Time Warner's Wheel of Retention Deals

[Update: See our updated piece with important new details about how to great the best possible deal from Time Warner Cable.]

Your cable bill now exceeds your electric and landline phone bill combined.  You’ve dropped the multiple premium channels, dumped the extra add-ons like Road Runner Turbo and even considered turning in your DVR box.  But your bill after the 2011 rate increase is still sky high.

Stop the Cap! has spent the last week working with several Time Warner Cable customers looking for a better deal from the nation’s second largest cable company.  It was a learning experience for all of us, with different “best offers” extended to different customers, deals some employees insisted simply weren’t available… until they were, and confusion galore as employees had to navigate their way around corporate roadblocks.

The good news: The quality of customer service from most Time Warner employees we worked with was generally excellent — professional, generally helpful, and even irritated when they couldn’t get some of the best deals in place for customers.  The bad news: As Time Warner moves more towards a regional corporate bureaucracy, new rules and pre-conditions frustrate all concerned.

When it comes to this cable company, the less business you give them, the better the offers.

As Scott, our reader in Brighton, N.Y., tweeted to Time Warner: “It would be nice to toss your longtime customers a bone now and again.”

Step One: Review Your Bill

The first way to save is to scrutinize your current bill.  Know what you are paying and consider dropping services you no longer use.  Most Time Warner customers purchase a bundle of two or three services, usually cable-TV and broadband.  The Watch N Surf bundle in the Rochester area now runs $118.99 per month.  Below the bundle (shown in bold on the bill) are breakdowns of equipment charges — set top boxes and remote controls, and add-ons such as movie channels or Road Runner Turbo.

Before Time Warner Cable will authorize a lower price, expect them to question any add-ons, such as premium movie channels or Turbo.  They’ll attempt to get you to drop services before they’ll extend a deal.  We found it more difficult to convince the company to give price breaks to customers who subscribe to a number of extra services and want to keep them.

Be prepared to temporarily drop services if you want the best possible deal.  You can always add them back later.

Step Two: Prune Your Package

Still paying for channels no longer on Time Warner's lineup?

Think carefully about the services you are getting.  Are you still watching premium movie channels these days or downloading your movies from Netflix or other services?  A few years ago, Time Warner only charged $7 a month for each additional premium channel.  Now that price has nearly doubled in many areas.  Are you really watching them enough to make the price worthwhile?  At upwards of $13.95 per month — $167 a year, it may be time to ditch them.

Time Warner told us subscribers routinely confuse the “Digital HD Tier” with the cable company’s standard HD channels.  The package, priced at $4.99 in most areas, is on many customers’ bills because it used to include HDNet and HDNet Movies, two of the earliest HD channels a number of early HDTV set owners craved.  The company dropped both networks more than a year ago, replacing them with Smithsonian and the improbable RFD-TV.  The latter channel has no business in a premium-priced package — it’s like charging you extra to receive C-SPAN 3.  If you can do without those channels as well as MGM HD and Universal HD — you just saved $60 a year.  Time Warner does not charge extra for other HD channels.

Some Time Warner customers also have several set top boxes they originally got for free or at a discount.  Today those boxes run $7 per month.  If you have cable in a bedroom or kitchen and can manage with channels 2-99, you can turn in the set top box and save $84 a year per box.

Broadband customers with Road Runner Turbo, now $9.99 per month, may find little value from that add-on in areas where speeds increased in the past year.  In Rochester, for example, Road Runner Turbo turns 10/1Mbps service into 15/1Mbps service — hardly much of an improvement and certainly not worth the price.  Save the $120 a year for something else.

Step Three: Negotiating a Better Deal

Now that you’ve reviewed your services and pruned your package where necessary, it’s time for Time Warner to do their part and meet you halfway.

Getting the cable company to approve the best possible deal depends on a number of factors:

1. How long you have been a customer and how well you pay your bill;
2. How serious you are about canceling service;
3. How many services you have;
4. Who you talk to.

The fewer services you have, the better the deal you can get from Time Warner’s retention department.  For example, a recently-ended promotion offered a year of free DVR service — but only for customers who don’t have a DVR box already.  If you already have phone, broadband, and cable service from Time Warner, scoring the most aggressive Triple Play promotion was a lot harder than it was for a customer with a single service.  But not always.  More often than not, deals that were not available from one customer service representative were available from another.

Let’s get started.

Call your local Time Warner Cable office and request to cancel your service.  You want to be transferred to a Retentions Specialist, authorized to extend special deals to departing customers.  Ordinary customer service representatives won’t have access to the best deals.

