Oregon's telephone company service areas

Frontier Communications has won approval to assume control of telephone lines serving 310,000 Oregonians.

The Oregon Public Utilities Commission Friday unanimously approved the transfer of service from Verizon to Frontier as part of a 14-state transaction.

“First and foremost we want to ensure that customers are not harmed by this transaction.  That’s why we are requiring more than 50 conditions, all aimed at making sure customers are not harmed by this sale,” Chairman Lee Beyer said. “In addition, we are requiring Frontier Communications to spend $25 million on expanding high-speed internet access to its Oregon customers by July 2013.”

In return for approval, Frontier agreed to PUC demands for customer service protections:

• A commitment that Frontier spend at least $25 million to expand high-speed broadband in Oregon by July 2013;
• No changes in “commission-regulated” retail service plans for at least three years;
• Costs of the transition must not be paid by customers in the form of rate increases;
• 90-day window to change long distance carrier without any fees;
• An independent audit, paid for by Verizon, to ensure Frontier can handle service for those customers affected by the deal;
• An opt-out provision letting Oregon’s FiOS subscribers terminate their contracts without penalty if Frontier reduces Internet speeds or drops any of its television channels.

What is missing from Oregon’s agreement?

• A prohibition of Internet Overcharging schemes like Frontier’s 5 gigabyte “acceptable use” policy that potentially limits customer’s broadband use.  Expanded broadband that customers can only use for basic web browsing and e-mail, without fear of exceeding the limit, indefinitely punishes rural Oregonians with no broadband alternatives;
• A specific definition of what constitutes “broadband” speeds.  Frontier can continue to deliver the 1-3 Mbps it routinely provides to its less urban service areas.  While better than nothing, Oregon regulators could have used the deal as leverage to win 21st century broadband speeds from Frontier, not yesterday’s ‘barely broadband;’
• Fines and penalties that will punish a provider that does not invest appropriately in high service standards to provide quality service, and a trigger to permit automatic cancellation of operating certificates should Frontier go bankrupt.

Too many of these deals offer upsides for Wall Street and little benefit to consumers, especially those dependent on their landline phone company for basic communications services.  By forcing requirements that prove costly for a provider to renege on, investors will understand their gains will only happen when they are assured Frontier is doing right by their customers, as well as their shareholders.

Oregon is the sixth state to approve the sale.

Frontier currently serves only 12,000 customers in the state, mostly in southwest Oregon, including the communities of Azalea, Canyonville, Cave Junction, Days Creek, Glendale, Myrtle Creek, O’Brien, Riddle, Selma, and Wolf Creek.

The company’s new customers will come mostly from Washington County, east Multnomah County, and from several pockets of customers in the northwestern part of the state.  Oregon’s largest telephone provider is Qwest Communications, but the state has numerous smaller independent providers as well.

Charter customers thank the company for the speed increases

Charter Cable has made it clear — no metered billing and no enforcement of its “soft usage caps.”

“We have no plans to introduce metered billing,” Ketzer told Broadband Reports, adding no trials were forthcoming either.

But Charter Cable did say bandwidth consumption is a concern for the company, and a measurement tool to educate customers about their current usage was on the way.

“Right now we are gathering requirements to develop a resource so that customers can monitor and control their bandwidth resources,” said Ketzer. “This was something that our customers have been requesting and we want to meet that need.”

Separately, Charter also announced speed upgrades for many of its broadband customers.  Starting this morning, customers can briefly unplug their cable modems to reset them and enjoy some increased speeds at no additional cost.

Charter's old speed tiers (shown above) got an upgrade this morning. Prices quoted are for new customers. Existing customers: add $15 -- Internet Only customers: add $25

The new speed increases impact three of their broadband plans.  Only “Lite” speeds remain unchanged:

• Lite: Remains the same at “up to” 1 Mbps/128 kbps
• Express: Increases from 5/1 Mbps to 8/1 Mbps
• Plus: Increases from 10/2 Mbps to 16/2 Mbps
• Max: Increases from 20/2 Mbps to 25/3 Mbps

Charter advises Max customers will need to exchange their current cable modem to receive the new speeds.  They come as a result of DOCSIS 3 upgrades, which requires a modem that supports that standard.

Some Charter customers can go even faster with the company’s Ultra60 plan delivering 60/5Mbps service for $139.99 a month.  Customer promotions, typically running six months, can cut the cost to $109.99 during the promotional period.

