TDS Telecom, the Madison, Wisc. independent telephone company serving about 1 million landline customers in rural and suburban communities in 30 states, is losing 5.5 percent of those customers every year, as consumers increasingly drop their landline telephone service.

In second quarter financial results reported to investors this week, TDS noted it is increasingly dependent on selling DSL broadband and managed data services to stabilize long term revenues and minimize line losses.  Like many independent phone companies, TDS’ largely rural service areas offer the opportunity of delivering broadband service to areas unserved by cable broadband, and unlikely to find robust cell phone or wireless data coverage.

Vicki Villacrez, TDS’ chief financial officer, reports the phone company now has a 60 percent penetration rate for residential landline customers taking DSL service.

TDS is losing more than 5% of their landline customers a year, which limits potential growth.

“High speed data subscribers grew 6% year-on-year.” Villacrez said. “We continue to attract healthy levels of new customers and they are taking higher speed. Over 80% of our data subscribers are taking speeds of three megabits or greater and 16% are taking greater than 10 megabit speeds.”

Because TDS customers are migrating to faster speeds, where available, the company’s average revenue per subscriber has remained stable at $37 per month.  That comes from a combination of the higher prices some customers pay for better service minus line losses, customer defections and retention offers delivering discounts to those threatening to switch providers.

TDS is also adopting similar strategies other phone companies are trying to hang onto customers: marketing their own triple play package of voice, broadband, and television service.  Like most smaller phone companies, TDS delivers voice and data over their existing copper wire network and relies on a resale arrangement with DISH Network to provide satellite television.

About 26 percent of TDS customers are enrolled in the company’s triple play package, up 2,700 customers in the quarter.

But the company’s cost control measures also signal TDS’ unwillingness to invest noticeably in expanding their DSL footprint to additional customers, or dramatically improve their existing network.  The company admits it plans to limit investment in new residential customers, and consolidated cash expenses were down 2.1% for the period, reflecting reduced spending.

Where is TDS willing to invest?  In data center assets and future acquisition opportunities.  TDS intends to broaden its presence in managed hosting and will continue to explore mergers and acquisition opportunities with other small, independent phone companies.

Customers who flee Bell Canada’s products and services for lower prices and less abusive Internet Overcharging are being encouraged to visit what Bell internally calls its “customer winback” website.  It’s Bell Canada’s place to extend special pricing and promotional offers to those considering a return to the telephone company.  But Stop the Cap! found the offers less than compelling and some of the company’s claims a real stretch:

There are many reasons to switch to Bell.

Switch to Bell for the most reliable home phone service¹. We’ve made many enhancements and are so confident you’ll enjoy our services, they come with a complete 30-day satisfaction guarantee, or your money back².  Switching is easy.  You can keep your existing home phone number³ and we’ll take care of the details with your current service provider.

With Bell Home phone you’ll enjoy:

• The most reliable service
• No reconnection fees

Plus, take advantage of savings on more great Bell services for your home.

Bell Internet – Perfect for sharing

• The largest fibre optic network in Canada
• Upload speeds up to 3x faster than cable⁴
• Free Wireless Home Network

Bell Satellite TV- Over 100 HD channels

• Stunning HD picture quality – 10x better than regular cable
• Canada’s best HD PVR⁵ – set and manage recordings from anywhere
• On Demand movies in 1080p HD – the highest quality of any provider

With Bell Install, you get a complete and customized installation at no charge⁶. Sit back, relax and we’ll set everything up for you.

Join the thousands of customers switching to Bell every week and start saving.

With six footnotes to the fine print in as many paragraphs, warning bells begin to ring almost immediately.  Those footnotes can cost customers some real money:

1. Applies to traditional copper-based (excluding fibre-based) wireline telephony; compared to cable telephony and based on continued service during extended power outages at customer’s home.

In other words, Bell phone service is more reliable because it works when the power goes out, unless it’s from Bell’s Fibe TV.  When power drops, your Bell Fibe phone line goes with it.  But if your phone lines are rotten, nothing will save you from a phone service outage, whether you are a wireline or “fibre-based” customer.  By the way, although Fibe is fibre part of the way, it ultimately arrives for most customers on the same copper wire phone line technology you’ve had for decades.

2. Credit offered on service fees for TV, Internet, Home phone (excluding Mobility), and applicable installation, activation or equipment fees; does not apply to usage fees (such as long distance, additional Internet usage capacity, On Demand TV programming). Client must call within 30 days of activation. Conditions apply, see bell.ca/satisfaction.

