Britt

Another two weeks, another stock sale for retired Time Warner Cable CEO Glenn Britt. The man that oversaw a business now rated worse than the MERS coronavirus no longer has to worry about the day-to-day ordeals of running a cable company under fire. His biggest challenge is where to stash all the cash he collects selling off the generous profligate number of shares he received during 12 years at the helm of the cable operator, as well as those granted in his golden parachute retirement package.

Last Friday, Britt dumped another 30,000 shares on the open market at an average price of $136.04 a share. His total take home: $4,081,200.00.

Incredibly, no matter how many shares Britt sells, he seems to end up with the same number he started with. The Legacy reports Britt still owns 177,542 shares in the company after the sale, worth an estimated $24,152,814. That does not include what he has cashed out over the last several months.

When you consider your last rate hike, remember one of the “increased costs of doing business” facing Time Warner Cable is paying exorbitant salaries, bonuses and benefits to top executives that increase annually. That is money out of your wallet.

Comcast says you must have the option to pay more for the same broadband service you already get, only now with an allowance

Comcast has announced it is considering testing an innovative new plan in several test markets offering “unlimited Internet access” to customers for a yet-to-be-determined price. Whoever heard of such a thing?

Comcast’s executive vice president David Cohen raised eyebrows last week when he predicted all Comcast customers nationwide would see usage-based billing for their Internet access within five years.

Such statements tend to muck up things like a $45 billion dollar merger with Time Warner Cable that both companies must prove is in the public interest. The buyer wants to limit your Internet usage and the seller got its fingers burned back in 2009 when it tried its own usage cap experiment and now advertises it has no data caps.

Telling Time Warner Cable customers it is in their best interest to lose unmetered Internet plans may be too tough to sell, so Cohen has spent much of this week backtracking and claiming he was “misunderstood:”

To be clear, we have no plans to announce a new data usage policy.  In 2012, we suspended our 250 GB data cap in order to conduct a few pilot programs that were more customer friendly than a static cap.  Since then, we’ve had no data caps for any of our customers anywhere in the country.  We have been trialing a few flexible data consumption plans, including a plan that enables customers who wanted to use more data be given the option to pay more to do so, and a plan for those who use less data the option to save some money.  We decided to implement these trials to learn what our customers’ reaction is to what we think are reasonable data consumption plans.  We certainly have no interest in adopting any plans that our customers find unreasonable or disruptive to their Internet experience.

It’s important to note that we remain in trial mode only.   We’re now also looking at adding some unlimited data plans to our trials. We have always said that as the Internet, and our customers’ use of it, continues to evolve, so will Comcast and our policies.

Cohen makes a careful distinction between a strict usage limit and the kind of usage-based billing that will fill the company’s coffers with overlimit fees. But any usage allowance is a limit of how much you can use the Internet before something bad happens — either your access is shut off or your bill explodes.

Stop the Cap! has talked with more than a dozen customers in Comcast’s test markets about their experiences with Comcast’s “data usage policy.” Although the company claims it is seeking customer reactions, it never asks whether those customers want usage limits or not, only what kind.

Giving customers “the option to pay more” is exactly the type of thinking that won Comcast the dubious distinction of being the worst company in America. No usage plan tested by Comcast actually offers savings to customers. It simply places an artificial, arbitrary usage allowance on the overpriced broadband service the company offers now.

At this point, Comcast is not offering any unlimited use trials, but we have learned the value they are likely to place on “unlimited” based on what certain customers have paid all along for that privilege. Ars Technica reports some avoided the 250GB cap by signing up for business class service. The cost? $133.79 a month for 50/10Mbps. If Google Fiber was in town, you’d pay $70 for unlimited 1,000/1,000Mbps service, and the search engine giant would still be making money.

Cohen claims nothing is set in stone, but considering Comcast’s “don’t care” attitude towards its customers, it is a safe bet they will do what is best for shareholders and ignore complaints from customers that often have nowhere else to go for 21st century broadband speeds.

de Blasio

New York City Mayor Bill de Blasio announced an ambitious plan this week to make the city a favored home for new high-technology jobs with a commitment to guarantee every neighborhood in the city is wired for high-speed Internet access.

de Blasio’s remarks came at the opening of the city’s “Internet Week,” an event promoting innovative uses of broadband.

