Customers of some of the largest cable, phone, and satellite companies will pay an average of 3-6 percent more for service in a series of rate increases taking effect between now and the end of February.

AT&T U-verse

If your introductory offer has expired, expect to pay more for just about everything as of Feb. 9.

Cable TV:

• U-family will increase from $54 to $57,
• U100 will increase for some from $54 to $59 and for others from $59 to $64,
• U200 will increase from $69 to $72/U200 Latino will increase from $79 to $82,
• U300 will increase from $84 to $87/U300 Latino will increase from $94 to $97,
• U400 will increase from $109 to $114,
• U450 will increase from $117 to $119/U450 Latino will increase from $127 to $129.

For high speed Internet customers who ordered their current speed before June 12, 2011, effective with the February 2012 billing statement, the monthly price for Basic will increase from $19.95 to $25, Express will increase from $30 to $33, Pro will increase from $35 to $38, Elite will increase from $40 to $43, and Max will increase from $45 to $48. If you are paying a monthly high speed Internet equipment fee for the Residential Gateway, the amount will increase from $4 to $6.

For Voice Unlimited, effective on February 1, 2012, the monthly price will increase from $33 to $35.

AT&T blames increased programming costs and “the cost of doing business” for the rate increases.  AT&T is increasing broadband pricing despite enjoying further cost reductions from their Internet Overcharging scheme implemented in 2011.

Comcast

Comcast implements rate increases at different times of the year throughout its national service area.  But a preview of what is forthcoming can be seen in south Florida and Minnesota, where Comcast’s new rates for 2012 have increased an average of 5.8 percent.  That comes after a 2 percent rate hike last year.  It’s a bitter pill for many customers to swallow, because Comcast has also been moving popular cable channels like Turner Classic Movies into the more expensive Digital Preferred package.  The price of that full basic package will now run just short of $85 a month. Customers in Minneapolis are staring down these new rates:

• Basic 1: no change in most franchise areas.
• Digital Economy: increases from $29.95 a month to $34.95 a month, or 16.7 percent.
• Digital Starter: increases from $62.99 a month to $66.49 a month, or 5.6 percent.
• Digital Preferred: increases from $80.99 a month to $84.49 a month, or 4.3 percent.

Comcast blames increased programming costs and upgrade expenses associated with its now completed DOCSIS 3 project.  Comcast also has converted many of its service areas to all-digital service, which has opened up additional room to sell more expensive broadband packages, add additional HD channels, and make room for new product lines relating to home automation and security.

Cox Cable

Broadband Reports readers are sharing anecdotal evidence Cox has begun its own 2012 rate increase campaign.  In Florida, cable TV rates are up yet again:

Prices for Cox TV and Cox Advanced TV will be as follows:

• Cox TV Starter will change from $19.55 to $22.85/mo.
• Advanced TV will change from $5.50 to $4.20/mo.
• Advanced TV Standard Definition receivers will change from $5.55 to $6.99/mo.
• Advanced TV High Definition, High Definition/DVR & DVR receivers will change from $7.45 to $7.99/mo.

Advanced TV Paks will change:

• Any 1 Pak (excluding Variety Pak) from $4.00 to $4.25/mo.
• Any 2 Paks (excluding Variety Pak) from $8.05 to $8.50/mo.
• Any 3 Paks from $12.00 to $12.50/mo.
• Variety Pak will be $4.00/mo.

Premium pricing will change:

• 1 premium channel from $13.99 to $14.99/mo;
• 2 premium channels from $23.99 to $24.99/mo;
• 3 premium channels from $30.99 to $34.99/mo;
• 4 premium channels from $36.99 to $44.99/mo.
• (Pricing for the 3rd and 4th Premium channels will be grandfathered at the current price for existing customers.)

Cox’s Preferred Internet tier is increasing from $49.99 to $53.99 a month.  Basic phone service increases from $11.75 to $13.18, and popular calling features like Caller ID are also increasing (from $5.95 to $9.00 per month).

Rates vary in different franchise areas.

DirecTV

The satellite TV provider will raise rates on Feb. 9 by 4 percent on average. Its costs are going up by more than that, the company said on its website: “The programming costs we pay to owners of TV channels will increase by about 10 percent.”

