High speed Internet, snail slow refunds

Each time Frontier Communications gets mentioned on Stop the Cap!, we receive e-mail from disgruntled customers arriving to share their horror stories.  Since Frontier has now absorbed Verizon landlines in several states, that e-mail is only increasing.

Because so many messages arrive on different topics, we’ll be trying to share your stories with our readers based on the types of problems experienced.  Today, it’s the issue of refunds.

Stop the Cap! reader Alexia from Elk Grove, California writes:

Phillip, I want my money.  For four months, I have called, written, and called again to ask where my refund check from Frontier is.  We disconnected our service from Frontier back in May and our final bill had a credit of nearly $150 on our two landlines, DSL, and returned equipment.  Why so much?  Because we were quoted a final amount for our account and instead of using their auto-payment service, we mailed them a last check.  They withdrew that amount electronically from our checking account anyway, so we had double payments.

This isn’t just me.  My sister decided to disconnect her phone and will rely on her cell phone from now on, and she’s still waiting for her final credit balance to arrive back as well.

When you call Frontier, assuming you don’t get a busy signal or are left on hold, they seem very sympathetic and promise the refund has been processed and they are sending the check in the mail.  The Pony Express could have gotten the check to us by now.  My sister is waiting for $22 to be returned to her.

When I have canceled credit cards, utilities, and other services and have a credit balance, most of them include a check either in the final statement or in a letter that arrives within the month.  Not Frontier.  One representative claimed they don’t send refunds right away in case they discover additional charges they need to apply to an account.  What charges?  Are they hoping to find some?  We have not made a long distance call on our landline in years since getting a cell phone and I cannot imagine what other charges they are talking about.

What is the story here?

The check is in the mail

Stop the Cap! reader Jeff in Elko, Nevada had a similar problem:

My job transferred me to Reno in July and we canceled our service with Frontier and are still waiting for our last bill refund because we had a credit balance.  It was only around $8, but that was after I had to argue with them about a cancellation fee they tried to charge me and a fee for the DSL modem we returned to them.  They credited our account for both after talking to a supervisor but now it is a waiting game for the final refund check to arrive.  Every other company we canceled service with, right down to the propane people handled our final bill correctly.  Not Frontier.

Since moving to Reno, we signed up for AT&T service which turned out to be way better than the DSL we had with Frontier that went offline nearly every afternoon, so we’re fine saying goodbye to them.  Frontier has been in Elko for awhile now so I can only imagine what the Verizon customers are now dealing with.

In September, Frontier’s “the check is in the mail” excuse caught the attention of a Sacramento TV station’s consumer reporter.

Jeanne Pritchett Melendez of Elk Grove was also waiting for a refund check from Frontier for just over $15.

Back in May, Jeanne paid her Frontier phone bill ahead of time.  And when she canceled her service mid-month, her bill was pro-rated and she was promised her money back.  She called the company… Asking when her check would be sent. And every time, she says she was told, it’s on its way.  But after more than three months…

“I was very frustrated and I said, you know what, if I don’t have a check in the mail by Friday, I’m going to call Kurtis [Ming – CBS13 Consumer Reporter],” says Jeanne.

Melendez got her refund before our readers did, along with an explanation from Frontier about why refunds take months to arrive:

Frontier Communications Statement:

Frontier’s refund process is to refund the final credit balance on disconnected accounts within 2 to 3 bill cycles from the disconnect date to allow time for any additional credits or charges that need to be applied to the account. This process is to ensure that the customer receives an accurate refund check.

The customer’s account reflects that the service was disconnected on May 13, 2010. The May 22nd , June 22nd and July 22nd bills reflected a credit balance in the amount of $15.03. A refund check in the amount of $15.03 was processed on the account on August 9th. The customer will receive the refund check within 10 to 14 business days to the address on record.

The representatives are trained to alert the customer that it can take 2-3 billing cycles which is usually between 30-60 days. However in the case of Ms. Melendez’s account the disconnect notice was so close to the bill date that three bill cycles were required to process the refund.