There is no reason to beat around the bush with the representative.  Just tell them “it costs too much” when they ask why you want to cancel.  You don’t need a sob story.  When you focus the representative on the money issue, you won’t have to navigate around their arguments about how bad satellite TV is or why the phone company offer isn’t as good.

The best savings and least red tape are won by new customers.  Judging from a few “shopping deal” websites we explored, it isn’t unprecedented for customers to cancel service and sign up under a family member’s name as a new customer.  But that method can be a major hassle.  Orders cannot be taken until an existing customer schedules a date to disconnect service.  Customers will also have to pay installation costs in some areas, and will lose their current Road Runner e-mail accounts.  We often found taking this drastic measure was not necessary — some existing customers managed to win deals just one or two dollars greater than a new customer would pay.

Time Warner’s most aggressive current offer is their triple play/$99 month offer, including cable-TV, phone, and Internet service.  Equipment costs extra, and that price comes before taxes and fees.  Virtually any customer currently taking broadband and cable-TV service can manage to score the $99 price when threatening to cancel service.  It also costs nearly $20 less per month than Time Warner’s price for just cable and broadband.  If you disconnect your landline, you will save another $20-50 a month and get unlimited long distance calling across North America.

Tweet Your Way to Savings.

Our reader Scott grabbed the $99 offer, and all it really took was a tweet to @TWCableHelp:

@twcablehelp Getting ready to cancel my #timewarnercable and take my $ elsewhere if they want new customers more than old.

After exchanging phone numbers, Scott was talking to a retention agent near Buffalo, N.Y., who secured a deal for him in about 10 minutes.

Time Warner says the national retention team has the keys to some of the best retention deals around — deals the local agents can’t always offer.

We did things the hard way — by phone, talking to multiple representatives, each who pitched us different deals, and rejected or accepted our counteroffers.  The diversity in responsiveness surprised us.

When Time Warner won't deal, one Buffalo resident called Verizon instead.

We spent time with Gennifer near Buffalo who ended up with a stubborn representative who refused to deal, and the call ended with a scheduled disconnect.

“I am not paying their higher rates,” Gennifer tells us.  “I’m switching to Verizon FiOS after this.”

Time Warner insisted she downgrade her add-on services before they would extend a deal her way.

“I am not going to have a cable company tell me what channels and services I should get, especially when the ‘other guy’ is cheaper,” she told us. “They obviously don’t want to keep me as a customer after years with them, so goodbye.”

Just an hour later, we were back on the phone with Time Warner easily scoring the $99 triple play promotion Gennifer couldn’t get, this time for a relative in Rochester, no questions asked.

“It is a great deal and we’re happy to extend it to you,” the representative told us.  (Gennifer eventually got that same offer talking to a different representative, but she’s still headed to Verizon FiOS regardless.)

Time Warner’s recently finished “12 months of free DVR service” promotion was much harder to get.  Representatives repeatedly told us the offer was not available to customers with existing DVR service, right up until they told us it “sort of was,” with some creative effort and the approval of the right supervisor.  Instead of that particular deal, another was offered worth nearly as much, with a one time credit making up the difference.  That works for us.

A particularly excellent representative, Tim, has gone all-out working on our account over the past three days trying to keep us happy.  Apologizing not less than two dozen times for various frustrations he encountered along the way, he’s still manning the wheel as he navigates around headaches thanks to a somehow-corrupted account and an obstinate Frontier Communications who is stubbornly trying to block the request to switch providers.  He continues to impress us as that journey continues, even offering a year of Showtime gratis to make up for all of the inconvenience.  Our “out the door” price will be around $132, including Turbo, a DVR box, a HD set-top box, Showtime, and a one time credit of around $25.  We were paying around $40 a month more, and will also save another $35 a month dropping our landline from Frontier Communications.

Seeing the back of Frontier Communications.

Time Warner’s willingness to deal gives us the chance to see the back of Frontier Communications, dumping their landline service.  In the process, we actually expanded the number of services we are buying from the cable company, and earning the chance to say goodbye to a phone company that has done little for this community in recent years.

When Frontier asked us why we possibly would want to cancel, we unloaded:

• The company’s insistence on Internet Overcharging schemes;
• The fact Frontier’s DSL service is at least a decade behind Time Warner’s broadband speeds;
• Frontier has done nothing for the Rochester area except provide slow and lousy DSL service — satellite TV as a triple-play afterthought doesn’t cut it;
• They charge too much and stick customers on term contracts that are expensive to cancel;
• We don’t have much confidence in Frontier’s long-term future with the ongoing exodus of customers.

