Steven Shepard, president of Shepard Communications Group

Burlington Telecom, the municipally owned fiber to the home cable and broadband provider still reeling from a late fall financial scandal, must think outside of the box if it is to survive and grow its business in Vermont’s largest city.  That’s the assessment of Steven Shepard, president of Shepard Communications Group, a consulting firm based in Williston.

It comes as both city and state officials continue an investigation into a $17 million loan from city coffers to cushion the provider from substantial losses incurred over the past three years of operations.

Burlington Telecom has been criticized for underestimating the costs of wiring Burlington with fiber optics, something Shepard doesn’t think is unusual.

“I haven’t found one yet that has come it at budget, or even under budget,” Shepard told WCAX-TV news.

Burlington Telecom director, Chris Burns, says the company needed the additional money to cover capital expenses as it works to build its all-fiber network in every part of the city. He says the initial investment of $33 million dollars was not enough. “Some of the early estimates weren’t based on firm engineering quotes,” says Burns. “They were rough order magnitude estimates.”

Chris Burns, Burlington Telecom

Burns feels Burlington Telecom needs to expand its service area to bring in additional customers to help keep the provider up and running.  Some customers recognize Burlington Telecom is a unique, municipally-owned asset that can potentially provide services that Comcast, the dominant cable provider in the area, cannot.  Comcast operates a traditional hybrid fiber-coaxial cable network with more limited bandwidth than Burlington Telecom’s direct fiber optic connection to the home can provide.

But Shepard believes most consumers don’t know or care how service reaches them, and believes fiber optic networks alone do not bring instant success to providers.

Unless Burlington Telecom creates services that would be difficult for Comcast to deliver, they are just another telecommunications company, Shepard believes.

One suggestion from Shepard: an automatic file backup service.  Fiber optics can provide upstream speeds equivalent to downstream speeds, something Comcast cannot easily deliver.  Such a service would automatically send a copy of every file to a secured, encrypted off-site backup system.  If a customer needed the file restored, or an entire hard drive, Burlington Telecom could transmit the files on request.  Assuming privacy is protected, such a service would give consumers a potential reason to switch providers.

For broadband customers, providing upstream and downstream speeds faster and cheaper than Comcast will go a long way towards motivating consumers to switch.

[flv width=”368″ height=”228″]http://www.phillipdampier.com/video/WCAX Burlington Can Burlington Telecom Survive 11-05-2009.flv[/flv]

WCAX-TV Burlington interviews Steven Shepard about the ongoing viability of Burlington Telecom. (November 5, 2009 – 4 minutes)

For some Burlington Telecom customers, improving customer service is an important first step, as WCAX found:

“A few weeks ago, the whole BT was down for half hour, phone and cable. And probably internet but I don’t have that,” says Beth Cane, who lives in the city’s south end. Cane says getting through to customer service is “like trying to get into Fort Knox.”

She is not the only one complaining. Rob Lyman says he is “not happy” with Burlington Telecom’s service. “I watched a trailer for an on-Demand movie and the whole system froze up and required a reboot of BT’s box. When I called the help desk they said they’ve known about this problem for six months and didn’t know when it would be fixed,” he says.

In mid-November, a possible solution to the funding issues came from Piper Jaffray, a Minneapolis-based investment firm.  The company offered Burlington Telecom a $61.6 million dollar refinancing package that would help keep the company viable and return taxpayer funds caught up in the controversy to the city.

The proposal was met with political wrangling from the Burlington city council, which spent the last month and a half doing damage control.

“Once TelecomGate went radioactive in October, it was everyone for themselves on the city council as the finger pointing started,” Stop the Cap! reader Dwayne writes from Burlington. “The progressives are blaming the former Bush Administration’s economic catastrophe for wrecking the credit and financing markets BT needed to access, the Democrats are trying to play the role of moderates, and the Republicans are questioning why the city should compete with Comcast in the first place.  Demagoguery is universal,” he shares.

