Alex Dudley, a specialist in corporate crisis communications, has left Time Warner Cable after serving as the cable company’s group vice president of public relations, to take an executive position at Charter Communications.

Our readers will recall Dudley represented Time Warner during its 2009 experiment with usage caps and consumption billing. He tweeted company talking points from his @TWCAlex account. In the summer of 2010, more than a year after the experiment was shelved after customer protests, Dudley was still defending the need for broadband usage limits:

“As Internet use increases, TWC techs, engineers, and executives need to make adjustments such as DOCSIS upgrades at the cable company headend or “node splits” that divide a shared cable loop in two when bandwidth use hits certain metrics. Paying all of these people costs money, and those costs increase as the network is more heavily used.”

Unfortunately for him, Time Warner Cable’s own financial reports belied his claims. The DOCSIS 3 upgrade, now complete at Time Warner Cable, had no material impact on the company’s pre-planned capital expenses, and was undertaken at the same time the cable operator began increasing prices on broadband service.

Dudley will assume the role of senior vice president of communications at Charter on March 18. His high-profile status at Charter was reflected by a statement from Charter CEO Tom Rutledge welcoming him to the company:

“These appointments reflect a commitment to our customers, shareholders and employees to support and sustain the positive changes taking place at Charter,” Rutledge said. “Alex is a proven leader who brings with him a wealth of expertise in developing and managing compelling messaging and executing high-impact, strategic communications. He will be a valuable contributor to our organization.”

Shammo

Verizon’s vision of broadband economics depends on the technology used to provide the service, according to some insights shared by the company’s chief financial officer at yesterday’s Deutsche Bank Access Media, Internet & Telecom Conference.

Fran Shammo outlined two strategies the company is using to profit from its broadband services. For wireless, Verizon has “flipped the model” from the traditional voice plan that starts with a bucket of voice minutes towards monetizing broadband usage instead. Today, customers buy plans that focus on anticipated data usage with unlimited voice and texting thrown in. But marketing broadband on Verizon’s fiber optic FiOS network is markedly different because the company is focused on speed over consumption.

“We are now shifting into concentrating on the broadband piece of that product, and the speed that the fiber to the home can give you we believe can’t be matched with anyone,” Shammo told an audience primarily made up of Wall Street analysts and investors. “We have a superior product.”

Shammo explained Verizon intends to “monetize speeds” that fiber broadband is capable of providing. That is important because Verizon FiOS now represents 70 percent of Verizon’s wired business, as traditional landline revenue continues to decline.

That is welcome news to broadband advocates that prefer current pricing models based on broadband speeds, not usage. Verizon FiOS intends to capitalize on its superior speed to differentiate itself from the cable competition, especially when some of those competitors are slapping usage limits on their customers.

Another important new revenue source for Verizon comes from switching legacy DSL users to FiOS technology.

In 2012, Verizon commenced its copper-to-fiber migration in FiOS areas. At least 200,000 homes formerly served by copper-based DSL were transitioned to fiber. In 2013, Verizon plans to migrate another 300,000 customers. When customers are switched to the fiber network, their former DSL speeds remain the same, but now Verizon’s marketing department has an opportunity to target upgrade offers for faster speeds.

“We give them the choice to start upgrading that speed [to] 15, 25, or 50Mbps,” Shammo reports. “What we are seeing is people are willing to pay for that additional speed, so we can monetize that fiber network more.”

However, Shammo reiterated that beyond what Verizon has already committed to in FiOS agreements with local municipalities, Verizon plans no additional expansion of FiOS in 2013.

The foundation for future profits come from data usage.

Unintended Consequences of Share Everything: Customers do an end run around Verizon’s “device fee.”

The conference also provided new insights into Verizon’s Share Everything wireless plans and the company’s other strategies.

Shammo admitted customers have done an end run around the “device fee” for multiple add-on devices.

Verizon expected mobile wireless-enabled tablet sales would increase as the cost to add a tablet to a Verizon Wireless account no longer required a separate data plan. But Verizon’s “device fee,” charged for each device connected to a Share Everything plan, has backfired. Customers are instead adopting Verizon’s “Mi-Fi” wireless hotspot device or other tethering solutions. Customers can then connect up to five Wi-Fi enabled devices through the hotspot and bypass paying multiple device fees that range from $5-20 per device.