Other Deals and Promotions

Time Warner broadband-only customers might be able to secure this deal, or pay Earthlink even less.

Not every customer will want a triple-play deal from Time Warner.  For those who want cheaper standalone broadband service, we recommend Earthlink’s six month promotion (available on Earthlink’s website), which is billed directly by Time Warner with no equipment changes:

• Standard: (equivalent speed to Road Runner Standard, without PowerBoost): $29.95/month for six months, $41.95/month thereafter;
• Turbo: (equivalent speed to Road Runner Turbo, without PowerBoost): $39.90/month for six months, $51.90/month thereafter.

After six months, switch back to Road Runner.  It should run $34.95 a month for the first year on a commonly-seen promotion.

We found a lot less savings for customers trying to lower the price of cable and broadband, without phone.  In fact, we found it was actually cheaper to take the bundled offer with phone service than finding a retention deal without it.  You are not obligated to use the phone service, of course.  They can assign you a new number you may or may not care to use.

Some other promotions to ask about:

• DVR Service: Rent one box at the regular price, get one free.  For homes who want two DVR boxes, ask if you can get the second one for free for the first year;
• Road Runner Turbo: This $9.99 add-on can be had for free for one year in some areas.  Ask the representative what they can do for you;
• Starz! $25 mail in rebate: Starz! is running a $25 mail-in rebate for new customers who keep the movie channel active for three months;
• Free Showtime: Although not promoted any longer, a year of free Showtime might still be available to those who ask and sign up for the $99 offer;
• Installation/Start Up Costs: Ask for free installation, if you are a new phone customer.  You will probably still pay the one-time $20 fee phone customers are charged, but let the cable company install the service for you for free.

If you are uncomfortable with the agent or the offers you are getting, tell them you still want to go ahead and schedule a disconnect.  Suggest a date a week in advance.  Then, a day later, call back Time Warner and again request to “cancel” service, telling the representative you want to confirm your disconnect date.  Often, they are amenable to reopening negotiations at that point.  Yesterday’s “no” may turn into today’s “yes.”

Don’t be intimidated if a representative tells you he’s unlikely to get a supervisor to approve a counteroffer you make in response to theirs.  Go ahead and tell them to check anyway.  More often than not, the supervisor will “surprisingly” approve your request or provide a better offer.  If you live in an area with “price protection agreements” and think something better might come along in the next year or two, fight to stay off of one -and- get the retention deal price anyway.

Step Four: Gratitude Expressed

If you got what you called for, be sure to thank the representative and get their name.  You might want to drop a message to the president of your local Time Warner Cable office to thank the company and mention the representative that helped you remain a customer.  Good employees deserve recognition and in the future, these are the people you will want to talk to when you call about something else.

In the end, it was a hassle to spin the “Wheel of Retention Deals” to see where it landed.  It sometimes took multiple calls to get the best deal, and we agree with Scott’s assessment that treating your best customers to the worst deals is not a great way to win customer loyalty.  Calling and asking for discounts is a necessary annoyance these days but we’d rather never have to do it.  The next step is outright cancellation of services like cable-TV, so Time Warner gets something out of the process as well.  We just wished the representatives were given the tools to be more consistent.

As we’ve always said here — we have no complaints about the quality of the local employees who manage and maintain the service we’ve subscribed to for well over a decade.  Our beef has been and probably always will be with the corporate decision-makers who conjure up the rate increases, experiments of Internet Overcharging schemes, and other annoyances.

Copps

A Statement from FCC Commissioner Michael Copps: The Lone Dissenter in Today’s 4-1 Decision Approving the Merger of Comcast and NBC-Universal:

Comcast’s acquisition of NBC Universal is a transaction like no other that has come before this Commission—ever. It reaches into virtually every corner of our media and digital landscapes and will affect every citizen in the land. It is new media as well as old; it is news and information as well as sports and entertainment; it is distribution as well as content. And it confers too much power in one company’s hands.

