A California woman is suing Verizon Communications for selling her faster Internet service, at a higher price, the company cannot actually deliver.

Patricia Allen of Santa Monica filed suit in Los Angeles after Verizon sold her an upgrade to her current DSL plan that turned out to be anything but.  Allen was paying $23.99 a month for 768kbps service, but in March, 2011 Verizon promised they could give her a speed upgrade to 1.5Mbps for $11 more per month.

Exactly one year later, Allen learned her “upgraded service” performed no better than her original Internet plan, which itself only managed around 500kbps, and called Verizon to complain.

Verizon technicians quickly responded Allen could never get the benefits of a faster speed plan because she lived at least two miles from her local Verizon central office.  DSL speeds degrade with distance and can also be impacted by the quality of the landline network Verizon maintains in southern California.  Because Allen lives too far away to receive anything better than 700kbps service, she was advised to downgrade her $34.99 DSL plan back to the one she started with.

Allen requested a refund for the extra $11 a month she was paying for the last year for promised speed improvements Verizon never delivered, but the company flatly refused her request.  Allen is now taking her case to the California courts, and her legal representatives are seeking to have the case designated a class action covering all Verizon landline customers in California who, like Allen, are paying for Verizon-marketed speed upgrades they actually cannot receive.

The suit claims Verizon is well aware it is selling speed upgrades to customers who live too far away from the company’s facilities to actually benefit from the enhanced service, and pockets the proceeds without delivering improved service.  The suit alleges Verizon is engaged in unethical, unscrupulous, immoral, and oppressive business conduct in violation of California state law.

Verizon’s spokesman Rich Young called the lawsuit “baseless and without merit.”

Verizon Class Action Copy

California AT&T customer Matt Spaccarelli can’t understand why his wireless phone company is selling him an “unlimited data plan” for his iPhone that is subject to being throttled to dial-up speeds after as little as 13 minutes of Netflix viewing per day over the course of a month.

Spaccarelli argued his case with several AT&T representatives, who recommended he “upgrade” his account to a tiered plan that would guarantee him at least 3GB of an unthrottled experience for the same price he was paying for an ostensibly “unlimited use” plan.

“That to me says ‘if you pay more, then you get what we promised you in the first place,’ and that is not cool,” Spaccarelli told the Associated Press.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/AP ATT Backpedals on Throttling 3-1-12.mp4[/flv]

The Associated Press talks with Matt Spaccarelli, who successfully sued AT&T over his throttled Internet connection.  (3 minutes)

The Simi Valley man did what few AT&T customers have dared — he took the company to small claims court, and won a judgment of $850.

A Ventura County judge took a dim view of AT&T’s claim that customers can enjoy an “unlimited usage” experience, as long as they understand AT&T never promised what speeds customers would receive along the way.

AT&T lost, according to the judge, because of the legal concept of “justifiable reliance,” which means because AT&T advertises itself as the “fastest wireless network,” a normal consumer with an average understanding of mobile broadband should not expect to have their speeds on an advertised “unlimited use” plan reduced to something akin to an AOL dial-up account.

After AT&T’s representative read the company’s carefully-constructed legalese in its contract and terms of usage in court, even the judge was confused, relates Spaccarelli.

“What does this mean?” Spaccarelli remembers the judge asking.

AT&T's Control Measure for "Heavy Users"

Spaccarelli said he tried it AT&T’s way — switching to a 3GB tiered usage plan to stop the throttling on his “unlimited” plan.

“For one month they switched me to a tiered plan and that month I used the smallest amount of data ever and got the highest bill,” he told KTTV in Los Angeles. “AT&T has not and cannot show that my usage has ever caused damage to their network or caused other people to slow down.”

The AT&T Usage Limbo Dance — Lowering the Bar on Customers With Continuously-Decreasing Usage Allowances

Spaccarelli explained in court his throttling experiences with AT&T have gotten worse over the last several months as part of what he calls AT&T’s “Upside Down Pyramid Scheme.”

