More than 35,000 Netflix subscribers flooded the company’s blog and Facebook page with negative comments less than 24 hours after the company announced major pricing changes for its DVD-by-mail and streaming services.

News that Netflix would unbundle discounts for customers who enjoy online streaming and still need to rent an occasional DVD-by-mail went over like a lead balloon for the overwhelming majority, who hit the 5,000 comment limit on Netflix’s own blog by 5:30pm Tuesday, and continue to pound the company’s Facebook page by the tens of thousands this morning.

One of the most “liked” comments came from longtime Netflix customer Scotty Fagaly:

“The only way that this is terrific for the customer is if you plan to offer your entire collection available for streaming,” Fagaly lamented. “Otherwise, this is just yet another way to choke more change out of your customers.”

Only about 20 percent of Netflix’s library is available for streaming at any time, with some titles and studios coming and going.  Several television series are available online, but certain episodes are often missing from the streaming library, requiring customers to rent the DVD to see everything.

Are these discs made of gold now?

The biggest negative response came from the loss of the popular $9.99 plan, which allowed unlimited streaming and an unlimited number of DVD’s — sent one at a time — to customers.  With the unbundling of discounts, that same plan now costs $15.99 — a 60% increase.

Netflix officials have yet to respond to the firestorm of criticism, in part laid at the feet of Jessie Becker, who tried to make lemonade out of the price increase most customers describe as a lemon.

“It’s insulting that Netflix think we’re stupid enough to believe this change is either ‘exciting’ or ‘good news,'” one hostile commenter noted.  “Stop couching this as anything other than what it is — a price hike.”

“So far you have 32,446 people on your Facebook page planning to or already have canceled, and 6,857 on this blog [over an] announcement yesterday. If nothing else there might be an award in it for you guys for most Internet hits for pissing off customers in the shortest amount of time,” said Christine Perry.  “I can go to Redbox and rent a new release for a dollar, watch it and return it the same day and get a new one. Why would I pay $7.99 to wait 3 days to get a DVD, and the another 3 days after I watch it for you to get it back, and then another 3 days to get another one?”

Daniel Indiviglio, a former investment banker who works today as an associate editor at The Atlantic, called Netflix’s price changes “boneheaded,” particularly for investors if it backfires:

“How much could Netflix lose? Let’s do a quick analysis. According to one estimate, about 80% of Netflix subscribers currently have by-mail service that includes free streaming. Of that portion, let’s say half cancel streaming but keep by-mail service. Remember, many people don’t use streaming at all. In particular, if you don’t have an Internet-ready device connected to your television with a Netflix widget, then streaming is far less attractive. Through Netflix’s new pricing, by-mail only service will be about 20% cheaper than the current rate that includes free streaming.

[…] “Netflix has been a darling of investors for some time now. In just the past year, its stock price has increased by an amazing 144%. But Wall Street might begin to question its strategy. The company has said that streaming is the future. It’s right. But the future isn’t here yet. If its streaming subscriber base suddenly plummets by 50% or even by a smaller margin like 30%, then investors might worry about whether consumers are really ready to embrace the service on which Netflix has been investing a huge portion of its revenue. And if its profits dive as a result of the rate hike, then investors will be even more concerned with Netflix’s vision.

“So what should Netflix have done? It should have increased its rates slightly, maybe by a dollar or two, and broke out streaming and by-mail service. For example, the company could have increased the cost of its basic plan from $9.99 to $11.98 for streaming plus by-mail service. If you wanted the two a la carte, it could have charged $4.99 for streaming and $6.99 for one DVD-by-mail. Although customers wouldn’t love the rate increase, they’d be better able to stomach it. It would also give Netflix the ability to up its fees in future years gradually, to hit the target that it believes is appropriate. But putting the hike in place immediately may do the company more harm than good.”

Your Alternatives

Bankrupt Blockbuster wasted no time taking advantage, pelting many of their former rental members with e-mail reminding them they can rent Blockbuster DVD’s by mail without a monthly subscription.  Unfortunately, it’s not cheap.  A seven day rental of a single disc will cost $4.99.  Subscription plans offer a better value for frequent renters.  Blockbuster also benefits from not being perceived these days as a “bad boy” by Hollywood studios, who have been penalizing Netflix with longer rental embargo windows.  Many new releases reach Blockbuster a month before showing up in Redbox or on Netflix’s roster.  Customers can also swap out up for five DVD’s a month at BlockBuster retail outlets, and video game rentals are also available.

