As part of its investigation of cable and satellite television companies, the U.S. Senate Permanent Subcommittee on Investigations found large discrepancies in how five of America’s largest cable and satellite companies—Charter Communications, Comcast, Time Warner Cable, DirecTV, and Dish—identify and correct overcharges caused by company billing errors.

The subcommittee released its report to coincide with today’s hearings on customer service and billing practices in the cable and satellite television industry. The Senate subcommittee focused its attention primarily on billing errors associated with rented set-top boxes and receivers, not programming packages or add-on services. The bipartisan report found satellite TV company Dish was probably the least prone to billing errors associated with satellite equipment and Time Warner Cable was the worst at identifying equipment billing discrepancies. Even when it did find instances of overbilling, the company refused to give customers automatic full refunds as a matter of “efficiency.”

That “efficiency” is expected to be very profitable for Time Warner Cable, which is likely to collect $1,919,844 from overbilling this year alone. Time Warner Cable estimates that, in 2015, it overbilled 40,193 Ohio customers a total of $430,393 and 4,232 Missouri customers a total of $44,152. Time Warner Cable also told the subcommittee that, during the first five months of 2016, it overbilled customers in Ohio for 11,049 pieces of equipment, totaling $108,221.

Charter Communications only did marginally better, mostly because it is a much smaller cable company. Charter estimates that it has overcharged approximately 5,897 Missouri customers a total of $494,000. Charter, along with Time Warner Cable, made no effort to trace equipment overcharges to their origin unless customers specifically asked them to and did not provide notice or refunds to customers.

Let’s review how the five companies compare:

Time Warner Cable

Time Warner Cable is notorious for its “no refunds unless asked” policy, which often leaves customers uncompensated for service outages and other problems. That policy also extends to equipment-related billing errors. During the 6.5 year time period covered by the subcommittee investigation, Time Warner Cable never automatically refunded or credited customer for equipment overcharges discovered by the company. Instead, Time Warner’s “Revenue Assurance” team quietly identified and corrected billing errors without any notification or explanation to customers, which may explain why your Time Warner Cable bill can change even when you are locked in with a promotion.

The subcommittee discovered Time Warner Cable still relies on two entirely different billing systems. One, “Integrated Communications Operations Management System”, otherwise known as ICOMS, is especially troublesome to navigate at Time Warner because the company does not use standardized coding across the entire company. Placing an order for Internet service in the Northeast Division of Time Warner Cable is completely different from ordering the same product in a city like Kansas City or the west coast. Employees have complained about ICOMS for years, noting it can take up to 30 separate codes entered correctly in the system to add just one product, like High-Speed Internet. A simple data entry error can mess up an order and generate a billing error (or a lost order or service request that is never processed). But Time Warner Cable also relies on a different platform developed by CSG to manage some of its billing. Some of Time Warner Cable’s acquisitions, like Insight Communications, have operated under the Time Warner Cable brand for several years, but still use some of the billing platforms that were in place before Time Warner took over.

The subcommittee found strong evidence ICOMS is a big problem for Time Warner Cable. Attempts to audit the platform often crash, as it did in May of this year, preventing Time Warner Cable from identifying billing issues. At best, the company only aims for an 80% correction rate using its auditing tools.

One audit uncovered 18,000 customers in the Carolinas, Midwest, and Northeast that were being overbilled for modem and CableCARD equipment. Although Time Warner Cable was going to remove the erroneous charges going forward, it had no plans to automatically refund customers it identified as overcharged unless customers somehow realized that themselves and called in to request retroactive credit.

Time Warner Cable once erroneously billed one of its own employees for three Internet accounts.

The subcommittee found if an audit showed that a customer had not been billed for equipment or services that the customer had received, the company treats those inconsistencies as undercharges and adds the charge to the customer’s bill going forward. Time Warner Cable does not attempt to retroactively charge the customer for previous months where that customer was undercharged.

If the audit shows that a customer has been billed for equipment or services that he or she does not have, the story is more complicated. In some cases, customers agree to pay for equipment they do not actually have so that they can receive a cheaper package price—for example, a consumer who wants only Internet service might decide the cheapest option is a promotional package including both Internet and cable television. By participating in the promotion, the customer agrees to pay a monthly rental fee for a set-top box but may instruct the company not to provide a set-top box. In such a case, the customer’s billing records will show a charge for a set-top box, but the customer’s equipment records will show that he or she does not physically have a set-top box. In April 2016, for example, Time Warner Cable identified 49,132 pieces of equipment associated with overcharges; of those 37,653 (approximately 77 percent) were not “correctable” overcharges because they were associated with accounts participating in promotional offers.