“The problem with using the top 5% of data users [as a basis for throttling] is because [customers] are not able to use the services that we would normally use, data usage becomes less and less,” he says. That in turn makes AT&T’s “top 5% usage throttle” engage at perpetually lower and lower usage rates.  Heavy users that used to make the top 5% of data users last fall were consuming a dozen or more gigabytes per month.  Today, AT&T’s “top 5%” consume only 2GB of data.

“When this all started I was getting slowed down after around 10GB of usage, then 8GB and then 5GB,” he says. “[Now] AT&T will admit that 2GB is the average when most people get slowed down.”

“They don’t want my usage to affect other users, which I totally understand,” Spaccarelli says. “But it seems like as long as I pay more they don’t care that my usage might affect other people.”

Spaccarelli pays AT&T around $140 a month for a plan he says AT&T sold him as “unlimited everything.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/KTTV Los Angeles ATT Lawsuit Interview 3-1-12.flv[/flv]

KTTV talked with Spaccarelli about why he decided to sue AT&T, what the experience was like, and why consumers should be concerned about usage-limiting Internet plans.  (5 minutes)

A judge was persuaded by Spaccarelli’s argument and awarded him $850 for the value of his effectively-lost “unlimited use” plan.  But Spaccarelli isn’t waiting by his mailbox — AT&T has indicated it intends to appeal the judge’s ruling and has not sent a check.  (Perhaps he could follow in the footsteps of George Kontos, an AT&T customer in Winston-Salem, N.C. who walked into a local AT&T retail store with a Forsyth County Sheriff’s deputy, to seize the store’s merchandise to satisfy Kontos’ $2,000 judgment.)

Lowering the bar on "unlimited use" customers.

That a customer successfully sued AT&T in small claims court is a potential nightmare for the company, which has worked for years to eliminate consumer protection clauses from its contracts.  AT&T already prohibits customers from pursuing class action lawsuits and typically mandates corporate-friendly arbitration in customer-company disputes.  But AT&T has not yet prohibited customers from suing them in small claims court, where damages are limited.

“I’m not a lawyer and I’ve never done something like this before,” Spaccarelli writes on his website. “I did my own research and took my own time to put together this case against AT&T.”

A case that he has begun documenting in an effort to help consumers pursue their own actions against AT&T.  He says filing a small claims case is simple.

“You give the clerk $85 and the court will give you a court date, that’s it,” Spaccarelli told AP.

Now AT&T has backpedaled on its original plan to throttle unlimited customers who use more than 2GB per month.  Instead, they have announced the throttle will kick in after 3GB of usage, the same amount offered by AT&T’s most popular $30 tiered plan.  That gives customers two choices: a speed throttle or overlimit fees for customers who exceed AT&T’s allowance.

AT&T has at least 17 million customers grandfathered on its now-discontinued “unlimited use” plan.  Any of them face the potential of throttling by AT&T, which could lead others to small claims court, with Spaccarelli’s help.  He told the New York Times he’s willing to travel anywhere in the country to appear as an “expert witness” in future court cases, as long as someone covers his travel expenses.

Spaccarelli says he’s not really interested in the $850, he just wants his unlimited use plan to really mean “unlimited use” again.

“I’d give back the money if they stopped slowing my speed down,” he says.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Spaccarelli Calls ATT 3-12.flv[/flv]

Spaccarelli calls AT&T customer service looking for his $850.  (2 minutes)

Billing problems, promotions-not-honored, and passing the buck are all common complaints from cable and phone customers, especially when employees of large providers don’t communicate with each other and saddle customers with the role of “go-between.”

Two recent examples of Customer Service From Hell reached our desk this week, one involving Verizon which has the “not my job” mentality firmly entrenched in their call centers, and the other from Time Warner Cable, where “Diego” told a new customer he couldn’t install their service until they disguised themselves as an old customer to cancel someone else’s service first.

The Case of the Persnickety Promotion – You Don’t Qualify Because We Never Added It to Your Account

You can't touch this Verizon offer when the company forgets to apply it to your account for eight months.

Anthony Caruso received an offer he couldn’t refuse from Verizon FiOS: $69.99 a month for a triple play package of phone, Internet, and television service good for 12 months, with a reduced discount of $89.99 per month for the second year — still a great deal over what Comcast was selling.

He signed up for service in June and was happy with the installation and the service… until the bill came.

