For years cable subscribers have lamented the “all or nothing” approach to cable packages.  Choosing only the channels you want to watch, and pay for, is out of the question.  But as the economic downturn drags on, and more consumers drop their cable service, Comcast has continued experimenting with “economy packages” consisting of fewer channels at a lower price.

First appearing a year ago in cities like Hartford, the reduced channel lineup works fine for many consumers who don’t watch sports networks or need access to niche networks.

For customers in the Twin Cities of Minneapolis and St. Paul, Comcast’s $29.99 Digital Economy package ($10 more if you do not subscribe to phone or broadband service) offers more than just the local stations in the broadcast basic package, but fewer channels than Comcast’s traditional standard Digital Starter tier, priced at $57.50.

Digital Economy includes all of the local television stations in the area, plus 20 mainstream basic cable channels familiar to any cable subscriber, including A&E, Cartoon Network, CNN, Discovery, Disney, Food Network, Fox News, Hallmark, History, Lifetime, USA and the Weather Channel, among others.

The channel selection trends towards being attractive to older subscribers, but hopes to be attractive to families as well.

It’s “educational, family-oriented channels,” Nick Kozel, Comcast’s vice president of marketing and sales in the Twin Cities told the Minneapolis Star-Tribune.

“This particular customer group typically likes them all, so what we’ve done is tailored what’s available to what a portion of the population really likes,” Kozel said.

The new package will be available in the Twin Cities market starting December 16 and includes one digital receiver and remote control.

Still, Twin Cities residents hope for the day when they can choose exactly the channels they want.

“Price each channel and let us pick the channels we want. These tiers are a joke to stick us with 50 channels we don’t want,” writes Derek.

“Having to buy a “package” is not consumer friendly. We want to choose and pay for only the channels that we watch, not the other 200 that are bundled in,” adds Clint.

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A Comcast subscriber explains the Digital Economy Package (3 minutes)

AT&T Mobility wanted Verizon Wireless to stop showing ads that call out the differences between the two wireless competitors’ national 3G networks.  When Verizon didn’t, AT&T sued.  This week Verizon Wireless doubles down with three new holiday season ads that are guaranteed to enrage AT&T even further.

Anyone who has seen a Rankin/Bass holiday special will instantly recognize at least one of the ads is a play on the Island of Misfit Toys, seen in the 1964 holiday classic Rudolph, the Red-Nosed Reindeer.

[flv width=”620″ height=”380″]http://www.phillipdampier.com/video/Verizon Wireless Verizon Misfit Toys Ad.flv[/flv]

Verizon Wireless – “The Island of Misfit Toys” (30 seconds)

AT&T accuses Verizon Wireless of misrepresenting its national data coverage by showing non-3G areas in white, a color AT&T says traditionally represents no service at all.  AT&T says its wireless data network, in its entirety, is more expansive than Verizon’s.  Verizon counters its ads only compare 3G coverage, and clearly label the maps as such, including a fine print disclaimer indicating “voice and data services available outside 3G coverage area.”

AT&T further argues watching frustrated consumers shaking their phones or sitting alone because they were unable to meet up with their friends would suggest to a casual viewer they weren’t able to access any service.

[flv width=”620″ height=”380″]http://www.phillipdampier.com/video/Verizon Wireless Blue Christmas Ad.flv[/flv]

Verizon Wireless – “Blue Christmas” is sure to draw the ire of AT&T as a frustrated father visibly shakes his iPhone and never seems to be able to use it. (30 seconds)

Verizon Wireless’ attorneys officially responded to the AT&T request for a temporary restraining order to pull the ads off the air with a direct opening: “AT&T did not file this lawsuit because Verizon’s ‘There’s A Map For That’ advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts.”

The attorneys argue, “Remarkably, AT&T admits that the 3G coverage maps — the one thing that is common to all five ads — are accurate and that the ads’ express statement that Verizon has ‘5X More 3G Coverage’ than AT&T is true.”

AT&T has been one of the loudest voices in this advertising battle, spending many millions of dollars to market its 3G network as the “Nation’s Fastest 3G Network” and, with its exclusive partner Apple, naming the latest iPhone (only available on AT&T’s network) the “iPhone 3GS.”

The stark truth, as revealed by the concededly accurate coverage maps in Verizon’s advertising, is that the geographic reach of AT&T’s 3G network is far less extensive than AT&T would have the public believe — and far less extensive than Verizon’s 3G network. Consumers who are interested in smartphones have a strong interest in knowing the comparative 3G coverage offered by Verizon and AT&T.  Cutting off the free flow of information about Verizon’s more extensive 3G coverage would harm consumers in a way that could not be redressed.  And because injury to First Amendment rights is by definition irreparable, suppressing Verizon’s speech on an “emergency” basis before a definitive and fair adjudication would irreparably injure Verizon and its goodwill in addition to costing Verizon customers. Any harm to AT&T, in contrast, is merely speculative.