Increasing speeds and shelving Internet Overcharging schemes like usage limits and usage-based billing build customer loyalty and bring new customers, particularly at the expense of telephone company DSL plans, which cannot compete on speed.  Most DSL providers have stopped increasing speeds beyond the maximum 6-10 Mbps they have advertised for years.  Many barely deliver 3 Mbps.

AT&T, which provides service in many Charter markets, has raised the stakes for competition as it rolls out U-verse, an advanced type of DSL service that can support video, telephone, and faster broadband.  In Reno, where AT&T has conducted usage cap experiments for more than a year, the news that Charter won’t comes as welcome news.

Stop the Cap! reader David canceled AT&T service when he found out the company was testing a usage cap in Reno.

“When we found out they were limiting us (after we signed up), we not only canceled AT&T broadband, but also disconnected our two phone lines as well,” David writes.  “We won’t do business with a company that wants to limit our broadband use and we resented being guinea pigs in the first place.”

David adds a “retention specialist” offered to waive his participation in the trial, but he wasn’t interested and is not looking back.

“Unless you deliver a clear message these ripoffs are unacceptable in a way they understand – money – they will just come back for more once the ‘experiment’ is over,” he said.

David is happy with his Charter Cable service, and estimates AT&T’s experiment cost them nearly $200 a month in revenue they used to earn from his family.

“Their cost control program certainly worked — for me.  I’m saving more money with Charter than what I was paying AT&T,” he adds. “I wouldn’t have switched except for their usage cap.”

Charter itself has some broadband usage limits, but they are almost never enforced.

Charter currently defines “normal” residential usage at around 15 gigabytes per month.  Charter’s usage allowances appear in its “excessive use” clause in the Acceptable Use Policy:

Residential service usage will not exceed 100GB of bandwidth per month for Customers subscribing to Services of 15 Mbps or less per month and 250GB of bandwidth per month for Customers subscribing to Service over 15 Mbps and up to 25 Mbps. Charter reserves the right to revise usage limits or to implement additional usage limits. In the event residential usage exceeds the above-described limits Customer will be notified and required to either limit Customer’s bandwidth consumption to permitted levels/limits or subscribe to a Service with a higher monthly bandwidth limit if a higher limit subscription is available.

Since these limits have not been aggressively enforced, they are known as “soft usage caps.”  Most Internet Service Providers have provisions for such limits in their customer agreements, although they are usually only enforced only when a customer’s usage reaches into the stratosphere (often terabytes of usage are involved) or creates a problem for the provider.

Still, some customers dropped Charter Cable even over the defined “soft caps,” switching to competitors who had no such provisions in their usage policies.  Consumers hate Internet Overcharging schemes, and will readily change providers to avoid them.

[flv width=”500″ height=”380″]http://www.phillipdampier.com/video/Charter Thank You Ad 3-1-2010.flv[/flv]

Charter Cable created this ad from customer recorded submissions sent over their Internet service (1 minute)

To listen to some executives cry on their quarterly conference calls about the struggles of the cable television industry during the economic downturn almost makes you want to weep for their misfortune, until you realize some of those voices are getting big salary hikes anyway.  For a select few, economic downturns are for the little people.  Nothing shall stand in the way of substantial salary raises and bonuses.  Don’t have the money to pay?  Just raise your rates!

Take Time Warner Cable’s Chief Operating Officer Landel Hobbs.  Many of y0u will remember him from last April’s controversial Internet Overcharging experiment.  Landel tried to convince consumers their rape and pillage broadband pricing was a good thing, and objections to it were simply a result of you misunderstanding how good of a deal it was.

Hobbs has an all-new employment agreement you can read for yourself.  Sonya Hubbard from footnoted, which reviews SEC filings, notes the company went out of its way to hand Hobbs a new contract a year before his current one expires:

The odd thing about Hobbs’ raise is that, according to the proxy filed April 20, 2009, his 2008 employment agreement wouldn’t have expired until January 31, 2011.  That agreement paid him a base salary of $900,000, an annual discretionary target bonus of 233% of his base salary (nearly $2.1 million), and a discretionary annual equity and other long-term incentive compensation award with a minimum target value of $3,000,000.