Over the last eight months, Caruso has never received a single bill that reflected the offer he signed up for, resulting in monthly calls to customer service lasting between 30 and 75 minutes each.  Every month, Verizon told Caruso the promotion he received never existed, but they would issue certain credits as a gesture of goodwill.

The Star Ledger exhaustively details the entire debacle, but suffice to say, Caruso was a victim because nobody at Verizon applied the promotion to his account.  The company also never bothered to investigate why a customer had to keep calling (eight times in the last eight months) to receive those credits.  The newspaper illustrates how complicated it all got:

In early July, Caruso received the first bill, for $176.44.

It was more than a little confusing: $470.32 in “Current Activity” charges minus $289.96 in “Specials & Promotions” minus $21.24 for a partial month. The bill also included a “Showtime Starz Entertainment Pack” for $16.99 and “Multi-Room DVR Package” for $24.99, neither of which Caruso ordered.

The bill also included a “first bill estimate” showing monthly charges would be $139.31.

“Very confusing collection of charges and credits,” he said. “I paid the full amount to avoid billing issues for my first payment.”

He called Verizon on July 29 to discuss the bill. Caruso was transferred three times, and a rep named Sandy helped. Caruso said she dropped the “Showtime Starz” package and applied a one-time $30 credit. Caruso decided to keep the “Multi-Room DVR Package,” so his future billing should be $104.43. Because of the overpayment on the first bill, the amount due on the August bill would be $43.21.

“I was also told I was getting $9.99 “Epix” movie channel free for three months,” he said. “The FIOS lineup shows Epix is included in my package, but I decided not to fight this.”

Caurso said he paid the August bill, but there were still problems. It showed the normal monthly price to be $133.63.

He called again, and this time spoke to a rep named Jason, who said he had never heard of a $69.99 bundle offer. Caruso faxed a copy of the offer letter to the rep, who then recomputed the bill to reflect the correct package amount.

But the September bill was for $127.26.

Caruso called Sept. 7 and spoke to two different reps. The second rep also denied the existence of a $69.99 bundle offer, but asked Caruso to again fax a copy of the offer.

The rep applied another one-time credit and said the correct amount would now be $92.16.

This continued for the next several months. The bill would be wrong, Caruso would call and the reps would apply credits.

Got it?

After months of endless frustration, Caruso had to appeal to the newspaper’s Bamboozled column for Star Ledger readers seeking a solution to their endless customer service nightmares.

Tom Maguire, a senior vice president for Verizon, figured out what at least 10 Verizon customer service representatives couldn’t — the company never applied the original promotion to Caruso’s account because the service order was not written in a way that would allow the promotion to be applied.  Instead of the two year promotion, Caruso was signed up for month-to-month service, at a price of $129.99 a month, not $69.99.

“They basically dropped the ball from my perspective,” Maguire admitted.

What irritated Maguire (and Caruso even more) is that repeatedly-faxed copies of the promotional offer made no difference.

Caruso’s consolation prizes for his eight month ordeal:

• A direct number to a senior customer service representative already aware of Caruso’s service history;
• A restart of Verizon’s promotion, effectively extending it for nine additional months;
• A multi-room DVR package at a discounted price for the life of his service.

Tips for Living With Verizon:

Keep a copy of the promotional offer you select until it expires. If Verizon does not apply it correctly, or it mysteriously drops off your account at some point, you will have evidence the offer existed.  If you experience a repeated billing problem, ask the representative that answers to transfer you to a senior customer service supervisor.

Time Warner Cable’s Mind Games Threaten Our Relationship

Courtesy: Jacobson

Julie Jacobson chose Time Warner Cable over AT&T for her new Carlsbad, Calif. condo located to the north of San Diego.  The deciding factor: no cable box required for extra sets hooked up to expanded basic cable. (Unfortunately for Jacobson, that won’t be true much longer as Time Warner embarks on a nationwide conversion to a virtually all-digital lineup, which will require extra equipment on most television sets.)

Unfortunately, ever since Jacobson signed up for service, Time Warner has been playing “hard to get.”

