AT&T’s investment in U-verse expansion is expected to peak this year as part of its “Project VIP” effort to bring the fiber to the neighborhood service to more areas and offer faster broadband speeds to current customers.

AT&T is spending $6 billion over three years to broaden the footprint of U-verse, which now earns AT&T 57% of its total consumer revenues. In 2013, AT&T earned $13 billion in revenue from U-verse, up 28%.

AT&T’s investment in U-verse is dwarfed by the company’s efforts to benefit shareholders. In the last quarter of 2013, AT&T realized $6.9 billion in profits on revenue of $33.2 billion. For 2013, AT&T repurchased 366 million shares of its own stock for around $13 billion and paid out another $10 billion in shareholder dividends. Together, the total return for shareholders for the year was $23 billion and in the last two years AT&T achieved a new record benefiting shareholders with $45 billion in returns. In contrast, AT&T will spend just $6 billion on the current round of U-verse upgrades, with those markets left out likely pushed to wireless-only service if the company succeeds in winning approval to decommission its rural landline network.

Most of AT&T’s revenue growth is coming from its wireless business, particularly wireless data. After AT&T eliminated its flat rate plans, monetizing data usage has become very profitable — $23 billion per year and growing at 17% annually. Because increasing wireless usage forces customers to upgrade to higher cost plans offering more generous usage allowances, AT&T’s average revenue per customer increased by 3.9% — the highest in the wireless industry and the 20th consecutive quarter of customers collectively paying higher cell phone bills.

“The next steps are to make our networks even more powerful and layer on services that will drive new growth in the years ahead,” said AT&T CEO Randall Stephenson.

AT&T is counting on even higher customer bills as the company moves forward on several revenue-enhancing initiatives:

1. Moving an increasing number of customers away from subsidized handsets. AT&T Next allows wireless customers to get a new handset every year, but in return AT&T no longer subsidizes equipment purchases. Instead, most Next customers finance their current phone and will finance their next one, assuring AT&T of a constant revenue stream for equipment. AT&T expects to gradually move away from phone subsidies altogether;
2. Data plans for cars are forthcoming, as auto manufacturers install wireless capability in new vehicles. Many are signing agreements with AT&T that will make it easy for current customers to add vehicles to their existing plan, but customers of other carriers may find signing up for a new plan prohibitively expensive;
3. Internet-connected home security systems are getting a major marketing push in 2014 with advertising blitzes and other promotions. The alarm systems are connected to and use AT&T’s wireless data network;
4. AT&T customers are being pushed to wireless data plans with much higher data allowances than they need, delivering extra profits for AT&T with no impact on its wireless network;
5. AT&T wants to begin selling “sponsored data” services to companies willing to foot the bill for accessing preferred websites. AT&T calls it “toll-free data” but Net Neutrality advocates complain it monetizes data usage and establishes a unlevel playing field where deep pocketed companies can help customers avoid AT&T’s usage meter while others have to contend with customers worried about their data allowance.

[flv]http://www.phillipdampier.com/video/ATT Next – Get A New Smartphone Every Year from ATT Wireless 1-2014.flv[/flv]

AT&T explains its Next program, which lets customers upgrade to a new smartphone every 12 or 18 months. AT&T doesn’t tell you the plan is effectively a lease that benefits them by not having to pay a phone subsidy worth hundreds of dollars to discount a phone they will eventually refurbish and resell after you return it. AT&T Next, as intended, is an endless installment payment plan that never stops as long as you keep upgrading your phone. You also can’t leave AT&T until you pay your current phone off. (1:30)

A new way for AT&T to end phone subsidies.

Despite fierce competition from T-Mobile, AT&T so far has seen little impact from T-Mobile’s aggressive marketing. AT&T added 566,000 new contract customers in the last quarter and sold 1.2 million smartphones to its customer base. AT&T’s customer churn rate — the number of customers coming and going — remains very low despite T-Mobile’s latest offer to cover AT&T’s early termination fees to encourage customers to switch.

Stephenson says AT&T’s superior wireless 4G LTE network and its larger coverage area make customers think twice about taking their business to a smaller carrier.

In 2014, AT&T laid out these plans during its quarterly results conference call this week:

• U-verse will get an expanded TV Everywhere service allowing customers to view programming on smartphones and tablets inside their home and out;
• U-verse broadband speed enhancements should be available to at least two-thirds of customers, with speeds up to 45Mbps;
• LTE coverage expansion targets are expected to be ahead of schedule;
• AT&T will begin a “big effort” on network densification — adding overlapping cell towers and small cell technology in current coverage areas — to handle network congestion;
• AT&T will focus on improving its wired and wireless networks to prioritize video delivery;
• If approved by the government, AT&T will use its acquired Leap/Cricket brand for aggressive new no-contract plans marketed to customers with spotty credit without tainting or devaluing the AT&T brand;
• AT&T will use its agreements with GM, Ford, Nissan, Audi, BMW, and Tesla to offer AT&T wireless connectivity in new 2015 model year vehicles.

