If you thought waiting three days for a service call was too long, you haven’t talked with Tod Robberson, editorial writer for the Dallas Morning News. AT&T has scheduled his U-verse installation 23 years from now.

Robberson has been buried in AT&T promotional mailings pushing its U-verse fiber to the neighborhood service he was ready to sign up for two years ago, but wasn’t yet available in his neighborhood. Dozens of mailings arriving this summer indicated that finally changed and he was ready to see the back of Time Warner Cable:

I phoned one day after receiving my first notice. I signed up immediately for service. The friendly sales person told me because of high demand, she couldn’t set an installation date for sooner than two weeks. Whatever. Fine. We agreed on August 19, somewhere between 9 and 11 a.m. I couldn’t wait.

Then, on August 16, they called with bad news. They needed to delay the installation for another week. Big disappointment, but I could live with it, I thought.

A week later, they called again and said there was another delay. The lines in my area needed “conditioning.” Each week since then, I’ve received a call from an AT&T person telling me about the conditioning problem. I finally offered to get out my own bottle of conditioner and do it myself. They didn’t get the joke.

Finally, today, I escalated. I talked to Gilbert in Complaints. Gilbert the Problem Solver. He heard me out. I told Gilbert that AT&T had me at hello. I was just dying to get U-verse and was very frustrated that no one at AT&T would listen. I could swear he even giggled a little when I made the “bottle of conditioner” joke. Then he did some checking around and told me that, well, truth be told, I could be waiting another year before they got around to installing my service. That’s right, one year.

Turns out that Gilbert was optimistic. I went online today with AT&T just to make sure I didn’t misread the notice I got from AT&T. Did they really tell me that service was now available? Well, I couldn’t have signed up if it wasn’t. AT&T’s system is set up to block you if your neighborhood isn’t ready.

But now, the “due date” on my installation has changed. It reads: 12/31/2036.

Dallas is home to the headquarters of AT&T and was an early adopter of U-verse. But AT&T has won the right under state law to decide when and where it chooses to deploy the service, leaving a large number of Dallas residents waiting since its introduction in 2010.

For the foreseeable future, Robberson’s tree-infested, satellite-unfriendly neighborhood is stuck with one choice for pay television and broadband: Time Warner Cable.

*-Terms, conditions, and a whole lot more applies.

Austin residents are getting spoiled with promises of gigabit broadband — the first major city in the country offered a competitive choice of 1,000Mbps Internet providers — Google and AT&T.

But one of those claiming to offer a “100-percent fiber Internet broadband network that will deliver up to 1Gbps per second,” is already fudging on that commitment before activating its first fiber customer.

AT&T’s sudden interest in selling 1,000Mbps service came as a surprise to Austin residents that have been told for years their broadband service was fast enough as is. Grande Communications had been the choice for customers seeking the fastest speeds — they sell up to 110/5Mbps for $110 a month. Time Warner Cable still tops out at 50Mbps and AT&T’s U-verse, still not fully deployed in Texas, sold up to 24Mbps ‘screaming fast’ Max Turbo service as its top offering until recently, when AT&T began limited roll-out of up to 45Mbps service.

Mere hours after Google announced Austin as its next choice for Google Fiber, “me-too” AT&T was announcing it would build its own gigabit fiber to the home network in the same city. That was a complete 180 for AT&T, which has consistently argued that running fiber to the home was an unnecessary expense. While Verizon faced the wrath of Wall Street for its decision to launch FiOS — an all-fiber-network — analysts were complaining Verizon was spending too much while AT&T was spending considerably less on its fiber to the neighborhood U-verse system that keeps existing copper wire into the home.

Right from the beginning, AT&T has always accompanied certain terms and conditions for any fiber deployment — winning equal concessions that Google received from local officials with respect to pole attachment fees, zoning, permits, and other expenses. If those were not forthcoming, AT&T could walk away from its fiber commitment at any time.

On Monday, AT&T announced it had started deploying fiber for AT&T U-verse with GigaPower, with a plan to launch in December in neighborhoods with the highest number of votes to get the service. AT&T is taking names and numbers of interested customers seeking to show their interest in fiber service. No deposit or commitment is required to vote, but you will be placed on AT&T’s marketing mailing lists.

“Austin embodies innovation and social consciousness, and is the heart of a vibrant, ever-evolving tech culture and entrepreneurial spirit,” said Dave Nichols, president of AT&T Texas. “With our all-fiber U-verse services, we are building the foundation for a new wave of innovation for Austin’s consumers, businesses, and civic and educational institutions. It’s about engaging the full community and empowering the city and its people with all that technology can offer us. This investment will help attract new business and new jobs to Austin.”

