Stop the Cap! readers will recall we pulled the plug on Frontier Communications with the disconnection of our landline back in early February.  After at least 25 years doing business with Rochester Telephone Corporation, later Frontier-Global Crossing, later Frontier-Citizens Communications, we had enough.  Frontier Communications has done nothing of merit for the metropolitan Rochester, N.Y., area since the late 1990s.  Their DSL broadband service is handily beaten in quality, reliability, and price by cable competitor Time Warner Cable, and Frontier’s lack of willingness to invest in something better for their largest service area of nearly one million people in western New York has left us cold.  After a one week experiment with Frontier’s DSL service in 2009, we dropped the service like a hot potato after it achieved an underwhelming 3.1Mbps in the town of Brighton, less than one mile from the Rochester city line.

In early February, our last remaining service — the landline — was transferred to Time Warner Cable.  But even on the way out the door, Frontier continued to disappoint.  After more than two months (and two invoices later), Frontier had still not refunded our credit balance of $26.09.  We’re a long way from Rochester Telephone, a well-regarded predecessor to Frontier which traditionally enclosed a refund check with the final bill.  Frontier makes you wait, and wait, and wait some more, reminding you they owe you money with repetitious “do not pay – credit balance” invoices for long-terminated service.

More than two months after disconnecting service, our refund check finally arrives!

On Monday, the refund check finally arrived, in an obscure envelope resembling one of those PIN reminders banks send you.  After tearing away three sides of perforated strips, there it was — $26.09 from Frontier Communications.

The long wait is hardly a random glitch.  Stop the Cap! covered the story of a Frontier customer in California who waited several months for the phone company to refund her just over $15, and just this evening we heard from one of our regular readers in Rochester disappointed by Frontier’s hardly-rapid refund policy.

The only good news is that we weren’t overbilled on the way out the door, as one Elk Grove, Calif. customer was — to the tune of $680.

To Frontier we say goodbye and good luck (and we’ll be cashing that check faster than you sent it).

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Your cable company has a problem.  Collectively, the cable industry has lost more than 2 million video customers over the past year, and the problem may be getting worse.  Some of the largest cable companies in the United States are making excuses for the historic losses:

• The bad economy
• Housing and foreclosure crisis
• High unemployment
• Family budget-cutting

But cable companies should be rethinking their excuses, according to a new report from Strategy Analytics.

“Throughout the past seven consecutive quarters of subscriber losses, the inclination of cable has been to point the finger at various external factors,” said Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics service. “Our analysis shows that neither the economy nor the housing market is to blame for these subscriber defections. The problem is one of value perception.”

Value perception.  That’s a measurement of whether or not one feels they are getting good value for the money they pay for a product or service.  Value comes in several different forms, starting with emotional — do I feel good, safe, secure, or nostalgic using the service?  Can I imagine life without it?  What about my friends and family — will I stand out if I am not buying this product?  It’s also practical — Can I afford this?  Can I find a cheaper or better alternative?  Do I really need this service anymore?

Tied into value perception is customer goodwill.  If you have an excellent experience with a company, letting go of their products comes much harder.  If you feel forced to deal with a company that has delivered poor and expensive service for years, pent up frustration will make it much easier (and satisfying) to cut them loose at the first opportunity.

Embarq used to be Sprint's pathway to prosperity in the local landline business, until cord cutting put landlines into a death spiral.

In the telecommunications industry, value perception is a proven fact of life.  It began with phone companies.  Formerly a monopoly, landline providers have been forced to try and reinvent themselves and become more customer-friendly.  First long distance companies like Sprint and MCI moved in to deliver cheaper (and often better quality) long distance service.  Sprint even got into the landline business themselves, forming EMBARQ, which at its peak was the largest independent phone company in the United States.  When Voice Over IP providers like Vonage and the cable industry’s “digital phone” products arrived, they promised phone bills cut in half, and introduced the concept of unlimited long distance calling.

