The 500 channel universe has arrived for around 23,000 households around the state capital as Verizon officially unveiled its FiOS television service last week.

The company added television to its broadband service offering after securing video franchise agreements in suburban Bethlehem, Colonie, Guilderland, and Scotia.  It also expects to win approval to provide television service to the nearby city of Schenectady and the town of Colonie shortly.

The arrival of Verizon’s triple-play package begins with a $100 monthly promotional package (go to Verizon’s FiOS website and the online price can be lower) including phone, Internet, and television service for a year, rivaling a similar $99 promotion on offer for new customers from incumbent Time Warner Cable. But Verizon delivers faster broadband service and more HD channels than its cable rival, and will deliver up to 535 channels to subscribers — 130 in High Definition.

“Consumers and small businesses in these communities at long last have a better choice for TV,” said Tracey Edwards, president and general manager for Verizon’s Upstate New York region. “We’ve had great success in many other parts of the state. Now it’s time to bring FiOS TV to this part of northeastern New York and provide customers in the region a choice that is truly different from the cable TV company.”

Verizon officials also claimed the introduction of FiOS TV would result in lower prices for local residents, a claim that does not necessarily hold up when examining the rates for each company.  Both deliver triple-play promotions and retention offers that come within a few dollars of each other.

Time Warner Cable says Verizon’s service does not come with the same local commitment to the region the cable operator has provided with its local news channel YNN, and features that allow customers to start programs over from the beginning or watch live streams of 32 channels on the company’s iPad application.

But the fact a new choice is now available has delighted some of our readers.

Jeff in Guilderland says a number of Albany residents were upset when Time Warner Cable unveiled its $99 promotion which turned out not to be available to existing customers.

“They only give the best prices to their least loyal customers who are ready to cancel their service or sign up as new customers,” Jeff says.  “We’ve had cable from these guys for over a decade and when we sought a temporary price break, they wanted to give us a $20 credit — thanks for nothing.”

Now Jeff says with Verizon around, Time Warner better offer more than that.

Verizon put expansion of its Verizon FiOS fiber-to-the-home service on hold more than a year ago, stopping new cities from winning new options made possible with fiber optics.  But Verizon is still continuing to meet its commitments to communities where the network has already broken ground.  Where communities have not given Verizon video franchise agreements, Verizon markets its broadband and phone options.  But delivering video completes the triple play package many consumers want.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Albany Gets FiOS TV 3-26-11.flv[/flv]

WNYT and WXXA-TV reports some Albany-area residents can now get FiOS TV, showing Verizon is still expanding its FiOS product line in areas where fiber has already been laid.  (3 minutes)

Time Warner Cable’s new free iPad application, giving authenticated cable customers a selection of live cable channels to watch on the portable device, crashed under heavy demand last evening, hours after the company unveiled it in a mass e-mail campaign to customers.

Time Warner Cable TV for iPad is Time Warner’s first serious effort at delivering a cable TV experience to an online audience, initially streaming 31 cable channels in HD to customers who pay for both cable television and broadband from the company.

Several of the featured networks were part of earlier contract battles with the cable company. Scripps-Howard’s Food Network and HGTV are there, as is Fox’s FX and Fox News.  Some smaller “less-connected” networks like Hallmark Channel also made the cut.  Comcast-NBC’s networks also have a prominent place, including Bravo and CNBC.  All four major cable news channels are included.  Time Warner has been making a point to negotiate for on-demand and streaming rights with cable networks as part of contract negotiations.

Channel Lineup

Requirements

• iPad™ with iOS 4.
• Time Warner Cable video package at the Standard (Expanded Basic) level or higher.
• Time Warner Cable Internet Service (Road Runner^® Standard or higher recommended for best experience. EarthLink^® High Speed or EarthLink^® Cable Max is also supported).