For any transaction that comes before this Commission, our statutory obligation is to weigh the promised benefits against the potential harms so as to determine whether the public interest is being served. There are many potential harms attending this transaction—even the majority recognizes them. But all the majority’s efforts—diligent though they were—to ameliorate these harms cannot mask the truth that this Comcast-NBCU joint venture grievously fails the public interest. I searched in vain for the benefits. I could find little more than such touted gains as “the elimination of double marginalization.” Pardon me, but a deal of this size should be expected to yield more than the limited benefits cited. I understand that economies and efficiencies could accrue to the combined Comcast-NBCU venture, but look a little further into the decision and you will find that any such savings will not necessarily be passed on to consumers. When they tell you that at the outset, don’t look for lower cable or Internet access bills. As companies combine and consolidate, consumers have seen their cable bills out-strip the Consumer Price Index by orders of magnitude.

Many of the new commitments that have been added aim no higher than maintaining the status quo. The status quo is not serving the public interest.

It is also claimed that the duration of the commitments made by Comcast-NBCU are longer than any that have been attached to previously-approved mergers. That may be true—but it is also true that power is patient and that big businesses can bide their time when they have to in order to reap the fullest harvest.

While approval of this transaction was from its announcement the steepest of climbs for me, given my long-standing opposition to the outrageous media consolidation this country has experienced over the past few decades, I did meet with stakeholders on all sides to make sure I understood their perspectives on the matter. And I worked to develop ideas to minimize the harms and to advance at least some positive public interest benefits. I know my colleagues worked assiduously on this proceeding, too.

Commissioner Clyburn, for example, worked successfully to achieve commitments from Comcast-NBCU to improve diversity, expand broadband deployment in unserved areas and increase broadband adoption by low-income households. The Chairman and his team, led by John Flynn, and many, many other members of the FCC team put more effort into this transaction than I have seen put into any transaction during my nearly ten years here at the Commission. I also salute the unprecedented cooperation between the agency and the Department of Justice.

Comcast's Online Toll Plaza

But at the end of the day, the public interest requires more—much more—than it is receiving. The Comcast-NBCU joint venture opens the door to the cable-ization of the open Internet. The potential for walled gardens, toll booths, content prioritization, access fees to reach end users, and a stake in the heart of independent content production is now very real.

As for the future of America’s news and journalism, I see nothing in this deal to address the fundamental damage that has been inflicted by years of outrageous consolidation and newsroom cuts. Investigative journalism is not even a shell of its former self. All of this means it’s more difficult for citizens to hold the powerful accountable. It means thousands of stories go unwritten. It means we never hear about untold instances of business corruption, political graft and other chicanery; it also means we don’t hear enough about all the good things taking place in our country every day.

The slight tip of the hat that the applicants have made toward some very limited support of local media projects does not even begin to address the core of the problem. Given that this merger will make the joint venture a steward of the public’s airwaves as a broadcast licensee, I asked for a major commitment of its resources to beef up the news operation at NBC. That request was not taken seriously. Increasing the quantity of news by adding hours of programming is no substitute for improving the quality of news by devoting the necessary resources. Make no mistake: what is at stake here is the infrastructure for our national conversation—the very lifeblood of American democracy.

We should be moving in precisely the opposite direction of what this Commission approves today.

There are many other facets of the joint venture that trouble me. I worry, for example, about the future of our public broadcast stations. Comcast-NBCU has committed to carry the signals of any of those stations that agree to relinquish the spectrum they are presently using. Will public television no longer be available to over-the-air viewers? And, what happens when the duration of this commitment has run its course? Might the public station be dropped to make room for yet more infotainment programming? In too many communities, the public television station is the last locally owned and operated media outlet left. Public television is miles ahead of everyone else in making productive, public interest use of the digital multi-cast spectrum licensed to it.

Why in the world would we gamble with its future?

While the item before the Commission improves measurably on the program access, program carriage and online video provisions originally offered by the applicants, I believe loopholes remain that will allow Comcast-NBCU to unduly pressure both distributors, especially small cable companies, and content producers who sit across the table from the newly-consolidated company during high-stakes business negotiations for programming and carriage. Even when negotiations are successful between the companies, consumers can still expect to see high prices get passed along to them, as Comcast-NBCU remains free to bundle less popular programming with must-have marquee programming. Given the market power that Comcast-NBCU will have at the close of this deal over both programming content and the means of distribution, consumers should be rightfully worried.

In sum, this is simply too much, too big, too powerful, too lacking in benefits for American consumers and citizens. I have respect for the business acumen of the applicants, and have no doubts that they will strive to make Comcast-NBCU a financial success. But simply blessing business deals is not the FCC’s statutorily-mandated job.  Our job is to determine whether the record here demonstrates that this new media giant will serve the public interest. While I welcome the improvements made to the original terms, at the end of the day this transaction is a huge boost for media industry (and digital industry) consolidation. It puts new media on a road traditional media should never have taken. It further erodes diversity, localism and competition—the three essential pillars of the public interest standard mandated by law. I would be true to neither the statute nor to everything I have fought for here at the Commission over the past decade if I did not dissent from what I consider to be a damaging and potentially dangerous deal.

