NY State Attorney General Andrew Cuomo

The New York State Attorney General has slapped Frontier Communications with a $35,000 fine and ordered the phone company to refund up to $50,000 it wrongfully charged consumers in so-called “early termination fees” for telephone and broadband service — fees consumers were never properly informed about at the time they ordered service.

“Frontier failed to spell out in its contracts the existence of costly fees,” said Attorney General Andrew M. Cuomo. “The company is now fixing the issue by providing written notices of these fees and paying back consumers who were wrongfully charged.”

Frontier, located on South Clinton Avenue in Rochester, provides high speed broadband Internet service (FrontierHSI) and local and long distance telephone service. Between January 2007 and September 2008, Frontier sold bundles of various services under one-, two- or three-year agreements known as Price Protection Plans that offered a lower rate than month-to-month service as well as a promise that the subscription rate would not increase during the term of the plan. However, Frontier charged early termination fees to consumers who terminated a service before the end of the term. These fees typically ranged between $50 and $400, depending on the contents and services included in the package.

The Attorney General’s investigation determined that consumers who purchased one-year bundle agreements were never provided with written notice of the term or the existence of an early termination fee. The investigation also uncovered that consumers were not notified in their monthly billing statement that their agreements contained early termination fees. Therefore, many consumers first learned about the fee only after they canceled their service with Frontier and the charge appeared on their final bill.

In at least one instance, Frontier automatically re-enrolled a consumer to a term commitment after the initial term expired and then charged an early termination fee when she canceled after the initial term.

This is not the first time Frontier’s promotions have faced scrutiny by a New York Attorney General.  In March 2006, Frontier agreed to pay $80,000 in penalties and around $300,000 in customer refunds for what former Attorney General Eliot Spitzer called “misleading advertising and marketing tactics.”

Frontier’s customer service centers have often provided uneven service to consumers calling for information about products and services.  Stop the Cap!‘s editor, yours truly, had a number of problems when sampling Frontier’s DSL service during the Time Warner Cable Internet Overcharging experiment.  In addition to inconsistent product information, pricing, and terms and conditions, customer service representatives were ill-equipped to properly describe their own lineup of products, at one point promoting their wireless wi-fi network service in Rochester as “wee-fee.”

After the company couldn’t provide DSL service to my residence at speeds better than 3.1Mbps, service cancellation did not result in an early termination fee, but did cause serious billing foul-ups that took multiple calls to sort out.

In 2008, Stop the Cap! helped many customers cancel their DSL service without incurring early termination fees when the company introduced a 5GB usage limitation in their Acceptable Use Policy, under the provision allowing customers to opt-out of materially adverse changes in their service.  The company later announced customers under their Price Protection Agreement would not be subject to any service limitations until those agreements expired.

In January 2009, Attorney General Cuomo’s Office began investigating Frontier Communications and its subsidiaries after receiving dozens of complaints from consumers who were unexpectedly charged early termination fees.

Through an agreement with Attorney General Cuomo’s Office, Frontier must pay up to $50,000 in refunds and credits of early termination fees paid by eligible consumers who filed complaints prior to December 31, 2008. The company has provided the Attorney General’s Office a list of those eligible for refunds or credits.

Frontier's headquarters in Rochester, N.Y.

Other consumers who believe they are eligible for a refund or credit may submit a claim to the Attorney General’s Office by December 21, which will review the claims and act as the final arbiter for eligibility for reimbursement. Consumers wishing to file a complaint should call the Attorney General’s Rochester Regional Office at (585) 327-3240.  A promised web-based claim form could not be located on the NY Attorney General’s website at press time.  Residents living outside of New York State are not eligible to participate, but you may want to contact your own state’s Attorney General and ask them to review the New York settlement agreement, which could provide the basis for similar settlements in other states.

Frontier must also pay $35,000 in fees and costs. Frontier will send written notices to all customers who subscribe to new services regarding early termination fees. The company will not collect any such fee until after the notice has been sent. Frontier must also include a written notice of the term of any service agreement on consumers’ monthly billing statement for any agreement with an early termination fee.

Many customers never realized Frontier automatically renewed their Price Protection Agreements without their explicit consent, generating early termination fees of $300 for some customers who left after more than five years of service with the company.

JuniPerez, a former Frontier customer, wondered whether Frontier was offering a Price Protection Lifetime Agreement: “I had Frontier’s DSL and phone service for about five to six years (phone service for much longer). After my last move, I switched to Time Warner’s phone, cable, and broadband package. Within two weeks of notifying Frontier of my service cancellation, they sent me my last bill — $300.00! This was for what they called an “Early Termination Fee”. After five to six years I had an early termination fee? I didn’t even get a chance to dispute it. Within days (not weeks or months) they turned the account over to a collection agency. They still dare to send me ‘come back to us’ flyers and specials.”