[flv width=”416″ height=”254″]http://www.phillipdampier.com/video/TV for iPad Time Warner Cable Ad.flv[/flv]

Time Warner Cable advertises its new iPad app for online viewing.  (15 seconds)

Time Warner Cable's new app for the iPad delivers 31 channels of live cable network viewing for free -if- you are a cable subscriber willing to watch from home.

Plenty of channels are missing though, including local broadcasters, Turner Broadcasting-owned networks like TNT and Turner Classic Movies, and sports networks.

But the most obvious limitation is that the service only works from inside of your own home, over a Time Warner Wi-Fi broadband connection.  You cannot take your viewing on-the-go.  This limitation seemed curious, considering other companies provide similar online viewing apps that can be used anywhere a wireless connection exists. 

Despite the limits, AdWeek reports several unnamed cable networks fired off warning shots yesterday to Time Warner Cable executives warning them they were streaming networks without permission.

Network legal reps are issuing a flock of heated missives to the nation’s No. 2 cable operator, calling for an immediate halt to a new service that allows subscribers to stream video content to iPads and other tablet devices. Although Time Warner Cable introduced the free app just 24 hours ago, a number of cable network groups have already made it abundantly clear that they had not signed off on any such distribution arrangement.

[…] “Distribution via any sort of third-party app is not addressed in our carriage deals with Time Warner Cable or any other operator,” said one affiliate chief. “There is going to be a messy dissection of what the rights are, but our position is that [this sort of distribution] is not authorized by our affiliate agreements.”

TWC CEO Glenn Britt has cautiously navigated the syntactic rapids, offering carefully worded assessments about the nature of the service. “Certainly all the business structures with the owners of copyrights are not fully in place, but you can begin to see a very exciting future for this set of industries and for the American consumer,” Britt said last August, after announcing plans to bow the iPad app. “There is great potential in all these devices…But it’s also a complicated process.”

Cable networks are concerned viewers who are not authenticated cable subscribers could get free access to programming from account sharing.  But considering Time Warner Cable has locked down viewing to inside the home for the time being, it is unlikely Time Warner Cable faces the same degree of wrath that could be heaped on Comcast and satellite dish TV providers who deliver apps that permit anywhere-viewing.

Time Warner Cable's new iPad app crashed under a heavy load last night.

The cable company’s heavy promotion of the newly-available app in mass e-mail announcements was probably a mistake, however.  The online viewing party came to a rapid end last night when the company’s servers, unprepared for the demand, ended up turning away many would-be viewers.

Jeff Simmermon, director of digital communications for the cable company, said they did not anticipate the level of demand they got last night.

“At about 8 o’clock last night the app crashed under a much heavier load than we anticipated. Our engineering team is working as hard as they can to put a fix in place and get everything up and running as soon as they can,” Simmermon wrote on Time Warner’s blog.

“For the time being, the app is running with only 15 channels. We have found that by temporarily reducing the number of available channels, we can ease strain on the authentication process. This will enable us to offer at least some sort of an experience to our customers while we get a fix in place. We’ll add the other 17 channels back in as soon as we can fix the underlying issue, and we’ll be adding more channels in future iterations of the app as well.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/BTIG Time Warner Cable iPad App.flv[/flv]

Rich Greenfield demonstrates Time Warner’s new iPad app.  (3 minutes)

Frontier attempts to dig themselves out.

The Oregonian has been covering the plight of Frontier customers in the Pacific Northwest who signed up for Verizon’s fiber to the home service — FiOS — and are now facing down the new owners who want to raise the price by $30 a month.

Frontier has done itself no favors in the media with an ongoing series of reports of service problems, rate increases, and now the latest signs it wants out of the television delivery business altogether.

In a letter dated March 4th, Steven Crosby — senior vice president of government and regulatory affairs, told the city administrator in Dundee, Ore., Frontier FiOS TV has been a flop.