Stop the Cap! reader James dropped us a note to let us know Cablevision customers calling to cancel their cable service are scoring $20 a month off their cable bills for two years if they decide to stay with the cable company. It’s all because of the ongoing dispute between Cablevision and Fox over programming fees.

That $500 goes a long way towards compensating Cablevision customers for at least a year of petty programming disputes between executives who think of $500 as tip money.

So if you are a Cablevision customer, here is how to get your money back:

1. Call Cablevision at this number – 1-800-918-2581, which takes you directly to the customer retention department.
2. Tell the representative you wish to cancel your cable service because of the ongoing dispute with Fox and your loss of local and cable channels.
3. When they argue with you about why you should stay, tell them you are tired of being put in the middle of these disputes and forced to pay for programming you are not getting.
4. They may offer a $20 credit for just 12 months.  Tell them that is not long enough and if the representative won’t do any better, hang up and call back.

Be polite, persuasive, but persistent.  Customers on existing promotional deals may not qualify for this, but if you are paying regular Cablevision prices, you do.

The sooner you call, the better as word is getting out about this deal which could be withdrawn at any time.

Charter Cable customers are upset over new surcharges of a dollar or more on their monthly cable bills to pay for broadcast/over-the-air stations they can receive for free.  Even worse, Charter already charges its basic customers in areas like upstate South Carolina up to $25 a month for basic cable, which includes local channels and a handful of cable networks.

Now customers like Cathy Bader want to know why Charter needs a dollar surcharge on a $25 cable package when it only costs Charter a dollar for the local channels she wants to watch.

Those in other parts of the state pay as low as one-third that price for the same local channels.

“If you’re only paying $1.12 to rebroadcast the same channels that you can get with an antenna or on basic elsewhere [in the state] for $14 dollars, well, why don’t [they] take it down to $14 for basic cable,” Bader asked Diane Lee, a consumer reporter for WSPA-TV in Spartanburg.  “Why gouge the customers when you are the only game in town for most of us.”

Now that Bader has learned the exorbitant markup rate on basic, she wants to know how much Charter pays to re-transmit other channels, too.  She’s certain it is much less than the $111 she pays every month for cable service.

Time Warner Cable, in comparison, charges between $8-13 per month for the same broadcast networks in other parts of the state.  A good antenna will cut that bill to zero.

Charter Cable handed the TV station a written response:

“The pricing for our basic level of service incorporates the overall operating costs of providing video services to our customers.  Charter’s price for basic service in the upstate area is comparable to prices charged by certain other video providers, including basic cable service in the Atlanta area, which is approximately $23 a month.”

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WSPA Spartanburg Charter Surcharge 10-5-10.flv[/flv]

WSPA-TV in Spartanburg ran this report about Charter’s high basic cable rates.  (2 minutes)

Residents of these Virginia homes are required to pay $146 a month for Cox Cable, Broadband, and Phone service whether they want it or not.

Marilyn Castro decided she did not need her landline phone any longer.  The Virginia Beach resident learned her provider would be happy to oblige her request to disconnect service, but she is still required to pay her phone bill, even without the service, for at least the next 25 years.

Woodland Park, Virginia resident Allan Pineda got a similar story when he wanted out of Cox Cable’s landline service.  Yes, Cox will schedule a visit to disconnect service at his convenience, but he’ll still have to pay his cable bill, including landline charges, every month.

Frederic Martin, who lives at a Mid-America Apartment Communities-owned complex in Dallas, learned he was on the hook for cable-TV service, even though he has not owned a television set for more than a decade.

In Weston, Florida, some 15,000 homeowners pay for cable television whether they want it or not and if they don’t pay, their homes are at risk from foreclosure.

It’s all thanks to the concept of “bulk billing,” a practice growing in popularity that delivers mandatory cable, phone, and broadband service to renters and homeowners whether they want the services or not.  It’s a multi-million dollar racket, and thanks to the Federal Communications Commission, it may be coming to your community or apartment complex soon.

