A classic phone hundreds of thousands of Americans are still paying a monthly equipment fee to lease

Do you or someone you love still have an old looking rotary dial or traditional bell ringer phone mounted to the wall or installed in the bedroom?  Are you sure they still aren’t paying a rental or leasing charge for that phone?  Many customers, particularly the elderly, have no idea they need not continue to pay fees up to $90 a year for a phone manufactured at a time when color television was a novel concept.

A legacy of the old Ma Bell phone monopoly, telephone companies used to own every piece of equipment attached to their lines.  Individual customers would pay a monthly fee to lease telephone equipment that was approved by the phone company to work with their service.  By the early 1980s, nearly every American home had a kitchen wall phone and one or more extensions, usually installed in the living room or bedroom.  Manufactured by companies like ITT, Stromberg-Carlson, AT&T or Comdial, these phones were built to last… and pay for themselves many times over by unaware consumers who don’t realize the days of renting phones are long gone.

After the breakup of AT&T, most phone companies began telemarketing campaigns trying to convince consumers to buy their formerly leased phones.  Those who did now own these classics outright.  Many who didn’t returned them and bought their own new phones.  But more than a million consumers did neither, and continue to pay phone equipment rental fees to this day.  Even as phone companies abandoned the phone rental business, not everyone got the message.

Most phone companies sold off their remaining leased customers to third party companies long ago, including QLT Consumer Lease Services in Miami and Ft. Worth.  QLT has several hundred thousand customers paying quarterly lease fees for telephones often years old.  The company itself admits the majority of its customers are retired, elderly consumers.

QLT markets refurbished bell ringer phones at some surprisingly high prices:

• A traditional desk or wall retro-rotary dial telephone, which many under 30 have never seen before, costs $4.45 per month to rent.
• The glitzy-for-its-day lighted dial Princess phone costs $6.95 a month.
• Big button touchtone phones run $8.85 a month.

Those quarterly fees add up

QLT informs customers they cannot buy the phones at any price — they must lease them.

QLT claims its customers appreciate the familiar phones from an earlier era, and the bell ringers are louder, too.  Customers can exchange a broken phone within a day after the company is notified, if they can figure out how to install the replacement.

But it’s an extraordinarily high price to pay for classic phones, especially when replacements can be purchased outright for less than $20.  But many QLT customers don’t realize they have that option.  While the company also pitches decidedly non-phone-related services like roadside assistance plans and health care discount cards, it doesn’t spend any time or effort informing customers they can buy their own phones.

So next time you visit your older relatives and see a classic phone, perhaps it would not a bad idea to ask if they’re still paying for it.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WBAL Baltimore MD Many Older Residents Still Renting Phones 5-25-10.flv[/flv]

WBAL-TV in Baltimore found one woman still paying $90 a year for a phone that had been attached to her kitchen wall around the time Ronald Reagan was inaugurated president of the United States.  (4 minutes)

Bowman is the public affairs manager for Wilson, N.C.

Brian Bowman reports from Save North Carolina Broadband that S1209, Senator Hoyle’s municipal broadband killer bill, was yanked from yesterday’s meeting, apparently to “study the issue some more.”  Perhaps elected officials are studying the implications of passing this anti-consumer nightmare on their chances in the next election.  Let’s deliver the death blow to S1209 by getting on the phones and e-mail again today!

You need to keep the pressure on with calls and letters to all of these officials, reminding them you are watching this bill very closely and are waiting for them to cast their “no” vote, but will also at least accept a vote that yanks the bill from consideration for the rest of 2010.

Remind them this bill was quickly foisted on the Senate Finance Committee, and its wide-ranging implications are too important to North Carolina’s high tech future to let this bill rush into law.  Tell them the only real assault on your wallet comes from big telecom providers who will stop at nothing to make sure municipal competition never sees the light of day — municipal competition that is the only realistic way many North Carolina towns and cities can deliver 21st century broadband service that will help get them back on track for economic success.

Don’t sit back and think someone else will do the writing and calling for you.  We made a difference last year because everyone called and wrote.  We need that to happen again!

Here is the list:

Rep. Dan Maffei (D-NY)

Rep. Dan Maffei (D-New York) has begun to worry broadband consumers in his western and central New York district.