Some Frontier customers sign up for bundled packages of service to receive incentives, such as heavily discounted satellite television service or a “free” Dell netbook (after paying $45 in fees for taxes and shipping), in return for signing a two- or three-year Price Protection Agreement.  The agreement promises customers will not see any changes in pricing for the length of the agreement.  At the same time, the agreement “locks-in” the customer to stay with the company for the length of the contract, or face a penalty for canceling service early.  In many cases involving incentives, the early termination fee amounted to $300.

But Frontier appears to have made some changes even before yesterday’s settlement with the Attorney General.

As of at least this past spring, customers signing up for a promotion with a Price Protection Agreement were directed verbally to an e-mail copy of the agreement sent to them, urged to read it, and were required to electronically consent to the terms of the agreement in order to participate in the company’s promotions.  Follow-up e-mails were sent to customers who did not complete this process.  The contract also included provisions notifying customers that agreements were automatically renewed for an additional term unless the customer notified the company in advance they did not consent to automatic renewal.  In fact, customers could cancel the contract renewal almost immediately after electronically consenting to it.

Frontier’s e-mail was sent to the customer’s Frontier e-mail account, which some customers never used and never accessed.  For some, the terms amounted to “fine print” that many never read.  While the New York Attorney General ultimately found Frontier Communications responsible for failing to adequately notify customers about such fees, Stop the Cap! reminds the public they have a responsibility to carefully read and review the terms and conditions of all service agreements, especially those involving promotional giveaways tied to service commitments like Price Protection Agreements.  Many have historically carried steep cancellation penalties as well as automatic renewal provisions designed to keep you from switching providers.  Such agreements should be considered only if you are certain you are happy with your service provider.  If you are trying a service for the first time, inquire whether you can sample the service for a trial period and retain the right to cancel without incurring penalties.  Frontier traditionally offers a 30-day trial period for DSL service.  Always record the time and day you made the inquiry, and the name of the customer service representative you spoke with.  Should you be given incorrect or inconsistent information, being armed with this information may help convince the provider to agree to what you were promised.

Customers who are not satisfied with the response they receive from a customer service representative or their immediate supervisor should check the front of their telephone directory for the number of the “executive customer service office,” sometimes also called, “unresolved complaints.”  These special representatives are empowered to resolve complaints customer service representatives may not have the authority to fix.  Failing that, contact your state’s Public Utilities/Service Commission or the Attorney General’s office.

Two video news reports appear below the fold.

… Continue Reading

Verizon FiOS today adds television to its lineup of services in several suburban towns in the Syracuse area, as competition heats up in central New York for cable, telephone, and broadband service.  But the incumbent cable operator, Time Warner Cable, says it’s not worried by Verizon’s arrival, and a company spokesman predicts no price war will result.

Eight communities in the Syracuse area will now be able to choose Verizon FiOS television service in addition to broadband and phone service: Camillus, Clay, Cicero, DeWitt and Salina, and the villages of East Syracuse and North Syracuse in Onondaga County, and the town of Fleming in Cayuga County.

The arrival of television service is important for Verizon, because it lets them compete head-on with incumbent cable operator Time Warner Cable that already offers bundled packages of services, typically known as a “triple play” in the industry — telephone, cable-TV, and broadband.

Chris Creager, Verizon’s president of Northeast operations, claims competition for cable television in central New York will result in better service at lower prices.

“When we enter a market, customers win,” Creager said. “Usually, cable companies are more receptive to looking at prices.”

Time Warner Cable downplayed the competitive threat Verizon could pose to their operations in the region.

In a statement echoing the sentiment Time Warner Cable has expressed in most of the communities where FiOS competes with them, spokesman Jeff Unaitis said Time Warner Cable already has an advanced cable network and has experience delivering cable television service to Syracuse-area residents that Verizon lacks.  Competition is nothing new to Time Warner Cable, he said, noting the company has faced satellite television competition for years.  Unaitis also predicts no significant price cuts as a result of Verizon’s all-fiber FiOS system arriving in town.

Indeed, evidence suggests that Verizon’s FiOS service does not result in dramatic savings for consumers, with one significant exception.

New customer promotions often offer significant price savings, particularly for customers who sign contracts to remain with providers for one or two years, and choose bundled packages of multiple services.  Central New York customers signing up for Verizon FiOS for at least two services can receive a $150 gift card.  Customers choosing their “triple play” will receive $30 off their monthly bill for six months.