The rhetoric has grown so heated, it has stalled the city council’s approval of the loan package, to the disappointment of Mayor Bob Kiss.

[flv width=”368″ height=”228″]http://www.phillipdampier.com/video/WCAX Burlington Burlington Telecom Gets New Backing 11-13-2009.flv[/flv]

WCAX reports Burlington Telecom has the potential to secure new funding to refinance operations.  (November 13, 2009 – 3 minutes)

The Burlington Free Press has documented some of the language now a part of the debate:

“I do not believe that keeping Burlington Telecom alive during the absolute failure of our capitalist system was the wrong thing for any of us to do. We can’t afford to sit around. We have an interest payment (for BT’s current $33.5 million outside debt) that is due in February.” — Marrisa Caldwell, P-Ward 3, a Progressive Party member characterized as a fierce supporter of Burlington Telecom, is upset the city council delayed the approval of the loan package.

“The same forces that want to preserve the private insurance monopoly in health care by opposing the “public option” are now out to preserve the private corporate monopoly in Vermont telecommunications. The [Governor Jim Douglas (R)] administration is hell-bent on putting Burlington Telecom — which provides public sector competition to for-profit corporations such as Comcast and FairPoint — out of business, no matter what the consequences.” — John Franco, Vermont Progressive Party

“[Vermont Public Service Commissioner David O’Brien] is a political hack appointed by Douglas. They only want private-sector telecom in the state. He is out to get rid of the competition for the private companies. That’s very clear.” — Marrisa Caldwell

“I’m not going to engage in this kind of dialogue. It serves no purpose. We’re going to proceed with the investigation and work to resolve this situation.” — Deputy Public Service Commissioner Steve Wark, asked to comment on Caldwell’s remarks.

Caldwell also charged that the Free Press coverage of the BT issues has been influenced by advertising revenue from cable provider Comcast. She called the council’s vote to delay action on the new BT loan “disingenuous at best. It’s completely dysfunctional government,” she said. “They just tied the administration’s hands and hamstrung BT.”

“[On the city council’s lack of resolve and action] it’s erroneous and not well-founded. I never heard anyone say why they wouldn’t move forward (on the BT loan). It wasn’t leadership and (was) a lack of ability to collectively try to solve the problem.” Sharon Bushor, I-Ward 1, who generally supports Burlington Telecom.

“It seems only rational to do our homework on this (loan). I don’t think one of us is saying it isn’t feasible. All we’re saying is slow down and learn more.”  Councilman Paul Decelles, a Republican, called Caldwell’s remarks “destructive. I would challenge her to find one councilor who has thrown out the word ‘partisan,'” he said. “That word is coming from the administration and from the three Progressive councilors. We’re trying to do what is best for Burlington. This is the residents’ telecom. If acting in a slow, methodical way is unacceptable to some, so be it. It’s irresponsible of them to expect us to rubber-stamp this.” — Paul Decelles, R-Ward 7

“I am shocked and shocked again every time someone raises the partisan flag. This could have been a Republican or a Democratic blunder. The Progressives have been in office a long time. That’s just a fact. When we disagree, apparently, we’re being partisan, (but) it’s not personal, and it’s just not partisan.” — Nancy Kaplan, D-Ward 4

“No one is interested in destroying BT and the administration. Jonathan Leopold said Monday that (the council’s position on BT) was an attempt to destroy the administration. From my own perspective, that’s not the case at all. The first order is to take care of BT, but there have been missteps by the administration.” Mary Kehoe (D-Ward 6) said she has concerns about the loan proposal from Piper Jaffray, particularly the language that indicates the loan repayment will come from Burlington Telecom revenues in the form of city budget appropriations.  “If (BT is) short, what then?  How do we know BT is going to have the capacity?”  She said she voted to delay a decision on the loan, “because we want information. We’ve not been getting the information, and they want us to sign off. That’s not going to happen anymore.” — Mary Kehoe, D-Ward 6

“This is ridiculous. Burlington is starting to look more and more like Washington, with the level of partisan wrangling reaching an intensity that I’ve never seen before in my 15 years of living in Vermont.” — One resident commenting on the coverage and the back and forth.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WPTZ Plattsburgh Burlington Telecom Editorial Oct 28 2009.flv[/flv]

WPTZ in Plattsburgh, which is part of the Burlington television market, ran a station editorial on the Burlington Telecom matter on October 28th.  (1 minute)

Glenice Maclellan, Telstra's point person on broadband, has recently discovered Australians don't just want to browse the web and read e-mail on their broadband service.