In the final analysis, AT&T seeks emergency relief because Verizon’s side-by-side, apples-to-apples comparison of its own 3G coverage with AT&T’s confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business, and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger.

[flv width=”620″ height=”380″]http://www.phillipdampier.com/video/Verizon Wireless Elves Ad.flv[/flv]

Verizon Wireless – “Elves” includes the line “good luck browsing the web with that one.” (30 seconds)

AT&T has gone all out to find confused consumers to back up their request for a temporary restraining order, running a survey asking ordinary cell phone users what they thought Verizon Wireless’ ads meant.  But Verizon Wireless answers the survey wasn’t limited to smartphone customers, who are already well aware of the differences between 3G and older, slower speed data networks, and for that reason the results are invalid.

Verizon Wireless says it will continue the aggressive campaign beyond the all-important holiday season, when cell phone handset sales are at some of their highest traditional levels.

Byron L. Harris heads the Consumer Advocate Division of the West Virginia Public Service Commission

Strong opposition to the proposed spinoff of Verizon service in West Virginia to Frontier Communications erupted Monday as the state Public Service Commission (PUC) published a flurry of written testimony filed with the state agency.

Some of the strongest criticism of the deal came from the state’s Consumer Advocate (CAD), an independent division of the PSC that represents residential utility customers.  Division director Byron Harris testified the deal carried “too many risks” for the state, and suggested Frontier failed to do its homework before considering the implications of the deal for nearly the entire state’s telephone system.  Harris added residents faced higher phone bills, early termination fees, little improvement in service, and was highly skeptical of Frontier’s promises to expand broadband service in the state, suggesting the company will not be in a financial position to offer acceptable “plain old telephone service,” much less broadband.

Harris testimony called on the Commission to reject the deal:

The proposed transaction poses too many risks for retail telephone customers in West Virginia from both a financial and an operational standpoint. The proposed transaction also poses too many risks for Verizon-WV’s wholesale customers and, ultimately, the tens of thousands of West Virginians served by these entities.

In his testimony on behalf of the CAD, Mr. Roycroft [one of two expert consultants hired to analyze the proposed sale] explains the operational difficulties that Frontier will face in assimilating the Spinco properties and operating systems. As Mr. Roycroft makes clear, the operational difficulties associated with a transaction as large as the one proposed are exacerbated by the fact that the proposed transaction – from an operational standpoint – actually involves two mergers in one:

1. The acquisition of the legacy Bell Atlantic network and OSS in West Virginia, and
2. The acquisition of the old GTE network and systems in 13 other states.

Mr. Roycroft details the multitude of risks that the proposed transaction presents for retail and wholesale telephone customers in West Virginia. Not only do customers face service and service quality risks, but they also face the risk of higher rates and/or other adverse terms and conditions of service such as early termination fees.

Mr. Hill points out, in his testimony, the many unrealistically optimistic financial projections Frontier makes in support of the proposed transaction. As Mr. Hill points out, Frontier’s projections rely too much on financial information that has been provided by the seller, Verizon, without independently verifying Verizon’s numbers. Frontier’s projections similarly rely on a number of assumptions about reducing access line loss, cutting operating expenses and capital expenditures, and realizing merger savings that would require Frontier to substantially reverse recent trends.

The fallout from the proposed merger not going well obviously affects retail and wholesale customers currently served by Verizon-WV and Frontier-WV as well. As discussed below, and in Mr. Roycroft’s testimony, Verizon-WV’s customers already have experienced sharp declines in their service quality, which is the predictable result of years of falling investment in the company’s telephone plant and workforce in West Virginia, as Verizon has focused its attention on other markets in other states and other service offerings, such as wireless service and video/Internet/telephone service provided via its FiOS offering (which is not offered in West Virginia).

The financial and operational risks associated with the proposed transaction jeopardize the combined company’s ability to maintain even current service quality in Verizon-WV’s service territory, let alone follow through on Verizon-WV’s obligation to improve that service quality going forward under the Plan.

Although the CAD obviously is (and has for some time been) concerned with the poor service quality currently provided to customers by Verizon-WV, the CAD believes that service is likely to get even worse under Frontier’s ownership. The proposed transaction will result in a post-closing Frontier that will not have the financial resources to be able to improve service quality for “plain old telephone service” – as voice-grade traditional telephone service is often called – in Verizon-WV’s service territory, much less to deploy broadband to the extent suggested in Frontier’s direct testimony.