The value perception among consumers became clear as they began disconnecting their landlines.  The alternative providers offered cheaper, unlimited calling services, often bundled with phone features the local phone company charged considerably more to receive.  Even though VOIP is technically inferior in call quality in many instances, the value the services provided made the decision to cut the phone cord easier.

But local phone company landline losses would only accelerate with the ubiquity of the cell phone, but for different reasons.  What began with high per-minute charges for wireless calls evolved into larger packages of calling allowances, with plenty of free minutes during nights and weekends, and often free calling to those called the most.  Most Americans end the month with unused calling minutes.  As smartphones gradually take a larger share of the cell phone market, the accompanying higher bills have forced a value perception of a different kind — ‘I can’t afford to keep my landline –and– my cell phone, so I’ll disconnect the landline.’

The cable industry has traditionally faced fewer competitive threats and regularly alienates a considerable number of customers, but still keep their business despite annual rate increases and unwanted channels shoveled into ever-growing packages few people want.

This pent up frustration with the cable company has led to perennial calls for additional competition.  That originally came from satellite television, which involved hardware customers didn’t necessarily like, and no option for a triple play package of phone and broadband service.  The cable industry offers both, and by effectively repricing their products to discourage defections from bundled packages, customers soon discovered the resulting savings from satellite TV were often less than toughing it out with the cable company.

As a result, satellite television has never achieved a share of more than 1/3rd of the video market.  Many satellite customers are in non-cable areas, signed up because of a deeply discounted price promotion, were annoyed with the cable company, or didn’t care about the availability of broadband or phone service.  When the price promotion ends or technical issues arise, many customers switch back to cable.

More recently, researchers like Strategy Analytics have discovered some potential game-changers in the paid video marketplace:

• The impact of broadband-delivered video content
• The Redbox phenomena
• Competition from Telco TV
• The digital television conversion

Strategy Analytics studied consumer perceptions and found customers braver than ever before about their plans to cut cable’s cord.  According to the consumers surveyed, nobody scores lower in value perception than cable companies.  Citing “low value for money,” over half of the cable subscribers surveyed told the research firm they intended to disconnect their cable TV package in the near future.

While other researchers dismiss those high numbers as bravado, there are clear warnings for the industry.

“Much ink has been spilled on the topic of cord cutting and even skeptics are now admitting that it can’t be ignored,” said Piper.

Indeed, Craig Moffett, an analyst with Sanford Bernstein who almost never says a discouraging word about his beloved cable industry, told Ad Age Mediaworks the issue of cord-cutting was real.

“It’s hard to pretend that cord cutting simply isn’t happening,” Moffett said.

Craig E. Moffett, perennial cable stock booster, even admits cord-cutting is real.

The most dramatic impact on the cable industry has been in the ongoing erosion of the number of premium channel subscribers, those willing to pay up to $14 a month for HBO, Cinemax, Showtime, or Starz!.  The reason?  Low value for money.  As HBO loses subscribers, Netflix and Redbox gain many of them.  Netflix still delivers a considerable number of movies by mail, but has an increasingly large library of instant viewing options over broadband connections.  Strategically placed Redbox kiosks deliver a convenient, and budget-minded alternative.

The loss of real wage growth, the housing collapse, and the down-turned economy do put pricing pressures on the industry, but some cable executives hope the time-honored tradition of customers howling about rate increases without ever actually dropping cable service continues.

But as new platforms emerge, some delivering actual pricing competition to the cable TV package, increasing numbers of customers are willing to take their video business somewhere else.  Some are stopped at the last minute with a heavily discounted customer retention pricing package, but that doesn’t keep them from sampling alternative online video options.  Among those who actually do leave, some are satisfied with the increased number of channels they get for free over-the-air after America’s digital television conversion.