Once the promotional offers expire, so do most of the savings, unless a customer threatens to switch providers.  That often brings a renewal of their promotional package price for an extended period, although some providers limit the number of times a customer can take advantage of a promotion.  For consumers trying to optimize savings, that can start a ping-pong relationship with providers, as customers sign up for a promotion and then cancel service when it expires, taking their business to the other player in town.

Competition does often bring improved service, even when savings are elusive.  Broadband service in particular often benefits, as consumers enjoy faster speeds with fewer limitations in communities with FiOS as one of the competitors.

In Syracuse, Time Warner Cable has adjusted speeds upwards for its Road Runner service, in advance of Verizon FiOS’ arrival.  In contrast, speeds in Rochester, a city with no prospect for Verizon FiOS competition, has not seen a speed increase for standard service in several years.  In New York City, a system upgrade to DOCSIS 3 technology has allowed the cable company to offer a premium 50Mbps service tier.  The Syracuse Post-Standard explored the competition angle, and what central New York residents might expect to come from it:

Competition from FiOS, which offers Internet download speeds of up to 50 megabits per second, may push Time Warner Cable to deploy available technology to match those speeds, said Thomas W. Hazlett, a law and economics professor at George Mason University and former chief economist of the Federal Communications Commission. Time Warner Cable recently upgraded its New York City network to offer a 50-megabit option, compared with the maximum 15-megabit speed in Syracuse.

“If it’s like elsewhere, you’re going to see Time Warner respond,” Hazlett said. “They will increase speeds.”

Likewise, Verizon and Time Warner Cable will push each other to offer better channel lineups, better picture quality, on-demand programming and novel services, said Jeffrey Kagan, an independent telecommunications analyst in Atlanta. Prices also will be lower that they would be without competition, but don’t expect a big drop, he said.

The newspaper explored what each company offers customers:

$110 per month: Includes unlimited phone calls in North America; Internet at 15 megabits per second for downloads, 5 megabits for uploads; 255 standard-definition TV channels and seven high-definition channels.

$120 per month: unlimited phone calls in North America; Internet at 25 MBPS for downloads, 15 MBPS for uploads; free Wi-Fi access on nationwide network of hotspots; 275 standard-definition TV channels and 70 high-def channels.

$130 per month: Same package as $120, but with Showtime, 16 more standard-def channels and eight more high-def channels.

Creager said Verizon will lock in the price for two years.

Time Warner Cable’s regular rate for its “All the Best” triple play is $135.50. But new customers can get an introductory rate of $115 for a year, including free use of a digital video recorder for six months, according to the company’s Web site. The service includes unlimited phone calls in North America; Internet downloads at 10 megabits per second, uploads at 1 MBPS; 214 standard-def TV channels and 70 high-def channels.

Time Warner also offers a $100-per-month introductory package that includes fewer TV channels — 154 standard-def and seven high-def.

Several TV news video reports, and a Verizon video press release can be found below the page break.

… Continue Reading

From the Department of Duh:

The plight of mobile providers to strike profit riches in mobile broadband has been stymied by the fact customers actually want to use the service they pay for each month.

Even worse, customers are using dongles to give their laptops and netbooks wireless connectivity, which hurts an industry accustomed to charging top dollar for data plans used sparingly on cumbersome mobile phones.

“Dongles really are reaching a critical mass,” a Vodafone spokesperson told BBC News.

French operator SFR claims laptops equipped with a dongle use 450 times more bandwidth than a classic mobile phone.

So-called “smartphones,” which often include a built-in or on-screen keyboards, are using lots of data, too.

The result has been near-universal adoption of usage caps in European mobile broadband, which UK operator O2 admitted earlier this year were “used as a deterrent and to make sure that others using the network had a good experience.”

Many providers have customers too afraid to exceed those caps, often set at 1-5GB per month.  The punitive overlimit fee can easily add tens of Euros to mobile broadband bills.  Many customers stay well clear of the cap to avoid the prospect of receiving a shocking bill.

Providers fear their mobile networks may soon be at capacity.  That would logically lead many to presume fast and furious investments in their networks to upgrade capacity, but that is exactly the opposite view some providers have.

“You can easily lose money on mobile broadband if you do it in the wrong way,” warns Bjorn Amundsen, director of mobile network coverage at Telenor in Norway.

“We have had to be careful not to invest too much, because the only thing that would happen if we did would be to increase data traffic without an increase in our profits,” said Amundsen.