[flv]http://www.phillipdampier.com/video/Bloomberg ATT Latest Results Good 1-28-14.flv[/flv]

Bloomberg notes AT&T’s latest financial results are ahead of analyst expectations. Despite competition from T-Mobile, AT&T’s customer defection rate is at a historic low. (2:03)

Phillip “Size is Everything” Dampier

Comcast’s new $1.2 billion 59-story Comcast Innovation and Technology Center — 1,121 feet in height and the 8th tallest building in the U.S. and highest building in Philadelphia — will be subsidized by taxpayers.

Comcast’s new tower, not far from Comcast Center — the current champion of Philadelphia’s highest buildings — is scheduled to break ground this summer and receive at least $40 million in taxpayer assistance to pay for improvements including a subway stop inside the building and the construction of a Winter Garden on 18th Street viewable by Comcast’s executives and the ordinary little people who also happen to pass by.

The average Philadelphian will probably never visit the top 13 floors, dedicated to the luxury-priced Four Seasons Philadelphia, where well-heeled guests will be invited to check in on the top floor for one of 200 available suites. The public at large will be tolerated in the hotel restaurant (if they behave) and the 2,682-square-feet of space dedicated to retail shops.

Because Comcast is going to pack up to 4,000 employees in its new building, taxpayers are paying Comcast an added bonus — $4.5 million in state job-creation tax incentives for the 1,500 jobs Comcast claims it will bring to the city. That signing bonus, payable to Comcast – not the employee, runs $3,000 per job.

An artist’s conception of Comcast’s newest excess.

Philebrity reports the local NBC station and Telemundo 62 (both owned by Comcast) will also move into the building. For the benefit of the worker class, there will be an atrium every three floors because once you’re spending over a billion dollars, you might as well throw some damn plants in there.

The Inquirer fell all over itself gushing about the new building in a shameless puff piece:

With its new 1,121-foot-tall loft building, designed by Britain’s Norman Foster, Comcast fashions a rebuttal to all that. Think of the towering waterfall of glass that was unveiled Wednesday as a skyscraper version of the great, light-filled factory lofts of the early 20th century, but wedged into the unpredictable heart of Center City atop the region’s densest transit hub. In the six years since Comcast embedded itself in one of the city’s more straight-laced corporate towers, it has done a complete 180: Its second high-rise should be a glorious vertical atelier where employees can make a mess while they invent and build stuff.

In short, this is what the future of the growing Comcast campus at 18th and Arch Streets will look like: Suits to the east, hipster engineers in cutoffs and flip-flops to the west.

Readers will excuse the fact hyperventilating “Inquirer Architecture Critic” (does any other newspaper in America have one of those?) Inga Saffron needed to catch her breath before finally reminding readers in a later update Liberty Property Trust, Comcast’s partner in the building, is under the leadership of William Hankowsky, who coincidentally also happens to be part owner of The Inquirer.

Philebrity, in a less charitable moment, referred to the new skyscraper as Comcast’s middle finger to Philadelphia. Considering the fact Comcast subscribers nationwide will likely help foot the bill, that’s a finger seen from  Cape Cod to Catalina Island.

[flv]http://www.phillipdampier.com/video/American TV Bomb.mp4[/flv]

In less than nine minutes, we can convincingly prove to any judge or jury we should only pay for the channels and networks we actually want to see. Our cable/satellite dollar helped pay for these video atrocities of 2013. Watch if you dare, but NSFW. (8:39)

Phillip “Free Trade in Bad Broadband” Dampier

Sure we’ve had our cultural skirmishes in the past,  but on one thing we can all mostly agree: our largest cable, phone, and broadband providers generally suck.

Outside of hockey season, Canada’s national pastime is hating Bell, Rogers, Vidéotron, Telus, and Shaw. The chorus of complaints is unending on overbilling, bundling of dozens of channels almost nobody watches but everybody pays for, outrageous long-term contracts, and bloodsucking Internet overlimit fees. In fact, dissatisfaction is so pervasive, the Conservative government of Stephen Harper spent this past summer waving shiny keys of distraction promising Canadians telecom relief while hoping voters didn’t notice their tax dollars were being spent by the country’s national security apparatus to spy on Brazil for big energy companies.