Many others are switching to new offerings from telephone companies.  Both AT&T and Verizon deliver video packages to many of their customers, often at introductory prices dramatically lower than their current cable TV bill.  When considering a bill for $160 for phone, video, and broadband from the cable company or $99 for the same services from the phone company, $60 a month in savings for the first year or two is quite a value perception, and the inevitable disconnect order is placed with the cable company.

Ad Age‘s own survey, more skeptical about cord-cutting, confirmed that many former cable TV customers left for budgetary reasons, but many also kept their triple play packages.  They just bought them from someone else.

Also confirmed: a dramatic upswing in online viewing, sometimes paid but often ad-supported or free.

Strategy Analysts concludes in its report, available for $1,999, that the ongoing erosion of cable TV subscribers isn’t irreversible, but it requires urgency among providers to become more customer-friendly and increase the all-important value perception.

In other words: respecting the needs and wishes of your customers.

Thankfully, the cable industry is dealing with competitors like AT&T, who are willing to assassinate their current lead in value perception by slapping Internet Overcharging pricing schemes on their broadband service.  That will certainly raise the ire of their DSL and U-verse customers, many who are treating the customer unfriendly usage limits as an invitation to leave.  Their former cable companies are waiting to welcome them back.  The real question remains, will cable customers now be treated better?

Fast is in the eye of the beholder

Obtaining broadband in rural America can be a real challenge, but few rise to the occasion more than Stop the Cap! reader Paul, who lives in Blaine, Tenn.  Paul so wanted broadband service, he was willing to pay for his own telephone poles and equipment to get Frontier Communications to provide him with DSL service, even though he technically lives in AT&T territory.

Paul’s saga, documented on his blog, began in 2009, when his satellite fraudband provider Optistreams could no longer manage reliable uploading of images and maps for his employer, despite the fact he was paying nearly $150 a month for the service.  Satellite providers are having a tough time providing customers access to an increasingly multimedia rich Internet.  With low usage caps and ridiculously low speeds, most satellite customers we’ve heard from report their experiences to be frustrating, at best.  For Paul, in rural Grainger County, it had become intolerable. Verizon, the best possible wireless option, delivered one bar to the farm country Paul lives in — unsuitable for wireless data service.

Paul called his local phone company, AT&T, and inquired about when the company would extend its DSL service to his part of Blaine.

AT&T answered Paul succinctly:  “[We will] never provide DSL within 20 miles of your location.”

Paul’s property is situated right on the boundary between AT&T and Frontier Communications’ service areas.  AT&T provides service at Paul’s home, but Frontier Communications’ territory starts just 1,400 feet away, on the other end of his property.  In-between is a telecommunications no-man’s land.

Paul pondered emigrating his service from the Republic of AT&T to the Fiefdom of Frontier, which does offer DSL nearby.

Paul lives in Grainger County -- a Frontier Communications territory surrounded by the former BellSouth, today owned by AT&T.

AT&T told Paul he could leave them anytime he liked, taking his broadband business to Frontier.  Besides, nothing precluded him from doing that with or without AT&T’s consent, informed AT&T’s Eastern District Counsel.

Declaring allegiance to Frontier would be no easy matter, however.  Would Frontier allow him to settle down as their broadband customer?

“After a bunch of arguing with Frontier District Manager Mike Bird he sent District Engineer John Simpson out to my home,” Paul says.  “Simpson informed me that I was in AT&T territory and that ended all conversations.  I stated that AT&T had advised they had no problem and further there was no government regulation.  Didn’t matter I was told, that was that.”

Few, if any phone companies will agree to trespass on another provider’s turf, except under the most special circumstances.

Paul contacted Sen. Bob Corker (R-Tenn.) to escalate the matter, and followed up with an official complaint to the Federal Communications Commission.

Federal agencies like the FCC become particularly responsive when a United States Senator is involved in monitoring the dispute.  AT&T responded to the complaint telling the Commission Paul had effectively fled their service area and was now a customer of Frontier Communications.  Frontier ignored the FCC initially, and instead sent Paul a letter affirming they would be willing to provide him with DSL, but at a “go away” installation price of $10,000.