DirecTV defends its rate increase, noting it will introduce new features in 2012 that include more than 170 HD channels and the most 3D viewing options of any television provider.  The full breakdown is provided from DirecTV:

Consumer Tips

1. Customers who subscribe to bundled services will see the fewest rate increases.  The more services you bundle, the lower the typical cost of each component within the bundle.  It rarely pays to have one company as a TV provider and another delivering your broadband because standalone service pricing is increasingly the most expensive option.
2. Ask for an extension of your introductory or promotional rate.  Request pricing from the competition and be prepared to summarize it with your current provider when arguing for a lower rate.  If your current provider thinks you are serious about jumping to another provider, they may lower your rates to keep your business.
3. Be prepared to switch.  Cable companies base their retention offers on several factors: what the competition offers, how long you have been a customer (2+ years guarantees a better retention deal) and how you pay your bill.  If you are a late payer, expect a much more difficult time negotiating a lower rate.  You may encounter a brick wall if you are labeled a “flipper” that jumps between providers’ introductory pricing offers.  But even these customers will be welcomed back, with lower rates, when they inevitably return.  They just won’t get their promotional offer renewed.
4. Some companies reserve their most aggressive pricing for customers who actually schedule a disconnect or turn in their equipment.  Cable companies have gotten wise to empty threats from negotiating customers.  If you schedule a complete service disconnection two weeks in advance, some companies will take you seriously and call you with the most aggressive “win back” offers available, especially if you turned in your cable equipment.
5. Dump extras overboard.  Premium channel pricing has skyrocketed recently after remaining relatively stable for nearly two decades.  HBO is now at or above $15 a month in many areas.  As customers try to economize, premium movie channels are usually the first to go, and many cable operators are starting to lose preferred wholesale volume pricing discounts.  They are passing along new, higher prices to the dwindling number of premium customers left.  Scrutinize your cable bill carefully for potential savings.  Look for mini-pay tiers of HD channels you never watch, consider downgrading your “digital phone” package to local-only calling if you rarely make long distance calls, and consider tossing “Turbo” broadband speed packages that only incrementally increase download speed.  Many customers originally signed up to obtain higher upload speeds, but as cable companies boost speeds for all of their customers, the extra boost may no longer be worth the money.

"Hey, we're #19!"

The United States may be a leader in many things, but broadband isn’t one of them. The country has now fallen two more positions — to 19th place, behind South Korea, Sweden, Denmark, the United Kingdom, and even Iceland, since the Berkman Center for Internet and Society released its last rankings in 2009.

In 2004, President George W. Bush complained about the U.S. falling to 10th place, which he declared was “ten spots too low.”

Now eastern Europe and former Soviet Republics in the Baltics threaten to overtake the United States, and countries in southeast Asia already have.  Innovation in the United Kingdom, Australia and New Zealand means deploying fiber to the home service to the vast majority of the population.  Innovation in North America means conjuring up new pricing schemes to raise prices on broadband service and engage in competition-busting mergers and acquisitions.

But a USA Today editorial this week also places much of the blame on corporate influence inside Washington, which has promulgated legislative policies that favor telecommunications companies and throw customers under the bus.

“The simple answer is that other countries have policies that promote competition and innovation,” the editors write. “In contrast, policies here have allowed a few dominant players that control the least interesting parts of the broadband landscape (the cables and the wireless spectrum) to dominate.”

Indeed, a series of telecommunications laws enacted by Congress, combined with short-sighted policies at the Federal Communications Commission, have allowed a handful of super-sized players to own and control broadband service in America, resulting in providers establishing non-competing fiefdoms that avoid head-on competition.

The worst policy of all allowed broadband providers to keep competitors from reaching customers over existing broadband networks.  During the days of dial-up, you could purchase Internet access from the phone company, a large provider like MSN or AOL, or thousands of smaller regional and local service providers.  Simply dial a local access number and you were connected to the provider of your choice.  Now, U.S. law gives broadband network operators the right to restrict these independents from selling service over their networks.  Comcast need not sell anything other than Comcast Internet.  Frontier Communications can make a killing selling its own DSL service, while protecting that revenue from other Internet Service Providers who might sell the service over Frontier’s network for half the price.  Time Warner Cable voluntarily allows Earthlink and a handful of other companies to sell cable broadband service over its infrastructure, but at prices equal to or higher than what Time Warner charges itself.