Harris likened the deal to Frontier buying a used car from Verizon without knowing what’s under the hood.

“Frontier has essentially agreed to purchase a used car without first having the car examined by a mechanic. Without a thorough investigation of Verizon-WV’s plant, Frontier has no way of knowing whether its buying a pre-owned car that has had regular oil changes and proper tune-ups, or whether it is buying a clunker with a new paint job and a blown transmission. If Verizon-WV’s network has not been properly maintained (as the evidence seems to suggest), just like a car that hasn’t been properly maintained, getting it back to serviceable condition will be a very expensive proposition,” Harris testified.

Harris gave five specific reasons why the deal was bad for West Virginia:

First, Frontier has not done any in-depth analysis of the quality of the Spinco facilities that it is acquiring. This lack of analysis is disturbing on its face, as it would seem to be a fundamental area of inquiry for any prospective buyer. But the importance of this lack of meaningful review is magnified in West Virginia by the fact that Frontier knows, or reasonably should know, that Verizon-WV’s outside plant facilities in West Virginia are not in good shape. The Commission is well aware of the significant decline in service that Verizon- WV’s customers have experienced over the last several years. This decline is documented in the public record (in both the informal complaint records maintained by the Commission’s Staff, and in the record in proceedings related to Verizon-WV’s service quality docketed in the last few years). That record should have triggered a much more searching analysis by Frontier. This lack of analysis also impacts the overly optimistic assumptions that Frontier has used in its financial analysis of the transaction.

Second, Frontier’s overly optimistic financial projections increase the risk that the post-merger company will not be able to remedy Verizon-WV’s current poor service quality or to provide its promised broadband deployment. Verizon is obviously a larger and more financially sound company than Frontier. For a company such as Frontier which historically pays out greater dividends than its net income, the risk that the optimistic financial projections will not transpire is magnified.

Third, as of October 14, 2009, Frontier still had not determined how it will handle the additional call center volumes that will occur when the company acquires access lines in West Virginia.  Obviously, the proposed transaction would adversely affect the public if it is approved without a concrete plan to handle service calls from current Verizon-WV customers.

Fourth, similarly, no concrete plan has been put forth by Verizon for serving customers in West Virginia who are currently served out of central offices in Maryland. Again, the proposed transaction would adversely affect the public if it is approved without a concrete plan to serve Verizon-WV customers who are currently served from central offices in Maryland.

Fifth, current Verizon-WV retail customers face the prospect of increased rates and/or early termination fees as a result of having their current package or bundle service migrated to a similar package or bundle offered by Frontier. In discovery, Frontier has to date refused to identify the packages that will be offered to replace current Verizon-WV packages or to state at what price the packages will be offered to such customers. Verizon- WV customers with bundles that include Verizon broadband service also appear to likely face significant early termination fees of at least $120 if they elect not to transition or migrate to Frontier’s service after closing. This likelihood appears even greater when the companies’ obtuse response on this subject is considered. When the CAD asked whether Verizon-WV customers who elected not to remain with Frontier post-closing, would be charged any early termination fees, the companies merely stated that they will “honor the terms of their contracts with customers.” Obviously, “honoring” the terms of a contract that includes an early termination fee could very well mean enforcing that provision of the service agreement.

Hundreds of New York state residents were unfairly charged early termination fees that eventually brought Frontier to the attention of the New York Attorney General’s office, which obtained relief in the form of full refunds for affected New York residents.

Ironically, even though Verizon may seek to exit West Virginia’s landline telephone business, the company will continue to exist as a competitive player in the state — through Verizon Wireless, its mobile telephone division.  Verizon Wireless sent letters to customers urging them to terminate their home phone lines.  That will spell additional competition for Frontier Communications, as Stephen Hill testified, on behalf of the Consumer Advocate Division:

“Simplify your life and your budget by cutting the cord on your home phone today.”  It is reasonable to believe that such a letter coming from the company that had been a customer’s land-line phone service provider urging them to end that type of service and return to their former provider’s wireless service, would have an impact on Frontier’s ability to maintain that customer. The presentations to Frontier’s board of directors regarding the merger do not discuss potential competition from Verizon.