— Stephanie Beasly, Communications Manager

This isn’t the first time Kurtis Ming has had to approach Frontier Communications about Sacramento area residents’ frustrations with the company.  Back in July, KOVR-TV ran a story about a Frontier customer who was paying a whopping $15 a month for Frontier’s Peace of Mind hard drive backup service he never got because he didn’t realize he had to download software to get the feature installed.  While that was not Frontier’s fault (and the company provided a credit to the customer for the service he never used), charging $15 a month for a service other customers are paying less to receive isn’t exactly fair either.

[flv]http://www.phillipdampier.com/video/KOVR Sacramento Frontier Service Problems 7-7 and 9-17-10.flv[/flv]

KOVR-TV in Sacramento ran two segments on Elk Grove-area customers having problems with Frontier Communications — one waiting for a refund and the other charged for a service he didn’t realize he had.  (4 minutes)

Bray Cary -- Frontier's biggest fan in West Virginia

Bray Cary has been falling all over himself again — singing praises for Frontier Communications while many of its customers in West Virginia contend with service problems and outages, sometimes for weeks at a time.

Cary, president and chief executive officer of West Virginia Media, owner of television stations across the state, was a big supporter of the deal to sell Verizon’s landlines in West Virginia to Frontier Communications. This past spring, Cary’s weekly Decision Makers program treated viewers to a softball question and answer session with Frontier’s Ken Arndt, who was forced to “endure” Cary’s contention that opposition to the deal was limited mostly to labor union sour grapes.

With a hard interview like that, Arndt was delighted to be asked back for another edition of Tea-’N-Cookies Breakfast Club With Bray, this time to answer tough questions about how the transition could have possibly gone any better for the independent phone company.

Good morning and welcome to Decision Makers on a weekend when America is discovering the beauty of the great state of West Virginia.  Through the magic of worldwide television […] we here in West Virginia are on the verge of discovering the power of the Internet across all of our hills and all of our valleys.

With that over-the-top introduction, Cary was off, spending nearly 20 minutes glad-handing Arndt through an interview that could have been produced in-house by Frontier’s marketing department.

[flv width=”500″ height=”395″]http://www.phillipdampier.com/video/WTRF Wheeling Decision Makers Cary Arndt Frontier 7-31-10.flv[/flv]

Nearly 20 minutes of mutual admiration between Frontier’s Ken Arndt and WV Media’s Bray Cary can be experienced for yourself.  These segments appeared July 31st on the Decision Makers program.  (19 minutes)

Ohio County, WV

More tea?

Meanwhile, in other parts of the state things are not nearly as rosy as Cary and Arndt contend.

Stop the Cap! reader Ralph points us to Ohio Country, located in the Northern Panhandle of West Virginia, where Frontier has subjected some customers to service outages extending into three weeks.  Entire neighborhoods have lost phone and broadband service.  Dela Misenhelder, who lives in Valley Grove says a storm August 4th knocked out service for her and her neighbors.  Misenhelder used her cell phone to call Frontier three different times to no avail.

“My concern is the elderly,” Misenhelder told a local TV station.  “Do they have cell phones — being out in the country, do they even have a signal — and be able to get 911 in case of an emergency or problem.”

Frontier’s regional general manager, William (Bill) Moon said that Frontier was supposed to have contacted all of the neighbors impacted by the outage to make sure service was restored.  In Misenhelder’s case, since her phone line was still not working, she never got that call.

Moon is a name readers will become increasingly aware of, as he features prominently in damage control efforts by Frontier in northern West Virginia when they get negative media coverage.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTOV Steubenville Frontier Continues Dealing With Phone Service Issues 8-25-10.flv[/flv]

Dela Misenhelder in Ohio County, W.V., was without her Frontier phone line for three weeks.  She made three calls to Frontier, who ignored her, so Dela called the newsroom of local TV station WTOV-TV in Steubenville, Ohio looking for help.  They achieved results for her, as you’ll see in this report.  (2 minutes)

Hancock County, WV

Matters are even more serious in the northern tip of the state — in Hancock County — where emergency responders are coping with defective T1 data lines that Frontier has failed to maintain properly, causing interruptions in emergency radio traffic.

The problems started when Verizon was in charge, but have gotten considerably worse since Frontier arrived.  Now the backup systems are beginning to fail as well.