The Montreal Gazette is now collecting horror stories about dreadful service, mysterious price hikes, and promised credits gone missing on behalf of readers fed up with Bell and Vidéotron.

Rogers Cable, always thoughtful and pleasant, punished a Ottawa man coping with multiple sclerosis and cancer with a $1,288 bill, quickly turned over to a collection agency after his home burned to the ground. It took headlines spread across Ontario newspapers to get the cable company to relent.

Things are no better in the United States where the American Customer Satisfaction Index rates telecom companies worse than the post office, health insurers airlines, and the bird flu. National Public Radio opened the floodgates when it asked listeners to rate their personal satisfaction with their Internet Service Provider — almost always the local cable or telephone company.

The phone company Canadians love to hate.

Many responded their Internet access is horribly slow, often goes out, and is hugely overpriced. In response, the cable industry’s hack-in-chief did little more than shrug his shoulders — knowing full well American broadband exists in a cozy monopoly or duopoly in most American cities.

Breann Neal of Hudson, Ill., told NPR she has one choice — DSL, which is much slower than advertised. Hudson is Frontier Communications country, and it is a comfortable area to serve because local cable competition from Mediacom, America’s worst cable company, is miles away from Neal’s home.

“There’s no incentive for them to make it better for us because we’re still paying them every month … and there’s no competition,” Neal says.

Samantha Laws, who gets her Internet through her cable provider, says she also only has one option.

“It goes out at least once a day, and it’s been getting worse the last few months,” Laws says. She works with a pet-sitting company that handles all of its scheduling through email and the company website. At times she can’t do her job because of the unreliable connection.

Chicago is in Comcast’s territory and the company is quite comfortable cashing your check while AT&T takes its sweet time launching U-verse in the Windy City. AT&T isn’t about to throw money at improving DSL while local residents wait for U-verse and Comcast doesn’t need to spend a lot in Chicago when the alternative is AT&T.

Where there is no disruptive new player in town to shake things up, there is little incentive to speed broadband service up. But there is plenty of room to keep increasing prices for a service that is becoming as important as a working telephone. Companies are using broadband profits to cover increasing losses from pay television service, investing in stock buybacks, paying dividends to shareholders, or just putting the money in a bank, often offshore.

NPR’s All Things Considered:

“[For] at least 77 percent of the country, your only choice for a high-capacity, high-speed Internet connection is your local cable monopoly,” says Susan Crawford, a visiting professor at Harvard Law School. She is also the author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.

Crawford says that today’s high-speed Internet infrastructure is equivalent to when the railroad lines were controlled by a very few moguls who divided up the country between themselves and gouged everybody on prices.

She says the U.S. has fallen behind other countries in providing broadband. At best, Crawford says, the U.S. is at the middle of the pack and is far below many countries when it comes to fiber optic penetration. Given that the Internet was developed in the U.S., she says the gap is a result of failures in policy.

“These major infrastructure businesses aren’t like other market businesses,” Crawford says. “It is very expensive to install them in the first place, and then they build up enormous barriers of entry around them. It really doesn’t make sense to try to compete with a player like Comcast or Time Warner Cable.”

So Crawford is calling for is a major public works projects to install fiber optic infrastructure — a public grid that private companies could then use to deliver Internet service.

Powell

That’s an idea met with hand-wringing and concern-trolling Revolving Door Olympian Michael Powell, who made his way from former chairman of the Federal Communications Commission during the first term of George W. Bush’s administration straight into the arms of Big Cable as president of their national trade association, the NCTA.

Powell, well compensated in his new role representing the cable industry, wants Americans to consider wireless 3G and 4G broadband (with usage caps as low as a few hundred megabytes per month) equivalent competitors to the local cable and phone company.

“I think to exclude [wireless] as a substitutable, competitive alternative is an error that leads you to believe the market is substantially more concentrated that it actually is,” Powell says.

Of course, Powell’s new career includes a paycheck large enough to afford the wireless data bills that would shock the rest of us. All that money also apparently blinds him to the reality the two largest wireless providers in America are AT&T and Verizon — the same two companies that are part of the duopoly in wired broadband. It’s even worse in Canada, where Rogers, Bell, and Telus dominate wired and wireless broadband.

Although America isn’t even close to having the fastest broadband speeds, Powell wants you to know the speeds you do get are good enough.

“I think taking a snapshot and declaring us as somehow dangerously falling behind is just not substantiated by the data,” he says. He says it is like taking a snapshot of speed skaters, where there might be a few seconds separating the leaders, but no one is “meaningfully out of the race.”