Perhaps the more troubling aspect of Verizon as a formidable competitor, however, is that, under the current post-merger plan, Verizon will continue to operate the billing and back-office functions of most of the local exchange operations sold to Frontier. Under such circumstances, Verizon becomes both a business partner and a competitor of Frontier-a situation that would put Verizon in an even greater competitive position than it would be otherwise (Le., if it weren’t also leasing operating systems to Frontier). Therefore, it is quite possible that, due to competition-in which Verizon is likely to play an important role-the reduction in the rate of revenue decline forecast for the future may not be realized. Instead, the rate of access line loss may accelerate from historical conditions, making the fbture financial picture for a combined Frontier/Spinco more tenuous than now forecast.

Strong opposition also came from other providers, some of whom who may be affected by the sale through wholesale agreements currently in place with Verizon, as well as from the Communications Workers of America (CWA).

Susan Baldwin, who served as Director of Telecommunications for the Massachusetts Dept. of Public Utilities, submitted testimony on behalf of CWA.  In her testimony she stated, “If the transaction goes awry, consumers will bear the consequences….Even if the transaction does not go awry, it will adversely affect consumers because Frontier’s financial constraints will prevent it from investing in the WV telecommunications infrastructure.” Baldwin strongly urged rejection of the proposed deal.

David Armentrout, on behalf of FiberNet stated, “Frontier lacks the requisite resources, experience, and incentive to comply with wholesale obligations it will take on …in West Virginia.”

Some companies waived their right to file direct testimony but asserted their right, along with the parties who did file today, to file rebuttal testimony in December.

Coming up… The truth about Frontier’s DSL products, network capacity, and why their 5GB Acceptable Use Limit is part of official testimony calling on the Public Service Commission of West Virginia to just say no to Frontier Communications.

Are you a cable or telephone company scared of the costs associated with tearing out existing underground or overhead copper-based wiring to upgrade to fiber optics?

Why bother going through all of that effort when you can just yank the old copper wire out and push state-of-the-art fiber cable in.

Buckeye CableSystem, a Toledo, Ohio cable operator intends to do just that, using a process invented by an Austrian company, Kabel-X.

Buckeye will inject a Kabel-X supplied fluid between the outer jacket and the inner core of the cable.  This allows the cable company to pull the copper center conductor and the insulating material right out of the center of the cable, leaving plenty of space to insert new fiber optic cables, without having to tear up streets, get permission from local zoning authorities to string new cable, or go through the expense of completely replacing it.

Better known in Europe, where the process has been used throughout the continent, Kabel-X is now making inroads in North America with small scale projects with companies like Buckeye.  Kabel-X has been particularly attractive in eastern Europe, where the process is more affordable than complete cable replacement.  With more limited budgets, re-using existing cable already in place provides an attractive alternative.

Buckeye CableSystem in Toledo

The company claims it can replace up to 1000 feet of existing coaxial cable with fiber in as little as three hours.

Buckeye intends to experiment with the technology in a Toledo subdivision to see how well it works.

The one major downside to using Kabel-X is that service is typically interrupted while the cable work is being done.  Should something go wrong, customers could be left entirely without service, a prospect that mandates small scale experiments to train cable engineering crews to work speedily and efficiently, and prove the technology can work well in a variety of conditions.

“We see the Kabel-X technology as an innovative tool that will allow us to cost effectively deploy a fiber-to-the-home architecture in areas currently served by a traditional hybrid fiber coax network,” Buckeye Cablevision chief technology officer Joe Jensen said.

Buckeye’s efforts to upgrade to true fiber-to-the-home service may come as a response to AT&T’s U-verse service, which began competing for Toledo customers about a year ago.  Buckeye has 150,000 subscribers in the Toledo area, and remains the largest pay television operator, but U-verse is positioned to steal away some of those customers over time.

Buckeye’s cable broadband service, bex-Buckeye Express, offers customers up to 20Mbps service, if you opt to subscribe to other Buckeye services.

The company’s Acceptable Use Policy indicates they do not impose limits on usage at this time, but curiously do admit to throttling the speed of peer-to-peer traffic and dynamically reducing speeds for customers who are considered “high bandwidth users” during peak demand periods.  Both of these seemed to get Comcast into hot water with the Federal Communications Commission.

BUCKEYE EXPRESS™ HIGH SPEED INTERNET SERVICE ACCEPTABLE USE POLICY

Buckeye uses reasonable network management techniques to improve overall network performance and reserves the right to employ additional techniques as necessary or desirable. Some applications, including certain peer-to-peer applications, can consume inordinately high amounts of bandwidth on the network and degrade network performance. Buckeye’s current network management techniques include:

Speed Caps – limiting the speeds that a modem can transmit or receive data. Buckeye may lower the transmission rate or reception rate of high bandwidth users during times of high network demand. This may slow the transmission or reception rate for affected modems.