Castro

For almost five years, mandating cable service has become a growing problem in many parts of the country, especially in Florida and Virginia.  Most of the controversy comes when large housing management and homeowner associations, builders, and corporately-owned apartment complexes cut “discount deals” with a cable company to wire a community or complex for service.  Their mission is not always altruistic.  Many builders receive generous signing bonuses and ongoing kickbacks earned from condemning residents to mandatory cable service contracts that may not expire in their lifetime.

Some apartment complexes have added charges for cable-TV service to the rent. Many earn ongoing compensation from grateful cable companies who pay 3-5 percent of revenue back to the complex.  Even homeowner associations have gotten into the act, adding cable-TV costs to required association dues for upkeep and maintenance.  For those who can’t or won’t pay, liens and even foreclosure can soon follow.

LM Sandler of Virginia Beach, a Virginia builder, is a typical player.

Sandler has built entire neighborhoods of new homes across Virginia, most of which are covered by a “bulk billing” contract with Cox.  When residents buy or rent a Sandler-built property, a triple-play package of phone, cable, and Internet service comes along with the deal.  It’s not cheap, running $146 a month.  Even worse, your grandchildren could still be paying Cox Cable if they stayed in the family home, because Sandler’s contract with Cox runs up to 75 years.

Although residents are not required to take service from Cox, they are required to pay for it, in full, every month.

It gets worse for residents in Florida.  Most contracts with cable operators include provisions that can terminate service for entire communities if even a single homeowner is 60 days past due.  To keep that from happening, homeowner associations aggressively pursue slow-paying residents.  JMB Partners, who built much the residential housing in Weston, and the governing bodies in Weston committed residents to an agreement that has enormous implications if they miss a payment:

Between Jan. 1 and Dec. 17, 2004, the Town Foundation, Weston’s homeowner association, filed liens against more than 200 homes in the city. Most of these, according to Broward County court records, are for unpaid cable TV bills, which until 2003 were collected by the foundation. The city utilities department now handles that task.

One of the upset residents is Vincent Andreano, whose mother, Lita Andreano, was faced with the predicament of losing her Weston Country Club Home for a $109 cable bill that he said had been left outstanding by the previous owner.  The Andreanos said that when closing on the home about a year and a half ago, they came upon the outstanding debt and sent a check.

”No one ever contacted me or my mother afterwards to tell us they had not gotten the check or that the debt was still outstanding,” said Andreano, an attorney. “Then a year and a half later, they slap my mother with a foreclosure lawsuit. It’s legal brutality.”

Andreano said he tried to reason with Town Foundation attorney Douglas Gonzales, whose signature appears in the lawsuit paperwork, to no avail. He said he was told to pay the debt, plus legal fees billed at a little more than $200 per hour, in addition to court filing fees and other miscellaneous charges. The final tab: more than $1,500.

In the Tampa area, mandatory cable service bills for some neighborhoods and planned communities have increased by an eye-popping 44 percent because of the foreclosure crisis.  That’s because of mandatory payment clauses many have with providers like Bright House that demand full payment even when homes are unoccupied.  When a resident’s home is in foreclosure or a resident refuses to pay, all of the remaining area residents pick up the tab for unpaid cable bills.  This wreaks havoc with homeowner association budgets, who must find the money to pay the cable company, in full, every month.  Many have slashed security, road maintenance, refuse collection, landscaping, and other quality-of-life expenses just to keep the cable company happy.

Back in 2008, when Florida first began a downward housing spiral, the impact was already being felt:

The Chapel Pines subdivision in Wesley Chapel found itself stuck in a cable contract that requires $15,000 a month payment to Bright House, and is seeing the strain of foreclosed homes no longer paying their fees. That payment represents nearly half their total association budget.

The South Fork 1 development in Riverview has a 15-year contract with Bright House that requires a $9,700 a month payment, roughly one-third of the neighborhood’s total budget.

“We still have to foot the bill whether people live in those homes or not,” said Fred Perez, the former president of the South Fork association. “You end up with a big, bad debt line item on the budget.”

With the problem worsening, that homeowner’s association even contemplated bankrupting itself just to free it from obligations to Bright House.

Other communities are levying “special assessments” on homeowners to cover cable bills in high foreclosure areas:

To cement a good deal, the community, South Bay Lakes in Gibsonton, years ago signed a bulk contract with Bright House Networks to provide cable TV in the neighborhood, in exchange for a regular fixed payment.

That arrangement worked out fine when the neighborhoods filled up and residents paid their association fees – and the association turned over the cable TV payments to Bright House. The problem occurs when neighbors go into foreclosure and stop paying their fees.

