A “disruptive market force” in France’s mobile phone market has turned an expectation of fat, easy, and fast profits on its head as companies scramble to slash prices to meet the challenge of a new player in town.

That “disruptor” is Free Mobile, owned by French broadband service provider Iliad.  In December, Iliad’s Xavier Niel delivered an early warning shot to other cell phone providers in France:

“Start cutting your prices! We are coming. Go away this weekend, rethink your marketing strategy and that way you might have a chance to continue existing.”

Evidently they were not listening, or did not believe Niel.

In January, Free Mobile arrived with prices shocking to a French market used to paying much more.

For $26.50, Free Mobile delivers a plan with unlimited calling, messaging, 3GB of mobile data and free international calls to 40 countries in North America and Europe.

The nearest comparable plan, Orange France’s “Sosh,” charges more than $66 for a similar range of features.  That’s more than double the price.

“Up until now you have been cash cows,” Niel said during a press conference introducing the service. “Now you can either call your current operator and ask for the same price or join us.”

The French people are doing both. Panicking operators that have lived happily on fat profit margins made possible by a generally uncompetitive marketplace were shocked out of their complacency and have begun lowering their own prices as customers threaten to leave for Free Mobile.

La Poste Mobile for example, which has about 550,000 customers, announced three new plans that start at prices comparable to Free Mobile, but include a subsidized phone — something Free Mobile does not offer.  Instead, Free Mobile splits any upfront equipment costs into installments which run the length of the contract, up to 24 months.

Other companies are turning to their marketing departments to solve the problem, resulting in some wild marketing claims that play fast and loose with the facts. Curious about Clientverge? Learn all about them here. French consumer group UFC-Que Choisir has heavily criticized a handful of providers that claim to provide unlimited calling and texting but then limit call time to 200 hours per month in the fine print.

Free Mobile’s offer has resonated across France and at least 1,000,000 people signed up in January, overwhelming the country’s number portability system allowing customers to change providers and keep their current phone number.  The overwhelming majority of Free Mobile’s customers come from other carriers.  Sixteen per cent switched from Bouygues Telecom, 22 per cent from SFR and 30 per cent from Orange France, with most of the rest switching from resellers who lease airtime from the three largest providers in France.

Financial analysts opine that if Free Mobile is here to stay, it will have a major impact on the French mobile marketplace, first on resellers that offer service delivered over other companies’ networks.  French unions fear their workers will pay the price as providers protect investments and management perks.

CGT, SUD and the CFE-CGC suggest wage and job cuts for workers will come as companies look for savings to offset their profit losses.  One report predicted as many as 10,000 job cuts in the mobile industry in the future.

Ironically, while Iliad, a French broadband provider, has challenged the French mobile market and has brought price savings to consumers, American cable companies capitulated on competition, selling their wireless spectrum to the country’s largest wireless company, Verizon Wireless.  Additionally, American cable and phone companies have agreed to market their products together in bundle offers, potentially eliminating any serious competition between them.

AT&T increases upgrade fee. (Photo courtesy: Engadget)

AT&T has announced it is doubling the price of its equipment upgrade fee, now charging $36 when a customer activates a new phone on their wireless account.

Our regular reader Scott sent word AT&T raised the upgrade fee Feb. 12, from $18 to $36, to “cover their costs. ” The fee now matches that charged by Sprint.

From AT&T’s official statement:

Wireless devices today are more sophisticated than ever before. And because of that, the costs associated with upgrading to a new device have increased and is reflected in our new upgrade fee. This fee isn’t unique to AT&T and this is the first time we’re changing it in nearly 10 years.

Wireless companies in North America encourage more frequent phone upgrades because of their business model: pitching subsidized phones in return for a two-year contract commitment, along with higher-priced service plans which gradually recoup the cost of the subsidy.

Consumers who hang on to their phones longer than two years continue to pay higher prices for service plans designed for those who always upgrade phones every two years at contract renewal time.  Phone companies also prefer customers who live under a term contract because they are less likely to switch providers.