Phillip Dampier

As long as those consumers, businesses, and jobs are within the first deployment zone for AT&T’s fiber network.

For the rest of this year and well into the next, that will be a very exclusive neighborhood.

AT&T’s press release claims it will “initially reach tens of thousands of customer locations throughout Austin and surrounding areas this year, with additional local expansion planned in 2014.”

The five-county Austin–Round Rock metropolitan area has a population of 1,834,303 residents. Assuming AT&T managed to offer fiber service to 100,000 residents — and that is a generous figure, that represents only 5.5% of Greater Austin. The old U-verse is still a work in progress in several Texas cities, so it could take years for AT&T to deploy fiber in Austin. Expect AT&T to start with the low-hanging fruit — multi-dwelling units such as apartments, condos, and other similar buildings, some that already have existing fiber connections in place.

AT&T may never get around to offering fiber to more rural locations in Austin’s suburbs: “There are many factors involved in stringing an advanced fiber network, so having your neighbors vote to be notified about U-verse with GigaPower is no guarantee we’ll get to your neighborhood first, but it does give us some idea of where we want to focus our efforts; and besides, things are always more fun when we work together.”

AT&T is already backing away from its commitment to offer gigabit service, at least initially.

“The December launch will initially feature symmetrical speeds of up to 300Mbps, […] with an upgrade to speeds up to 1 Gigabit per second when available in mid-2014, and at no extra cost,” AT&T writes in its press release.

Speaking of cost, nobody at AT&T is willing to give us one for the 1,000 300Mbps launch tier.

If AT&T is smart, it better set it lower than what Google is likely to charge, considering AT&T will initially only deliver less than 1/3rd of the promised gigabit speed.

While thinking about that, AT&T might also want to dump usage caps. The fastest U-verse tiers come with a 250GB usage allowance, which can really crimp a screaming fast fiber experience once your allowance runs out.

Frontier Communications believes it can win back disconnected customers, many taking their business to competing cable companies, with marketing offers that avoid tricks, traps, and hidden fees.

Frontier executives told investors on a recent quarterly results conference call that the phone company was adding new broadband customers poached from local cable operators, unusual as DSL market share has eroded in favor of cable broadband.

“A lot of folks in [the markets we inherited from Verizon] took cable because that was the only game in town, and it didn’t mean that they liked their cable operator,” said CEO Maggie Wilderotter. “We did surveys in these markets, 75% of their customers don’t like them and 50% of them said they’d be willing to switch for the right offer.”

Wilderotter said a significant part of the phone network it acquired from Verizon was initially not compatible with broadband service. Frontier’s market share in broadband was predictably low until it expanded broadband service in those areas.

Wilderotter: Most of our customers are satisfied with 6Mbps broadband.

As the invests in its broadband facilities, market share has improved, as have speeds in some areas.

“Forty percent of our footprint has 20Mbps today, so we’ve continued to invest even though 80% of what we sell is 6Mbps and if we look at the usage patterns of our customers, it’s under 6Mbps on a monthly basis,” said Wilderotter. “Somewhere between 12 and 40Mbps is probably going to be the sweet spot of what we’re going to have to build to but we put in the right backbone in order to make that happen.”

Frontier claims its entire middle mile network between central office facilities and individual neighborhoods has been upgraded with fiber, giving Frontier added capacity.

Wilderotter told attendees at the Goldman Sachs Communacopia Conference that Frontier will continue the practice of selling simplified pricing packages that de-emphasize temporary discounts and high value awards like Apple gift cards or television sets. The company renewed its current commitment not to leverage modem fees, impose lengthy contracts, or offer temporary discounts that expire midway through a term commitment.

“Our current bundles really resonate well,” said Frontier chief operating officer Dan McCarthy. “It gives people predictability, it doesn’t really require commitment from a price protection plan, and there are no hidden fees.”

Price seems to matter a lot to Frontier customers.

“It isn’t always about speed for customers — 80% of the customers’ sales that we have today are for more the basic speed level of 6Mbps,” said McCarthy. “They have the ability to take 12 or 20Mbps max in many cases but they still choose 6Mbps. It’s really more about service, it’s about the price value equation, it’s about simplicity and really not having surprises.”

Time Warner Cable believes it has room to raise broadband prices and get away with it without much customer backlash.

The cable company’s chief financial officer, Arthur Minson, raised the prospect of more price hikes at Tuesday’s Goldman Sachs 22nd Annual Communacopia Conference.

“Look, the modem [fee] was really just a form of a High Speed Data rate increase,” Minson said, referring to the company’s introduction of a $4 cable modem rental fee last fall and a later increase to around $6 a month introduced this summer. “I do see an ability for us to continue to have ARPU increases on that product.”