Prices:

• One DVD out at a time: $12 per month
• Two DVDs out at a time: $17 per month
• Three DVDs out at a time: $20 per month

Hulu Plus has not been a runaway success for its owners, charging $8 a month to paying customers who win the right to watch additional content, but with the same commercial load the free alternative service provides.  People don’t think of Hulu for movies because the service is heavily focused on television series, but Hulu Plus does deliver a small selection.  Amazon Instant Video is another alternative, for those paying Amazon.com $79 a year for the privilege of getting their orders shipped to arrive in 48 hours for no additional shipping charges.  Amazon added unlimited access to their Instant Video streaming library at no additional charge for Amazon Prime members.  Just about anyone signing up with a new account at Amazon can get a 30-day free trial of Amazon Prime, with the movie service.  But you will make due with watching around 6,000 titles, many of which are obscure or a distant memory.

Many of Netflix’s upset customers report they are headed for the Movie Tardis — the 27,000+ giant red boxes erected in front of grocery and drug stores.  Redbox pitches $1 movie rentals, but you need to return them by 9pm the following day.  Blu-ray movies cost 50 cents more.  Redbox carries a healthy selection of current titles, and you only interact with a machine, so you won’t deal with the eye-rolling you might get renting at area video stores.  This option works best if you are within a very short distance from the nearest kiosk.  Otherwise, you may find returning discs a hassle.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WNAC Providence Netflix raising prices 60pct 7-13-11.mp4[/flv]

Netflix is raising prices and subscribers are not happy, shares WNAC-TV in Providence.  Their advice? “Stick to Redbox.”  (1 minute)

Leap Wireless’ Cricket is raising prices $5 a month on its prepaid 3G mobile broadband service for the second time in nearly a year, with the announcement the company will offer limited data roaming on Sprint’s 3G network.

In return for being able to access Cricket mobile broadband outside of the company’s highly limited network of cell towers, the price has to increase, according to statements made on Cricket’s website.  Cricket will now sell three different broadband plans, all without a contract:

$45/month for 2.5GB, $55/month for 5GB, or $65/month for 7.5GB

But there are a number of catches.

First, your service will be terminated if you do not live in a zip code where Cricket provides its own cellular service.  The company is only interested in selling service to customers who will primarily use it inside of its own coverage areas.  Second, if you are caught data roaming on Sprint’s network for more than 50 percent of your monthly usage, the company can throttle your speed to dial-up for at least one month or terminate your account.

These pricing changes could also impact certain grandfathered Cricket mobile broadband customers, some of whom are still paying Cricket’s rate of $40 a month for up to 5GB of usage that was being sold until last summer.  Who will pay the added $5 bite depends on when and where you activated your account:

Customers activated prior to August 2, 2010: You are likely grandfathered on Cricket’s $40 a month plan, good for up to 5GB of usage per month.  Most of these customers never activated last year’s newly introduced limited 3G mobile data roaming, so they will not be able to use their service outside of a Cricket service area.  They will not see a rate increase unless they opt-in to “roaming” service from a menu on their wireless device’s configuration panel.  If you opt in, you cannot opt back out.

Customers who purchased their device at Best Buy, Wal-Mart, or Radio Shack at any time: You are not eligible for 3G data roaming service at this time.  You will not see a rate change unless and until that changes.

Customers activated after August 3, 2010: Your device was activated with 3G roaming capability and you will be impacted by the price change.  Existing customers on an impacted account will receive Nationwide 3G coverage beginning July 12.  The first bill with increased pricing will be for customers with a bill due on August 11.  Your bill will see an increase on or after this date.  Technically that equals one month of free roaming coverage.

Cricket's new data coverage map, with Sprint roaming included.

For some customers, this is quite a price increase from two years ago when the company claimed to provide “unlimited” 3G wireless broadband service for $40 a month.  Customers soon learned Cricket’s definition of “unlimited” meant around 5GB of usage before the company throttled broadband speeds to near dial-up for the remainder of the billing month.  By last summer, “unlimited” was gone, replaced with usage allowances enforced by the aforementioned “fair access policy” speed throttles.

Although the company touts the service will run at speeds up to 1.4Mbps, in reality, most will see speeds much lower than that.  From Stop the Cap! headquarters in Rochester, N.Y., we routinely see speeds on Cricket’s 3G network operating at between 300-600kbps.