In April 2009, when Time Warner Cable’s announced Internet Overcharging experiment was upsetting customers in Rochester, Maffei claimed he was concerned about limiting broadband usage for customers in the area.  But when former Rep. Eric Massa introduced legislation to ban unjustified usage caps and consumption billing, Maffei told his constituents he wasn’t interested in Massa’s approach:

Thank you for contacting me regarding H.R. 2902, the Broadband Internet Fairness Act. I appreciate hearing from you and welcome the opportunity to respond. The Broadband Internet Fairness Act was introduced by Representative Eric Massa (NY-29) on June 16, 2009, and was referred to the Committee on Energy and Commerce. The bill would authorize the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) to review volume usage service plans of major broadband internet service providers to ensure that such plans are fairly based on cost.

When Time Warner Cable announced in April that Rochester would be used as a test market for charging Internet users based upon consumption usage, I, along with Representative Massa, opposed this policy. We helped persuade Time Warner to abandon the plan in the area. At that time, Representative Massa also introduced the Broadband Internet Fairness Act.

Other utilities, like water or electricity, charge customers based on usage, but Internet users have traditionally been charged a flat fee for unlimited access to the web. The Broadband Internet Fairness Act would require Internet Service Providers that want to implement usage-based pricing plans to go through several traditional regulatory hurdles. While I share many of the goals of Representative Massa’s legislation, I do not believe passing this stand-alone bill is the right approach at this time.

Of course broadband is nothing like water or electric utilities.  In fact, Maffei’s inclusion of that reference is a classic talking point of the telecom industry.  Notice they, and Maffei, didn’t mention telephone service — the one utility that provides flat rate calling for most Americans.  It also happens to be the utility most comparable to broadband service!

New York's 25th Congressional District

But Maffei made a bad situation worse when he joined 72 other House Democrats co-signing a letter from Rep. Gene Green (D-AT&T), urging FCC Chairman Julius Genachowski not to fight a court decision overturning the agency’s ability to conduct broadband oversight.

The letter represented one giant talking point — the false premise that enforcing a fair, free, and open Internet with Net Neutrality would somehow stifle investment in broadband expansion.  Yet AT&T was required to honor the very same principles when it merged with SBC, and managed to remain a multi-billion dollar powerhouse well positioned to expand broadband service to additional customers in its ever-growing service areas.

The fact the broadband industry is a duopoly for most Americans — one that can threaten to pull back on service if it doesn’t get its way in Washington — is just one more reason the industry requires more oversight, not less.

Yet Rep. Maffei stood alone as the only member of the western New York Congressional delegation to sign his name to the agenda of big cable and phone companies.

Perhaps the congressman has forgotten these facts which trouble broadband consumers across western and central New York:

• Rochester, NY was the only city in the northeast where Time Warner sought to conduct an Internet Overcharging experiment, made possible because of limited competition in the Rochester market;
• Rochester’s other broadband provider, Frontier Communications, insists on a monthly usage allowance of just 5GB per month in its Acceptable Use Policy;
• Verizon FiOS has suspended expansion indefinitely and the service will never be available in most of the 585 area code where Frontier operates, and it will take years for most of the rest of his Syracuse district to see the service reach those areas;
• Time Warner Cable increased its broadband rates in 2010, as did Verizon;

Green’s letter dances around the real issue — telecommunications companies are spending millions to oppose pro-consumer reforms and stop a return of oversight authority the FCC lost after a recent court decision.  Without this authority, the FCC cannot implement the National Broadband Plan’s insistence that American providers not block or impede network traffic.  These Net Neutral policies preserve net freedom.  The FCC cannot even require that providers tell the truth about broadband speeds and include the company’s terms of service in plain English.

Western New York is a hotbed of consumer activism on broadband issues, particularly because we are actual victims of provider abuse.  No one knows more than we how critical 21st century broadband is to the transformation of this region’s perennially challenged economy.

Rep. Maffei needs a reminder this is a hot button issue for consumers from Irondequoit to Manlius.  Perhaps he just doesn’t fully understand what’s at stake here.  You need to remind him.

We’ve included a suggested letter you can use to help write your own.  For maximum effectiveness, include some of your own personal stories, challenges, and frustrations with your local broadband provider.  Feel free to share yours in the Comments section.

Dear Rep. Maffei:

I was extremely disappointed to discover you signed your name on a letter written by Rep. Gene Green urging FCC Chairman Julius Genachowski not to restore oversight authority over broadband.  While Rep. Green’s letter illustrates he’s mostly concerned about the well being of AT&T, Verizon, Time Warner Cable and Comcast, as a consumer I am more concerned about the broadband duopoly that exists in Rochester & Syracuse.