Time Warner Cable does not attempt to trace billing errors to their origin. Instead, it only provides a partial credit for the month during which the error was discovered. The company will not notify you of the error or for how long it has been on your bill. Unless you call and demand full credit for the overbilling, you will not receive it.

The cable company defends its policy on the ground that it is “efficient.” Going through months of customer bills to identify overcharges would be costly and time consuming, the company argues. The company also claims that the customer is best positioned to notice an overcharge and bring it to Time Warner Cable’s attention.

After reviewing policies at several different companies, the subcommittee cast doubt on Time Warner’s assertions, noting other companies had no problems returning overbilled amounts to customers without a request to do so.

Charter Communications

Unfortunately for customers, not included on the list of companies willing and able to automatically refund overbilling is Charter Communications, which recently acquired Time Warner Cable and Bright House Networks.

The subcommittee called Charter’s process of identifying and correct overbilling “substandard.”

According to Charter, prior to August 2015, the company did not run any systematic audits to reconcile its billing records with equipment records. Charter’s failure to perform regular audits means that overcharged customers could not receive a prospective correction of their bill unless they noticed the problem themselves and contacted Charter. Beginning in August 2015, however, Charter began taking steps to identify equipment overcharges now on its system. Charter will complete that process in June 2016.

Charter recently upgraded some of its systems to make sure that when an employee adds or deletes services and/or equipment, an update to the customer’s billing record occurs automatically. Charter has 21 employees working for its Billing Quality Assurance department. The employees randomly sample bills to check their accuracy and when Charter changes its bill format or presentation, the team is supposed to review the bills to make certain any billing changes do not introduce mass errors. The subcommittee found these auditing methods were unlikely to discover common “one-off” errors, such as when customers are overbilled for equipment or programming on their specific account.

Charter’s alternate methods of identifying discrepancies quickly become more convoluted and less useful after that.

For example, beginning in August 2015, Charter undertook what it called a “controller reconciliation,” in which the company began to reconcile its billing records with equipment data from its 35 “controllers” throughout the country. These “controllers” are designed to manage box authorizations and “from the office” service connection and disconnection so that a truck roll is unnecessary. These systems can also be useful in identifying unauthorized equipment installed at locations where they were never registered or if the box was authorized for channels a customer was not paying to receive. A controller reconciliation allowed Charter to identify anomalies like in Missouri, where almost 6,000 customers were being billed for set-top boxes they were not using.

The subcommittee was unhappy neither Time Warner Cable or Charter seem willing to use “brute manpower to identify how long a customer has been overcharged and automatically grant a refund or credit,” as well as do more to minimize equipment and programming mismatches with billing records.

Comcast has bigger problems than overbilling.

Comcast

Comcast relies on a very similar auditing process in use at Time Warner Cable to identify billing discrepancies, except once Comcast finds one it identifies how long a customer was overcharged, notifies the customer and automatically credits the customer’s account. Starting late last year, Comcast began running audits weekly to improve billing accuracy. Comcast claims just a 0.3% error rate.

Comcast has more than 60 employees nationwide on the east and west coasts examining billing issues and, when needed, individually investigates each case to identify applicable refunds.

DirecTV

DirecTV doesn’t do regular audits, instead relying on a program called SAS Enterprise Miner to search for billing errors before bills are generated. It can also use the same tools to identify and correct past billing errors. The satellite provider goes as far back as necessary to correct past mistakes, and pointed to instances where credits of thousands of dollars were issued to affected customers. DirecTV’s Revenue Assurance department can also reach out and communicate with employees at all levels of the company to investigate billing issues and prevent future ones. What will change as a result of AT&T’s ownership of the company isn’t known.

Dish Network

Dish was cited by the subcommittee report as having the billing system least likely to generate billing errors. Dish links its equipment and billing systems together, which means any change on one system automatically updates the other.