“We take an energetic view of helping this sector grow,” said de Blasio. “We can’t continue to have a digital divide that holds back too many of our citizens.”

The mayor noted Harlem will be the home to the nation’s largest continuous free-access Wi-Fi network when it is completed.

“This will bring free Wi-Fi to 80,000 people between 110th Street and 138th Street,” de Blasio said during a news conference on West 18th Street in Manhattan. “And it’ll be a great model for us going forward.”

Under the former Bloomberg Administration, New York City already announced several other regional free Wi-Fi hotspots, in various stages of development:

Brooklyn:

Frontier is introducing a new $5 a month disaster landline service in June.

With plenty of talk about the impact of global climate change, Frontier Communications will soon introduce a new inexpensive landline service to help customers plagued by weather disasters.

Frontier Security Phone is a $5 a month landline that can only reach 411 and 911 — perfect for those who lose their Voice over IP phone service in a power failure or find cell service clogged or otherwise unavailable.

“Our [service areas] are very prone to severe weather, lots of hurricanes, tornadoes and the mud slides in Washington State,” said Frontier CEO Maggie Wilderotter. “We have markets that are very plagued by bad weather and having a landline phone that works when your power goes out where we have a density of 34 homes a mile is important.”

Frontier will market the bare bones landline service to customers planning to disconnect service in favor of another provider as well as those that already have. Unlike basic budget service, Frontier Security Phone will not be able to make or receive regular phone calls — it is intended for emergency-use only.

Little known to most Frontier customers (and only mentioned on their website in a thicket of tariff filings) is that different types of landline service are available. By switching away from flat rate service to a measured-rate plan, where each local outgoing call is charged at a prevailing per-call rate (usually under 10 cents), customers can still have the option of making and receiving calls on a budget, especially considering incoming calls are free. In large cities like Rochester, Frontier charges $18.03 a month for flat rate local calling. If one switched to a measured-rate plan, the charge is $12.07 a month. Those interested will have to call Frontier at 1-800-921-8101 and specifically inquire about measured rate local telephone service.

Frontier is also exploring a market trial of a new Voice over IP landline service sold as a bundle with DSL.

Wilderotter told investors attending the JPMorgan Global Technology, Media and Telecom Conference that Frontier believes streaming, on-demand video is the future of Frontier, not traditional linear/live television.

Wilderotter

Therefore, despite the fact Frontier will continue to support legacy FiOS TV services in adopted Verizon markets in Indiana and the Pacific Northwest, and will likely take ownership of AT&T U-verse in Connecticut, the company has no plans to introduce cable-TV service anywhere else. The biggest reason is the cost of video programming for smaller competitors like Frontier.

“We’re never to going to be big like some of these big guys are, which is why we have a partnership with the Dish Network, because they’re big,” Wilderotter explained. “They go negotiate all the content deals and then we offer those packages to our customers and we get paid a sales commission and a monthly customer service and billing fee from Dish on behalf of that service.”

Although Frontier applauded AT&T for its announced intention to acquire DirecTV, Frontier customers in Connecticut currently subscribed to DirecTV through AT&T will eventually be switched to Dish Network — Frontier’s chosen video partner.

Wilderotter explained that Frontier can leverage its broadband network to support streaming video services without assuming the costs of licensing the content. As Comcast and AT&T grow larger, they can negotiate better volume discounts unheard of among smaller competitors, keeping companies like Frontier at a major cost disadvantage. But if a customer wants Netflix or YouTube, they will need a broadband connection to get it, which is where Frontier comes in.

“If you think about Frontier, we’re in 27 states today, soon to be 28 with the Connecticut acquisition, about 30,000 communities, predominantly rural and suburban. That’s sort of our footprint,” said Wilderotter. “So when we think strategically about the assets that we have as a company, first and foremost is [the] networks in all of those markets, and those networks have been upgraded. So for us, the cost of adding another customer to broadband is really the upfront sales cost, because the network is already in place and the capabilities are already [there].”

Wilderotter adds Frontier’s average payback on its investment to hook up a new broadband customer is about three months.

“We also have industry-leading margins in our company,” Wilderotter said. “Our margins are in the mid-40% range and we’ve typically always had very strong margins in terms of how we run the business from an efficiency and effective perspective.”

