Verizon’s FiOS expansion is still, still, still, still, and still dead.

Despite the passage of favorable legislation deregulating the state’s largest telecom companies, Verizon has thumbed its nose at New Jersey’s efforts to convince the company to expand its fiber-to-the-home service.

“Verizon does not plan to expand its FiOS service footprint,” wrote Tanya Davis, a Verizon franchise service manager for FiOS in New Jersey and New York. “The company remains focused on continuing to meet its franchise obligations, and delivering competitive services, and enhanced consumer choices, where the services are available.”

More than a decade after passing the 2006 Cable TV Act in New Jersey, designed to convince telecom companies to compete more vigorously with each other, Verizon remains uninterested in further expanding its fiber network in New Jersey and beyond.

After successfully lobbying the state to adopt a statewide cable TV franchise policy, making life easier for Verizon by not requiring the company to negotiate a contract with each town serviced, Verizon suddenly stopped caring after announcing a pullback in further FiOS expansion in 2010. The change in heart appears to have started at the top. Then CEO Ivan Seidenberg, who approved FiOS, retired and was replaced by Lowell McAdam, who preferred Verizon invest mostly in its wireless networks.

Vergano

As a result, New Jersey has a telecom industry-friendly deregulatory policy in place with nothing to show for it.

“People want to see competition,” Wayne Mayor Christopher Vergano told the North Jersey Record, citing complaints his office has received about Altice USA’s Optimum service. “Over the years, they’ve seen their cable bills increase. We’re trying to give residents options.”

Wayne’s Township Council passed a resolution asking state lawmakers to review the 2006 Cable TV Act to find a way to coerce Verizon to do more fiber upgrades in the state. In 2006, then Gov. John Corzine got Verizon to commit to wiring 70 towns across New Jersey, and Wayne was not one of them.

Verizon agreed to expand its fiber network to all county seats, as well as areas with a population density in excess of 7,111 residents per square mile.

New Jersey’s Board of Public Utilities (BPU) is still allowed to report on Verizon’s progress, but little else, thanks to deregulation. A BPU report stated deployment of FiOS slowed to a crawl between 2010-2013, when only three new towns were reached with fiber upgrades. What little interest Verizon still had in FiOS expansion ended after 2012’s Superstorm Sandy, after which Verizon ended expansion in urban areas of New Jersey as well.

“It’s solely Verizon’s discretion to add municipalities to its system-wide franchise,” a BPU spokesman told the newspaper.

Prior to deregulation, utility boards and regulators could compel companies to offer service instead of shrugging their shoulders and telling state lawmakers ‘it’s all up to Verizon.’

Charter Spectrum will soon charge you for a full month of service, even if you downgrade or cancel in the middle of a billing cycle, ending a decades-old practice of issuing a partial month credit for dropped services you no longer want or need.

Tucked into customers’ May billing statements, Charter Spectrum announced it intends to stop giving partial refunds for service effective June 23, 2019:

The financial benefit to Charter Spectrum is substantial, because customers will be forced to pay for a full month of service even if they cancel during the first week of a new billing cycle. The cable industry has been gradually shifting away from issuing partial month credits after other telecom companies, notably Windstream and wireless operators, moved to “full month billing – no refunds for partial month” billing.

Cablevision/Optimum was among the first cable companies to stop issuing credits for disconnects that occur before the billing cycle ends. It led to a 2017 class action case against Cablevision, now owned by Altice USA, filed by an ex-customer. A 2018 ruling dismissed the class action case, compelling the plaintiff to use mandatory arbitration, required of all new subscribers. The final disposition of the case is unknown. Charter Spectrum maintains a similar clause in its own terms and conditions.

Your time is up. It may have been one, two, or if you are especially lucky — three years since you signed up for Charter Spectrum service. But your temporary reprieve from the high price of cable is over.

The bad news arrives in a letter:

Thank you for being a Spectrum customer. When you signed up for your services, you received a promotional discounted rate on your bill. This promotion is coming to an end. However, as a valued customer we are pleased to offer a new promotion for an additional year.

Spectrum certainly is pleased. You may not be. To avoid shocking you too much, the company does not provide a new “out the door” price. They wait until they send you your first post-promotion bill. The letter also does not remind you what you were paying, it breaks out the price of each component service of your bundle for the following 12 months in an effort to lessen the surprise.

For most Spectrum customers on a basic, new customer promotion lasting one year, the rate change is substantial — once you add it all up.

For a customer subscribed to Standard Spectrum TV with two DVR boxes, Internet Ultra (400/20 Mbps), and Spectrum Voice, here is what you can expect (prices and promotions may vary):

• Standard Spectrum TV: Your promotional rate of $54.98 will rise to $86.97, an increase of $31.99.
• Internet Ultra: The promotional triple-play bundled price of $54.99 increases to $74.99, up $20.
• Spectrum Voice: The bundled price of $29.99 will decrease to $19.99, a savings of $10.