Jacobson painfully details her encounters with Time Warner customer service, who had no idea what a CableCARD was (much less an “M-Card” which allows multiple signal streams).  She was also not impressed to discover the “free” HD-DVR promotion on offer evidently only applied to the cardboard box it came in.

“Your ‘free’ HD-DVR comes with an additional $11/month box-rental fee and $11/month service fee,” Jacobson discovered. “The HD-DVR is free + $22/month, which puts TWC pricing into U-verse territory.”

But even that wasn’t enough for Jacobson to declare Time Warner Cable “sucky.”  It was this:

Julie,

Thank you for placing your Time Warner Cable order online. We were unable to complete your order with the information you provided.

Please call us at 855-889-4113 so we can proceed with your service order. Be sure to have your order confirmation number (########) and the four-digit PIN you created during your online order ready when you call. We look forward to hearing from you so we can complete your order as soon as possible.

Thank you for choosing Time Warner Cable.

So I called the number on a Sunday at 3:15 p.m., using the phone number in the email. The office was closed by then. Believe it or not, I started pining for Comcast back in Minnesota. At least their customer service is 24/7.

After being bounced from offices in Wisconsin and North Carolina, she was finally transferred to California, where Diego (with his barely decipherable English) was waiting to not provide customer service:

I’m sorry, but I had a really tough time understanding him. As it turns out, it didn’t really matter because he was flat-out wrong. He told me the old tenants returned their TWC equipment, but they didn’t call to cancel their service; my order wouldn’t go through because there was already an account associated with the address.

“You need to call them to cancel their service,” he said.

“What?! I don’t even know who they are!”

In that case, he said, I could go to the local TWC office and bring them a copy of my lease.

That’s real convenient, given we’re only in town for one day.

So I ask Diego for the store phone number, and he provides it.

“Where is it located?” I ask.

“I don’t know … somewhere in the LA/San Diego area.”

Thanks, that narrows it down.

A more encouraging experience with another representative later on seemed to have everything worked out, until a new message from the company reached her e-mail box earlier today:

3rd Attempt: Please call us to avoid cancellation of your Time Warner Cable order.

Tips for Living With Time Warner Cable:

Time Warner’s system for dealing with new customers always hangs up when it finds existing service already established at an address. We encountered this ourselves and had to arrange for the old owners of our home to arrange for a service disconnection before Time Warner could complete our order for new service. Usually it makes better sense to call and establish service directly with a Time Warner representative over the phone when a complication like this arises. The representative would have identified the problem immediately instead of dispatching cryptic e-mail messages about a generic “problem with your order.”  Calling the local office nearest you is also a great way to cut through red tape and stop your call from being transferred to different call centers.

If your order went horribly wrong and you were inconvenienced, ask a representative to throw in free installation or some other extra promotion for your time and trouble. 

We also suspect that “third attempt” notification was probably associated with the earlier e-mail and not the more encouraging, later experience with another representative by phone.

Plenty of taxpayer-backed money for this... (Time Warner Cable Arena - Charlotte, N.C.)

Which is more important:

1. Spending hundreds of millions of taxpayer dollars to finance sports facilities, stadiums, and “incentive packages” to attract and keep major sports franchises calling your city home;
2. Building quality digital infrastructure that will deliver 21st century broadband service at affordable prices for every local citizen that wants the service.

Here in western New York, the city of Buffalo — the third poorest city in the nation with 28 percent of its residents living in poverty and suffering chronically high unemployment — is about to the recipient of a one billion dollar bailout courtesy of the state government (a/k/a taxpayers).  That, even as some in the city are howling that the promised tens-to-hundreds of millions in promised renovation funding for the Ralph Wilson (Buffalo Bills) Stadium is apparently not included.

While hundreds of millions of taxpayer dollars are readily available to finance sports stadiums, getting privately financed bonds for public broadband is somehow the real crime in states like North and South Carolina.  North Carolina already has legislation in place that virtually assures broadband service is under the control of the state’s largest phone and cable companies, or it simply is not provided at all. Evidently in a battle over worthwhile public spending, financing a reported $260 million for Charlotte, N.C.’s Time Warner Cable Arena remains a higher priority than making sure the people of North Carolina have decent broadband service.