Living Off the Revenue from a 3G Network Verizon Has Stopped Expanding, Improving

Shammo also noted Verizon has stopped further investments in its 3G wireless network.

“We are not investing any more capital in that network other than to keep it up and running, so no more coverage [expansion] capital, no more capacity [expansion] capital,” Shammo said. “If I can keep that network up and running that just generates more [revenue] for us.”

Verizon plans to keep a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

Verizon’s Plans to Reduce Device Subsidies, Discounts

Customers have grown to expect a free or low-cost upgrade to a new smartphone every two years. But wireless companies find the costs of fronting device subsidies troubling because it affects the short-term bottom line. As wireless providers trim discounts, tighten upgrade policies, raise prices, and introduce new upgrade and activation fees, the $200-400 device subsidy recouped over the life of a two-year service contract remains a fat target for pruning.

But Verizon and other cell phone companies do not want to cut plan prices that are now inflated by $10-15 a month to cover paying back phone subsidies. The best of both worlds: eliminating device upgrade discounts –and– keeping prices the same for wireless service, banking the extra revenue as profit.

Verizon’s current solution is a middle-ground approach that gradually reduces device subsidies while hoping increased competition among device manufacturers will lower retail prices. For the consumer, that means prices will remain generally the same. But for Verizon, it means higher revenue from paying out lower subsidies while being able to maintain current pricing.

“I am a believer that over the next two to three years subsidies will start to decrease just because of the ecosystem,” said Shammo.

Verizon’s conversion to LTE means the day of a pure LTE-only smartphone is not far off. It will not include added-cost chips to support legacy technology, particularly older data networks and CDMA.

Wall Street Pressures Verizon to Talk Customers into Less-Costly (Anything but an iPhone) Smartphones

Brett Feldman, an analyst at Deutsche Bank who moderated the question and answer session with Shammo pointedly noted the Apple iPhone is the most-costly phone to subsidize.

“Are there things you can do with your sales force where you would proactively incentivize them to maybe sell different devices,” asked Feldman.

“It is critical that we don’t do that,” Shammo explained. “What is more important for us is a customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incent a salesperson to get you into a phone thinking you are going to like and in three days you come back because you don’t. Now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone.”

Cablevision’s yesteryear marketing: As outdated as this Harvest Gold Trimline phone.

Cablevision’s bizarre new ads for its Optimum triple-play package (the one that puts broadband, arguably its most important component, dead last) have reached a new low in the latest series featuring… Michael Bolton?

Bolton is a practical unknown to the most important demographic group not buying cable: recent graduate twenty-somethings that were 12 when one of his songs last plagued top-40 radio. Cablevision’s misfire could only be outdone if Nike hired Dick Van Dyke to pitch their shoes.

This is the best Cablevision can manage after Sandy blew away 11,000 of their customers (potentially for good) and rate increases took another 28,000 households with them (mostly to the benefit of Verizon FiOS)? Was the runner-up Joyce DeWitt from Three’s Company pitching a three-pack of phone, television, and (oh yes) Internet service?

Cablevision’s marketing efforts are now partly overseen by the CEO’s wife, who ‘somehow’ landed the prominent role of rebranding Cablevision/Optimum. Perhaps her best talents lie elsewhere.

Verizon featured Michael Bay blowing things up in FiOS ads five years ago that were more trendy than Cablevision was this week.

The point of the ad? Michael Bolton keeps getting annoyed with masses of would-be Cablevision customers calling in to sign up for cable service on a toll-free number that is just one digit away from Michael Bolton’s toll-free number (?) Yes, that is Bolton talking on a (shudder) landline (at least he has a cordless phone). Does anyone under 30 even know what a “toll-free” call is?

For those of us who remember what a dial tone sounds like and can still recognize a Trimline rotary phone, the ad still does not make sense. I am perplexed why Michael Bolton has a toll-free number. I guess when Tonya Harding’s name recognition rivals Michael Bolton’s, the fact he has a toll-free number gives him the edge.