Connection Limits – limiting the number of simultaneous connections for any modem during an online session. With a typical user having a dozen or so simultaneous connections for routine use, this limit provides a means of identifying and hopefully thwarting malicious attempts to harm the network or other users. This limit is currently set well above the number of connections used by typical user in a session.

Application-based Rate Limiting– limiting transmission speed of certain high bandwidth applications. Some applications, typically peer-to-peer applications, can consume large amounts of bandwidth, often without the knowledge of the user/customer. By limiting the portion of the network capacity available for these applications during periods of high traffic, Buckeye is able to improve the overall performance of the network for all users. Transmission of traffic subject to this technique may be slower during periods of high network usage.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/Kabel-X Demo.flv[/flv]

Watch the Kabel-X process at work in this company-produced demonstration video. (7 minutes)

Regulating mobile broadband data usage on a constrained network has posed a challenge for mobile broadband providers that can’t always easily expand their networks to accommodate growing demand.  As mobile broadband providers work with the frequency allocations they have either been assigned or won through airwave auctions, simply adding more capacity by using additional frequencies isn’t always possible.  So most providers have increasingly turned to usage allowances to artificially control demand on their existing networks.

Who wins the next round of spectrum auctions sets us up for the mobile broadband chicken and egg scenario.  Providers cannot bid the enormous dollar amounts these auctions routinely command without revenue from customers craving access.  Customers aren’t about to commit paying even more for mobile broadband service that, in the United States, is almost universally limited to five gigabytes of consumption per month.  Finding ways to attract new customers who have been resistant to the current pricing of mobile broadband service could provide a source for additional revenue.

But as far as consumers are concerned, the current model of “usage allowances” combined with punishing overlimit penalties is extremely unpopular, and will keep many potential customers away.

Camiant, which helps create and manage traffic management solutions for broadband networks, today announced the findings of its latest study, “Rethinking Mobile Broadband Data Rate Plans.”  Although some of the study was no doubt designed to help sell the case for Camiant’s product line devoted to “intelligent” network management and quota systems, it provides important insight into the European mobile broadband market.

The conclusion: Europeans don’t like Internet Overcharging schemes either.

In fact, when the 263 survey respondents using plug-in mobile broadband modems in the UK, France, Germany, Italy, Spain and Sweden were asked about their preferences for various rate plans, the key finding was consumers don’t like ‘Cap + Overage’ style rate plans.  Among their concerns:

• 62% didn’t know what their usage cap was;
• 76% didn’t know how much data they actually used;
• 39% didn’t know what happened if they went over the usage cap;
• 45% were very/moderately concerned about exceeding the cap.

When presented with four alternative rate plan structures and asked their preference — “Cap + Overage” was least preferred by consumers.  ‘None of the above’ was not an option, so those surveyed chose the plan most acceptable under the parameters of the study.  The result showed almost half wanted unlimited service, and just over one-third wanted to pay less for a plan with an allowance, but one that wouldn’t empty their wallets if they happened to exceed the limit:

Many users were willing to pay additional fees beyond the base subscription for potential “extras”:

• 43% of all respondents would pay €5 in addition to base plan for unlimited usage of one specific application. Of those that were interested, 90% said it was important that they select the application.
• 45% of respondents interested in a service that might provide lower speed at some point said they would be willing to pay between €1 and €3 for on-demand higher speed “for a short duration (e.g. 1 hour).”

“It’s becoming very clear that network operators need to offer a wider range of package options to users of mobile data users,” said Graham Finnie, Chief Analyst at Heavy Reading. “This study provides strong evidence that end users are willing to consider a range of alternatives to conventional usage management schemes.”

Some similar studies and focus groups being conducted in the United States testing additional rate plan options, most of which carrying a lower usage cap and lower pricing.  Many of the private studies are including the dreaded ‘I wouldn’t buy any of these plans because they are all too expensive for what you get’ option to determine if consumers are simply going to continue turning their noses up at overpriced data plans.

Mobile broadband growth at the $60 for five gigabytes price level has been accepted by the on-the-go traveler or business person dreading hotel Internet connection fees, but have been difficult to sell to occasional users, residential customers, or those who consider the price out of line for the amount of access it includes.  Most of these types of customers rely on free or reduced price wi-fi instead.

With 49% of survey respondents looking for unlimited plan options at reasonable prices, and most of the rest looking for a lower price with some limitations, today’s American mobile broadband pricing platform charging high prices for highly limited service is the worst of both worlds for consumers.