South Carolina this week is considering extending a similar courtesy to companies like AT&T and Time Warner Cable.  They need better broadband even more than their neighbors to the north.

Happily, broadband advocate Craig Settles has found a way for broadband lovers to have their cake and eat it too.

...but none for this?

Why not construct public, non-profit broadband networks by selling ownership shares to the general public?

All of you who believe in broadband’s impact on economic development (or are a little jealous of stories like this about Chattanooga’s 1 gigabit network), should look to the Green Bay Packers of the NFL for the key to financing your broadband network.

Yeah, they kind of choked in last Sunday’s playoff game against the N.Y. Giants. But the team is a surefire winner when it comes to raising money. The franchise raised $70 million to rehab its football stadium (Lambeau Field) by selling 280,000 stock shares to individuals at $250 a pop. They pulled off this amazing feat in just five weeks!

With apologies to New Orleans Saints fans — “Who Dat” is bringing big bucks into town for a project that will pump up the local economy? The citizens of Green Bay. Literally. The Green Bay Packers are a nonprofit corporation owned by local residents and businesses. Packers pride enabled Green Bay to outdo tech companies that can’t get an initial public offering off the ground, let alone raise $70 million.

If Green Bay can do all this for a football field, can’t your hometown or county convince constituents to raise just a few million for a broadband network?

$250?  That’s the combined price of today’s cable and cell phone service over just a single month.  Should a private non-profit group act as coordinator for the project, they can walk right past existing restrictions on municipal broadband enacted at the behest of big cable and phone companies.  Self-financed fiber to the home service could pay dividends… to customers instead of Wall Street.

Settles lays out the parameters and the challenges, namely fighting that old meme that only giant telecom duopolies know how to run a broadband business.  But as we’ve seen from small scrappy private providers like Sonic.net in California and publicly-owned EPB Fiber, providing superior service at a reasonable price will bring customers to your door.  Even more so if they also happen to own the door.

Years ago, phone companies could not simply raise rates willy-nilly.  They had to justify rate increases before an oversight body, usually on the state level.  But after spending millions to lobby state lawmakers to deregulate the phone business, AT&T is set to recoup their investment with a dramatic 25 percent rate increase for landline phone service in the state of California.

Some residential customers have kept basic landline service as a last resort, switching to “measured service,” where customers pay a small charge for every call they make or receive a calling allowance that covers several calls a day.  Measured service can deliver substantial savings over traditional flat rate service.  But now AT&T is targeting these “budget customers” for some stunning rate hikes.

Starting March 1st, AT&T is raising rates by nearly 25% for measured service — from $12.37 to $15.37 a month — a $3 increase.  After your calling allowance is exhausted, each additional local call will cost three cents per minute.

Customers with flat rate service will also pay AT&T $1.05 more — $21 a month (before taxes, fees, and surcharges) for basic flat rate, unlimited local calling.

Best of all (for AT&T), the company does not have to explain or justify the rate increase.  That attitude was evident when reading the Los Angeles Times‘ account of the rate hike, complete with an arrogant, shoulder-shrugging AT&T spokesman:

Lane Kasselman, an AT&T spokesman, said fees for measured and flat-rate calling plans are going up because, well, because.

“Goods and services go up,” he told me. “That’s how our economy works.”

The increase is expected to hit seniors and low income consumers the hardest — they are the biggest constituency of the 10 percent of AT&T customers who choose measured-rate, budget service.  They are also the least likely to have cut the cord on their traditional landline service in favor of a cell phone or competing Voice Over IP provider.

AT&T hints that the rate increase is partly to push customers into multi-service bundles that include phone, Internet, and television service.  By hiking the price of individual services, the bundled price suddenly seems to deliver the best “savings” for customers.

Critics call that price pumping — artificially raising the price of a-la-carte services to create phantom savings for the company’s higher-revenue bundled service packages.

A San Francisco advocacy group calls it something else.

“It’s extortion, pure and simple,” said Regina Costa, telecom research director for the Utility Reform Network, or TURN, a consumer group. “There’s no proof that these price increases are justified.”

Thanks to California’s deregulation of the landline phone business, no proof is required.