“ARPU” refers to the Average Revenue Per User — a term that reflects what companies earn in revenue divided by the number of customers. In most cases, an ARPU increase comes from price hikes or customers subscribing to additional value-added services.

Minson

Minson suggested that the company’s gradual rollout of optional usage-based pricing tiers provides an alternative for price-sensitive customers that cannot afford rate increases on flat-rate service or are seeking a price reduction.

“I think we’re very pleased with where we are in the usage-based pricing front and I think that’s something we will continue,” Minson concluded. “I think over time it will be interesting to see how many people ultimately take the usage-based pricing, or will people say I just want to have unlimited and I think the market will speak on that.”

Time Warner Cable has focused investment on several fronts this year, and plans continued investments to expand offerings in these key areas:

1. Business broadband expansion. Some of the company’s biggest investments target wiring businesses and office parks for cable service, primarily to expand commercial broadband. “Commercial services is success-based capital that we see real meaningful returns on,” Minson said.
2. Wi-Fi expansion. Time Warner Cable will continue expanding Wi-Fi hotspots in select cities. Customers with Standard (15/1Mbps) service or above can use the service for free. Minson said that the company was very happy to offer customers subscribed to unlimited use tiers free access to Wi-Fi. Not so for those choosing usage-based pricing plans. They will have to upgrade to an unlimited plan to get free access. “That’s a real incentive to drive people into the higher tiers,” Minson noted.
3. DOCSIS 3.1. Time Warner plans to adopt and invest in DOCSIS 3.1 cable modem technology when it is officially released. DOCSIS 3.1 will offer more efficient broadband transport and will let companies offer even faster speeds. Minson noted that broadband is increasingly the company’s anchor product, so it will continue investments accordingly.

Customers looking for aggressive pricing won’t find much at Time Warner Cable. Minson noted the company will continue its year-long pullback on low-priced promotions.

“We have a $79 bundle out in the marketplace and you would say okay, that sounds similar to the offer in the marketplace last year,” Minson said. “It may be similar but in terms of what you get for that $79 it is very different from what we gave a year ago and what we have now is the ability to meaningfully up sell the customers from the beacon price.”

A year ago, Time Warner Cable didn’t have a modem rental fee and typically bundled its Standard tier Internet service in its promotional packages. A traditional triple-play package of phone, cable TV and Internet service starts at $89 today, but only includes 3Mbps broadband, doesn’t bundle DVR service, and doesn’t include a mandatory set-top box which now costs a minimum of $8.99 a month each. Combining the modem fee with the mandatory box charge raises the promotional price to $104.97 a month.

• Upgrading to Standard 15/1Mbps service costs an extra $10 a month.
• Adding a DVR? That costs an additional $21.94 a month.
• The “whole house” DVR package is now priced at $37.47 a month.
• Time Warner Cable has also recently increased the price of premium movie channels to a uniform $15.95 each for HBO, Cinemax, Showtime, and Starz.

Taking into account these popular upsold add-ons, the promotional price of $79-89 might be seen as bait and switch by some customers. The true cost for most choosing a triple play package including cable TV with DVR service, one set-top box, a Time Warner-supplied cable modem, and a speed upgrade to 15/1Mbps service is $127.92 a month before taxes and fees.

Customers unhappy with their cable bill who call to complain are now routed to specially trained retention operators, Minson said.

“We’ve taken about a 1,000 dedicated employees and focused them on retention and even within those centers there are areas of expertise,” Minson said. “For our Spanish language customers we have retention centers set-up to help them when they call in. For people who are coming off a promotional offer, we have dedicated reps who can deal with that group of customers. So it’s having a deeper set of expertise in those areas and the returns so far are well within our expectations and we are really pleased with how it’s going.”

Verizon’s moratorium on further expansion of its fiber to the home service will continue for “the next couple of years.”

Verizon FiOS won’t be coming soon to a home near you, unless that home is inside a community with a standing agreement with the phone company.

Verizon CEO Lowell McAdam made it clear to attendees at Tuesday’s Goldman Sachs 22^nd Annual Communacopia Conference his priority continues to be investing in the company’s highly profitable wireless business, while the company’s wired infrastructure is being targeted for more cost cutting, especially in areas designated to see existing copper infrastructure decommissioned. As for expanding FiOS into new communities, McAdam said he instead preferred to concentrate on improving market share and profits for the next few years in areas already getting the fiber optic service.

McAdam noted John Stratton, president of Verizon Enterprise Solutions, has been hard at work pruning Verizon’s wireline products and services targeted to business and government customers.