The new agreement took effect January 1, 2010 and has the same expiration date… January 31, 2011 as his former agreement.  But now Hobbs gets a minimum annual base salary of $1,000,000 and an annual long-term incentive compensation with a target value of $3,650,000.  The annual discretionary cash bonus remains at $2,100,000 (although now the number is specifically stated, rather than given as a percentage of his salary).

Senior Executive Vice President and Chief Financial Officer, Robert Marcus also gets a new contract, after his old one expired in 2008 (he’s been getting a monthly extension ever since).  Hubbard reports:

The company had given Marcus raises, of course.  In addition to other types of compensation, as of last April Marcus’s base salary was $800,000, his annual discretionary target bonus was 175% of his base salary ($1.4 million), and his discretionary annual equity and other long-term incentive compensation award had a minimum target value of 225% of his base salary ($1,800,000).

The new agreement, which became effective January 1  and runs through December 31, 2012, states that Marcus will now get a minimum Base Salary of $900,000, an annual Target Bonus of $1,500,000, and an annual long-term incentive compensation with a target value of $3,100,000.

While executives surely appreciate a raise as much as the rest of us do, it’s probably a safe bet that investors and especially cable customers may be less enthusiastic about the new agreements.

At those prices, both can afford a lot of pay-per-view, but then, Time Warner Cable often provides free service to its higher level employees and management, so they’re insulated from those pesky rate hikes the rest of us pay year after year, too.

Princeton, Kentucky

A cable technician and his supervisor were jailed late last week after a customer dispute escalated into a shoving match between the Mediacom employees and the Princeton, Kentucky police.

Under arrest are Shannon K. Parker, 46, of Indian Avenue, Oak Grove, and 55-year-old Phillip R. Tosh of Centennial Drive.

Police officials responded to a call from 509 North Jefferson Street over an argument between a customer and the cable technician.  When police arrived, they report Parker was using loud, obscene language and refused to follow police instructions to calm down.

Tosh, a Mediacom supervisor, then joined the fracas and reportedly shoved one of the officers attempting to take Parker into custody.

The Times-Leader reports both men were arrested and lodged in the county jail.

Parker was charged with disorderly conduct. Tosh was charged with third-degree assault on a police officer and hindering prosecution or apprehension.

The investigation continues, and other charges are possible, police told the newspaper.

Strigl, who has 18.5 million reasons to smile

It used to be when a truly valued employee choose to retire, he or she might get away with a gold watch and a retirement bash, but those days are over.

While the rest of America copes with layoffs, high unemployment, and a decline in real income, the chosen few retire in style, walking away with stunning parting gifts.

Take Verizon’s Dennis F. Strigl, the company’s former president and chief operating officer.  After years of service to Verizon, he decided to retire this past December.  In addition to whatever parties his fellow employees threw him at the end of the year, Strigl will also receive an $18.5 million separation payment this July.  That’s 14 times his former annual salary of $1.32 million dollars.  Verizon claims in its filings with the Securities & Exchange Commission that it was “required” to cough up the 18 million because of Strigl’s employment contract.

DealBook’s Perk Watch found out plenty more:

There are other goodies thrown in as well for Mr. Strigl, including a $1.9 million short-term plan award, a $451,000 executive life insurance benefit, and a tax gross-up worth $367,478. Mr. Strigl will also have his telecommunications services covered for the next five years, which the company estimates will cost around $11,500 ($192 a month).

A Verizon spokesman, Bob Varettoni, said in an e-mail message that Mr. Strigl’s employment agreement “was used as a retention vehicle when Bell Atlantic completed its acquisition of GTE in 2000, forming Verizon and Verizon Wireless. So it was a contractual payment under a legacy employment agreement.”

Toben

Walk into your boss’ office and ask where your retention vehicle is in your employment contract.

Executive suite Money Parties don’t stop with Strigl.  Doreen A. Toben, who stepped down as chief financial officer last March and left the company in June, received $3.5 million under her employment agreement and also entered into a one-year consulting agreement that paid her $125,000 each month. And at the end of 2008, when William P. Barr retired as Verizon’s general counsel, he received a payment of $10.38 million six months after he stepped down from the company, according to Perk Watch.

For those on the lower floors, the company will provide you a free cardboard box to collect your belongings and get out of the building.  After slashing 17,000 jobs in 2009, Verizon has announced it expects to cut another 13,000 employees in 2010.