When that happens, emergency communications with fire, police, and ambulance can’t happen, forcing first responders to rely on cell phones to communicate with one another.

Frontier called the problems with the T1 lines “odd” and at last check was examining more than 10,000 feet of phone cable looking for problems.

A local TV station witnessed the failure of a Frontier T1 line provided for emergency radio traffic themselves while filming a story on repeated Frontier outages.

On Saturday, another Frontier outage disrupted 911 service across Jefferson, Belmont and Harrison Counties, forcing local media to deliver streams of local direct numbers for emergency officials across all three counties.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTOV Steubenville Hancock County Experiencing More Phone Problems 7-8-10.flv[/flv]

Not less than three reports about failures in emergency communications attributed to a defective T1 line maintained by Frontier Communications have run on WTOV-TV in the last two months.  (6 minutes)

Residents in Marshall and Wetzell counties, which complete the Northern Panhandle are no strangers to Frontier service problems.  They were Frontier customers before Verizon sold its landline network to the company.

Stop the Cap! reader Mitch in New Martinsville writes to tell us West Virginia is just becoming acquainted with service on ‘the Frontier.’

“The company delivered lousy service to us long before they’ll deliver lousy service to the rest of the state,” he writes. “We cannot get DSL from Frontier because they won’t spend the money to re-engineer the ancient wiring on our street.”

For Mitch, the outage experienced by his ailing grandmother this past February, which stopped calls connecting from outside of the 686 exchange, was the last straw.

“She couldn’t reach me and I couldn’t reach her,” Mitch adds. “If a phone company cannot even handle basic phone call connections, what good are they?”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTOV Steubenville Phone Service Knocked Out In Parts Of Marshall Wetzel Counties 2-10-10.flv[/flv]

A winter storm knocked out Frontier service across parts of the Northern Panhandle this past February.  Customers discovered they could only dial and receive calls from other local residents.  WTOV-TV covered the story.  (2 minutes)

When Mitch tried to cancel Frontier service, he says they tried to stick him with an early termination fee of more than $100.

“I never signed a contract with them,” he writes.

NY State Attorney General Andrew Cuomo

Mitch escalated his complaint to the West Virginia Public Service Commission, which finally got Frontier to relent.

Mitch’s experience with phantom early termination fees charged by Frontier are hardly new.  Last fall, Frontier was slapped with a $35,000 fine and ordered to refund $50,000 in wrongfully charged termination fees by the NY State Attorney General’s office.

That precedent might come in handy in Washington state, where Frontier “accidentally” put former Verizon customer Steve Matheny in Redmond on an annual contract with a hefty cancellation fee.  When Frontier took over for Verizon, Matheny decided it was time to drop service.  Frontier sent him a final bill including a fee of $120 for terminating his service before his contract had ended.

Only one problem — he never had a contract.

“These folks rolled in and added a fee that no one committed to, at least I didn’t commit to,” he said.

Frontier ignored Matheny’s attempts to get the fee off his final bill, so he called KING-TV in Seattle for help.

As with so many other cases, when local TV stations feature Frontier’s mistakes and bad service on the 6 o’clock evening news, doors to a speedy resolution have a tendency to open.  Matheny got his $120 “fee” removed.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KING Seattle Bundled by accident charged a fee 8-24-10.mp4[/flv]

Redmond, Washington resident Steve Matheny joins a growing number of Frontier customers who suddenly find themselves on annual service contracts with hefty cancellation fees, despite the fact they never agreed to them.  KING-TV reports their intervention finally cut through Frontier’s red tape to get $120 in early cancellation fees removed from a final bill.  (2 minutes)

For West Virginia residents, the next time you experience a problem with your Frontier landline or broadband service, why not contact Bray Cary and ask him what he’ll do about it.  At the very least, ask him to pass you the plate of cookies.

In the financially difficult world of landline service, there has been one bright spot for Verizon — its state-of-the-art fiber optic service FiOS.  The cost of replacing obsolete copper phone with 21st century fiber optics has proved to be an expensive, but successful endeavor, at least in the eyes of customers.  Hated by Wall Street for its costs but loved by those who enjoy the service, FiOS has successfully proven traditional phone companies can earn money by providing the kinds of services consumers want, just so long as investors are willing to hang in there while the investment pays off over time.  But many investors aren’t.