The South Bay Lakes homeowners association still must pay about $140,000 a year to Bright House, even though there’s less money coming in from homeowners.

Because about numerous homes in the 300-home development are in foreclosure, South Bay Lakes had to issue “special assessments” on residents.

Fees rose from $150 a quarter to $216, and that probably won’t cover the shortfall, according to association officials. The Bright House bill represents almost half of the association’s annual budget of $261,000.

To make matters tougher, the community is locked into that deal with Bright House until 2019, with cable rates that rise “from time to time” according to the contract.

The city of Weston collects cable payments from residents forced to pay for service from Advanced Cable Communications.

Earlier this year, Stop the Cap! covered the story of residents in Tennessee and Texas who discovered the corporate owners of their apartment complexes were making cable-TV mandatory and adding the resulting charges to lease agreements.

Defenders of these bulk billing arrangements claim they deliver savings residential customers could not obtain on their own and ensure that complexes and planned living communities are fully wired for service.  Besides, they claim, there is no obligation to use the services provided and customers can obtain service from another provider.

But they still face paying for service they don’t use.  In some communities, it is service many don’t want to use.

John Carter, who lives in Weston, told the FCC as a senior on a fixed income he cannot afford to pay a second cable bill, even though his existing service is terrible.

“I am stuck with poor programming options, outages during stormy weather, slow Internet speeds of 15kbps and poor customer service,” he wrote the agency.

In other instances, sweetheart deals fuel incentives for builders to sign lucrative contracts with providers even before a homeowner’s association is formed.  In some cases, the provider turns out to be a family member or associate of the developer.  In many others, perpetual kickbacks through “royalties” and fees are paid to the builder or complex owner as long as the agreement remains in place, even long after the builder is no longer on scene.

For impacted residents like Castro stuck with landline service she didn’t want, it was time to fight back.  She launched Ban Bulk Billing, an online forum for those who oppose mandated cable-TV service. Castro asked consumers to join her in protesting the fees with the FCC.  But it’s hard to keep a movement going when giant corporate providers and other special interests have the resources to shout down consumers.

In March, the FCC collected its thoughts and submissions from property owners, apartment complex management companies, cable and phone companies, and consumers and rendered its decision — which threw consumers under the bus:

We conclude that the benefits of bulk billing outweigh its harms. A key consideration for us is that bulk billing, unlike building exclusivity, does not hinder significantly the entry into an MDU by a second MVPD and does not prevent consumers from choosing the new entrant. Indeed, many commenters indicate that second MVPD providers wire MDUs for video service even in the presence of bulk billing arrangements and that many consumers choose to subscribe to those second video services. We find it especially significant that Verizon, which more than any other commenter in the earlier proceedings argued that building exclusivity clauses deterred competition and other proconsumer effects, makes no claim in its filings herein that bulk billing hinders significantly or, as a practical matter, prevents it from introducing its service into MDUs. Bulk billing, accordingly, does not have nearly the harmful entry-barring or -hindering effect on consumers that exists in the case of building exclusivity.

In other words, because Verizon didn’t have a problem with these bulk billing arrangements, they’re fine by the FCC.  Verizon wants into this arrangement themselves, so it’s hardly a surprise they are not objecting.  The significance of Verizon’s change in position is hardly a mystery — the earlier barriers the FCC wrote about were designed to keep Verizon out of apartment complexes and condos.

The incentives for providers earned from these bulk billing contracts are enormous:

• The cost of collections and billing are passed on to local government, homeowner associations, rental companies, or other agents.  The risk of non-payment by a homeowner’s association or city government is nearly non-existent;
• Marketing expenses and customer promotions can be slashed because customers already have the service when they move in;
• Competition is diminished, especially from capital-intensive wired competitors.  Would you contemplate wiring a community for competitive service knowing existing residents are held captive by mandatory cable contracts?;
• Innovation expenses can be curtailed because the customer is already captive to the existing level of service;
• Rate increases are built-in, allowing companies to raise rates and still keep all of their existing customers.

Residents of Staples Mills Townhomes in Richmond, Virginia understand this only too well.  When the new corporate owner, PRG Real Estate moved in a few years ago, they brought Comcast with them, mandating every resident pay for basic cable service as part of their rent.

PRG’s website highlights Staples Mills as an example of “an institutional equity partnership:” (underlining ours)

The PRG model for improvement is two-pronged — pay close attention to the details of management with a well thought out capital improvement plan. Imbedding [sic] PRG’s professional management structure would mean the implementation of aggressive PRG policies and procedures, taking virtually all contract services in-house to save the profit margin being captured by contractors. The upgrade to PRG-trained site personnel would particularly enhance the marketing effort. Although the property was 97% occupied we anticipated that, after the capital improvements, the same occupancy rate would be maintained with significantly higher rents.

