Frontier Essentially Accuses Time Warner Cable of Being a Shakedown Artist

Early indications of a more challenging second quarter of 2009 may be what’s behind the sudden speed increases and new promotions being run by providers, who are also counting on signing new customers, now that moving season is in full swing.  A roundup of promotions and service adjustments customers may find enticing them:

AT&T

U-verse Internet Max customers received free upgrades last week in most areas, boosting broadband download speeds from 10Mbps to 12Mbps.  AT&T previously announced a slowing of U-verse deployment for economic reasons.  AT&T competes with cable operators offering video, voice, and broadband service.

Cablevision

Cablevision Systems continues to offer new customers taking at least a combined broadband and phone package a $200 American Express gift card through June 30.  The company already announced major increases in premium speed levels, and promises no limits on consumption.

Comcast

Reduced pricing in highly competitive Washington, DC market for premium 50Mbps service to under $100, for customers signing up for at least two Comcast services (video, voice, and/or broadband)

Frontier

A substantial mailing offering discounts and giveaways was sent through postal mail to consumers in many Frontier service areas.  Frontier is using a cable-critical mailer depicting their cable competitor as “Rob” and “Bill.”

Rogers (Canada)

Rogers, which earlier increased rates for subscribers, announced a “free speed increase” to its “Hi Speed Internet Express” package, from 7Mbps to 10Mbps, and “Internet Lite” from 1Mbps to 3Mbps.  Rogers limits its customers typically to 60GB of consumption per month for standard levels of service.  Much lower limits are placed on economy packages.

Time Warner Cable

Time Warner Cable is continuing to mail customer postcards and other mailings promoting its existing service packages, but this week also attempts to pick up customers trapped in Frontier term contracts by agreeing to cover early contract termination penalties, up to $200.  Time Warner Cable is also hinting that cable customers will soon be able to use Tivo software for their Digital Video Recorder (DVR) boxes, which permit customers to record programming.

Verizon

Verizon announced substantial speed increases throughout their service area. The company also has engaged in a price war with Cablevision over gift cards. Verizon offered $150 gift cards to new customers signing up for a service bundle (although Cablevison beat their offer by $50).  The company also began promotional giveaways to customers signing a contract agreement.

To date, AT&T continues tests limiting consumption to as low as 20GB per month in Beaumont, Texas and Reno, Nevada.  Comcast has a straight limit of 250GB of consumption per month for residential customers nationwide.  Frontier defines “acceptable use” at 5GB consumption per month, but does not enforce it at this time.  Rogers limits consumption based on the level of speed selected by the customer.  Most customers face a 60GB monthly limit.  Time Warner Cable tested, but temporarily shelved, tiered pricing and consumption limits.  Other providers not listed have no Internet Overcharging schemes in place.

The NoChokePoints Coalition has a point.  They are a coalition of public interest groups and providers like British Telecom and Sprint-Nextel that are upset with monopolistic pricing for high speed broadband lines.  Verizon and AT&T “control the broadband lines of almost every business in the United States” the coalition states, and “generates a profit margin of more than 100% for the controlling phone companies.”

“Releasing the broadband economy from the chokehold these huge phone companies have on the special access market will be a catalyst for innovation and investment in the broadband marketplace, something we desperately need,” said Maura Corbett, spokeswoman for the NoChokePoints coalition.

“Every time you send an email, withdraw money from an ATM, or use your wireless phone, your information travels on these high-capacity lines. Excessive pricing and other market abuses by these companies have long been an issue of concern at the Federal Communications Commission (FCC). Nearly five years ago, after many complaints by broadband customers in several FCC proceedings, the Commission began a review of the high-capacity broadband market to determine the changes needed to ensure reasonable prices. Despite ample evidence of excessive pricing, the Commission inexplicably has yet to take any action.”

“The Obama administration, Congress, and the FCC repeatedly emphasize the importance of broadband to our economic recovery and, frankly, it defies explanation that we are still fighting this market abuse,” Corbett continued. “Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.”