Phil Sayer, principal analyst at Forrester Research told the BBC, “the user community as a whole is tired of hearing special pleading from the mobile operators.”

“Remember, these guys have been making money hand over fist from data roaming charges,” Sayer said.

"PPC-1" - Pipe Network's new fiber link opens this week

Ongoing connectivity issues and lack of competition continue to leave Australians with expensive, slow, and usage-limited broadband service.

This week, Pipe Networks will make a small dent in improving international connectivity when it activates its new PPC-1 fiber link between Sydney and the U.S. territory of Guam in the Pacific. The project, first envisioned in December 2006, took nearly three years to complete at a cost of more than $175 million U.S. dollars, and has a design capacity of 1.92Tb/s run over two fiber pairs.

Telecommunications analyst Paul Budde said Pipe Networks, along with others “would help to reduce this problem and will therefore provide ISPs with better prices,” which was supposed to result in a lifting of Internet Overcharging schemes like usage caps.

Not so fast.

Broadband providers in Australia have taken notice of Pipe Networks’ new pipeline, but many have not lowered prices or removed usage caps.  The lack of competition has kept a price war from taking place.  Ovum senior telecommunications analyst David Kennedy told Australian IT that without a price incentive, a lot of customers, particularly those served by Optus and Telstra, are unlikely to switch providers.

ADSL2+ Speeds drop dramatically the further away you live from the phone company's switching office

One DSL provider in Australia, Internode, has made some changes to its service offerings in response to the new fiber link.  The Adelaide-based company has simplified some of its service plans, cut the price of small office/home office pricing by about $9 per month, and increased the paltry usage cap on its Easy Broadband plan from 30GB per month to 50GB per month.  Internode’s Easy Broadband charges $44 a month for DSL service at 1.5Mbps/256kbps,  or in areas upgraded to ADSL2+ service, up to 24Mbps/1Mbps.  Actual speed on the latter service is highly dependent on how far away you live from the telephone company local switching office.

Internode chief executive Pat Tapper doesn’t think PPC-1 will make a huge difference for his company.

Internode sells "data blocks" for consumers intending to exceed their allowance.

“In the whole scheme of things the PPC-1 circuit doesn’t represent a huge spend in terms of what it costs to run the network. It will change a little bit in terms of our overall cost but only a very small amount,” he said.

“What it does give us is the ability to deliver more capacity to customers in downloads.”

That means a larger usage cap, but not cheaper pricing.

Internode customers that exceed the cap can purchase additional usage blocks, at pricing starting at $2.20 per gigabyte.

I like to think our issues are neither right nor left.  Net Neutrality preserves freedom of speech from provider interference whether you are Glenn Beck or Michael Moore.  Internet Overcharging costs conservatives as much money as it does liberals.

As various special interest groups and public relations firms continue their efforts to co-opt Net Neutrality into a partisan political issue, in hopes of muddying the waters and helping to engage consumers to help in its defeat, I occasionally take time out to talk to some of the opponents of Net Neutrality to understand their points of view, to engage them in a discussion deeper than the usual memes about “government control” or “takeovers,” and ask them to present their arguments opposing a measure that has support from groups across the political spectrum (Democrat Underground, MoveOn.org, AfterDowningStreet.org, and Common Cause on the left,  Glenn Reynolds, the Christian Coalition, and the Gun Owners of America on the right.)

Sometimes the discussions are illuminating, and I can respect their points of view even if I personally disagree.  Other times, rebutting an article published on another blog that elicits a two sentence reply from the author illustrates the fact many of these articles are more heat than light.  Often, an author fundamentally seems to misunderstand the basic tenets of Net Neutrality, replacing them with an odd assortment of conspiracy theories.  Other times, they are assured of their fact presentation right up until their points are debunked, at which point the only response they are capable of is a feigned complaint that you are “attacking them”… and then they attack you back.

Such is the case this evening in a debate with RedState blogger Neil Stevens, who has been on a rage (Google Undermines the Internet, On Julius Genachowski and Net Neutrality, and Google’s Non-Evil Pose: Hand Out Palm Facing Up) over Net Neutrality for several months, alternating between the belief the entire campaign is being orchestrated by Google and the one about it being a giant socialist conspiracy.

Tonight, the latest tirade, The Real Net Neutrality Astroturfers, attempts to neutralize efforts to call out Broadband for America, and other like-minded industry front groups, by suggesting Net Neutrality proponents have their own groups in the fight.  There is no doubt there are consumer groups out there that do not take a penny of industry money and support Net Neutrality.  There is also no doubt there are some companies involved in this fight on the pro-Net Neutrality side as well.  That’s hardly “breaking news.”