Some of Verizon’s critics in the investment community complain the company is n0t earning enough from FiOS — in fact, for some critics who didn’t want Verizon spending money on a fiber-to-the-home network in the first place, financial returns provide the evidence used to claim they were right all along.

Despite the naysayers, revenue for Verizon FiOS is up by almost one-third each year, with average revenue per user now reaching $145 a month.  That’s well above the money Verizon earns on its legacy copper network phone customers keep leaving, especially outside of major cities where DSL service is spotty.  There is plenty of room for Verizon FiOS to grow in the limited communities it reaches.  Unfortunately, Verizon has stopped expanding its FiOS network to new communities, in part from pressure from investors who want to see cost cutting from the telecommunications giant.

Despite the positive reviews (subscription required) FiOS earns from consumer publications like Consumer Reports, Verizon slashed marketing and promotion expenses, resulting in second-quarter net additions for FiOS TV coming in at 174,000, compared with 300,000 a year earlier.

With Verizon now deploying service to communities on a reduced schedule, the results have been underwhelming according to the Wall Street Journal:

Verizon Communications may want to tweak the ad slogan for its TV and ultrafast Internet service to “This is FIOS. This is pretty small.”

Not catchy, but it would be more accurate than the current “This is Big” line.

[…]It eventually became clear that Verizon had slowed the time frame of the buildup, originally scheduled to be mostly done this year. Instead, it now expects to meet its target of passing 18 million homes with the network by 2012.

The slower timetable allows Verizon to trim capital spending this year. The problem is that FiOS’s expansion could stall with a less aggressive approach to growth. Already, Verizon has retreated from its target of adding one million subscribers a year, in favor of boosting penetration to 40% of homes passed. At June 30, its 3.2 million TV subscribers was about 20% of homes passed.

[…]And that can only reinforce questions about long-term returns on the $23 billion FIOS investment.

Evidence that Verizon is looking for more customers in its existing FiOS markets can be found in the news the company dropped its contract commitment for new customers.  The term contracts may have held some potential customers back out of fear of a lengthy term commitment with a $360 early cancellation fee.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon FiOS goes contract free ad.flv[/flv]

Verizon started running this ad several weeks ago touting its new “no contract” FiOS service.  (15 seconds)

But a change in strategy isn’t enough for investors who demand immediate results through further cost cutting measures.

In Verizon’s second quarter earnings reports, company executives speak to this perception, proudly noting they have slashed costs through job-cutting and reduced spending on infrastructure and services.  Some of those services include DSL expansion for rural Verizon customers, many who are now left on hold waiting for broadband from Verizon indefinitely.

In many states, Verizon’s DSL expansion was incremental at best, with the company issuing press releases touting new service for literally hundreds of potential customers.

Verizon’s traditional landline business continues to lose customers year after year, and is abandoning millions of others through sell-off deals with companies like Frontier Communications.  Light Reading notes Verizon eliminated 11,000 jobs in its Mid-Atlantic and Eastern regions through early retirement incentive programs, an idea soon to spread to other regions, particularly California and Texas in the coming months.  This kind of cost cutting saves cash and allows companies to report positive financial results in quarterly reports.

According to John Killian, executive vice president and CFO of Verizon, the job cuts are just getting started.  As Verizon further alienates its non-FiOS landline customers who can find better service and lower prices elsewhere, the company expects “further force reductions” in the coming months.  Verizon is also slashing costs by selling off real estate, consolidating operations and vacating buildings.

The impact can become a vicious circle of deteriorating service, customer defections, and additional cost cutting, which starts the circle all over again.  In West Virginia, deteriorating Verizon phone lines reached the point of serious service outages whenever major storms hit the state.  Then Verizon simply sold off its network in West Virginia.  Those customers are now served by Frontier Communications.

Verizon previously declared the era of the landline dead, and is now seeking to prove its point, even as it demonstrates it can make money by spending money on FiOS, if only investors would give them the chance.