Broadband providers argue that allowing competitors to sell service on their network would discourage future investment and rob shareholders a return on investments already made.  Today, major cable operators and phone companies are falling all over themselves denying they are in anything but the broadband business.  It has become an enormously lucrative enterprise, more profitable than television or telephone service.

USA Today compares the broadband landscape back home with that in South Korea — perennially the world’s fastest, and considerably less expensive than what North Americans pay for service:

South Korea has made broadband a national priority, mandating deployment and in some cases giving private companies incentives to build out. It has also prevented major players from monopolizing their businesses, encouraging competition and innovation. In South Korea, consumers can get broadband service from a cable or telecom company. But they may also choose among myriad independent providers that are given access to the physical infrastructure. This competition keeps prices down and the quality of service high.

[…] But over time, cable and telecom companies worked the courts and Congress to make sure that this competitive world would never come to be [in the United States]. […] Wireless is a bit better. But the market has remained a near duopoly, with none of the smaller players emerging as a strong competitor to AT&T and Verizon.

The same open network concept has fought its way forward in Canada (where Bell has worked furiously to sabotage the business plans of independent providers) and in the United Kingdom, Australia and New Zealand where all three governments have decided the best solution would be to scrap the ancient landline network and start fresh with an open-to-all-comers fiber to the home service.

Back home in the States it is business as usual with increasing broadband prices and the looming prospect of usage-limiting schemes designed to cut capital costs, monetize broadband usage, and stop cord-cutting.

The opposing point of view comes courtesy of dollar-a-holler, corporate-backed think tank The Heartland Institute, who is stuck quoting notorious industry-funded studies and think tanks like the Discovery Institute and the Technology Policy Institute:

The idea that European and Asian countries are lapping America in the race for broadband speed and penetration is a fallacy created with statistics comparing “persons” instead of “households.” Once you make that correction, the USA is firmly planted among the top of industrialized nations, as economist Scott Wallsten pointed out when he was a staffer at the Federal Communications Commission in 2009.

And as tech researcher Bret Swanson of Entropy Economics points out, if you measure Internet usage by gigabytes used per month — a better measure of the speed and utility of networks — the USA has nearly lapped Western Europe once and Asia twice.

Heartland Institute: "By not disclosing our donors, we keep the focus on the issue."

If you measure how many mouse clicks customers in New York make on a Thursday afternoon, we could be number one as well!  Gigabytes used per month does not measure the speed or price of service on broadband networks, considerations that actually do impact broadband rankings.

Mr. Wallsten is a familiar favorite go-to-guy for The Heartland Institute.  He’s also the choice of Time Warner Cable, who paid him $20,000 for a 2010 essay: “The Future of Digital Communications Research and Policy.”

There is big money to be made writing corporate-funded research reports.  Bret Swanson knows that very well, having been involved with the Discovery Institute, a “research group” that delivers paid, “credentialed” reports to telecommunications company clients who waive them before Congress to support their positions.  Swanson is also a “Visiting Fellow” at Arts+Labs/Digital Society, which counted as its “partners” AT&T and Verizon.

The gentleman from Heartland also quotes from the misnamed “Progressive Policy Institute,” which counts among its funding partners, AT&T.

It would have been probably easier (but ineffectively transparent) to simply quote from AT&T and Comcast directly.

The Heartland Institute, unsurprisingly, believes letting existing broadband providers deliver service exactly the way they want is the best option:

The digital economy — one of the only vibrant economic sectors left — doesn’t need more government “investment” or regulation. It needs only for government to butt out and let the market work the magic that continues to bring us the marvels of the modern age.

That magic will cost you $50 a month and rising.  If some providers have their way, while the rest of the world abandons usage caps, American providers can’t wait to slap them on, reducing the value of your service even further.

Comcast, Time Warner Cable, and Bright House Networks sold AWS spectrum in areas shown here to Verizon Wireless, virtually guaranteeing the cable industry will not compete in the wireless phone business.