Cricket still delivers a cheaper plan over Sprint-owned Virgin Mobile, which charges $50 for 2.5GB.  For those who want more, Clearwire is still pitching 5GB of usage on Sprint’s 3G network and “unlimited” use on its 4G network, although “unlimited” really isn’t when the provider deems you a heavy user and throttles your speeds.  T-Mobile offers a data pass for some of their customers allowing 1GB of data for $30, 3GB of data for $50 — all prepaid.

Netflix has dramatically raised prices for their customers who subscribe to both unlimited streaming and renting DVDs-by-mail, several months after their last rate increase.

The company today announced it was unbundling discounts for its plans that include both online video streaming and DVD rentals-by-mail.  Under the old pricing, customers could watch an unlimited amount on online content and still get one DVD at a time mailed to them for $9.99 per month.  Effective today, that same plan will cost $15.98 — a $6 monthly increase.

According to Netflix’s Jessie Becker, the company is effectively pushing customers through pricing to either renting all of their DVD’s by mail or going with unlimited streaming.  Doing both will carry a significantly higher price.

“We are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both,” Becker writes on Netflix’s blog. “With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.”

That’s not exactly true, however.  Netflix is still selling combined plans, just at substantially higher prices.  A three-DVD-by-mail plan that includes unlimited streaming used to cost $19.99 a month, but will now be priced at $23.98 a month, a four dollar increase.

The new pricing does not include the very steep price increases forecast by Wall Street for unlimited streaming.  Content creators, especially large Hollywood studios, expect to aggressively negotiate for dramatically higher fees to renew contracts for Netflix video streaming rights.  Most anticipate Netflix will need to raise streaming prices to cover those costs in the near future.

Customer reaction?  Overwhelmingly hostile, with many threatening to cancel service in favor of Amazo, Hulu, or even Redbox.

Among the comments:

◊ This is a 60% price increase. Netflix sure has some audacity to think they can get away with a 60% price increase in this economy. I currently have the $9.99 one-DVD plus streaming plan. Sept 1st I will have to pay $15.99 ? Not gonna happen. I’ll cancel one or both services. There are other options (I have Tivo, Apple TV, Amazon Prime, etc.) Netflix has peaked. They are going to blow it.

◊ You can spin this any way you want, Netflix, but it comes down to simple greed. With limited new content on your streaming service, I will be definitely be canceling that and will probably cancel DVD service as well just on principle. Time to sign up for Hulu Plus! Go ahead and change your name to Blockbuster, because with more stupid decisions like this, it’s only a matter of time before you go by the wayside like they did.

◊ 60% increase, practically overnight, to get the same service I get now? That sucks. If I rented more than one or two DVDs a month, it might be worth it, but I only use the DVDs as a fallback when the movie I want isn’t on streaming, and they often take several days to arrive. If you had your entire catalogue on demand, then I could pick between two options, but you’re forcing me (and a lot of other customers) to pay full price for both in the hope of getting one complete service. You already increased prices at the beginning of the year, and this kind of hike six months later is unacceptable. Hulu is starting to look very good.

◊ Congratulations. You’ll probably be losing our household subscription. We’re long-time members (since 2002) on the Unlimited 3-disc plan. We just started streaming more because we finally have a game system set up in the living room. However, with these “changes” we’ll no longer be able to afford both. So why bother to keep either? Thanks, a lot, Netflix. I really bloody hate you. And that’s sad because until this year, I didn’t have many complaints about your company. Why the hell can’t you just leave things as they are? If things aren’t broken, don’t fix them. 🙁

◊ The only way I will be sticking with Netflix then is if they offer newer titles and ALL titles in just streaming. Because I’m not paying 15.98 for what I get now at 9.99. This doesn’t make sense. THe only reason I signed up is because I thought “9.99 a month. I can do that.” but 15.98 a month with my minimum wage job, having to pay for college, gas, insurance, cell phone. I’m not adding an un-needed 15.98 a MONTH netflix bill. Count me out.

◊ So, my 2-at-a-time with streaming and Blu-ray plan currently costs $17.99 (up from $16.99 last year and $13.99 when I first joined in 2008). Under this new scheme, I get no new features or services, but I have to pay $22.98? Um, no thanks… I think I’ve had enough.

◊ The whole point is that we use the streaming primarily and only order a DVD when you don’t have it available for streaming… thus the $2 per month for DVDs makes perfect sense.  You guys have really messed up here.