Telstra, Australia’s largest telecommunications company, has responded to customers leaving their broadband service over its fraudband speeds and paltry usage caps by increasing both, but not nearly enough to change perceptions that Australian providers still serve up slow, overpriced and restrictive service.

Telstra’s CEO David Thodey, who replaced the oft-despised Sol Trujillo, told investors what every Australian contemplating broadband service already knows: “In some parts of the market we’ve gone too far out of line and we need to come back. We must focus on our core business and our customers, this is where we create value for shareholders. At its simplest, the next stage in Telstra’s long-term strategy is to focus on satisfying customers, invest in new capabilities, and drive growth in new businesses.”

Thodey’s approach is to do away with the company’s downright lousy “broadband” service in many rural areas of Australia.  More accurately called “fraudband,” there are still many Australians suffering with Telstra BigPond service that tops out at a ridiculously slow 256kbps.  And because company officials suspect you’ll even use that too much, they slapped a usage cap as low as 200 megabytes on the service, with a war crime overlimit fee of $0.15 per megabyte thereafter.  Your low price?  $27US a month.  For that.  But you can double your allowance to 400 megabytes for a mere $9US more per month.  Grab the bargain.

Effective December 1st, Telstra will move its rural customers to 1996-level broadband service, offering 1.5Mbps minimum to those doing their web surfing over DSL lines.  For those paying $27 a month, they’re increasing your usage allowance to a still-paltry 2 gigabytes per month, and leaving the $0.15/mb overlimit fee in place.  Most DSL customers stuck on these plans will be herded up to the $36 a month plan which is “generous” in comparison with a new download quota of 12 gigabytes per month and no overlimit fee.  Instead, once you hit your limit, they cut your speed to 64kbps for the rest of the month.

Oh but wait, there are some more gotchas:

• Unless you are bundling your molasses-slow Internet service with a phone line package that brings Telstra at least $81US per month in revenue, add $9 to these plan prices.  You wouldn’t want Telstra management to go home hungry, would you?
• Uploads are also a part of your usage allowance.
• Many of their plans lock you in with a 24-month service commitment.  They’ve got you right where they want you.

If you find Telstra’s Oliver Twistian-usage allowances leave you hungry for more, no worries.  Telstra will happily upgrade your service to a higher usage plan, with correspondingly higher prices, by the following day.  That’s good to know if Microsoft obliterated a good part of your usage allowance for the month with critical Windows updates.

Or you could always take your business elsewhere, as many budget conscious Australians have.  Thodey’s fear about out-of-touch broadband pricing is real when considering Telstra’s competitor iiNet offers 4GB (2GB peak/2GB off peak) for just about the same price Telstra charges for its $27 a month/200 megabyte plan.

The company has also recently discovered that Australians want to use their broadband service for more than just web browsing and e-mail.  That’s apparently news to Telstra management, who threw this into their PR push:

“Telstra’s new plans cater for the changing ways Australians use broadband for communications and entertainment at home.  Gone are the days when broadband was used only to check email or internet surf. Australian families now also use broadband to download videos, play online games, or check social networking sites all at the same time”. — Glenice Maclellan, the Acting Group Managing Director of the Consumer division, Telstra

Thanks, Glenice.  The only problem here is that Australians didn’t get to do those things much because of your rationed broadband plans which either overcharged them if they tried, or speed throttled them back to dial-up as a reminder not to be a naughty data hog.

