an industry of which I do not wholeheartedly approve,” he writes.

Martin is now coordinator for Tenants United for Fairness and has launched an online petition demanding an end to mandatory cable-TV charges.

He has gathered more than 100 signatures from 13 states so far, and the petition is open for everyone to sign, even if they are not currently impacted.

Martin says getting signatures has proved challenging in some cases.

“It has been very hard to get tenants to sign my petition because they’re in fear of the landlords,” Martin says. “Very few of those who have signed have gone further and contacted their elected officials or the FCC to complain.”

The impact of the March decision by the FCC has given providers a green light to expand mandatory service even further.  Some communities are now finding mandatory broadband service fees being added to cable-TV charges.

The FCC’s response?  “Consumers complaining about these latest new fees are sent an unsigned form letter from the FCC advising them to “talk to your landlord,'” says Martin.

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/WVEC Virginia Beach Residents fight mandatory bundle agreement 3-16-10.mp4[/flv]

WVEC-TV in Virginia Beach covered the plight of residents struggling to understand why they should be forced to pay $146 a month to Cox for cable, broadband, and landline phone service.  (3/10/2010 — 4 minutes)