In the past, loyal customers not only received extra incentives and discounts when they renewed their contracts, they also had these kinds of service fees waived.  No more.  Most companies have discontinued extra upgrade discounts for existing customers and increasingly refuse to waive service and equipment fees.

Broadband life in Frankford, Greenbrier County, W.V. may be slow, but few customers of Frontier Communications thought things could get even slower.  And then they did.

Stop the Cap! reader DJ has been frustrated with the performance of his phone company — Frontier, that took control of Verizon’s landline network across the state.  Verizon rarely got the hopes up for customers waiting more than a decade for broadband service to reach them.  Dana Waldo, Frontier’s senior vice president and general manager did, telling West Virginians Frontier would propel the Mountain State from its current rank of 47th in the country to the top 5.  Achieving that goal seems unlikely when the company quietly reduces some customers’ broadband speeds.

“We are on the High Speed Max plan which gives us, or should I say gave us 3.5Mbps,” DJ shares.  Although his phone line supported that speed, Frontier’s congested network could not, especially at night when speeds dropped dramatically.  It took several months for Frontier to upgrade local facilities in the county to better manage the broadband demands of customers who pay $110 a month for DSL and phone service.

Frontier representatives promised the Pocahontas Times further upgrades were on the way by February of 2011, DJ says. February came and went and promised speeds of 5Mbps never arrived and Frontier representatives told DJ they didn’t know a thing about a 5Mbps broadband plan.

Fast forward to last spring: Frontier’s website suddenly advertised speeds up to 12Mbps.

Frontier's Mysterious Upgrade List

“I first contacted them through their Twitter account and was told I could receive 8Mbps, went through all the processes and a few days later I was told I [already] had the maximum speed available for my area and nothing was ever done,” DJ writes.

The Phantom “Network Upgrades” List

More discouraging to DJ was the surprise appearance of a Network Upgrades listing on the company’s website that again promised better days for customers in states like West Virginia.

“The geniuses at Frontier listed us as Frankfort instead of Frankford but either way we were listed to get upgrades at the end of [this past] November,” DJ says. “The date came, the date passed. Never once did I see a Frontier truck out working. I still found myself [with] 3.5Mbps and after being lied to about upgrades for the third time in a few years I was ticked.”

Frontier representatives would later wonder where DJ obtained the Network Upgrades list, which has since disappeared from the company’s website.  Stop the Cap! has an archived copy here (PDF).

The worst part of DJ’s story came on Jan. 24, when Frontier reduced his speed from 3.5Mbps to 1.3Mbps without notice or explanation.  Frontier, the phone company that provides free speed decreases for customers, is not part of any marketing plan DJ knows about, so he began calling the company for answers.

“I was told my speed would be fixed when “upgrades” were complete,” DJ reports. Later that day, after a series of complaint calls, his old speed returned, leaving him right where he started in 2010.

“There is no excuse for that kind of treatment and it has been going on for years,” DJ says. “It’s a shame we can’t get anything else; Suddenlink literally stops serving just down the road with 10Mbps service — sad.”

[Updated 3/26 2:31pm ET:  Changed piece to reflect unincorporated Frankford is actually in Greenbrier County, not Pocahontas.]

Diana Thibodoux documents Comcast's shoddy work in her rented home.

The city of Savannah, Georgia is at the mercy of Comcast Cable, and city officials and local residents are fed up with high bills, the “don’t care” attitude from customer service, and cable and broadband that fails repeatedly, sometimes extending for weeks.

The fervor came to a head in December when city council had accumulated more than 150 complaints from local residents, deciding public hearings were warranted to deal with the city’s dominant cable company, Comcast.

“Comcast Destroyed My House”

Diana Thibodoux called Comcast to deal with a cable issue in her Ardsley Park home and never expected the service call would turn into an expensive nightmare.

Thibodoux says the Comcast technician who showed up decided on his own to rewire the house for cable and began drilling through brick and expensive plaster, stringing easily visible black coaxial cable along outside walls, inside baseboards and up over doors, all in plain sight.