“I think [he] killed about 2,000 products this year, and we have taken 350 systems offline last year,” McAdam noted. “I think we are already at 250 this year. That sort of discipline gives you the ability to streamline your infrastructure.”

For residential customers, Verizon has two sets of offerings: one for customers served by FiOS fiber optics, the other for customers unlikely to see fiber upgrades indefinitely.

Inside Existing FiOS Service Areas

“We are doing some major technology shifts within FiOS to make it more efficient,” McAdam said. “We’re going to concentrate there for the next couple of years.”

McAdam’s signals to Wall Street were loud and clear: no more FiOS expansion into new communities for now.

McAdam

Instead, Verizon will focus on improving existing service in several key areas:

• Verizon has almost two million optical terminals that McAdam says were active at one point and are now sitting idle, suggesting FiOS has won and lost nearly two million customers since launching, either because the customer switched providers or moved away. McAdam said he wants to improve Verizon FiOS’ product set enough to attract those customers back. He noted with the terminals and cables already in place, the capital costs to win back a former customer are near zero;
• Verizon is introducing a new terminal this fall. Verizon’s FiOS Media Server “eliminates the requirement for coax, once you get into the optical terminal in the basement or wherever in the house,” McAdam said. “That slashes the installation time, and therefore makes the product a lot more profitable for us going forward. It eliminates set-top boxes, it is all IP-based going forward.”
• Verizon will continue to expand Verizon FiOS, particularly in New York City where it has a commitment to offer service.

Verizon FiOS has managed to build a much larger market share than its nearest neighbor, AT&T U-verse. McAdam claimed Verizon FiOS has achieved a 39 percent market share in broadband and around 34 percent on its television service so far. McAdam’s goal is to boost that to 45 percent. In areas of Texas where Verizon first introduced its FiOS fiber optic service, the company already has a penetration rate above 50 percent for broadband and 50 percent for television, demonstrating room to grow market share. AT&T’s U-verse TV penetration rate is 20.1 percent.

For Those Unserved by FiOS

Verizon’s 4G LTE Broadband Router with Voice

Except for Fire Island, N.Y., there are no significant announcements of FiOS expansion. Instead, Verizon has focused on investing to improve its wireless 4G LTE cell networks with the hope existing landline customers will consider switching to higher-profit wireless service. An attempted trial of Verizon Voice Link, intended to be an entry-level wireless replacement of landline service, failed badly on Fire Island due to an avalanche of complaints about poor quality reception, dropped and incomplete calls, and lack of support for data.

Now Verizon is back with a new offering, its 4G LTE Broadband Router with Voice ($49.99 2-yr contract with $175 early termination fee/$199.99 month-to-month).

“Securely connect wired and wireless devices to the 4G LTE network, and connect your landline phone to make calls,” Verizon’s website says. “Combine voice and data on a Share Everything Plan for added savings.”

The device can function as both a wireless landline replacement and router for data. The unit includes three Ethernet ports and Wi-Fi to share your connection. A landline phone or cordless phone base station can be plugged in as well.

Verizon charges an extra $20 a month for Home Service Monthly Line Access on Share Everything Plans, which covers your telephone service. Customers get unlimited local, long distance, call forwarding, call waiting, three-way calling, and voice mail. 911 is available, but Verizon disclaims any responsibility if you cannot reach an operator. The device also supports TTY-TTD calling.

Verizon claims users can expect 5-12Mbps downloading and 2-5Mbps uploading on Verizon’s 4G network, assuming there is solid coverage where you use the device. Usage caps apply. A backup battery keeps the service running for up to four hours of voice calling in the event of a power outage.

McAdam admitted the thing that keeps him up most at night are regulatory issues. He particularly called out Europe, which he believes is hostile for investment. But Europeans pay considerably less for wireless service than North Americans pay, and often have more choices due to competition and regulatory oversight.

“I think the beauty of the ’96 Telecom Act was that it was such a light touch on broadband and mobile,” said McAdam. “And that is — and I sit in Europe talking to investors all the time — that is the biggest difference between the U.S. and Europe.”

To head the FCC off from pursuing any additional regulatory oversight, McAdam claims he reluctantly approved Verizon’s lawsuit against the government on Net Neutrality.

“We have had to take some positions, frankly, that we didn’t want to take,” McAdam said of the lawsuit. “It opened the door for them to get into price regulation of broadband. And I think that is not their charter, and I think it would be a mistake for the U.S. economy and certainly the telecommunications ecosystem.”

[flv width=”488″ height=”300″]http://www.phillipdampier.com/video/Verizon 4G LTE Broadband Router with Voice 9-25-13.flv[/flv]

Verizon Wireless’ latest 4G LTE router supports wireless landline service and 4G data.  (1 minute)