A minute later, I am left wondering why I care. I am not certainly not wondering why I haven’t picked up the phone to order Cablevision service.

When it comes to branding and image, here is what Cablevision just accomplished:

• Verizon FiOS circa 2008 = Michael Bay blowing cool stuff up.
• Cablevision this week = Michael Bolton.

‘Nuff said.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Cablevision Ads Michael Bolton.flv[/flv]

AD FAIL: What were they thinking? Michael Bolton annoys viewers trying to recollect his career while Cablevision tries to make New York, New Jersey and Connecticut remember why they should care.  (1 minute)

Verizon Wireless is planning a major audit of their employer discount plans to verify customers’ continued eligibility, according to a report in PhoneArena.

Commencing April 1, Verizon will begin contacting customers receiving corporate discounts through text messages, direct mail or e-mail requesting proof of their continued employment within 60 days. If validation is not received, the discounts, which range between 10-25 percent, will be automatically removed in July.

Customers will be able to revalidate over the phone, by mail with a copy of an employee ID badge, or through a renewal website that will likely require the customer to use an employer-provided e-mail address for verification.

With no serious corporate discount audit conducted by Verizon Wireless in the recent past and a major upheaval in employment since the Great Recession, the audit procedure will likely net Verizon millions in additional revenue after removing discounts customers are no longer entitled to receive.

[Update 3/7: Verizon Wireless’ Brenda Raney sent word Verizon does not consider a copy of an employee ID badge as proof of employment.]

Esteves

Time Warner Cable is spending less to maintain and improve services for residential customers even as broadband usage grew 40-50 percent, redirecting spending on its business services division instead.

Irene Esteves, chief financial officer of Time Warner Cable, told attendees at Morgan Stanley’s Technology, Media & Telecom Conference that the growth in the company’s capital spending is associated with serving business, not residential customers.

Esteves reported that spending on residential services was actually down slightly in the last year. The business services division used its increased capital to wire 100,000 office buildings and provisioned 1,900 cell towers with backhaul service last year.

But despite decreasing costs, Time Warner Cable expects to continue increasing broadband prices, primarily because it can.

“What we have found is […] as customers use it more, value it more, we can then price it more,” said Esteves. “And we think that’s a terrific dynamic for the market for quite a bit of time.”

Powering usage growth more than anything else is online video.

“If we look at peak volume, which is really what drives our capacity planning, 66% of that increase comes from streaming video,” notes Esteves. “Again, the more they use it, the more they love it, the more important we become to them as a service provider. So we’re continuing to watch that usage pattern and cheering them on.”

For traditional television viewing, Time Warner’s march to digital will also carry on, but it will happen slowly.

Time Warner Cable has chosen a gradual transition to IP video for cable television service. Subscribers can expect about a dozen channels per year to be removed from analog service until the cable system offers a completely digital television package. In Maine and New York City, that digital transition is already complete.

“We’re taking a more measured approach over a 5-year time period,” said Esteves. “We’re taking [away] analog channels in the 10 to 12 per year kind of measure, which is less disruptive to our customers and less capital-intensive.”

That kind of transition, coupled with annual rate increases, could potentially alienate customers, but Time Warner has retrained its retention specialists to assuage customers headed for the door.

“With the increasing promotional activity in the marketplace, we have more and more of our customers on promotion and it’s imperative that when the [promotion expires], we’re being very thoughtful about who rolls off to what, when,” said Esteves. “We’re training specialists to talk to customers, listen to them, find out the reasons for potentially leaving and recapturing those.”

But the industry is also under pressure from Wall Street to cut promotional activity and stop discounting service excessively, because it gets customers used to a lower price.

“If you think about the promotional prices in the marketplace, that really drives people to price shop and that just increases the transactions and the turmoil in the industry, which increases everyone’s cost and reduces everyone’s profitability,” Esteves said. “So the real conundrum for the entire industry is how do we each build on our retention rather than build on the promotional side in order to keep our customers and become more profitable.”