If this is a new way to attract customers, it’s sure stumping marketing experts who are questioning Hawaiian Telcom’s launch of its new cable TV service to compete with Time Warner Cable’s Oceanic Cable.  Nobody knows where exactly the service is available for sale, or for how much, and HawTel officials are not saying.

“If you call Hawaiian Telcom and ask them about the service, they essentially say ‘don’t call us, we’ll call you’ and they are the phone company!” says Oahu resident and Stop the Cap! reader Dan Ho, who first discovered HawTel was getting into the cable business from Stop the Cap!  “I realize we’re talking about another form of U-verse here, but that could still be a good thing for Hawaiians who cannot get Oceanic Cable and are stuck with HawTel’s awful DSL service.”

HawTel’s new fiber-copper hybrid network tested successfully for 250 mystery families who participated in a secretive beta-test.  The new service is expected to be sold mostly in a packaged bundle with extra high speed DSL (presumably up to 25Mbps), a central DVR terminal that can record up to four shows off the company’s digital cable TV package concurrently, and unlimited phone service.

Lester Chu, a HawTel spokesman, wouldn’t tell reporters the prices for the new service, instead offering to accept bills from competing providers and allowing HawTel to competitively bid for your business.  The company also wouldn’t say where the service was for sale, “for competitive reasons,” added Chu.

But HawTel has been licensed to provide service on the island of Oahu, and intends to rollout the service in contiguous service areas, so once the first new customers do go public, we’ll be able to ascertain where the service is slated to be delivered next.

HawTel says they will begin targeted advertising to alert residents when the service will be available.  That traditionally means direct mailers, door hanger tags, and door-to-door visits from sales teams hired by HawTel.

“It’s a crazy way to build excitement for the product, by keeping it a secret,” Ho believes. “More important, I suspect their pricing is not going to be very good if they require customers to bring in a current bill from a cable competitor in order to get a quote.”

Ho should know, he’s a marketing professional himself.

“I suspect the company wants face time with a customer to explain away the lack of visible savings by instead talking up the features they will offer that Oceanic Cable does not,” Ho suggests.

Among those features – the four-recordings-at-a-time DVR, the 250-channel all digital lineup, and the presence of NFL Network, a network Time Warner Cable systems have perennially refused to carry on their basic digital tier because of its cost.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KITV Honolulu Hawaiian Telecom Bring Cable Competition To The Islands 7-7-11.mp4[/flv]

KITV-TV in Honolulu opened their newscast with the mysterious launch of Hawaiian Telcom’s new TV service.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KHON Honolulu Hawaiian Telcom launches cable TV service in select location 7-7-11.mp4[/flv]

KHON-TV in Honolulu covers HawTel’s introduction of cable competition on the island of Oahu, even though company officials won’t say where it’s available or for how much.  (Loud Volume Warning!) (1 minute)

We have received dozens of e-mails from readers trying to add Verizon Wireless’ coveted 4G $30 unlimited-use Mobile Hotspot feature to their accounts, with varying results.  We’ve compiled, with the help of our readers, a guide to assist you in scoring the only good thing to come from Verizon’s recent changes in data pricing.  If you follow these steps, you should be good to go.

Q&A

1. What is a Mobile Hotspot and What Is Verizon offering? — Verizon Wireless offers customers a service to turn their 3G or 4G phones into a Wi-Fi provider, letting you connect your other portable devices, like a tablet or laptop, to your Verizon Wireless data connection to access the Internet over Wi-Fi.  Technically, this feature is built-in to most smartphones, but cell phone companies monetize it by charging you an extra monthly fee to use the service.  Traditionally, Verizon charges $20 extra a month (on top of your data plan) to enable this feature, and has limited it to 2GB of use per month.  Each additional gigabyte will cost you $10.  But when Verizon introduced its new 4G LTE network, early adopters to 4G phones got access to this feature for free, for a limited time.  On 7/7, Verizon’s new limited-use data plans took effect, and Verizon expired the free 4G Mobile Hotspot feature.  To placate 4G owners, it offered them the chance to continue getting unlimited use of this feature, for an extra $30 a month.

That’s a stiff price to pay on top of your monthly data plan, but because Verizon’s LTE network is currently fast enough to serve as a home broadband backup (we consistently get speeds of 11/3Mbps on LTE from our headquarters), $60 total for unlimited wireless Internet isn’t completely outrageous at those speeds.  Yes, it’s ridiculous Verizon disabled a feature built in and functional on phones in other countries, but it is the same story with other carriers as well.  We even agree with the proposition you should be able to use your unlimited data plan for anything you want, but that’s just not a reality at the moment.