Now, Australians can at least feed at the trough… for a little while.

Telstra offers other plans, which vary on whether you qualify for ADSL 1 service (original DSL) or live in an urban/suburban area upgraded for ADSL 2 or cable modem service.  All prices hereafter are in Australian dollars – $10AUD = $0.91US at time of writing):

New Broadband Pricing for full service fixed phone customers

Those prices are enough to give North American providers dreams of Money Parties in their heads forever.  Only Time Warner Cable came close with their infamous $150 unlimited usage plan they tried to stick customers with in several cities this past April.

That platinum-deluxe BigPond Liberty 200GB plan bundled with a TV package will cost you more than $4,560US over the life of the 24-month contract.

Australians continue to wait for a National Broadband Network plan that the government says should finally free Australians from a life of being told you have to spend more… a lot more, to save just a little from companies like Telstra.

A spoof on Telstra’s BigPond Internet Support Call Center (1 minute)

Orangeburg County, South Carolina has 12,000 Time Warner Cable customers

First North Carolina and now in South Carolina, Time Warner Cable has announced a statewide rate increase taking effect this December.

As has always been the case, Time Warner Cable officials blamed the increase on programming costs, particularly for sports programming.  The company also blamed local broadcasters, who increasingly demand fee-for-carriage arrangements.

Dan Jones, Time Warner vice president of government relations, told Orangeburg officials the price increases were given careful consideration.

“The value customers receive goes beyond the pure price,” Jones said in a letter to the city, reported by The Times and Democrat. “We’re offering customers more local programming, increased video on demand content, more high definition channels and enhanced cable television options.”

No explanation was provided for the increase in broadband pricing.

Orangeburg Mayor Paul Miller told the paper rate increases are out of the control of City Council.

Cable customers with the broadcast station package will see costs increase from $9.30 a month to $10.20 a month. The cable programming package will increase from $45.15 a month to $48.75 a month. Basic cable, which consists of both the broadcasting and cable programming, will rise from $54.45 to $58.95.

For Road Runner customers, the biggest increases come from Road Runner Lite, up three dollars from $24.95 to $27.95.  Other broadband package prices changes include:

• Road Runner Basic, bundled with cable or digital phone — from $32.95 to $37.95
• Road Runner High Speed online, bundled with broadcast cable, basic cable or digital phone — from $47.95 to $49.95
• Road Runner High Speed online, bundled with digital cable — no change
• Earthlink, bundled with broadcast cable, basic cable or digital phone — from $47.95 to $49.95
• Earthlink, bundled with digital cable — no change

Charter Cable, which has been in Chapter 11 bankruptcy since March 28, has been among the worst hit cable operators by an American economy in trouble, accusations of poor service, excessive executive compensation, and spiraling debt.  Before entering bankruptcy protection, the company had $21 billion in debt — a significant amount for a cable operator serving just 5.5 million customers in 27 states.

Company founder Paul Allen, a co-founder of Microsoft who controlled 91 percent of Charter Cable before bankruptcy, will control just 35 percent of the company as it emerges from reorganization in the coming weeks.  Allen’s attention will then turn to the bankruptcy of another one of his concerns – Digeo Inc., which is best known for its Moxi HD DVR.

Despite the bankruptcy, Charter Cable aggressively continues to upgrade its broadband service to DOCSIS 3 in many of its service areas, introducing new faster broadband products to customers.  But broadband service from Charter is just one of three services they offer customers, and many are not satisfied with the service they are getting.

Beyond bankruptcy, Charter Cable continues to face bad press for providing poor service, hassling customers with aggressive telemarketing calls, dramatic rate increases, and in one shocking incident this week, a Charter Cable technician in Victorville, California was attacked and killed while on a service call.

Authorities are still searching for a motive for Monday’s unprovoked attack on 25-year-old Trevor Neiman, of Phelan, California.  After surviving three tours of duty in Iraq, Neiman was killed with a small hammer in a Victorville home.  Police say the attack came from a relative of the homeowner who was visiting at the time of the assault.  The suspect, Hesperia resident Johnny Acosta, 45, was arrested on suspicion of murder a short time after fleeing the scene.