When providers confront unprofitable customers difficult to serve, it is often easier to give them a sky high installation price with the hope it will discourage them from pursuing the matter.  Frontier claimed the costs of running infrastructure to reach Paul would amount to $9,977.44 — check or money order, please.

From Gregg Sayre, Frontier’s Eastern Region Associate General Counsel:

“As you know, you are in the service territory of AT&T.  AT&T is correct that we legally can provide service to you outside of our local service territory.  Unfortunately, the cost of serving you… if fully absorbed by Frontier, would overshadow the potential profits.  …In this case it does not make economic sense for us to undertake a line extension at our expense into AT&T’s service territory to reach your location, and the law does not require us to do so.”

“I countered with the fact that we would run the poles along the roadway and they could pay our pole attachment agreement.  They balked,” Paul writes.  “We, in turn, stated we would bring our own infrastructure to them underground and across a friend’s farm and did such for a quarter of the price.  This included running our own network interface at their pole and our house.”

In the end, Paul paid out of pocket for 1,600 feet of direct burial cable running across two farms and a county road.  He assumes responsibility of his cable, Frontier is responsible for the network from their pole back to the central office.

After the robust investment in time, money, and energy, what Paul ended up with wasn’t worth a dollar:

Frontier DSL in East Tennessee: 205kbps/142kbps

That’s worse than most satellite providers.

In fact, Paul has documented much of the time he is without any service at all — offline at least 38 of the last 50 days.

“Our average speed until they installed a new D-SLAM was 92kbps down and 125kbps up,” Paul writes.  It wasn’t just a problem for him.  Among Frontier’s loyal subjects already a part of their service area, customers also reported similar slow speeds.  Paul organized a door-to-door campaign to bring a united front of complaints to company officials.

Paul notes the local Frontier technicians have been responsive and understanding, but Frontier officials higher up are simply dragging their feet on needed upgrades.  Finally, $200 in service credits later, Frontier is promising to install a fiber cable to reduce the distance between the central office and the more distant points in the exchange where Paul and his neighbors live.  While that might help bring Paul’s speeds up, Frontier is notorious for overselling their network, leaving customers in large regions with slow service at peak usage times.  This has particularly been a problem in nearby West Virginia.

Paul says Frontier is largely unresponsive to individual complaints.

“I racked up well over 170 repair tickets in six months,” Paul shares.  “I organized my rural area and we hammered their call center. Did that do anything? Well, I can’t honestly say it did.”

With Frontier, it takes media exposure and embarrassment or the work of individual employees willing to persistently push higher-ups to authorize real solutions to customer problems, not temporary Band-Aids.

Broadband over a telephone network that is decades old requires substantial investments to function well.  In rural areas where customers have few choices, phone companies delivering service on the cheap too often leave paying customers with a quality of service highly lacking.

AT&T Internet Rationing Board - Do More With Less!

Today should be your last day for doing business with AT&T’s DSL and U-verse services.  If you feel strongly about your broadband usage being counted and limited, it’s time to bail out of AT&T’s Internet Overcharging scheme, which took effect earlier today.

From this day forward, AT&T DSL customers are limited to 150GB of usage and U-verse customers top out at 250GB before the overlimit fee kicks in — $10 for every 50GB customers exceed the cap, billed in $10 increments. It’s classic AT&T Math, where $1.01 of usage is rounded up to $10.00.

AT&T certainly got off on the wrong foot on day one.  We’ve received more than a dozen messages today from customers who find AT&T’s usage meter offline, showing this message:

“We’re sorry, but we’re unable to display your Internet usage at this time.”

Do you think AT&T would accept that excuse if you enclosed a note telling AT&T you are unable to pay your Internet bill at this time?

On an ongoing basis, we intend to hold AT&T’s feet to the fire until they rescind this unwarranted overcharging scheme.  While company officials claim it is intended to protect their customers from a handful of “heavy users,” they also argue they have plenty of capacity for everyone.  The company cannot have it both ways.