According to Dish, it is impossible to add or remove equipment without altering the customer’s billing records. Dish provides each customer with one free “receiver”—Dish’s term for the equivalent of a set-top box—and charges $7.00 to $15.00 per month for each additional receiver a customer has. That is the only equipment charge. Dish’s system will only send a television signal to receivers that have been “activated,” which happens as part of the installation process. Once a receiver has been activated, the customer’s billing information is automatically updated to reflect that addition. That system ensures that no receiver is added to a customer’s account unless it has been activated.

Dish customers return their receivers by mail. Dish provides a packaging label so that it can track the receiver once it has been mailed. When the receiver returns to the Dish warehouse, an employee scans the barcode on the receiver, which removes the receiver from the customer’s provisioning records and, in turn, from the customer’s bill.

[flv]http://www.phillipdampier.com/video/Senate Cable Billing Practices 6-23-16.mp4[/flv]

The Federal Communications Commission is getting an earful from satellite provider Dish Network, upset with the agency’s proposal to boost regulatory fees covering direct broadcast satellite services by 125% this year.

If the FCC adopts its new fee structure, Dish will pay 24 cents per subscriber (up from 12¢) per year to cover the cost of full-time employees at the FCC who spend their days monitoring and regulating satellite television providers. Satellite companies will also pay a one-time fee of 3¢ per subscriber in 2016 to cover the FCC’s downsizing expenses.

The regulator has successfully found a way to cover some of its expenses by charging the companies it oversees “user fees.” In 2015, the FCC collected nearly $340 million in regulatory fees. This year, the FCC wants more, seeking to impose a temporary “facility reduction cost” surcharge that will cover the expenses of moving employees to new, smaller offices, or downsizing the current ones to save money. The FCC says that will cost an extra $44 million. Taxpayers won’t pay those expenses, but pay television customers ultimately will when providers pass both of those fees on.

Dish says the rate hike is unjustified because of its size and scope, and runs contrary to the FCC’s goal of minimizing consumer bill shock. The satellite provider also wants the FCC to explain how it can justify more than doubling user fees while downsizing.

If the FCC doesn’t answer, the American Cable Association, representing small independent cable operators, is willing to share their views on the matter. The ACA complains the FCC isn’t charging DirecTV and Dish enough, noting they are still getting preferential treatment over cable and IPTV providers that are being asked to pay $1 per subscriber this year.

“There is absolutely no basis for keeping the proposed DBS fee levels over 75% below those proposed for other entities in the Cable/IPTV category,” wrote ACA president Matt Polka in comments to the FCC. “DBS providers should be paying the same Media Bureau regulatory fee.”

Polka pointed to AT&T’s acquisition of DirecTV as an example of how disproportionate fees cost small independent cable companies much more on a per-subscriber basis than telecom giant AT&T has to pay for almost 20 million DirecTV satellite customers.

“AT&T, now the nation’s largest [pay TV company], operates two types of services – its U-verse IPTV service and its DirecTV DBS service,” noted Polka. “Yet, AT&T will be assessed starkly lower regulatory fees for its approximately 20 million DirecTV subscribers than it will pay for its approximately 6 million IPTV subscribers, even though all of these services make absolutely comparable use of Media Bureau […]  resources and AT&T’s advocacy […] is on behalf of all its [pay TV] subscribers.”

Polka wants fee parity – charging the same user fees for all providers, regardless of the technology they use.

“Doing so will avoid the competitive distortions the current fee structure creates by having cable operators and IPTV providers, most of whom are far smaller than the DBS providers, cross-subsidize the fee burden of their primary and direct competitors in the marketplace,” Polka argued.

Whatever fee structure is ultimately approved by the FCC, customers can be certain providers will pad those fees when passing them on to customers. For more than a decade, some providers have used regulatory fee increases amounting to spare change as an excuse to pass on new “regulatory surcharges” that are many times more than what those providers actually pass on to the government.

“It’s a price increase,” bluntly notes Mark Cooper from the Consumer Federation of America back in 2004.

This spring, The Consumerist broke down a typical AT&T U-verse bill loaded in junk fees and surcharges. (The RED numbers [1, 4-10, 13-14, 17-20, 22] are AT&T-originated fees, fake surcharges/bill padding, or fees that represent the cost of doing business; BLUE numbers [2-3, 11-12, 15-16, 21, 23-25] are real government fees passed on to local, state, and federal taxing authorities.)

