Frontier Communications will not roll out a national IPTV service to compete with cable operators in all of its service areas, but is still exploring its options for providing pay-TV service in larger cities.

That decision, announced by executive vice president and chief financial officer Donald R. Shassian, came at last week’s Global Technology, Media, and Telecom Conference sponsored by Wall Street investment bank J.P. Morgan.

Shassian used the occasion to clarify remarks made during the company’s first-quarter results conference call, which caused some shareholders and analysts concern about the company’s lackluster performance, capital spending plans, and company debt that will come due early next year.

Shassian said Frontier will not deploy U-verse-like IPTV service across its entire national service area, but is considering the future option of delivering the service (and better broadband speeds) theoretically in selected markets.

Shassian also raised the prospect of modifying part of its acquired fiber-to-the-home FiOS network to fiber to the neighborhood technology that companies like AT&T are currently using. But for the foreseeable future, most Frontier customers will have to subscribe to satellite television if they want a video package with their home phone and broadband service.

Stop the Cap! was the first to report Frontier was considering licensing AT&T U-verse to use in selected larger markets where the company has lost considerable ground against cable competitors that deliver consistently faster broadband service.

Wall Street reaction to the proposal has been negative, with concerns Frontier will need to spend hundreds of millions, if not billions, to deploy such a network.

Shassian sought to distance the company from any suggestion they will further increase spending on network improvements. In fact, Shassian says Frontier will end its broadband expansion program, and the extra spending to pay for it, by 2013.

“Our capital expenditure spending will decrease in 2013 as the geographic broadband expansion of our network concludes,” Shassian said. “We expect capital expenditures to drop by approximately $100 million in 2013.”

In lieu of national IPTV service, Frontier remains committed to its resale partnership with satellite TV provider Dish Network. But Shassian did admit U-verse technology is among the options the company is exploring to remain competitive.

Surprisingly, Shassian also said the company was considering partially modifying its acquired FiOS network in Indiana and the Pacific Northwest, because of the cost savings it could deliver.

“We have been evaluating alternative platforms which could generate savings from capital expenditures, video transport and even content costs that can be significant to the FiOS video market business,” Shassian said. “I want to be clear that we have no plans to deploy IPTV across our nationwide network and therefore do not see upward CapEx pressure from any potential changes in our facilities-based video strategy.”

Asked about the potential cost savings afforded by swapping out FiOS technology for IPTV fiber to the neighborhood service, Shassian said it could open the door to expanding service in areas where existing copper-based last mile network facilities can sustain a minimum of 20Mbps broadband service. Frontier claims 1.9 million homes in its service area can receive 20Mbps today, of which 600,000 are currently within a Frontier FiOS service area.

“If we changed, we may have to change out set top boxes on [existing FiOS customers],” Shassian said.

In this clip, Frontier Communications’ executive VP and chief financial officer Don Shassian speaks to a J.P. Morgan investor conference in Boston about the company’s broadband and IPTV plans. (May 15-17, 2012) (4 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

The implication of substantially altering the company’s existing fiber-to-the-home network baffled some analysts.

One, who talked with Stop the Cap! asking not to be attributed, suspects Shassian’s role as a financial officer at Frontier may explain part of the mystery.

“He’s not the chief technology officer, and I suspect he is partly confused about the different technologies,” the analyst explains. “I can’t see Frontier tearing down their current network, but it may make sense for them to switch technology strategies when considering if and where they can expand their network.”

“Frontier’s first quarter results were more than disappointing, and the company is being exceptionally cautious about anything that requires spending right now,” the analyst said. “The next shoe to drop is another dividend cut, which would kill the stock in the market, and if we think Frontier will spend a billion to improve its network, that dividend is going down.”

Our source says he does not have much confidence in Frontier’s current management.

“They talk a nice story, but the numbers never finally add up,” he says. “Rescuing wireline is expensive and companies always promise it will cost incrementally little to expand revenue-enhancing broadband to their rural customers, but if that were true, the companies would have already done it, and without significant spending they have not.”