That is why we still celebrate and honor Svetlana Radkevich from Belarus who competed in the speed skating competition at the Vancouver 2010 Winter Olympics. She made it to the finish line and ranked 33rd. Ironically, South Korea ranked fastest overall that year, taking home three gold and two silver medals. In Powell’s world, that’s a distinction without much difference. You don’t need South Korean speed and gold medals when Belarus is enough. That argument always plays well in the United States, where Americans can choose between Amtrak or an airline for a long distance trip. Who needs a non-stop flight when a leisurely train ride will get you there… eventually.

There are a handful of providers uncomfortable with the mediocre broadband slow lane. Google is among them. So are community broadband providers installing fiber broadband and delivering gigabit Internet speeds. EPB in Chattanooga is among them, and it has already made a difference for that city’s digital economy neither AT&T or Comcast could deliver.

Unsurprisingly, Powell thinks community broadband is a really bad idea because private companies are already delivering broadband service — while laughing all the way to the bank.

If a community really wants gold medal broadband, Powell says, they should be able to have it. But Powell conveniently forgets to mention NCTA’s largest members, including Comcast and Time Warner Cable, spend millions lobbying federal and state governments to make publicly owned broadband illegal. After all, cable companies know what is best.

All Things Considered recently asked its fans on Facebook, “How satisfied are you with your Internet service provider?” Many responded that they didn’t like their Internet service, that it often goes out and that their connection was often “painfully slow.” Listen to the full report first aired Jan. 11, 2014. (11:30)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Is your promotion with AT&T U-verse coming to an end? Are you actually paying regular price for Internet, phone, or television service? Why?

“AT&T will do whatever we can to keep your business,” an AT&T customer retention specialist tells Stop the Cap! “If you seem serious about canceling service by quoting us rates from one of our competitors, we will give you an even better deal to stay with us with faster speeds and a lower price.”

AT&T has been attempting to improve its “promotional churn” numbers — the percentage of customers who switch to AT&T U-verse with a special deal only to cancel after the promotion ends. So far, it seems to be working, especially in the Midwest where AT&T’s pricing has been so aggressive, Time Warner Cable admitted it has had trouble keeping customers and winning former ones back.

Providers are especially vulnerable when promotional packages expire and rates reset to the regular retail price, often $30-80 or more a month, depending on the number of services. When the first bill reflecting non-promotional pricing arrives, a lot of customers with bill shock consider their options and some leave for a better offer elsewhere.

Time Warner Cable handles this by offering a less generous, follow-up promotion when the original one expires. AT&T usually waits until customers try to cancel service before a “customer retention” specialist goes to work to save the account.

An AT&T customer service representative working in AT&T’s customer retention department talked with Stop the Cap! this week about AT&T’s current pricing and promotions, but requested anonymity because she was not authorized to speak with the media.

“When a customer calls in and asks to cancel service, those calls are automatically passed on to our department to change the customer’s mind,” says our source. “We take calls of all kinds including profanity-laced, ‘one-way’ conversations from angry customers upset about poor service, those fishing for a better deal, and those that have already set up an installation appointment with a competitor.”

“We are trained to resolve customer concerns, so the guy who loses U-verse service during Sunday football doesn’t need a lower rate, just a serious effort to stop those outages from repeating,” says our source. “We’re worried the most about customers who can quote our competitor’s best promotional offer and are prepared to switch immediately. These customers are clearly price shopping so we have to find ways to lower our price, improve our service, or a combination of both or the customer will walk.”

With U-verse still being a relatively new product, AT&T invests a considerable amount of money to provision service to new customers. To recoup that investment, AT&T needs customers to maintain service for at least a few years. If a customer cancels as soon as their promotion expires, AT&T will lose part of that investment.

“It is actually better for us to upgrade your service and even cut your price than to lose your business, so we do exactly that,” our source says. “That is why our best retention offers are not available to new customers. That is actually a good thing in my view because we’re treating our current customers better than those who are not,” she adds.

Stop the Cap! has assembled a guide to help current AT&T U-verse customers snag one of these retention deals and save. However, please be aware your results can vary based on a number of factors including: your past payment history (chronic late-payers will not qualify for the best offers), the level of competition in your area, the customer service agent you are dealing with, and the perceived seriousness of your threat to cancel service.

We have focused most of our attention on the broadband part of U-verse, but those with bundled service can also get some attractive retention deals.

“It doesn’t hurt to ask even if you are still on a contract,” says our source. “Although we won’t give contract customers the best deals, we can often offer a free speed upgrade through the customer retention department.”

What about U-verse’s 250GB usage cap?