Since Frontier Communications Northwest, Inc., acquired Verizon’s operations on July 1, 2010, it has built on Verizon’s prior actions and continued to offer a robust and aggressively priced video product to attract Dundee subscribers.  Despite these efforts, however, customer growth has been disappointing and stagnant and Frontier has not achieved a commercially reasonable level of subscriber penetration.

Frontier also admits it has been under-pricing its video service to stay competitive and attract new customers, but those days are over.  The company earlier announced its intention to raise rates by $30 a month for its standard cable TV service, making it more costly than its nearest competitor, Comcast.

Frontier recognizes the impact its enormous rate increase will have on its subscriber base, soberly noting it is likely to “further depress subscriber penetration.”

With this in mind, Frontier is exercising its right under the franchise agreement it has in Dundee to provide notice it intends to terminate its video service at a future date, after providing subscribers with 90 days advance notification.

Similar letters went to city administrators in Newberg, McMinnville, and Wilsonville.  City officials had no reservations about interpreting the meaning of the letters and plans to implement a $500 installation fee for future FiOS TV installations.

“Looking at it, you expect there will be no new customers,” Dan Danicic, Newberg’s city manager told The Oregonian. “Getting this opt-out notice is not a huge surprise to me, but we are disappointed.”

Frontier's rate increases are driving many consumers back to Comcast for their television service.

Sources tell Stop the Cap! there was considerable debate inside Frontier’s offices last week on how to implement directives from executives to shut down FiOS installations as quickly as possible.  Initial efforts to quietly raise the installation price — without giving subscribers’ advance notice — were on track until Frontier’s legal department quashed the plan.  Concerns were also raised inside the customer support units responsible for taking orders and handling customer billing inquiries over how to deal with the inevitable subscriber backlash when the first bills arrived in the mail.

“Frontier hates dealing with FiOS and they can’t wait to be rid of it — they claim that the product is at least 10 years away from really returning any investment from its original deployment,” a well-placed source told Stop the Cap! late last week.

Frontier FiOS is an anomaly for the rural phone company, which delivers the vast majority of its broadband customers DSL service over copper wire phone lines, usually at speeds approaching 3Mbps.  Frontier FiOS “came along with the deal,” one Indiana Frontier official told local media there in response to rate hikes there.

Still, media reports that the company plans to ditch its TV customers created a small panic inside Frontier by the weekend.

“Getting customers switched over to satellite TV service in an orderly manner was the original plan, but reports the company was abandoning the service altogether risks we’ll lose our customers to Comcast, and many will take their phone lines to the cable company, too,” a second source informed Stop the Cap! this morning.  “We were told ‘orderly transition’ over and over again, so reassuring customers is today’s top priority.”

Dundee, Oregon

Evidence of this campaign was not difficult to find over the weekend, as The Oregonian amended its original story claiming Frontier does not have immediate plans to exit the video business.

Crosby told the newspaper: “Our actual implementation decisions will be business driven. At this time, there is no change in our FiOS video offerings or in our FiOS video service delivery to our customers. And this filing does not affect our FiOS high speed service.”

Stephanie Schifano, identifying herself as an employee of Frontier Communications, attempted to spin the letters sent to several Oregon communities as a simple matter of business and not a foreshadowed abandonment of television service.

“Frontier is exercising our right under the franchise agreements to terminate the franchises. The right to terminate soon expires, and if Frontier didn’t give notice now we may have been required to provide this service, with these franchises, for another 12 years. This notice offers Frontier the flexibility to continue to analyze the FiOS Video/TV business and continue to service our customers,” Schifano wrote.

But both of our sources well-familiar with Frontier FiOS say the company’s actions speak louder than its words.

“When you increase the installation fee to $500 and raise your prices nearly $30 higher than Comcast, you would be crazy not to interpret the message Frontier is trying to send — go get your satellite dish from us and get off FiOS,” our second source told us.

Telecompetitor read into some of the company’s comments about utilizing the acquired fiber network in a new way, perhaps for over-the-top Internet video content.

“That’s wishful thinking,” our second source says.  “Frontier’s only online video efforts surround its rebranded Hulu service, relabeled myfitv.”