Panera Bread installed free Wi-Fi years before Starbucks got around to it, trying to boost customers in between breakfast, lunch, and dinner.  The experiment worked, according to USA Today, but now Panera has a new problem: their Wi-Fi networks are clogged and customers won’t leave to make room for others.

Panera executives say the company connects 2.7 million sessions a month at its 1,565 locations nationwide.  The result is Wi-Fi that slow to a crawl, overloaded with dozens of customers trying to get online at the same time. The problem has gotten even worse since wireless phone companies began usage capping and throttling their customers. That brings data-hungry people to Panera for the free Wi-Fi, but they don’t always stay for the food.

Now Panera is considering rationing its Wi-Fi service and giving priority to its most-frequent visitors who belong to the company’s MyPanera loyalty program, rewarding them with extra time on the network or prioritized traffic that forces non-members onto slower connections.

That could discourage casual visitors and those not purchasing food to look elsewhere.  JiWire, which sells ads on Wi-Fi networks, estimates 55% of those using free in-store Wi-Fi are searching for a faster connection than their wireless phone company provides. If Panera forces them to use slower speed connections, they may go somewhere else.

Panera, like coffee shops and other eateries, all face the same challenge: how to discourage the freeloaders who spend hours occupying tables and seats without buying anything while not alienating the customers that do buy and appreciate the wireless Internet connection as a free perk.

As wireless carriers continue to charge more for less service, those challenges are expected to only grow in the coming months.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/USA Today Talking Tech Customers clog Paneras free Wi-Fi 5-17-12.flv[/flv]

USA Today visited Panera Bread to find out whether customers went for the food or the free Wi-Fi.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Ben Silverman on Web Delivery of TV Progamming 5-17-12.mp4[/flv]

Ben Silverman, founder of Electus and former co-chairman of NBC Entertainment, talks on Bloomberg TV about the migration of entertainment programming delivery to web-based outlets, and how the “big boys” like Comcast will have considerable control about how, where — and how much you will pay to watch. (5 minutes)

What capacity crisis? This is about the money.

Yesterday’s news that Verizon Wireless plans to terminate the grandfathered unlimited data plans of their existing customers, forcing them to choose from a range of potentially more expensive shared data plans, would seem to be part and parcel of the cell phone industry’s need to move away from all-you-can-eat data to preserve what little spectrum they have to handle wireless data growth.

AT&T’s Randall Stephenson is on record stating AT&T has been hiking prices because of the imminent spectrum crisis and its inability to manage it with a buyout of T-Mobile:

“We’re running out of the airwaves that this traffic rides on,” Stephenson said. “There is a shortage of this spectrum. The more competitors you have, the less efficient the allocation of spectrum will be. It’s got to change. I don’t think the market’s going to accommodate the number of competitors there are in the landscape.” Stephenson noted AT&T’s data prices have increased 30% since the deal was killed.

“In a capacity-constrained environment we will manage usage-based data plans, increased pricing and managing the speeds of the highest volume users. These are all logical and necessary steps to manage utilization,” Stephenson said about AT&T’s rationing plans.

Over at Verizon Wireless, the announced end of unlimited data carried no such warnings of imminent wireless spectrum doom.  In fact, chief financial officer Fran Shammo on Wednesday said Verizon was just fine with spectrum and capacity for at least the next two years, if not longer (underlining ours):

“Well, I think prior to the deal that we announced with the cable companies and the acquisition of spectrum, we were saying that we were going to need a spectrum — we were going to need more spectrum by 2015. With the approval of this deal now, with the AWS, we think we are in very good shape here beyond 2015.

“In addition, the way our 3G spectrum is in individual slices, it is going to be very efficient for us to take slices out and re-appropriate that to the 4G technology. So I think that through that spectrum efficiency, also I think that there will be some help from the manufacturers in getting more equipment out there that utilizes spectrum more efficiently, although I don’t think that solves the problem, the industry is going to need more spectrum in the future because of the way that we see the guide path of consumption. But I think right now, we are in pretty good shape for at least the next several years.

[…] “So from a spectrum perspective, I think we are absolutely fine.”