Among the other terms and conditions not immediately disclosed:

• No refunds will be issued to customers modifying or upgrading any existing Eligible Services;
• Prior to issuing a refund for equipment purchased directly from Bell, the equipment must be returned to Bell in the same condition as when it was purchased, with all original packing materials, manuals, accessories and associated equipment, along with proof of purchase;
• You may claim no more than one (1) refund under the Bell Satisfaction Guarantee in any 12 month period;
• You must be fully compliant with the terms and conditions applicable to your Eligible Services, and
• All accounts for Bell services must be in good standing.

3. Within same local calling area

A no-brainer.

4. Current as of May 1, 2011. Comparison between Bell Fibe Internet 25 (upload up to 7 Mbps) and Rogers Ultimate Internet (upload up to 2 Mbps).

Bell apparently doesn’t think Quebec’s Videotron is worth mentioning.  They upgraded to 3Mbps upload speeds for their highest tiers last February.  Like AT&T’s U-verse, “fiber to the neighborhood” networks simply cannot deliver the fastest download Internet experience that fiber to the home or cable DOCSIS 3 providers can deliver, although the upload speed for Fibe (when you actually achieve 7Mbps) is a nice change from the neutered speeds cable companies provide for “the up side.”  But Bell counts your upload traffic against the usage allowance.

5. Based on a combination of 30-second skip function, 9-day programming guide, expandable recording capacity and remote PVR feature. Additional equipment required.

Additional equipment costs additional money.

6. Conditions apply; see bell.ca/fullinstall for Bell Internet and bell.ca/installationincluded for Bell TV. For Home Phone, available to customers with Home Phone Choice or Complete, or with Unlimited Canada/US long distance plan, or the Bell Bundle; one-time activation fee (up to $55/line) applies, credited on the account before taxes, and additional charges may apply for installation of a new phone jack.

A complete and customized installation “at no charge,” except for that pesky $55 “activation fee” eventually credited on the account (but you still pay GST/PST on the ‘rebated’ amount).  Some of our readers have complained to us that they’ve had to call Bell, sometimes repeatedly, to get that activation fee credited back.  Bell sometimes forgets.

Unfortunately, for too many in suburban and rural Canada, it’s Bell telephone infrastructure or nothing — no cable provider exists to offer a competitive alternative.  They are the company that charges more for less.

Considering Bell is Canada’s number one advocate for Internet Overcharging, you can do better with almost any other provider.  Let Bell know they can “win you back” when they deliver scheme-free service at a fair and reasonable price.  Until then, tell them they can swing alone.

Verizon employees rally in New York. (Photo: Gary Schoichet)

More than 45,000 Verizon landline workers are on strike this morning after union workers overwhelmingly rejected a proposed contract from Verizon Communications that could result in as much as $20,000 in reduced benefits per employee, per year.

Workers employed by Verizon East, which serves the company’s northeastern and mid-Atlantic regions from Massachusetts to Virginia, left their jobs as their contract with the company expired over the weekend.  Two unions — the Communications Workers of America and the International Brotherhood of Electrical Workers, are pitting the dispute as part of a corporate war on the middle class.

Verizon has been demanding serious concessions from union workers in negotiations for a new contract agreement.  But employees are expressing serious concern over draconian salary and benefit concessions that could drastically reduce their pay and benefits package.  According to William Huber, president of IBEW Local 827:

• Verizon is seeking to tie pay increases to company-defined performance reviews;
• Employees would pay significant sums towards health care premiums;
• Pensions would be frozen at the end of 2011;
• Sickness and death benefits would be eliminated;
• Disability benefits would be slashed from 52 to 26 weeks and authorized “sick time” curtailed.

Verizon officials claim the benefit and pay concessions are part of the reality of today’s landline telephone business, which has been in decline for several years.

“We need to reach a contract that addresses economic realities,” said Lee Gierczynski, a Verizon spokesman. “The wireline business is constantly in decline. In order for Verizon to compete, Verizon and the unions need to make some difficult decisions.”

That contention is seriously disputed by the two unions and employees.  The CWA called Verizon one of the most profitable companies in the U.S., noting the company earned $19.5 billion in profits in the last four years and paid over $258 million in compensation to just five top executives.

“So tell me, where is their loss?” said Dino Cantillo, a facilities technician and 17-year employee. Cantillo told the Star-Ledger that Verizon’s CEO, Ivan Seidenberg, earned more than $18 million in total compensation in 2010 – roughly $49,000 every day.

“It takes these guys a year to make that,” said Cantillo, pointing at the two dozen or so protesters who picketed in Howell, N.J.

“They are trying to get rid of the working class,” said Bill Gebhart, a lineman who has worked for Verizon for 15 years. “They are totally annihilating it.”