NoChokePoints cited four central principles of its campaign to reform the special access market: (1) the special access market is broken; (2) the outgoing Federal Communications Commission made a bad situation worse by failing to address obvious market abuse by these huge phone companies; (3) this unchecked market control continues to slow broadband deployment, compromise innovation and harm our national information economy; and (4) the resulting market failure must be corrected now.

Yes, when one or two providers get together and establish pricing for a product that is way out of line for what it costs to provide, and uses that control to further squeeze every last penny they can from customers, something should be done.

As consumers, we should agree to join the NoChokePoints coalition struggle.  There are several very credible pro-consumer organizations that support the Coalition and its goals.  And consumers like myself shall, mere seconds after:

Member BT (British Telecom) stops throttling UK customer’s broadband connections, and imposing Internet Overcharging schemes on customers through limits on their data consumption.

Member Sprint-Nextel agrees that consumers should be able to request temporary suspension of their wireless data account, currently limited to 5GB of consumption per month, the moment the limit is reached to avoid the potential of paying overlimit fees, if/when applicable.

TW Telecom gets a pass here as they are entirely independent from Time Warner Cable.

Internet Overcharging schemes, monopolistic control, abuse of market pricing, and other anti-competitive behavior should be confronted.  But companies engaged in problematic behavior themselves should not anticipate a great deal of consumer compassion towards their plight, when those consumers often are on the receiving end of that problematic behavior themselves.

Verizon FiOS, the fiber to the home service from “the phone company” in many areas around the country, today formally announced it was increasing broadband speeds for customers to provide them with better service.  FiOS often provides the fastest Internet speeds in the markets they serve, prompting speed, service, and occasionally even price wars wherever Verizon competes with cable companies.

Verizon’s strong competition makes cable think twice about conducting Internet Overcharging experiments with talk of limits, tiers, and other anti-competitive, anti-consumer pricing.

“From its inception just five years ago, Verizon FiOS has transformed the American broadband and home-entertainment experience by delivering innovative services that our competitors can’t match,” said Mike Ritter, chief marketing officer for Verizon Telecom. “Today FiOS leaps forward again with faster two-way broadband speed options that free customers to fully participate in today’s interactive, multimedia Web.”

Verizon is doubling-to-quadrupling the upstream connection speeds and increasing the downstream connection speeds of its most popular FiOS Internet offerings. The company has raised the connection speed of its entry-level FiOS Internet service from 10/2 megabits per second (Mbps) to 15/5 Mbps, and has raised the connection speed of its flagship, mid-tier offering from 20/5 Mbps to 25/15 Mbps. In New York City, on Long Island and in other New York City suburbs, FiOS Internet is even faster with a new entry-level connection speed of 25/15 Mbps, and a new mid-tier offering of 35/20 Mbps, available only in bundles.

According to a survey of residential broadband users in the U.S. by the market intelligence firm In-Stat (“US Broadband Speeds on the Rise,” In-Stat, Feb. 2009), the average upstream connection speed used by cable broadband customers is 2.68 Mbps. Verizon is offering speeds two-to-seven times faster than this typical cable upload speed.

Verizon’s standard service plan offers new customers in many areas some dramatic improvements, leaving services like Time Warner Cable and Comcast in less competitive areas in the dust:

Verizon FiOS Standard Service (outside of NYC/Long Island) (was 10Mbps/2Mbps) is now 15Mbps/5Mbps
Time Warner Rochester Standard Service remains 10Mbps/384kbps
Price per month $45 (TWC charges $5 less if you are a cable customer)

Verizon FiOS (‘Faster’ Plan) (outside of NYC/Long Island) (was 20Mbps/5Mbps) is now 25Mbps/15Mbps
Time Warner Rochester Turbo Plan remains 15Mbps/1Mbps
Verizon plan is $65 per month, Time Warner Turbo is cheaper but has much slower upload speeds, and runs around $50 a month.

The new speeds are available to new customers or those existing customers who wish to upgrade to a new contract with Verizon (one year term commitments are common for FiOS).  But customers who sign up for a bundle package of telephone, broadband, and video service will also receive a free Flip Ultra Camcorder or Compaq Mini Netbook.