June 16, 2016

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Ms. Burgess,

Today, we confirmed that Charter Communications has ordered an indefinite suspension of the Time Warner Cable Maxx broadband upgrade program pending a review that seems to carry no specific timeline for completion.[1]

We are deeply concerned about the implications of this decision, particularly as Time Warner Cable has been performing broadband upgrades this spring and summer in the Hudson Valley[2] and Syracuse/Central New York[3] regions that deliver important speed upgrades to customers in New York State. We have good information that Rochester was the next city scheduled for these upgrades, followed by Buffalo. These upgrades would have provided customers with up to 300Mbps broadband service as soon as late this year across a significant section of upstate New York, with the western New York/Buffalo region upgraded in 2017.

It is clear the only reason these upgrades have been suspended relates to the recent ownership change of Time Warner Cable, approved by the N.Y. Public Service Commission.

As you know, Stop the Cap! argued our concerns about approving the merger transaction between Charter Communications and Time Warner Cable, in part because Time Warner Cable’s Maxx upgrade program offered more compelling broadband upgrades, at a lower price, and introduced faster than Charter’s own offer.[4]

The alarming development of an indefinite nationwide suspension of the Maxx upgrade program has profound implications on large sections of upstate New York waiting for urgently needed broadband speed upgrades. The announcement also suggests large sections of New York will be waiting much longer to reach speed parity with cities, mostly downstate, that already enjoy up to 300Mbps service on an upgraded, less trouble-prone network.

Once again, New Yorkers are being divided into those with reasonably fast speeds, and those without. Should Charter adopt the slowest possible upgrade schedule permitted by the Commission, several upstate cities will be waiting until the end of 2018 – almost two years, to receive 100Mbps broadband.[5] I’d remind the Commission other major cable companies are offering residential customers speeds up to 2Gbps today[6], and many already offer tiers that well exceed Charter’s promised maximum speed.

Charter’s corporate decisions also impact New Yorkers more profoundly than other states because of the absence of significant competition. Outside of limited deployments of Verizon FiOS, DSL continues to predominate from New York telephone companies, including Verizon, Frontier, TDS, Windstream, and others. In most cases, these speeds do not come close to achieving the minimum 25Mbps speed that the FCC defines as “broadband.”

In states to our west, AT&T is already offering gigabit Internet service to residential customers, and Google Fiber (which has bypassed the entire northeastern U.S. for fiber deployment) continues its own expansion.

We urge the Commission to obtain definitive information about the current Maxx upgrade delay, the reasons for it, the timetable to resume upgrades (if ever), and an assurance that Charter Communications will resume a comparably rapid Maxx-equivalent upgrade for New Yorkers that Time Warner Cable was well on its way to complete within the next two years. We also hope the Commission will share its findings with the general public.

Yours very truly,

Phillip M. Dampier
Director

[1] Text of a company memo obtained by Stop the Cap! originally sent to Time Warner Cable’s engineering/customer support team: “The Maxx Internet Speed Increase Program is currently undergoing review by our leadership team. As a result, all speed increases and customer communications were placed on a temporary hold beginning Thursday, May 26. Once the updated launch schedule is determined, updated hub schedules will be posted to KEY and area management will be notified. Customers will continue to receive notification when the new speeds are available in their hubs.” (http://stopthecap.com/2016/06/16/charter-indefinitely-suspends-time-warner-cable-maxx-upgrades-pending-review/)

[2] http://www.timewarnercable.com/en/about-us/press/twc-increases-internet-speed-hudson-valley.html

[3] http://www.timewarnercable.com/en/about-us/press/twc-to-transform-tv-internet-experience-central-northern-ny.html

[4] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={FCB40F67-B91F-4F65-8CCD-66D8C22AF6B1}

[5] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={DEE1823A-AADD-48D4-94BD-B96BAC096DAA}

[6] http://www.xfinity.com/multi-gig-offers.html

An effort by a House Republican to scale back the FCC’s Lifeline subsidy program failed on a largely party-line vote Tuesday.

Rep. Austin Scott (R-Ga.) introduced the last-minute End Taxpayer Funded Cell Phones Act, a virtual carbon copy of legislation he proposed in March – H.R. 4884, the Controlling the Unchecked and Reckless Ballooning of Lifeline Act of 2016 (CURB Act). Scott pointed to a proposed FCC fine of $51 million against Total Call Mobile that alleges the company knowingly enrolled ineligible customers for dramatically discounted cell phone service. He also objected to the FCC’s recent request for an expanded Lifeline budget of $2.25 billion annually as an example of government spending running wild.