“My house looks like a frat house,” Thibodoux complained to Comcast officials who were on hand to listen to customer complaints at the first of four public “town hall” meetings.

“I’ve never dealt with a company so incompetent,” another local resident said.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WTOC Savannah Ive never dealt with a company so incompetent 2-6-12.mp4[/flv]

WTOC in Savannah shares the horror story of Diana Thibodoux, who says Comcast destroyed her house thanks to an overzealous, incompetent repairman.  (3 minutes)

At least everyone knows she has cable.

Residents used the public sessions to vent about long hold times which can extend to as much as two hours, poor quality service, and what city officials call the predictable outcome of a company that has “a stranglehold” over Savannah’s cable TV market.

“Comcast has treated Savannah like a third world country for years, delivering the best service to the wealthiest neighborhoods while leaving cable lines dangling on the ground in the areas they don’t care about,” said Stop the Cap! reader Jenny Child, who has kept a folder of papers documenting more than a dozen service calls regarding poor Internet service at her small business.

“If it rains in Savannah, and it does so a lot, our Internet goes out,” Child complains. “We have called and called but the technician shows up when it is bright and sunny and shrugs his shoulders and says there is no problem.”

Child and her two employees now handle their online business activities based on local weather forecasts.

“If the man says we’re getting rain today, we handle our Internet things real quick, because as sure as I’ll be in church on Sunday, we won’t have service after the first drops fall from the sky,” she says.

Child keeps calling Comcast when her Internet service drops out, but long hold times to reach the company’s outsourced-to-India customer service department have cut into her business.

“I can’t be sitting here on hold with Comcast for 45 minutes waiting for some representative’s nails to dry so she can pick up the phone and deal with customers,” Child complains. “It’s the biggest cable company ever, and don’t they own NBC? How many people do they have working there that they can’t answer the phone. Maybe everyone else is calling to complain too.”

Comcast’s Business Broadband Blockade Prompts Whining When Potential Competition Shows Up

Hargray is wiring downtown Savannah with fiber broadband to serve long-neglected area businesses

While fielding complaints from more than 50 local residents at a second meeting held to address complaints, Comcast executives questioned whether the city of Savannah was giving favorable treatment to Hargray, a new entrant pushing to bring 21st century broadband into the city of Savannah for businesses Comcast has refused to serve for years.

Comcast complained they didn’t mind competition, but wanted “a level playing field,” a statement that prompted an immediate and angry response from some members of the city council, who blasted the cable company for its attitude.

Aldermen Tony Thomas, John Hall, and Tom Bordeaux all noted Comcast has steadfastly refused to wire many downtown business buildings for cable broadband service, despite years of requests.  Comcast claimed the relatively low number of customers did not justify the cost to expand the service.

Alderman Tony Thomas has championed the ongoing dispute with Comcast Cable on behalf of local residents.

All three could not understand why Comcast had a sudden urgency to complain about unfair treatment when a competitor sought to provide the service they never did.

“If [Comcast] did not want to offer that service previously and someone else is coming in to provide the service, where is the sticking point?” Thomas said.

Bordeaux was more blunt in his remarks intended for Comcast.

“Tell them to sue us,” he said.

In contrast to service from AT&T and Comcast, which often markets 3-6Mbps broadband in Savannah, Hargray’s fiber broadband project will deliver speeds up to 1Gbps, first to business customers. But the company promises it is considering selling to residential customers as well.

Great Deals, But Only for “Selected Neighborhoods”

As Comcast’s bad press has become fodder for the nightly newscasts on several of the city’s television outlets, Comcast literally took to the streets to try and mitigate their public relations nightmare. In the process, they created a new one.

Councilman Tony Thomas is happy Comcast is approaching upset customers and offering them substantial discounts on their cable bill.  But he’s not happy Comcast is only extending those deals to certain customers, not all.