Of course, where Verizon FiOS does not compete, expect more of the same from incumbent providers, who continue to contemplate ways to extract more money from customer’s wallets for the exact same, comparatively slow service.

Time Warner Cable’s Rochester, New York division has been playing hardball in Frontier Communications’ largest metropolitan service area for years, running ads that attack Frontier’s term contracts, inconsistent broadband speeds, hidden “extras”, and the fact customers might sign a contract today and be dissatisfied with the service tomorrow.

This morning, Time Warner Cable upped the ante with new ads, telling Frontier’s Rochester area customers who would prefer phone or broadband service from the cable company that they’ll cover up to $200 in fees Frontier charges for exiting a term contract early.

[flv]http://www.phillipdampier.com/video/TW-Frontier Ad War 6-22-09.flv[/flv]

There is, of course, the fine print:

Offer expires 6/26/09.  Up to $200 one-time credit available to current Frontier phone and/or DSL customers in a contract with a disconnect penalty who provide their Frontier bill evidencing early disconnect charge.  Credit will be applied to Time Warner Cable account after customer is installed with Digital Phone Nationwide and/or Road Runner Standard Service and within two weeks after customer supplies copy of Frontier bill to TWC showing the applicable cancellation penalty.  Credit will be equal to the amount of the early disconnect charge, not to exceed $200.  One credit per qualified household.  Customer must keep TWC services for a minimum of 12 months or the up to $200 credit will be charged back to their TWC account.

What Time Warner Cable has just effectively done is to get the subscriber out of one term contract with Frontier, and into another… with them.

AT&T’s pushback on Rep. Massa’s consumer protection legislation brought quite a reaction when it invoked the vision of “grandma” overpaying for her broadband account.  The Contact form here got a workout well into this afternoon, from upset grandmothers who attack AT&T for presuming they couldn’t spot a raw deal when they saw one:

Irene from Austin:

AT&T thinks they are so smart about getting us to believe them.  I’ve got five grandkids and raised four daughters and one son.  If they couldn’t pull a fast one on me, AT&T sure can’t. God didn’t put me on this earth to be stupid or He wouldn’t have given me a brain.  I don’t use that much Internet myself, but when the kids come over, the computer is the first thing they head for, and they’re doing everything on it. Heaven help people who don’t know about this hot air meter they want to stick us with, because they’ll be blown over when the bill comes. I’m not buying this one bit.

Dee from Thomasville, North Carolina:

I told Time Warner Cable they could come get their boxes and wires out of my house the minute they wanted to run this plan on us. Who do they think they are fooling. We grandmothers know a ripoff when we see one. I’d tell AT&T the same darn thing. Come and get your things out of my house. I’d rather not have it at all than pay even more than I do now.

“AT&T Granny” from Kernersville, North Carolina:

If Ma Bell were still alive, she’d take these greedy people out to the woodshed and set things right.

Ann from Perinton, New York:

I have their economy plan from Time Warner already.  It works just fine.  I don’t believe a word cable companies say. All they know is “price increase” and we just paid them another rate increase in February. I’m insulted by AT&T [that] thinks grandmothers like myself would be dumb enough to fall for their scams.  Now grandfathers might be something else, which is why I pay the bills in this house. When these cable companies want to let me choose what channels I want then tell me about their “fair” plan.  When cable companies and governments come to you with something called a fair plan, you know what to do. We live in New York and know better! Keep doing the right thing.

Nancy in Oklahoma:

I’m 77 years old. I’ve hated the darn phone company for 50 years. It’s always one lie after another with these people. It’s all about the money. How do they expect people to pay the bills they already get? Now these same companies want to get our tax dollars for Obama’s broadband, and then overbill us for more money? Never trust phone companies. They are almost as bad as those crooks in Washington. Not one of my children or grandchildren would work for AT&T. Where are the honest American companies that used to give you a good service at a fair price? I’ve learned a lot of things since my son gave me a computer and brought the Internet to me. But if they start telling me I have to worry about extra fees and meters to watch, I am getting rid of it. The Internet is not a credit card company.