“I have been fighting to end the unchecked spending and lack of accountability in the Lifeline program since I came to Congress,” said Rep. Scott. “While the program’s original purpose had merit, the program in its current form is wrought with fraud and abuse, and its past time for Washington to respond to the calls of our constituents to rein this program in. American citizens, who are all too familiar with ‘Obama Phones’, understand this and can agree that it is simple good governance to ensure we are curbing wasteful spending while also promoting accountability across the federal government. We have a responsibility to the American citizens to practice the same spending discipline they would in their own homes.”

Scott’s Georgia district includes the cities of Warner Robins, Tifton, Thomasville, and Moultrie.

Scott’s use of the term “Obama Phones,” didn’t sit well with his opponents, including Rep. Frank Pallone (D-N.J.), who blasted Scott and the House Republican leadership for suddenly bringing Scott’s bill to the floor for a vote.

“[House Speaker] Ryan and the Republican majority is bringing a bill to the floor that would eliminate the successful Lifeline program that provides millions of low-income Americans access to basic communications services,” said Pallone, who reminded his Republican colleagues the Lifeline program was created in 1985 during the middle of the Reagan Administration and was extended to include wireless service under the George W. Bush administration. Pallone added the Obama Administration has rooted out nearly $750 million in waste, fraud, and abuse of the Lifeline program.

“The American people know that if Republicans were really serious about battling poverty and shrinking the size of Lifeline, they would work with us to create more jobs for those that are unemployed or under-employed,” Pallone said. “The best way to lower the costs of the Lifeline program is to lift people up, not to take away their connection to a better life.”

The vote was 207 in favor of Scott’s bill, 143 against. All but one of the “yes” votes came from Republicans (seven opposed the bill). The 143 voting against were almost entirely Democrats, with just one voting in favor.

Because the bill was brought to the floor during a suspension of House rules, a two-thirds vote in favor was required to pass it. Having failed to achieve that, Scott’s bill died on the floor.

An AT&T executive casually told an audience attending the Wells Fargo 2016 Convergence & Connectivity Symposium that a significant part of AT&T’s wireless network was built with money intended for AT&T’s landline network.

“I came more from the wireline [landline] business and had always a little bit of frustration for me because for many years before I picked up operations in construction and everything for the wireless side of the business, in the wireline world, I was spending a lot of money that was directly supporting the wireless operation, but it showed up as wireline spend,” said Bill Smith,  who has been with AT&T for 37 years and has served as president of AT&T’s Technology Operations since January, 2010. “So we’re not that good at allocating those expenditures.”

Smith’s admission gives further evidence that AT&T has been shortchanging investment in wireline and fiber networks for years, to the benefit of AT&T’s profitable wireless business.

Smith

When mobile networks were first being constructed, there was concern that private investment, not landline ratepayers, be responsible for covering the costs of building wireless infrastructure. Both AT&T and Verizon submitted regular rate increase requests to state regulators during the period, claiming additional compensation was needed to cover the costs of landline network upkeep and upgrades. In most cases, regulators approved those rate increases.

Smith’s admission suggests AT&T systematically allocated expenses associated with its wireless network on the wireline side of the business ledger, reducing the amount available to maintain landline service. Had regulators known, they would have likely rejected the rate increase requests and, more importantly, required AT&T to stop spending landline ratepayer funds on wireless networks.

By depleting funds designated for wired networks, AT&T ultimately made a cheaper choice about the type of advanced network it would deploy. AT&T rejected Verizon’s choice of FiOS fiber to the home service because it was ‘too expensive.’ AT&T’s less costly solution, U-verse, relies on fiber to the neighborhood, with existing copper wiring remaining in place between the nearest fiber link and the telephone interface box on the back of your home or business.

Smith also handily defeated his employer’s justifications for data caps, telling the audience AT&T has strong capacity with plenty to spare, noting increasing traffic demands on AT&T’s networks are nothing new for the company.

“But getting back to the capacity question, I don’t lay awake at night worried about that,” Smith said. “Yeah there are a lot more demands coming in to the business, but there is nothing new about that. We’ve lived through many, many cases of new applications, new waves causing increases in consumption. I feel very good about where we are. The density of our network is very strong, and as I mentioned, I think we lead the industry in terms of U.S. footprint in the density of our network and that’s great. Also we have things like small cell coming on the horizon.”