Two years ago, Cox Communications was hungry to get into the wireless phone business.  It announced it was launching “unbelievably fair” wireless — an oasis in a wireless desert of tricks and traps on offer from competing wireless companies.  No more expiring minutes, the option of affordable flat rate service, and no hidden fees or surcharges were all supposed to be part of the deal.

“Our research found that value and transparency are very important to consumers when choosing a wireless service plan, but they are not finding these qualities in the wireless plans offered today,” Stephen Bye, vice president of wireless said back in 2010, introducing the service. “Total loss of unused minutes as well as unforeseen overage charges on bills are just two examples of what our customers have told us is just unfair.”

Those same issues still exist for wireless customers today, but Cox won’t be a part of the solution.  The company announced this past May it was exiting the competitive arena of wireless and would simply resell Sprint service instead.  Last month, it announced it wouldn’t even bother with that, and will transition its remaining wireless customers directly to Sprint.

What changed Cox’s mind?  The cost of building and operating a wireless network to compete with much larger national companies.  It simply no longer made sense to build a small regional wireless carrier and rent the rest of your national coverage area from other providers, who set wholesale prices at a level high enough to protect them from would-be competitors.

The lesson Cox learned first has now been taught to America’s largest cable operators Comcast and Time Warner Cable (and its sidekick Bright House Networks).

All three cable operators have effectively signed a non-aggression treaty with Verizon Wireless, agreeing to sell their unused wireless spectrum acquired by auction in 2006 at a 50% markup to Big Red.  In return, Verizon will market cable service to wireless customers.  It’s the ultimate non-compete clause so wide-reaching, Verizon stores will soon be selling Time Warner Cable right next to Verizon FiOS, something unheard of in the telecommunications marketplace.

It’s a win for Verizon Wireless, which accumulates additional wireless spectrum and peace of mind knowing the cable industry will not enter the wireless communications business.  Cable companies get to profit from their purchase of the public airwaves and see the potential of a dramatic reduction in customer poaching, as cable and phone companies stop fighting each other for customers.  Ultimately, it means customers could eventually pay the cable or phone company for all of their telecommunications services from television and broadband to wired and wireless phone service.  What consumers enjoy in one-bill-convenience may eventually come with higher rates made possible from reduced competition.

Verizon Wireless' currently unused AWS spectrum favor the east coast, but not for long.

Verizon will pay $3.6 billion to Comcast, Time Warner and Bright House Networks for the spectrum.  The deal has stockholders cheering because that payment represents a tidy profit for cable operators who did absolutely nothing with the spectrum they purchased five years ago.  It also makes AT&T even more intent on completing its own spectrum merger with T-Mobile USA.

The agreement has concerned consumer advocates because it seems to signal Verizon is content making money primarily from its wireless business, and will repay the favor from the cable industry by pitching phone customers on cable service.  That could ultimately spell big trouble for Verizon’s stalled FiOS fiber-to-the-home network.  Verizon may find it easier and cheaper to end its aggressive entry into Big Cable’s territory by simply reselling traditional cable television products.  It can still market wireless products and services to cable subscribers and not endanger the new atmosphere of goodwill.  Rural broadband, where cable never competes, could be served through wireless spectrum, for example.

For now, Verizon says it intends to continue competing with its FiOS network, but the company stopped deploying the service in new areas nearly two years ago.

The deal will go before regulators at the Justice Department and the Federal Communications Commission for review.  What will likely concern them the most is the appearance of collusion between the cable companies and Verizon.

“A flag is raised when two rival networks move to start selling each other’s services,” a person familiar with the concerns of federal antitrust officials told the Washington Post. “They lose their desire, impetus, to compete. That is a big antitrust flag.”

Mark Cooper, the director of research for the Consumer Federation of America, expressed serious concern as well.

“Verizon was supposed to be the great competitor for Comcast in the video space, while Comcast has been looking for a wireless play to match the Verizon bundle,” he said. “The deal signals bad news for consumers, who can expect higher prices for video, fewer choices and higher prices for wireless.”