Frontier's online video platform serves up mostly repurposed Hulu content.

“The company has no plans I am aware of for a grand video strategy — FiOS covers far too small a service area and there is no way Frontier will spend more money to increase that fiber footprint,” our source adds. “Frontier wants to meet its general obligations made as part of its deal with state regulators when it bought Verizon FiOS with the landline deal, and little else.”

Frontier will continue to offer FiOS to broadband customers for the time being, regardless of what it does with its video package.

“If it’s already there and not costing a lot of money to maintain for broadband, why not?” our source says.

One direct sales contractor for competitor Comcast suspects that train may have already left the station.

Calling Frontier’s customer service operation “a circus,” the salesman says Comcast is benefiting from Frontier’s ball-dropping.

“Many Frontier customers are unhappy with the customer service side while stating they do enjoy their phone, Internet, and video services provided by the FiOS network, but lose the business on the practically non-existing customer service side.”

The contractor says he hears stories from Frontier customers all day who are fed up with the frustration of extended hold times, inaccurate or missing bills, online account access problems, excessive call transfers to deal with service issues and high fees.

For regulators, the aggravation is much the same.

After being promised by CEO Maggie Wilderotter that Frontier would be an aggressive competitor in a barely competitive marketplace, Frontier has raised rates by 46 percent, irritated their customers with customer service problems and outages, and now has served notice it intends to flee the TV business at an undetermined point in the future.

One of the biggest impediments to freeing up space on cable television systems is the amount of analog television programming viewers still watch over televisions not connected to set top boxes.  Time Warner Cable customers, already weary from paying $7 or more a month per television to rent digital boxes could eventually be in luck, if they own certain televisions made by Sony or Samsung.

The cable operator announced at this year’s Consumer Electronics Show it would begin testing delivering cable television directly to some television sets equipped to receive the Internet.

Time Warner Cable’s test of IPTV would deliver the cable lineup over its broadband network, which removes the need for an expensive and unsightly cable box.

Since the cable company would only deliver the channels customers were authorized to receive, boxes with complicated digital tuners and encryption schemes would be unnecessary.  For the first time in years, consumers could once again get the full cable lineup just by plugging a single cable into the back of their television.  No boxes, no TV set remotes rendered useless, no cableCARDs, and no more tangled cables behind the set.

The company could also eventually dump their DVR boxes, which require regular service to maintain and replace worn out hard drives.  The future of DVR’s is “cloud storage,” — your recordings would be stored at the cable company on their equipment, ready for on-demand access.

Could the days of the set top box be numbered?

The new IPTV service can also deliver advanced graphics and provide better on-screen programming guides, and even open up the potential to integrate Internet applications with the television experience.

IPTV already exists today with AT&T’s U-verse, which delivers all of its video programming over the same bandwidth their phone and broadband services rely on.  But U-verse still has a box attached to each television in the home.

Consumers could end up saving plenty if they got rid of expensive rented cable equipment.

But there are some downsides — the biggest being the currently limited number of televisions equipped to handle Time Warner’s proposed implementation of IPTV.

IPTV has often also opened the door to concerns from content producers about stream security — could a consumer capture perfect digital copies of movies over the cable company’s IPTV network?  And what happens politically if the cable company tries to deliver unlimited cable TV over the same broadband network it tried to limit in the past.

Cable providers and phone companies are trying to keep video subscribers happy in hopes they won’t drop service.  Comcast and Time Warner Cable both announced last week they are trying to build virtual cable systems that would deliver their channel lineups live to tablet computers, starting over home Wi-Fi networks.  Verizon and AT&T are also working on similar features.

Frontier's Fiber Fantasies

Frontier FiOS is the fiber-to-home network that gets no respect, at least from the company that now runs it.

What Verizon considers its crown jewel, Frontier Communications considers an afterthought. Since buying up several million landlines from Verizon, Frontier has reluctantly adopted the fiber-to-the-home service already up and running in a handful of areas Verizon sold off.