If the FCC does not regain its ability to oversee broadband by reclassifying it under Title II — as a telecommunications service (which it very clearly is), the FCC can effectively do nothing to stop broadband provider abuses, such as Comcast’s notorious speed throttle on customers using certain Internet websites and services. It took an FCC investigation to finally get the cable company to admit the truth — it was interfering with customers’ broadband speeds.  The oversight power the agency had was just what was needed to convince Comcast to stop.

Unfortunately, a DC Circuit Court recently disagreed it had that authority and effectively stripped it away.  Chairman Genachowski is simply seeking a return to the status quo before that court decision was handed down.  He’s not asking to regulate broadband anything like telephone service.  In fact, he’s insisted on a “light touch.”  That’s better than today’s court-imposed total-hands-off reality.

By signing Rep. Green’s letter, you effectively tell us you don’t support Net Neutrality protections that guarantee providers cannot censor or impede web traffic.  You also do nothing to protect consumers from other provider abuses.  Considering what residents of Rochester went through last year fighting a Time Warner Cable scheme that would have tripled broadband prices for the same level of service, I’m shocked you of all people would be a supporter of big telecom’s agenda.

Telecom companies are claiming that if regulations enforcing Net Neutrality are enacted, investment will suffer and broadband expansion will be slowed.  Yet AT&T was required, as part of its merger with SBC, to respect Net Neutrality for several years.  The company flourished, broadband was offered to more customers than ever, and investors liked what they saw.

The record in western New York is clear — Time Warner Cable was willing to limit its customers access to broadband service, Frontier already does in its terms and conditions, and Verizon FiOS deployment has been suspended indefinitely.  For too many of us, there are too few choices.  In fact, the only thing we can be assured of is higher pricing and a strengthened duopoly.

I strongly urge you to remove your signature from Rep. Green’s letter and get on board with consumers like myself in your district who believe deregulation and oversight failures have given us nothing but nightmares — from Wall Street to BP’s oil spill.  Let’s not make another mistake in handing cable and phone companies unfettered permission to abuse their customers.

Please get back in touch with me as soon as possible on this important matter.

Rep. Dan Maffei told constituents he was concerned about Time Warner Cable’s Internet Overcharging scheme proposed in April 2009.  At a town hall meeting in Irondequoit, New York, he admitted Time Warner Cable held near-monopoly power over consumers in Rochester.  What changed his tune when he signed on to Rep. Gene Green’s anti-consumer letter to the FCC? (April 9, 2009 — 2 minutes)

Rep. Dan Maffei’s Contact Information

Washington, D.C. Office
1630 Longworth HOB
Washington, DC 20515
Phone: (202) 225-3701
Fax: (202) 225-4042

Syracuse Office
P.O. Box 7306,
1340 Federal Building
Syracuse, NY 13261
Phone: (315) 423-5657
Fax: (315) 423-5669

Irondequoit/Rochester Office
1280 Titus Avenue
Rochester, NY 14617
Phone: (585) 336-7291
Fax: (585) 336-7274

[Update: 11:30pm EDT: Free Press reports Rep. Maffei accepted $29,000 in contributions from telecom companies, including Verizon, Comcast, and AT&T.]

Pot?  Meet Kettle!

In one of the biggest ironies thus far this year, a British broadband provider trying to one-up the competition has started running ads with Dr. Seuss-like characters that represent marketing exaggerations, traps, and bad customer service, all while forgetting to disclose it engages in some tricks of its own.

O2’s Niggles & Narks campaign features animated creatures that represent where broadband has gone all-wrong:

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/O2 Niggles and Narks Ad 5-2010.flv[/flv]

Once upon a time, when broadband was made, we browsed and surfed and chatted — everybody played.

But for some, the magic faded.  Some things started to go wrong.

Without any warning, the niggles and nobs came along.

With the No Support-a-Saurus — spouting twaddle was his game.  His impossible instructions would slowly knot your brain.

The Crafty-Cost Nark took pleasure in his work, delivering line rental bills that drove us all berserk.

And with the Mystery-Speed Mook, you never really know. You thought you’d get mega-fast but got stuck with dead slow.

But this is where we draw the line and try to right what’s wrong.  Wouldn’t broadband be a better place, with narks and niggles gone?

But accusing the others of broadband narks and niggles -you- see, without confessing your own is little more than hypocrisy.

In a land of broadband O2 promises is not a dream, it brings to the table its own Internet Overcharging scheme.

No nobble or niggle could ever believe, selling unlimited broadband -that wasn’t- was something they could achieve.