“There was no exchange of words. There was nothing that occurred before the unprovoked attack,” said Jody Miller, a spokeswoman for the San Bernardino County Sheriff’s Department told KTLA News.

[flv width=”600″ height=”336″]http://www.phillipdampier.com/video/KABC Los Angeles Charter Cable Installer Killed With Hammer 11-10-09.flv[/flv]

KABC-TV Los Angeles shares the tragic story of Charter Cable technician Trevor Neiman, and the devastating impact Monday’s attack had on his wife and family. (2 minutes)

Beyond that horrific incident, Charter Cable has been irritating subscribers with a series of rate increases and annoying marketing campaigns across the country.

In West Covina, California Charter Cable is ridding itself of senior discounts and also dramatically increasing rates.  Broadcast basic cable customers face a whopping $10 monthly increase in their cable bill, and the more popular expanded basic service will increase by $5.25 a month.  The company claims the rate increases are part of “an investment in improving the overall customer service experience.”

Resident Hermine Deemer, 83, told the San Gabriel Valley Tribune her bill will increase to $67 a month from $53 – a 26 percent hike.

“That’s a big increase,” Deemer said. “Nobody gets that big of an increase. I know things go up but not that much.”

Charter Cable is calling customers trying to market bundled services including broadband and telephone, claiming the savings from bundling services together would be “higher than the senior discount ever gave.”

Deputy City Manager Chris Freeland said the city has received several calls on the increases but there is little they can do about it.

“We would much rather have the senior discount,” Freeland said. “It’s really beyond our control. The economy is tough and every little dollar for seniors is so precious.”

Customers commenting on the rate increase have encouraged seniors to cancel service and switch to DISH Network satellite service, and several seniors lament they are housebound and television is their primary window to the outside world.  With no increase in Social Security in 2010 and increasing medical costs, many seniors will face difficulty coping with the rate increases.

In Pendleton, Oregon, the city attorney blasted Charter Cable for a $5 increase in broadcast basic service (providing local broadcast channels and some public affairs cable networks) and a $3 increase in expanded basic, claiming it unfairly falls on those least able to afford it, all to subsidize discounts on their bundled service packages.  Peter H. Wells wrote an open letter to Charter Cable published in the East Oregonian:

Per-channel costs for Charter Cable in the Pacific Northwest

By imposing the same $5.00 increase for all service tiers and, in fact, a lower increase for those with expanded basic service, the basic tier customer is paying for a greater portion of the company’s total costs than before the fee increase.

Through February 2005, less than five years ago, basic tier service cost the customer $12.91 per month. The rate change effective in December to $24.99 per month is such that those customers will have had a 93 percent rate increase in the past five years. It also appears that Pendleton’s basic tier customers are paying the same for less service than basic tier customers in other nearby service areas.

Charter representatives claim that the service charge increases over the past few years were to compensate the company for upgrades to the physical plant in Pendleton. I believe that argument is not appropriate. The physical plant upgrades were to allow Charter to provide additional services of telephone, digital cable and Internet. The cost of those upgrades should be borne by the users of those services, not the basic tier customers on whom the increase is being disproportionately imposed.

Unfortunately, Charter Cable’s rates are not within the control of the city management, so Wells could only ask that concerned residents contact Charter Cable and complain.

At least one customer fed up with Charter’s marketing practices found g0ing to a local TV station’s consumer watchdog reporter was even more effective.

Carole McGuire of Madison, Wisconsin turned down Charter’s relentless marketing of their “digital phone” product, which she doesn’t currently purchase.  Despite her disinterest, the visiting salesman left an application, and called her the next day to see if she changed her mind.  After that, McGuire began receiving a barrage of automated phone calls from Charter claiming she ordered the service, and needed to obtain third party verification to meet Federal Communications Commission obligations and process her order.