Wilderotter also told investors that Frontier plans to add several additional services powered by its broadband network over the course of this year.

“We’re really looking in the categories of home automation, security, lifestyle products and monitoring products,” Wilderotter said. “And with that, there is ongoing monthly recurring revenue in terms of the tech support that we put with that product set when we sell it to a customer.”

When Wilderotter was asked about recent price hikes implemented by Frontier, she admitted the primary reason for the increase was the lack of competitive cable pricing in the market.

“If you look at what cable is offering in our markets, they offer a standalone broadband product somewhere $35 and $65,” she said. “And that doesn’t include the modem. So we felt we could increase the price, still be very competitive in the marketplace and have a product set that made more sense for our customers at a convenient price.”

While the New Jersey Board of Public Utilities was able to quickly settle its differences with Verizon by granting the phone company’s wish to walk away from its commitment to offer 45Mbps broadband across the state, New Jersey ratepayers are out $15 billion in excess phone charges levied since 1993 for promised upgrades many will never get.

The Opportunity New Jersey plan the state government signed with Verizon was supposed to expand advanced broadband across the state in return for “a modest amount of pricing flexibility” in the fees Verizon charged customers in New Jersey. But Verizon is not a modest company and a new report shows the phone company used the agreement to boost rates as much as 440% — primarily through ancillary surcharges including inside wire maintenance, wire investment, an investment recovery fee, a local number portability surcharge, merged local calling area charge, and various other charges for phone features including Caller ID, Call Waiting, etc.

Tom Allibone, the president of LTC Consulting joined forces with New Networks’ Bruce Kushnick to analyze more than 30 years of Verizon New Jersey phone bills and discovered when it comes to tallying up rate increases, Verizon’s addition skills are akin to taking out a bag of M&M’s and only counting the yellow ones.

“This Verizon New Jersey bill from April 2002 […] has an “FCC Subscriber Line Charge”, which was $6.21 cents per line. Verizon’s quote doesn’t include this charge in their analysis of no increases between 1985 to 2008,” Kushnick writes. “The FCC Line Charge (it has many names), is on every local phone bill and the charge started in 1985. You can’t get service without paying this charge and the money does NOT go to fund the FCC but is direct revenue to Verizon New Jersey.”

After adding up various other surcharges, Kushnick’s bill increased a lot.

“Add up the ‘Total Monthly Charges’ for 2 phone lines— It’s ugly,” Kushnick said. “While the cost of the ‘monthly charges’ was $25.62, there’s an extra $17.70 cents — 70%. I thought that Verizon said there were no ‘increases.’”

“Anyone who has ever bought a bundled package of services from Verizon (or the other phone or cable companies) knows that they all play this shell game; the price of service you have to pay is always 10-40% more than the advertised price. That’s because the companies leave out the cost of these ancillary charges and taxes in their sale pitch,” he added.

Verizon raised local residential service rates 79% in 2008, according to Kushnick. Business customers paid 70 percent more. Caller ID rates increased 38% — remarkable for a service that has a profit margin of 5,695%. But Verizon did even better boosting the charge for a non-published number by 38% — a service that has a 36,900% profit margin as of 1999 — the services are even cheaper to offer now.

Telephone service is one of those products that should have declined in price, especially after phone companies fully depreciated their copper wire networks — long ago paid off. Companies like Verizon have cut the budgets for outdoor wire maintenance and the number of employees tasked with keeping service up and running has been reduced by over 70 percent since 1985, dramatically reducing Verizon’s costs. But Verizon customers paid more for phone service, not less.

The cost of service might not have been as much of an issue had Verizon taken the excess funds and invested them in promised upgrades, but that has not happened for a significant percentage of the state and likely never will. Instead, they just increased company profits. More recently, Verizon has directed much of its investments into its more profitable wireless division.

Even though Verizon achieved total victory with the Christie Administration-dominated BPU, the company is still making threats about any future plans for investment.

“It’s important that regulators and legislators support public policies that encourage broadband growth in New Jersey rather than ones that could jeopardize the state’s highly competitive communications industry, or risk future investments by providers like Verizon,” wrote Sam Delgado, vice president of external affairs.