Stevens wants readers to accept a moral equivalency between industry-sponsored astroturf groups, supported by the very industry that seeks to throttle and overcharge for your broadband service, and consumer groups like ours (and several others) that do not take a penny of industry money, just because some big companies on the Internet share our position.

Stevens takes a wrong turn down Astroturf Alley, offering up a handful of BfA members that sound like they aren’t the astroturfing type as proof that BfA is not nearly as guilty as those big bad Net Neutrality supporter groups:

But despite such blatant falsehood, Save the Internet presses on to accuse its opposition of being ‘astroturf,’ that is, fake grassroots involvement. Now I would love for someone to accuse me of that, because I and anyone familiar with my financial situation would never stop laughing. Of course, they don’t mention the Open Internet Coalition backed by the above Internet titans, oh no. Only opponents like Broadband for America, a group promoting greater Internet access across America, gets that tag. I mean sure, when I think ‘corporate astroturf’, I think of BfA members like the National Black Chamber of Commerce, Child Safety Task Force, Hispanic Leadership Fund, the Livestock Marketing association, and the Jewish Energy Project. That’s just the corporate Axis of Evil right there, Save the Internet wants you to think.

Oh my.

I won’t bore our readers with my response to the rest of his theories about the true nature of Net Neutrality — you can follow the link and read them for yourself in the comments.  But this did represent an excellent opportunity to use the last week’s worth of research on individual BfA members to suggest Stevens might want to take a second look at his list, because most of them carry a fist full of broadband-provider-dollars or have telecom executives serving on their respective boards.  Another doesn’t even appear to exist.

But here is the illuminating part of my effort to engage with the Net Neutrality opposition:

I learned about BfA last week and saw the list of their 100 members. Most of them were obviously equipment manufacturers or telecommunications companies. But I wondered what in the world some of those public interest groups you mentioned, among others, were doing as members of this group. I spent last week researching ALL 100+ and the results are posted (on Stop the Cap!).

I could not find a single group that I could verify as representing actual consumers. Not one. The overwhelming majority of those public interest groups either received substantial funding from AT&T and/or Verizon, or had a company executive on their Board of Directors. I also found disturbing connections between several of the groups and Washington, DC lobbying and PR firms who have a habit of paying to use an organization’s name for a client’s agenda.

[…]

Odd how groups with Mission Statements that in no way relate to any of the broadband issues BfA will concern itself with: no regulation, no Net Neutrality, but yes to government handouts to providers to expand broadband, all seem to be members of this group, and often also magically chimed in on some other telecom issues, such as urging approval of Verizon’s merger with NorthPoint Communications or their buyout of Alltel.

[…]

Biggest advice I can give you is never simply take what you’re handed. Check it out yourself and be careful of hidden agendas and industry money, because it’s all over the place.

Stevens quickly responded, and I hoped it would provide for a spirited debate.  Not so much:

You can’t win the argument so you attack the speakers.

Get lost.

Although not so much a rebuttal as an indirect concession (when you can’t argue the facts, just feign you were ‘attacked’ and then attack back), in the spirit of harmony with conservative friends, Stevens and I continue to agree on one very important point: “We all need to look hard at just who is pushing this agenda….”

[Update: 2:20am — Moments before publishing this, I learned Stevens added a follow-up reply, before my account was banned:

Yeah, I’m not really going to let some fascist Obamanaut come here and start using this site to try to silence dissenters with the administration’s new FCC chairman.

Especially snotty bad faith posters like you.

Apparently on RedState, confronting inaccurate information and engaging in meaningful debate is a one-way ticket to banning.  That’s another indication of a weak argument at work — one that cannot withstand even the most basic scrutiny, without quickly getting rid of the person asking the questions.  On RedState, a ban is expressed by this error message when attempting to visit the site:

601 Database redigestation error.

I am not sure what ‘redigestation’ is, but it leaves a bad taste in the mouth.  Stevens is, of course, free to visit Stop the Cap! and share his views without fear of immediate banning just for disagreeing with me.  I’m not afraid of his arguments.]

[Update: 1:30pm — Amusingly, as of this afternoon, my original rebuttal to Stevens was modified – it’s now white text on a white background, creating a giant white empty-appearing block.  If you attempt select the text, however, it’s all still there and becomes visible.  Evidently Stevens (or someone running the site) felt his original rebuttal wasn’t terribly effective, so “additional measures” were warranted.  An additional reply this morning dismisses the whole rebuttal as inspired by George Soros, the right’s favorite bogeyman.]