Who owns what

Four years into the deal, consumers may not know what company they are dealing with, as cable operators will be able to market Verizon Wireless service under their own respective cable brand names.

The deal is also trouble for lagging Clearwire, which had been providing wireless broadband service to both Comcast and Time Warner Cable.  Under the agreement, both cable companies will end their relationship with Clearwire, which is particularly bad news for the wireless company because of its ongoing financial distress.  Sprint, which has heavily invested in Clearwire, may ultimately find itself with an investment gone sour, troubling news for the third largest wireless company manning the barricades against a nearly-complete duopoly in wireless service between AT&T and Verizon Wireless.

Cable stock cheerleader Craig Moffett from Sanford Bernstein seems thrilled with the prospect.  In a research note to his Wall Street clients, Moffett says AT&T could benefit from the Verizon pact with Big Cable by ending up in a “more duopolistic industry structure without paying for it.” If the FCC approves the non-aggression pact, the deal “would amount to an unmistakable step towards the duopolization of the U.S. wireless market, inasmuch it would leave T-Mobile, once again, stranded without a 4G strategy.”

Cable investors, he adds, are likely to be excited the cable industry won’t spend billions of dollars in capital building a wireless venture, and instead has agreed to work with competitors to cross-sell products and services.  With little competitive pressure, prices won’t be falling anytime soon.

That’s great news for investors, even if it is “unbelievably unfair” for consumers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Verizon to Buy Wireless Spectrum for 3-6 Billion 12-2-11.flv[/flv]

Bloomberg News explains the deal and its implications in the wireless industry spectrum battle.  (2 minutes)

Wireless operator (and cable company) Rogers Communications likes to spend big dollars pushing the message Canada is in the midst of a wireless spectrum crunch — a big reason why it wants “equal treatment”-bidding in upcoming spectrum auctions that may include “set-asides” exclusively for emerging Canadian wireless competitors.

But apparently the spectrum shortage only impacts areas outside of the province of Quebec, because Rogers plans to experiment with a new LTE wireless video on demand service it plans to pitch Quebecers, perhaps as early as next year.

Rogers CEO Nadir Mohamed told the Montreal Gazette the cable company intends to enter the Quebec market with an “over-the-top” on-demand video service, distributed over Rogers’ growing LTE wireless broadband network.  While Mohamed was quick to say this doesn’t mean Rogers intends to launch a full-scale competitive invasion against provincial providers Videotron, Ltd., and Bell Canada Enterprises, it is pre-emptively getting into the business of serving cord-cutters who drop traditional cable packages to watch online video.

The new service is expected to be accessible on phones, tablets, and Internet-enabled televisions and video game consoles, presumably through a wireless Internet adapter.

Mohamed

“Video for wireless has huge potential for growth,” Mohamed told the Gazette. “It’s sort of the mirror image of (how cable evolved), which went from video, to data to voice.”

Nothing eats bandwidth like online video, and Rogers traditionally caps this and other usage on their mobile wireless network, citing spectrum and capacity shortages. But Rogers sees few impediments serving up certain kinds of online video: namely their own.

That’s not a message the company continues to deliver consumers on its “I Want My LTE” website, part of a robust lobbying effort to get its hands on as much new spectrum as possible, even if it means locking out would-be competitors.  In fact, leaving the impression the company has spectrum to spare is so politically dangerous, Mohamed took the wind out of his own announcement by mentioning, as an aside, their networks still don’t have enough capacity to deliver full-motion video to a large number of customers at the same time.

“I think wireless networks in the foreseeable future will not have the capability to deliver full-motion video to a large number of customers at the same time, even with LTE,” he said. “So what you will see is an integration of wired and wireless, where the wireless network will off-load the traffic to a wired network.”

Rogers’ decision to limit the service, both in scope and range, is also designed to protect itself (and other cable operators) from unnecessary competition.  Rogers won’t offer a full menu of video services outside of its traditional cable system areas in Ontario, New Brunswick, and Newfoundland, and only Quebec residents (where Rogers doesn’t sell cable TV) will have the option of signing up for the wireless video-on-demand service.