2. Who exactly qualifies for the $30 unlimited Mobile Hotspot? — We have been able to confirm for sure that anyone who activated or at least ordered a 4G phone before midnight on 7/7 is qualified to upgrade to this plan.  You cannot, however, activate the plan on a 3G phone.  Only 4G models qualify.  Where things get murky is whether or not customers who currently have 3G phones can still upgrade to a 4G model after 7/7 and get this plan.  Droid Life believes the answer to this question may be “yes” based on two tweets sent from Verizon Support:

We are more skeptical, however, based on the accumulated responses we’ve collected from Verizon Wireless from our readers, which admittedly are all over the map.  Verizon reps have not been offering consistent information about the Mobile Hotspot plan since it was first announced more than a week ago.  The company is preoccupied with reassuring existing customers they were not at risk of imminently losing their unlimited data plans, an entirely different subject.

I would not upgrade to a 4G phone today in hopes of scoring this Mobile Hotspot plan unless you have the name of an employee you can use if you complete the order, try to activate the feature, and encounter resistance.  In truth, Verizon can do anything they want for any customer, new or otherwise.  The trick is finding an employee with the authority to make things happen.  Be prepared to escalate or call back if you encounter a roadblock.

3. What happens if I have a 4G phone and start a Hotspot session with a 3G signal, is it still unlimited? — Yes.  Any Mobile Hotspot session originated on this plan on a 4G phone is unlimited regardless of what network conditions you encounter, as long as you are on Verizon’s network.

4. Does this apply to mobile broadband, provided by a dongle or a MiFi device?  — No.  Only 4G smartphones qualify for this plan.

5. How many people can share my Mobile Hotspot connection at the same time? — Verizon traditionally says five, but my phone (Samsung Charge) supports up to 10 concurrent Hotspot connections.  That’s a lot, so if everyone piles on, expect some slowdowns from the shared connection.

6. Can you add and drop the featured plan and get it back later? — Verizon has not said.  The company has not responded to questions about the longevity of this plan, whether it could be withdrawn, or whether customers can add and drop it (and add it back) at will.  We see that as evidence this is a promotional add-on that is likely to be withdrawn for new customers at some point in the future.  Verizon traditionally grandfathers customers already on a plan indefinitely, which means if you have it, you can keep it.  If this feature is important to you, we recommend you add it and keep it active.  When it’s gone for new sign-ups, it’s gone.

7. I do not see the plan under Verizon’s My Services on their website.  Should I be concerned? — No.  The plan was being offered to customers initiating new Mobile Hotspot sessions on their 4G phones, but not to all.  We never found it on Verizon’s website.  The only indication it is active on your account is finding this: “4G SMARTPHONE HOTSPOT” listed on this page (to access, you must first login to your Verizon Wireless account and select the line on which the feature was ordered.)

Ordering Advice

We have found multiple methods of securing this plan, and with the thanks of Stop the Cap! reader DJ, we have even located the all-important plan number, which you can reference when contacting Verizon.  If you run into a roadblock calling Verizon customer service, or can’t get the plan added while visiting a Verizon Wireless corporate store, we have some other suggestions.

1. Customers who already had a 4G phone before 7/7 can call Verizon Wireless from your phone at 611 or 1-800-922-0204 Monday-Sunday 6am-11pm ET.  Tell them you wish to add plan code #76153 — $30 Unlimited 4G Mobile Hotspot.

2. If you activated a new 4G phone after 7/7, call VZW’s Orders & Activations Hotline at 1-877-807-4646.  Work through the prompts.  You may be prompted to accept a customer agreement and get “trapped” in a menu asking you to press “1” or “2” after accepting the customer agreement.  Press “0” and wait to be transferred to a live agent.  Tell them you wish to add plan code #76153 — $30 Unlimited 4G Mobile Hotspot.

3. If rebuffed by either, try calling 1-316-681-9940, the number to a Verizon store in Kansas that has employees active in several phone forums helping people trying to get on this plan.  They should be able to add the plan to any 4G phone account, whether you are in Kansas or not.  Again, reference plan code #76153 — $30 Unlimited 4G Mobile Hotspot.

Let us know if you still have any problems in our comments section!