[…]It was crucial that we succeed, not only in terms of return to our investor, but in terms of building our relationships and profile with other institutional investors. We needed to hit this one out of the ballpark.

New and improved Staples Mills?

Residents called a foul ball, one writing, “Residents were slapped in the face with the news that they will be forced to pay for mandatory cable (an extra $34 per month on the rent) from Comcast regardless if they don’t want it, already have satellite, or don’t even have a TV under the guise of ‘lowering cable rates.’ It’s called subsidizing the people who want it by juicing those who don’t.”

PRG may have succeeded in making their investors happy, but they alienated a number of tenants in the process, most of whom assumed Comcast was their only choice and wouldn’t contemplate paying another cable bill from a competitor.

The FCC’s decision recognized that competitors could enter a bulk-billed service area, but ignored the reality most won’t.

Indeed, the FCC itself recognized the impact of these bulk-billing arrangements on the competitive landscape in their own decision, quoting from a submission:

One bulk billing cable operator states that fewer than 5% of an MDU’s residents subscribe to another video provider. It estimates that if it lost its bulk billing contract, it would raise its prices substantially for the remaining 95% because of higher programming and labor costs per customer. The combined savings for 5% of the MDU’s residents would be dwarfed by the increased expenses for the 95%, making the MDU’s residents significantly worse off than they were before as a whole.

The Cowardly Lion is still working for the FCC.

This proves two points:

1. The FCC still cowers in fear from threats issued by providers that any attempt to rein them in will do everything from raising prices to killing jobs and innovation, despite the fact only five percent of customers in the cited case took service from a competitor.  A five percent loss of customers would create conditions for a “substantial” rate hike only in their minds.  AT&T U-verse has captured far more than 5 percent of cable customers in markets where it competes with cable, yet somehow cable manages to keep the lights on and their doors open;
2. The FCC pretends that these agreements don’t impact the marketplace when the 95 percent “take rate” for service plainly indicates otherwise.  Do 95 percent of residents in non-bulk-billed neighborhoods also take cable service?  Of course not.

Despite the FCC’s industry-friendly ruling, many impacted consumers are not giving up.

Martin, the Dallas renter paying for cable-TV even though he doesn’t own a television, is taking the fight to state Attorneys General, hoping a group effort on the state level will dislodge at least some consumers from being forced to pay for something they don’t want or need.

Martin believes it’s manifestly unfair to deliver mandated “discounted service” to some on the backs of others who don’t want a cable bill at all.

“No one should have the right to force you to buy what you don’t want from someone you don’t like,” Martin says.

He points out under Mid-America’s terms, even blind and deaf residents are forced for pay for cable service.

The only thing cheaper than a discounted cable bill is no cable bill at all.  Now that represents real savings.

Martin’s vociferous objections and intervention from his Texas state representative eventually managed to get him off the hook with Mid-America’s mandatory cable bill.  His rent was lowered by an amount equal to the monthly cable fee, but the cable company is still getting paid on his behalf.

Martin's petition to stop mandatory cable service

For Martin, that’s just plain wrong.

“I am still subsidizing an industry of which I do not wholeheartedly approve,” he writes.

Martin is now coordinator for Tenants United for Fairness and has launched an online petition demanding an end to mandatory cable-TV charges.

He has gathered more than 100 signatures from 13 states so far, and the petition is open for everyone to sign, even if they are not currently impacted.

Martin says getting signatures has proved challenging in some cases.

“It has been very hard to get tenants to sign my petition because they’re in fear of the landlords,” Martin says. “Very few of those who have signed have gone further and contacted their elected officials or the FCC to complain.”

The impact of the March decision by the FCC has given providers a green light to expand mandatory service even further.  Some communities are now finding mandatory broadband service fees being added to cable-TV charges.

The FCC’s response?  “Consumers complaining about these latest new fees are sent an unsigned form letter from the FCC advising them to “talk to your landlord,'” says Martin.

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/WVEC Virginia Beach Residents fight mandatory bundle agreement 3-16-10.mp4[/flv]

WVEC-TV in Virginia Beach covered the plight of residents struggling to understand why they should be forced to pay $146 a month to Cox for cable, broadband, and landline phone service.  (3/10/2010 — 4 minutes)