But O2 managed — somehow, we don’t know, to define “unlimited” as 10GB per month — exceeding it brings woe.

Maybe it's a typo that should have read, "download as much as WE like."

O2 sells its broadband packages across the United Kingdom, either bundled under a BTWholesale-based package or unbundled direct from O2 or BeBroadband.  Only the BTWholesale accounts, common in rural areas where O2 doesn’t have its own equipment installed in the exchange offices, are impacted by the limit on unlimited.  BT apparently charges them some form of consumption billing, and they aren’t willing to eat the costs.

Starting in March, many customers started receiving letters stating they were using the service too much, and if they didn’t back off, they’d be disconnected.  One customer received a disconnect warning after using 40.1GB, primarily from watching BBC’s iPlayer, which delivers on demand television programming.

What represented “too much” for an “unlimited service?”

“Most O2 customers use less than 10GB a month. Aim for that and you’ll be okay,” says one of O2’s support pages on the topic.

Outraged consumers arguing that “unlimited” should mean “unlimited” and didn’t comply were promptly disconnected.

With the introduction of O2’s new high-priced Niggles & Narks advertising campaign, the hilarity ensued as customers began calling out O2’s hypocrisy, leading to clarifications from O2 that were anything but:

As some of you have been discussing, we’ve started to disconnect some of the very highest usage customers whose download patterns have detrimentally affected other customers’ experience, even after we have requested them to reduce their usage and explained the effect it’s having. We will continue this in order to improve the experience for the majority of the customers on the service.

We are also making the service run more efficiently by updating the hardware and software that runs the Access service. This will improve the prioritization of the real-time activity, such as streaming, over less time-sensitive activities such as P2P. — O2 Statement from March 26th 2010

O2's "Unlimited Broadband" Price Chart

Then there is this fine print on the question of “unlimited service” that only a credit card company or bank could love (the underlining is ours):

How much should I cut my broadband use?

Most O2 customers use less than 10GB a month. Aim for that and you’ll be okay.

Your product is unlimited, so why are you telling me to use less?

There aren’t any usage limits on any of our O2 Home Broadband packages. That means you can download and upload as much as you like each month, within reason.

Our network’s been designed to cope with people downloading large files (like music or films) and watching video online. But if you’re using the service excessively – like continually downloading large files at peak times – then we do reserve the right to warn you to lower your usage. In exceptional circumstances, we can even terminate your account.

This is because excessive use by a few people can reduce the speed that other customers in the same area can get. We just want to provide everyone with an excellent level of service.

Then company officials unofficially increased the limit to 40GB per month, as this note on an official company forum disclosed:

We’re contacting less than 10% of our heaviest users at the moment and you fell into this top tier. The majority use less than 10GB and at present if you use less than 40GB, you wouldn’t hear from us.”

This isn’t the first time O2 has confused its customers.  ThinkBroadband reminds us of 2007’s mess over the same issue:

O2 have never been good at defining the term ‘unlimited’ as can be seen in 2007 when they had three different definitions for the word. Back then they did recognize that customers were confused by the term and the marketing director Sally Cowdry was quoted as saying “customer feedback has been that if we say unlimited, it should be unlimited.” We wonder why two and half years on, O2 still have not ‘nobbled this broadband niggle.’

Unfortunately for O2 customers, the company has not righted any broadband wrongs.  They’ve added to them.  O2 has an chronic problem with their own Niggles and Narks.  Perhaps British regulators can do a better job exterminating them.

AT&T is having trouble meeting the wireless needs of its customers in major cities like New York and San Francisco, so it is experimenting with free Wi-Fi connections in particularly crowded parts of its service area.

AT&T’s Wi-Fi “hotzone” launched Tuesday in Times Square.  The service has been installed near 7th Avenue between 45th and 47th street, and is designed for outdoor users.  Any AT&T customer can connect to the service with any Wi-Fi capable device.

AT&T has been promoting free use of its indoor Wi-Fi connections for customers for well over a year because it helps reduce demand on its 3G mobile broadband network.  Developing outdoor hotzones in densely populated cities like New York could offload considerably more traffic from congested 3G cell sites.

The company hopes that free Wi-Fi will prove more attractive to customers than 3G because it can deliver faster speed connections and won’t suffer from slowdowns that have become all too common on the company’s 3G network.

If the experiment proves successful, AT&T will consider expanding it to other cities where the company faces congestion issues.

AT&T's Hotzone in Times Square covers a narrow outdoor area bordering W. 45th Street and W. 47th Street near 7th Avenue.