Therefore, this week’s message to be shared with your friends and family is:

AT&T’s Broadband Network Is Not Good Enough to Handle Your Broadband Needs: Shop Elsewhere

AT&T’s wired broadband network, just like their bottom-rated wireless service, cannot handle their customers’ broadband needs.  The company proved that today by having to introduce a broadband rationing scheme, limiting customer usage.  Despite being America’s largest telephone company ISP, AT&T apparently cannot handle the traffic, telling DSL customers to lay off after 150GB and their “advanced” U-verse network customers to get offline after 250GB of use.  Evidently the company isn’t willing to invest some of their enormous profits to provide an ongoing level of broadband service their customers deserve to get, especially when compared with their closest cousin: Verizon.

“While Verizon is installing fiber optics to many of their customers’ homes and providing unlimited, blazing fast Internet service, AT&T admits through their own actions their network isn’t good enough to provide that same level of service to their customers — so now they are limiting the use of it,” says Phillip Dampier, editor at consumer group Stop the Cap! “If I was an AT&T customer, I’d shop around for an alternative provider that has a network robust enough to actually deliver the service customers pay good money to receive.”

AT&T’s U-verse service was touted to customers as delivering a next generation of broadband and television service that could provide healthy competition to cable television.

“AT&T wants U-verse to compete with the big cable companies, but usage caps tell us they can’t manage to do that,” Dampier says. “If their network is so great, why do they need to slap limits on customers?”

AT&T’s representatives claim the limits are intended to reduce congestion from a handful of heavy users, a claim that does not make sense to Stop the Cap!

“AT&T’s existing terms and conditions allow them to deal with any customers who create problems for other users on their network,” Dampier said. “Instead of expanding capacity or dealing with the so-called ‘handful’ of troublesome users, they have slapped an Internet Overcharging scheme on all of their customers.”

Stop the Cap! points out the irony AT&T has plenty of capacity for hundreds of television channels, but doesn’t have enough capacity to provide a worry-free High Speed Internet experience.

“AT&T’s U-verse has no problems finding space for more shopping channels, foreign language networks, and niche channels, but can’t find their way clear to leave customers’ unlimited Internet accounts alone,” Dampier adds.  “Their priorities are all wrong — giving you channels you didn’t ask for while taking away the service you do want.”

Bill Shock

Time Warner Cable’s fastest broadband speeds come to those willing to pay a stiff installation fee — $67.98, covering a required in-home installation.

Stop the Cap! readers have been sharing their experiences calling Time Warner to set up installation appointments for the DOCSIS 3 cable modem swap required to obtain the cable company’s top broadband speeds — 30/5 and 50/5Mbps.

Although one reader was quoted $29.99, the majority are sharing their surprise at a stiff $68 fee just to install the faster Internet experience they crave.

“I’d rather just swing by one of their stores and pick up the modem and install it myself,” writes Jon from Perinton, N.Y.  “All they are going to do is check the line — something they can do remotely — and hand me a new modem, and charge me half of my normal month’s bill for the effort.”

But it could be worse.  One downstate customer shared his experience with an even higher install fee when DOCSIS 3 was introduced in metropolitan New York: $40.95 for the truck trip and a $50.00 wireless activation fee (the new modem was part of a wireless router) – take it or leave it.

Stop the Cap! called Time Warner Cable this morning and learned there is a way to a lower price – be a new Time Warner Cable customer.  Those just signing up for cable, telephone, and DOCSIS 3 broadband service pay just $29.99 for installation of all three services, and we talked them down to $19.99 — the price charged to transfer a phone number to Time Warner’s “digital phone” service.

But they won’t budge on the $67 fee just to upgrade their existing Internet customers.

If you are still paying regular Time Warner prices, perhaps now is the time to cancel service and then return as a “new customer” under a price promotion, also scoring a dramatically lower installation fee in the process.