Frontier CEO Maggie Wilderotter said Frontier would not increase pricing on its services, in fact stating they had not had a price increase in several years.  But just months after winning approval of the deal with Verizon, Frontier stunned customers and regulators with one of the largest rate increases ever seen in the cable television industry: a $30 monthly increase for basic cable.

Understandably, angry customers have been calling Frontier in droves demanding an explanation.

Stop the Cap! reader Betsy was floored when a Frontier representative actually suggested to her its FiOS network wasn’t worth the trouble, and the representative was telling all of the customers calling they should “upgrade” to satellite TV instead.

“How do you even respond to that?  I thought I heard her wrong — I had the speakerphone on, but after the Frontier rep said it, my 87 year old mother who was listening hollered ‘that’s a bunch of bull****’ from the other room,'” Betsy shares.

“My mother almost never swears,” Betsy tells Stop the Cap! “But she was living with us when our family endured satellite’s rain fade, the neighbor’s trees, the picture freezes, and the equipment issues for almost ten years — why would we go back to that?”

In fact, it was Verizon’s FiOS network which attracted the Washington State family to take the satellite dish off the roof and toss it.  So it came as quite a shock to have a Frontier representative try and get her to rip a state of the art fiber network out to go back to DirecTV.

Frontier wants their customers to give up on this...

“Does anyone at this company have a clue what they are doing?  Using their logic, we should go back to dial or hand crank telephones,” Betsy concludes.

We wondered if this was a fluke, but then we found Frontier telling customers nearly the same thing in Ft. Wayne, Ind.

The Journal-Gazette reports Frontier’s rate hike in the Pacific Northwest foreshadowed similar rate hikes likely in the midwestern city that is Frontier’s second largest market, behind Rochester, N.Y.

Frontier Communications FiOS cable customers could be facing a monthly increase of $12 to $30 in coming weeks.

Many of the affected subscribers have a $99 bundle for monthly TV, telephone and Internet services. As an alternative, Frontier will offer DirecTV satellite service free for the rest of the year for customers paying for telephone and Internet, a spokesman said Wednesday.

“We will be making more information available by Tuesday of next week,” said Matthew Kelley, adding that existing customer contracts will be honored.

“With DirecTV, it really is a chance to get three services for the price of two. The channel lineups are pretty comparable.”

DirecTV offers more than 200 channels, Kelley said.

...and "upgrade" to this instead.

“Don’t sign me up,” Betsy writes when we showed her the Journal article.  “Channel lineups don’t mean much when you can’t watch them.”

Betsy’s satellite dish took a beating not only from the weather and efforts to find a clear view to the sky, but also from some birds advertising for a mate.

“The woodpeckers just loved to attack the dish — the jack-hammering sound could be heard all over the neighborhood when they got going,” she said.

Frontier’s Kelley admitted the company is small potatoes in the cable world, and simply can’t compete for good programming prices.

But even those of us at Stop the Cap! know that smaller players need not negotiate programming contracts themselves — they can join one of several groups that pool smaller providers together to grab substantial volume discounts.  Municipal players manage to find reasonable cable programming prices, but a multi-state corporate player like Frontier apparently cannot.

Bruce Getts, business manager for the International Brotherhood of Electrical Workers Local 723, shrugged off Frontier’s FiOS failures.

Getts, whose union represents 700 installers, repair technicians, customer service representatives and dispatchers at Frontier told the newspaper more people are going online to watch TV anyway, so the impact of the price hike might well become moot.

Unfortunately, Frontier is the same company testing an Internet Overcharging scheme in the Sacramento area that makes online viewing an expensive proposition, even more expensive than Frontier’s FiOS rate hikes.

“I think people will rue the day they let these bozos take over our phone service,” Betsy says.  “It looks like our family has a reason to cancel service with Frontier and head to cable.”