Thomas wants the deals offered to everyone, something that he says is not happening today.

(Courtesy: Ted Goff/newslettercartoons.com)

Andy Macke, Comcast’s Vice President of Communications counters, “All they have to do is call 1-800-COMCAST and they will hear the same deals that the same people are getting from those reps going from door to door.”

“Comcast’s attitude in Savannah is see no evil, hear no evil,” says Jeff White, a Comcast customer who has watched the scuffle. “They don’t even admit there is a problem until it runs on the evening news and city council waves 150 complaints they are getting at the camera — the ones Comcast ignored.”

Macke himself told WJCL-TV, which has covered the dispute with Comcast repeatedly, he was “unaware of the extent of the concerns that our Savannah customers had with us.”

Despite promises to make things right, Alderman Thomas says many complaints are still unresolved.

“We were told that all of those folks had been contacted and that their problems were being worked on. I have since found a few of these people [who] have had no contact whatsoever with Comcast,” Thomas told the TV station.

“Under no circumstances should City Council let the situation with Comcast get pushed under the rug,” one person wrote in the Vox Populi column in the Savannah Morning News. “We the people need help!”

No Help On the Way

Unfortunately for that reader, and other Savannah residents, an attempt by Savannah city officials to attract competing cable service has met with no success and no interest.  Cable operators almost never compete head to head, each respecting the service areas of fellow providers.  Hargray’s interest in Savannah is primarily serving business customers, and the option for municipal service may not be possible much longer if a bill supported by Comcast, SB 313, ever becomes law.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Comcast in Savannah 2-8-12.flv[/flv]

A compilation of news reports from WJCL, WSAV, and WTOC exploring Comcast’s performance problems in the city of Savannah, Georgia.  (15 minutes)

Georgia's broadband map shows just a smattering of 50Mbps broadband. That is half the speed required to attract new businesses, says the IEDC.

Suffering the Great Recession blues?  As communities continue to face the loss of manufacturing, heavy industry, and textile jobs to overseas outsourcing, local economic development specialists have discovered one of the most effective ways to lure new high-tech industry into areas hard-hit with job losses is the availability of cheap, plentiful, and fast broadband.

• 42% believe that that 1Gbps is the minimum speed needed to lure new businesses.
• 35% believe the minimum must be at least 100Mbps.
• Rural economic developers appear to be well ahead their urban counterparts in the area of planning. 58% of rural respondents either have broadband strategies and tactics worked into their economic development plans or are writing plans with these elements. Only 39% of urban respondents have done the same.
• 92% see no benefit from the FCC’s minimum broadband standard of 4Mbps, defined largely to suit telephone company DSL service common in rural areas.

Why are rural economies benefiting from better broadband planning? Because in the absence of commercial providers willing to provide the service, an increasing number of small towns and cities are building their own municipal networks to get the job done themselves.  Those networks are routinely superior to the facilities provided by most cable and phone companies serving less populated areas.

Community broadband is working in Wilson and Salisbury, N.C., where a transition from a textile/tobacco-based economy into higher-tech knowledge economy jobs required state-of-the-art broadband as a foundation.  Chattanooga, Tenn.-based EPB Fiber has already attracted dot.com giants like Amazon.com, creating hundreds of millions in local investment and thousands of new jobs.  Why Chattanooga?  Gigabit broadband for just a few hundred dollars a month is just one phone call away.

Relying on commercial providers to build 21st century broadband as a platform for economic transformation has delivered uneven results, especially outside of the largest cities. Large cities traditionally get most of the provider’s time, attention, and upgrades.  Smaller, more out of the way places often see little or nothing.

That is why this year’s latest push in Georgia and South Carolina to tie the hands of communities trying to remake themselves with modern broadband is so risky. While AT&T and the cable companies may position their argument as “protecting consumers,” in fact they are only protecting their own interests, even if it means the next Amazon.com distribution facility or Google data center finds a better home somewhere else.

Updated 3:55pm ET: We added a link to the full report, with appreciation to the author.