Not having placed an order, she ignored the calls, but they kept coming… over and over.

Exasperated, she turned to WISC-TV’s On Your Side reporter Erick Franke to see if he could get Charter to stop calling her.

[flv width=”530″ height=”316″]http://www.phillipdampier.com/video/WISC Madison Charter Cable Telemarketing 11-3-09.flv[/flv]

WISC-TV Madison’s On Your Side segment from November 3rd helps a Madison resident put a stop to annoying Charter Cable telemarketing efforts. (3 minutes)

Unfortunately, not even TV stations are immune from dealing with problems with Charter Cable.  About a month ago, residents in Clarksville, Tennessee discovered WKAG-TV in nearby Hopkinsville, Kentucky missing from their cable dial.

Charter Cable had removed the low-power 18,500 watt station claiming it couldn’t obtain a strong enough signal to carry it.  WKAG-TV happened to be the only station in the entire region that produced news programming for Clarksville residents, and had consistently served the community of 100,000 with local newscasts, sports coverage, weather, and public affairs programming.

WKAG management was surprised by the decision to drop the station, and mounted a public campaign to dispute Charter’s poor signal strength assertions.  Charter Cable ignored the station’s first press release and has now been confronted with embarrassing video evidence that the station can be received with a good over-the-air signal with just a two foot antenna from the top of a building at a location even more distant from Charter’s TV reception tower, and from a lower overall height.

[flv width=”640″ height=”480″]http://www.phillipdampier.com/video/WKAG Hopkinsville Charter Cable Dispute 11-5-09.flv[/flv]

WKAG-TV Hopkinsville, Kentucky prepared a web video showing evidence Charter Cable could restore the station to the cable dial in nearby Clarksville, Tennessee. (11/5/09 – 5 minutes)

Charter Cable used to import WKAG from a direct fiber feed, but dropped it several years ago in an apparent cost-cutting move.

Despite complaints from Clarksville residents, Charter continues to ignore customer demands for WKAG’s restoration.

From one side of the country to the other, Charter Cable’s finances are not the only challenge the company faces.  Providing affordable, responsive, and quality service to customers apparently also remains a challenge Charter Cable has yet to surmount.

Despite challenging economic conditions, Time Warner Cable CEO Glenn Britt told CNBC broadband from the cable operator has remained strong during the downturn.  The company reported the addition of 117,000 new Road Runner customers during the third quarter, many switching from rival telephone company-provided DSL service.

A CNBC anchor who visited a conference recently and absorbed cable industry talking points about consumption-based pricing asked Britt about whether Time Warner Cable’s network had the capacity to handle skyrocketing data consumption.

“Our physical plant is very capable and we invest in it in a steady way, so I think we’re able to keep up with demand.  I think the other question you’re really raising is who pays […] is an evolving thing.  Also the history has been everybody pays the same for unlimited access.  I suspect that will change going forward to some more usage based model, but that in itself is controversial so we’ll have to see what happens,” Britt said.

Britt’s comments about investments in their network are challenged by the company’s own financial reports which showed a decline in those investments and in the cost of obtaining network bandwidth.

Still, Time Warner Cable is upgrading some areas to DOCSIS 3 technology to market higher speed service to broadband enthusiasts.

The company continues to face significant challenges in its mainstay cable television business, losing 84,000 cable televison package customers in the last quarter, a result of the loss of home ownership during the economic crisis according to Britt, and a general downturn in the economy.  Still, through a combination of price increases and marketing bundled services, the company grew average revenue per subscriber to $102.48 a month in the third quarter.

[flv]http://www.phillipdampier.com/video/CNBC – Glenn Britt on Earnings 11-6-09.flv[/flv]

Time Warner CEO Glenn Britt is interviewed on CNBC about the company’s third quarter earnings. (11/6/09 – 4 minutes)

Stop the Cap! reader Nonya advised us about Britt’s latest appearance on CNBC.  If you find news our readers might be interested in, send us your news tip under our “Contact Us” link above.