Storm damage in eastern Massachusetts. (Courtesy: WGBH Boston)

The northeastern United States got more than its fair share of severe storms these past few months.  Remnants of Hurricane Irene caused severe flooding, heavy rainstorms that followed didn’t help.  But one of the worst of all was the Halloween Nor’easter that left serious wind damage in some areas, heavy snowfall in others, leaving customers without power, phone, cable, and broadband service for days, if not weeks.

Telecommunications companies including Cablevision, Charter Communications, Comcast, Cox Communications, Dish Network, Time Warner Cable, and Metrocast Communications of Connecticut are under fire across the region for not providing automatic service credits for impacted customers.  Charter and Comcast are both facing a class action lawsuit filed last week by a Massachusetts law firm that accuses the cable operators of “gouging” their customers by not automatically crediting affected subscribers for lost service.

Jeffrey Morneau of Springfield, Mass. law firm Connor, Morneau & Olin says up to 1.2 million Charter and Comcast customers were without service, but the companies will only provide credits on a case-by-case basis, and only if customers request them within a short time after the outage occurred.

“If you pay for a service and you don’t get it, the company can’t keep your money,” Morneau said.

Stop the Cap! readers in Massachusetts and New Hampshire report Comcast will grant reasonable service credit requests, assuming you get through to ask for them.

“Hold times are epic,” reports Tom Turlin, a Comcast customer in Massachusetts.  “I managed to get my credit by using their web contact form instead.”

Most providers require consumers to request credits for outages within 30-60 days of the service interruption, and time is running out for Nor’easter credits.

“Most people think they will only get 50 cents back so why bother, but actually with today’s huge cable bills, credits can be substantial,” Turlin says. “I received almost $15 back on my bill.”

Only AT&T, Connecticut’s largest phone company, agreed to automatically credit customers the company determined were without service for at least 24 hours.  Customers who don’t receive credit automatically can appeal to the company for credit they believe they are entitled to receive.

Here’s how different companies are responding:

AT&T: “We will give U-verse TV customers in Connecticut who experience a service outage for longer than 24 hours a pro-rated credit,” AT&T said. “In addition, we will voluntarily give similar credits for U-verse Voice and U-verse High Speed Internet service customers who experienced a service outage for longer than 24 hours. Customers are not required to take any action: the credits will be applied automatically on the customer bill for impacted customers within the next several billing cycles.”

Cablevision: “While state law provides for consumer credits for qualifying outages for cable service only, Cablevision has been providing a credit to customers on an individualized basis for all their services,” Cablevision said. “Customers will be credited when they notify us that they had a service outage. We are extending our normal period to request refunds to 45 days from the date of the storm.”

Charter: Customers must call or visit the cable company offices in person to request service credit.  “We are providing credit to customers for the entire time they were without service, from the time they lost power to the time their Charter services were fully restored, and we are providing credit for all services,” Charter said.

Comcast: “In order to receive a credit, a customer must contact Comcast and identify the time period during which they did not have access to Comcast services,” Comcast said.

Cox: “We need our customers to call us after their service is restored to report that they were without Cox services, and for how long,” Cox said. “We then credit their accounts from the time of the service outage until service was actually restored.”

DISH Network: The satellite provider is waiving service and equipment fees for consumers who need their equipment realigned, reinstalled or repaired due to the storm. “DISH subscribers who indicated that they were without service due to the storm were provided a credit for their time without service,” DISH said. “In addition, DISH subscribers who needed to suspend their service due to storm damage were allowed to do so at no charge.”

MetroCast Communications of Connecticut: It will provide customers with a refund on their next invoice after contacting the company. “The credit equals a prorated amount of the affected customer’s monthly charges for all MetroCast services, calculated based on the number of days during which such services were interrupted, and are included in the customer’s next invoice,” MetroCast said.

Time Warner Cable: Customers must contact the cable company online, by e-mail or phone and request credit for the number of days they were without service.  Most service credit requests that can be verified are granted within hours, and will appear on the next billing statement.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSHM Springfield City councilor Comcast disagree on cable rebates 11-21-11.mp4[/flv]

WSHM in Springfield covers the ongoing dispute city officials have with Comcast, who is refusing to automatically provide storm credits to customers impacted by the October Nor’easter.  (2 minutes)