The unions are especially upset Verizon has been aggressively trying to contract work out of the region, hiring workers offshore in Mexico, the Philippines, and other countries to perform tasks formerly done by regional employees.  The unions also point to significant corporate welfare Verizon received recently — a $1.3 billion federal tax rebate paid for by taxpayers.

“These negotiations are all about good jobs,” said CWA District 1 Vice President Chris Shelton. “Companies like Verizon should be investing in rebuilding the American economy, not contributing to the destruction of good, middle-class jobs.”

Verizon appears to be in no hurry to negotiate, cancelling several bargaining sessions last weekend.

During the last strike by Verizon employees in 2000, requests for repair service, installation, and other construction work languished for weeks, so it is very likely consumers with phone or Internet service problems or new order requests will face growing delays the longer the strike lasts.  Union officials plan to move against company plans to reassign managers and workers from other regions with strike protests and what one union official said would be a “blizzard of paperwork.”

Union workers also suggest the quality of repairs and installations done by those pressed into service with little experience may be below standard.

The CWA recommended that union workers and supporters retaliate against Verizon by canceling their phone, Internet, and cell phone service.  That could be an expensive proposition, particularly for wireless customers who would certainly face the prospect of early termination fees.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Verizon Strike 8-8-11.flv[/flv]

Visible strike actions by Verizon workers have served as catnip for local reporters, who are extensively covering the strike up and down the eastern seaboard.  Stop the Cap! has assembled coverage from stations all across the region. (28 minutes)

Despite the ongoing loss of cable television subscribers who are dropping video packages, broadband remains an incredibly important, and profitable component of today’s telecommunications industry.  Comcast, America’s largest ISP, now has 17.55 million customers, earning the company $2.2 billion dollars every quarter, which amounts to nearly $9 billion a year.  That amounts to an addition of 418,000 broadband customers for Comcast during the last quarter alone, the most Comcast has ever added since the first quarter of 2008.

For the second quarter of 2011, Comcast’s capital expenditures increased 5.5% to $1.2 billion, reflecting increased investment in network infrastructure to enable product enhancements, including faster speeds in high-speed Internet, as well as increased investment to support expansion in business services. Cable capital expenditures equaled 12.6% of Cable revenue in the second quarter of 2011.

For the six months ended June 30, 2011, Cable capital expenditures increased 10.0% to $2.2 billion, representing 12.1% of Cable revenue.

Time Warner Cable scores a distant second among cable companies with 9.99 million subscribers; Cox is third with 4.4 million.

Among the phone companies, AT&T remains the largest with 16.48 million customers.  Verizon is a distant second with 8.49 million customers.

Leichtman Research Group, Inc. found nearly 77 million Americans have broadband service from the 19 largest providers, which represent about 93 percent of the broadband market.

Almost every customer had the choice of two or fewer providers — a cable company and/or a telephone company.

Sources: The Companies and Leichtman Research Group, Inc.
* LRG estimate
** Includes LRG estimates for Bright House Networks, Mediacom, and RCN
^ CenturyLink acquired Qwest on 4/1/11
Company subscriber counts may not represent solely residential households
Totals reflect pro forma results from system sales and acquisitions
Top cable and telephone companies represent approximately 93% of all subscribers

AT&T is keeping the pressure on their grandfathered unlimited data plan customers.  Earlier today, AT&T confirmed rumors they are prepared to revoke customers’ unlimited usage plans if they are caught tethering their phones without an authorized tethering and mobile hotspot plan purchased directly from the company.  BGR quotes an AT&T spokesperson:

Earlier this year, we began sending letters, emails, and text messages to a small number of smartphone customers who use their devices for tethering but aren’t on our required tethering plan. Our goal here is fairness for all of our customers. (This impacts a only small percentage of our smartphone customer base.)

The letters outline three choices:

1. Stop tethering and keep their current plan (including grandfathered unlimited plan)
2. Proactively call AT&T or visit our stores and move to the required tethering plan
3. Do nothing and we’ll go ahead and add the tethering plan on their behalf — after the date noted in their customer notification.

An AT&T customer told 9to5 Mac he was threatened with the unilateral loss of his unlimited data plan if he was still unofficially tethering his phone after Aug. 11th, a date AT&T has since said may not be everyone’s “cutoff date”:

I was just informed that as of Thursday, August 11th, if you use MyWi or any tethering on the phone or using the phone as a modem, AT&T will automatically change your unlimited plan to a 2GB tethering plan for 45 dollars without the customer’s consent. This is for those who received emails or texts about the use of tethering without an AT&T tethering plan.

It’s clear AT&T is going hard line on their unlimited data plan customers, first sending notice they will throttle the speeds of any customer on an unlimited plan deemed a “heavy user,” and now threatening to terminate unlimited usage plans for customers who violate the company’s tethering terms and conditions.