Verizon's banking on more revenue when "unlimited data" is banished for good.

In fact, Verizon Wireless plans to reduce its spending on infrastructure projects designed to expand and enhance its wireless network, starting with its 3G service. Frammo (underlining ours):

“And now what you’re seeing is, if you will, a discontinued investment in 3G. Now we will have to continue to invest in that 3G from a maintenance and reliability perspective because we still have 90 million customers on that, but no more capacity or expansion of the 3G network. Our effort is going into 4G now and what I would say to you is look at Verizon on a total capital basis and I would say flat to slightly down. If you look at the components, what you will see is wireless decreased $850 million in the first quarter and that was because of the 3G buildout last year and not this year. But I think on a year-over-year basis, you could look to flat to down and that trend should continue.”

So what are Verizon’s primary goals in the near future? Increasing revenue. Frammo (underlining ours):

“So obviously, our goal is to increase cash flow. We came out of the first quarter with a $1.7 billion increase in our cash flow year-over-year, managing that CapEx. Our dividend policy is extremely important to us.“

Verizon Wireless handed out this statement this morning regarding the imminent demise of unlimited data:

“As we have stated publicly, Verizon Wireless has been re-evaluating its data pricing structure for some time, Customers have told us that they want to share data, similar to how they share minutes today. We are working on plans to provide customers with that option later this year.

“We will share specific details of the plans and any related policy changes well in advance of their introduction, so customers will have time to evaluate their choices and make the best decisions for their wireless service. It is our goal and commitment to continue to provide customers with the same high value service they have come to expect from Verizon Wireless.”

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WWLP Springfield Verizon Wireless Eliminating Unlimited Data 5-16-12.mp4[/flv]

WWLP in Springfield, Mass. explains to viewers the end of “unlimited data” from Verizon Wireless is near.  (1 minute)

At first, DISH Network couldn’t care less about Cincinnati-area resident Jeff Demoss’ problems.  The devastating March 2 tornadoes that ripped through Peach Grove and California, Ky., just across the Ohio border, took away Demoss’ home and all of its possessions. All that remained was a post with an electric meter and his DISH Network satellite dish.

Demoss called the satellite TV company to cancel his service. There wasn’t much point continuing to pay for satellite television when your television has blown into the next town over. At first, DISH Network representatives seemed sympathetic, promising the problem would be taken care of immediately.

That was, until DISH found out Demoss’ satellite receiver was also missing and could not be returned.

“We kept getting letters in the mail saying ‘You are going to have to return the receiver, or we will have to charge you $300 for it,'” Demoss told WCPO-TV’s consumer reporter.

And DISH did exactly that, removing $300 from the family checking account.

DISH Network has earned a mediocre C+ rating from the Better Business Bureau, and has racked up more than 13,000 complaints in the past three years, some about lost equipment fees.

Companies can charge early contract termination and lost equipment fees for customers who cancel service before their service contract ends or who do not return equipment. When tragedies like storms, fires, and floods strike, many satellite and cable companies try to bill customers accordingly, at least until they end up shamed on the evening news.

DISH quickly offered to refund the Demoss family their $300 once the Cincinnati television station got involved, and the satellite company apologized for the inconvenience.

Virtually all cable, telephone, and satellite companies will eventually relent on cancellation fees and damaged/lost equipment fees if customers tell the intransigent customer service representative or supervisor their next call will be to local media to share the story, so it pays to stand your ground.

However, as Stop the Cap! has repeatedly recommended in the past, your best protection is a renter or homeowner insurance policy, which typically covers these types of losses. Renters often assume their landlord maintains insurance on their behalf, but in fact they do not. Insurance purchased by the building owner only covers structural losses, never your personal property. Renters insurance is inexpensive and highly recommended.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WCPO Cincinnati Tornado victim struggles with DISH Network 5-16-12.mp4[/flv]

WCPO-TV in Cincinnati reports on how a Kentucky man who lost his home and possessions was forced to deal with DISH Network, who withdrew $300 from the family checking account for equipment lost in a March tornado.  (3 minutes)