Spectrum Voice, Charter’s digital home phone line product, is the most vulnerable part of their triple play bundle. Scores of customers drop landline service at the end of a promotion because, in many cases, having the landline as part of a triple play package either came free (or almost free), or actually reduced the price of the bundle. By offering a lower rate going forward, Charter is making a token effort to convince customers not to abandon voice service, but as the company’s landline disconnects continue to accelerate, it clearly isn’t an effective tactic.

The letter also ignores Charter’s ever-rising Broadcast TV Fee, now $11.99 a month, and is compulsory for all cable TV customers. So the old monthly promotional rate of $155.75 for this particular package will rise to about $193.94, a difference of $38.19 a month. After a second 12 months, prices generally reset even higher to the published “rack rate.”

Since Charter took control of Time Warner Cable and Bright House Networks, efforts by customers to negotiate a lower rate got much tougher, but the company’s customer retention efforts have stepped up slightly over the last year. You should still expect to pay more than you did before, but it is often possible to negotiate a slightly better deal by threatening to cancel service. Some customers report more success discussing the matter in a Spectrum cable store, cable modem and set top boxes in hand. But do not be surprised if they shrug their shoulders and agree to your request to cancel your account on the spot. Spectrum, like many cable companies, has gotten pickier about who they offer promotions to, and are willing to say goodbye to barely profitable customers, especially those only subscribed to cable TV.

Frontier Communications has no plans to upgrade most of their legacy copper DSL internet customers this year, leaving customers in many markets stuck at speeds as low as 1-3 Mbps.

Frontier CEO Dan McCarthy told analysts in a late afternoon conference call Tuesday that around one million homes have access to Frontier’s 100 Mbps DSL service, and six million can sign up for DSL at or above 25 Mbps. McCarthy considers those customers valuable targets for marketing campaigns because most are not Frontier customers. For the rest of Frontier’s legacy copper areas that cannot access those speeds, Frontier will have little to offer in 2019.

“I don’t think you’re going to see us do a lot of significant copper upgrades this year,” McCarthy admitted. “Our big focus is really future proofing kind of the [California, Texas, and Florida] fiber markets. So, we’re spending the money to upgrade th[ose markets] to 10 Gbps capability.”

Frontier reported another quarter of poor results late yesterday, widely missing analyst expectations. Frontier’s share price lost 26.8% of its value overnight in heavy trading. Over the last 12 months, Frontier’s share price has dropped by 77%.

Analysts remain deeply concerned about Frontier’s customer defections, which have persisted for several years and show no signs of ending. Even more daunting, Frontier’s high debt levels are still a problem. A major tranche of Frontier’s debt comes due for repayment in 2022, and there are concerns Frontier may not be able to cover it, which could force the company into bankruptcy. In February, Bloomberg News ranked Frontier No. 1 on the list of deeply distressed debt issuers in North America.

While cable companies can count on quarterly boosts in the number of customers signing up for broadband, Frontier shareholders have become accustomed to reading about subscriber losses. The company lost 38,000 broadband subscribers in the last quarter, including in its fiber to the home markets. Most of Frontier’s losses are Charter Spectrum and Comcast’s gains. Frontier also reported landline and video customer losses.

Although continued traffic growth would seem to indicate companies like AT&T and Verizon will need to continue major spending initiatives to keep up with demand, technological advancements and upgrade programs have made networks more efficient than ever, allowing AT&T and Verizon to report cost declines as much as 40% annually.

Wireless One’s Dave Burstein spoke with Andre Fuetsch, AT&T’s chief technology officer about current telco cost trends. Feutsch said a lot has changed with AT&T’s networks over the last several years.

“We’ve gone from 10 gigabits to 100 gigabits to now 400 gigabits on our fiber,” Feutsch told Burstein. “MIMO and massive MIMO are extremely productive. Yes, I think 40% per year is a reasonable estimate of how our costs are going down. AT&T’s leadership in open white box and SDN will continue to drive that number higher, which is needed as network demand increases.”

Burstein notes Verizon similarly estimated their costs were also falling about 40% annually.

“I have been able to confirm that the 40% Verizon efficiency savings figure is on target if not exact,” Burstein said. “You can replicate my thinking. Traffic has been growing 40% per year. Sales have been roughly flat for the similar time period. If productivity growth hadn’t been a similar 40%, profits likely would have trended down. In fact, they have been flat or slightly increasing.”

While AT&T has been embarked on a costly major fiber network buildout in its local phone service territory, Verizon has been focused on rebuilding and modernizing its core network. The “One Verizon” project is retiring a large percentage of the 200,000 legacy routers, switches, and other hardware in use across Verizon’s network and installing about 20,000 very efficient network box replacements. Verizon estimates its first year cost savings are about 50%.

Although network traffic growth, expansion, and upgrades come at a cost to carriers, technological improvements are covering much of those costs by making networks more efficient and capable of carrying much more data than ever before. When companies talk about their network investments in terms of justifying rate increases, that clearly does not tell the full story.