“It’s not enforced in most areas and I’ve never seen a customer call to cancel because they had overage fees on their bill,” says our source. “If they did, I’m sure we’d just credit them. I don’t see us losing a customer over this.”

Getting Prepared

You will be calling AT&T. Do not bother using their online chat support, e-mail, or snail mail to ask for a better deal. You will not get one. AT&T’s approach to customer retention requires a specially trained representative to speak with the customer by phone.

Visit the website(s) of the cable company and any other competitors serving your area. You will need to have specific pricing and service details handy when asking AT&T for a better deal. “Don’t make it up, because we will likely take a look at the same information you found and point out any fine print that might make a competitor’s deal less attractive,” says our source. “We are asked to document these details in the notes we place on your account. These are available to any other representative that looks at your account.”

Think about what is most important to you, upgraded service for the same price or a lower bill. The representative will have a few different retention offers to choose from, and in some cases a supervisor may need to authorize the better-priced deals. Most will require a one-year term contract.

Making the Call

A lot of customers want a better deal but don’t want to feel stressed out asking for one. Don’t worry. In most cases the entire process will take less than 15 minutes. But it helps if you can call when you are free of distractions or pressured for time. Hold times might vary and in some cases a less-than-helpful representative might require you to start negotiations over with someone else.

Have paper and pen ready to take notes. You will want to write down the name and extension of the representative and details about the types of retention plans being offered, especially if AT&T manages to ‘lose the paperwork.’

Do -not- call AT&T’s regular customer service number. Instead, call 1-800-288-2020. You will be prompted to select your state, asked for the phone number associated with your account, and offered a menu of choices to proceed. You need to say or select the option to “cancel service.” This will route you directly to a customer retention specialist.

Making Your Case

You: I am calling to cancel my U-verse service. I have been offered a better deal with the cable company.

AT&T: Really? We don’t want to lose you as a customer so let me pull up your account. Can you tell me what our competitor is offering?

At this point, you want to quote the deal you found on the competitor’s website and quote the offer. Let the representative know you are switching because of the price and/or features.

An alternative approach that has also proven effective:

You: I just received an offer from my cable company that has made me seriously consider switching but I wanted to reach out to AT&T to see what you could do to keep my business. I’d like to learn what promotions I might qualify for.

AT&T: Let me check. Tell me what the competitor is offering you.

You: (Describing the offer) There are certain things I like about the offer from the cable company but I could be persuaded to stay with U-verse. I am just concerned because for the amount you charge for broadband service, I can get faster speed at a lower price with the cable company. Are there any promotions that can boost my speed and offer me a better deal?

When the representative comes back on the line, they will usually offer a small discount or service credit ranging from $5-10. But better deals come to those who hold out.

You: My neighbor is getting a better deal than that. He received a speed upgrade and is paying something close to half the regular price for the next year. Is there anything like that available?

AT&T: Let me check. Yes there is, but I will need to speak to my manager.

“When we put you on hold to ‘speak to a manager’ this usually means we are putting notes on the account to justify the higher value retention deal we are about to offer,” says our source. “But if something unusual comes up, like a one-time credit or waiving an equipment fee, we may need a supervisor’s approval.”

Stop the Cap! has verified some valid U-verse retention deals that are commonly available throughout the United States. In some highly competitive areas, these deals are often sweetened with a $100 service credit instantly applied to your bill. You can always ask. Although AT&T might offer some of these for six months, most can be extended to 12 months upon request. Be ready to commit to AT&T for the next year to avoid any early termination penalties in the typical 12 month term contract that comes with these offers.

It is important to be flexible and don’t fixate on any particular element in an offer. A representative may not be able to waive surcharges like a modem rental fee (buy your own) or a Local TV Surcharge, but they can usually find a deal that more than compensates you with a much-reduced rate.

If the representative seems reluctant to extend an offer to you, thank him or her for their time and call back and speak with someone else. Some AT&T representatives are more helpful than others.

Frequently Seen U-verse Promotions

• Broadband-only service: 3Mbps for $14.95/mo, 6Mbps for $23, 12Mbps for $25, 18Mbps for $28, or 24Mbps for $33 (Buying your own modem avoids rental fees but if you plan to rent, ask if there are any promotions that reduce or waive the fee);
• Bundled TV/Internet Service:  The most commonly available offers bundle 18Mbps broadband with U300 service at prices that range from $101-103, although $104/month can upgrade you to 24Mbps with U300 in certain parts of Florida. (1-yr contract)

“We really aren’t routinely offering many deals for speeds above 24Mbps because too many customers don’t qualify for faster service,” says our source. “Offering something they can’t get only further disappoints them, which is something we prefer to avoid.”