[flv width=”576″ height=”344″]http://www.phillipdampier.com/video/CNN Behind the scenes at Verizon Fios 3-15-10.flv[/flv]

CNN took a behind the scenes tour of Verizon’s FiOS network in New York City, from the central offices to individual apartments.  (4 minutes)

Time Warner Cable is back again with another offer to existing Frontier Communications customers trapped in multi-year service agreements.  If you dump your Frontier landline overboard for Time Warner Cable’s Digital Phone service, the cable company will send you a gift card worth $200 good towards defraying your early termination fee, if any.  If you don’t have such a fee, you pocket the $200.  A year ago on this date the company ran a similar promotion heavily promoted in local cable television ad spots.

Time Warner will provide free installation of the phone line including unlimited nationwide long distance for $24.95 a month for 12 months.  With the $200 gift card, that’s above and beyond their usual promotion.  The company is also extending a bundled discount if a customer also takes Road Runner broadband service with their “digital phone” service.

For Frontier customers looking for an early exit, this offers one opportunity.

Existing cable subscribers can take advantage of the offer.  There are terms and conditions to consider, starting with where the offer is available.  The following Time Warner Cable service areas qualify:

• TWC Western New York
• TWC Central New York
• TWC Albany, NY
• TWC New England
• TWC Dothan, AL
• TWC Enterprise, AL
• TWC Yuma, AZ
• TWC El Centro, CA
• TWC Gunnison, CO
• TWC Telluride, CO
• TWC Coeur d’Alene, ID
• TWC Moscow, ID
• TWC Madison, IN
• TWC Newburgh, IN
• TWC Terre Haute, IN
• TWC Ashland, KY
• TWC Owensboro, KY
• TWC Richmond, KY
• TWC Kansas City, MO
• TWC Lincoln, NE
• TWC Ironton, OH
• TWC Richlands, VA
• TWC Pullman, WA
• TWC Clarksburg, WV

Next, the offer is only good for residential customers switching from Frontier’s landline service.  Limit one gift card per customer.  Your final Frontier phone bill showing a disconnect request must be furnished to Time Warner Cable within 30 days to qualify.  Your name and address must match on both bills.  Offer is not available to customers with past due balances with Time Warner Cable, defined as any money owed in the past 30-60 days or customers who have been disconnected for non-payment in the twelve (12) month period preceding this offer.  Service must be ordered by Dec. 31, 2010, and installation must occur within thirty (30) days of order date.

If you’ve contemplated a change in providers but didn’t want to be subjected to a steep early cancellation fee, this isn’t a bad offer.  Although I don’t use Time Warner Cable Digital Phone myself, others in my family do and they are satisfied with the service, although there have been at least two serious outages so far this year that ran several hours.  Since most people also carry a cell phone, any cable outage or power interruption that also takes out your phone line isn’t as serious as it might have been in earlier years.

And, ahem, unlike Time Warner Cable’s attitude towards broadband, they really do provide unlimited calling with their “digital phone” service.

Time Warner Cable is mailing this letter to Frontier Communications customers in the Rochester, N.Y. market. (Click to enlarge)

The days of AT&T’s exclusive American distribution of Apple’s iPhone are dwindling, but the mobile phone provider wants to make sure you tough it out with AT&T even after the iPhone becomes available from Verizon Wireless.  If you don’t, AT&T will charge you $325 to break your two-year contract.

Effective June 1st, AT&T’s near-doubling of its early termination fee from $175 to $325 for smartphones is a shot across the bow of regulators already annoyed with cell company fees.  But aggravating the FCC and Congress may be worth it if it means locking millions of AT&T customers into new contracts expected to be signed with the release of the next generation iPhone due next month.  AT&T is making it even easier by “upgrading” many current iPhone accounts to qualify for the latest phone at the new customer price… with another two year service contract.

AT&T claims the new fee more fairly represents the cost of subsidizing increasingly popular smartphones, and the fee will decrease by $10 for every month you stay over the life of your contract.  Without the subsidy, customers would pay nearly $600 for a phone AT&T reduces in price to $199 with a two year contract.  But companies like AT&T earn back the subsidy and then some from the monthly service plan fees collected over the life of a two year contract.  Customers who bring their own unsubsidized phones to AT&T get no benefit from doing so — they pay the same artificially higher prices subsidized phone owners pay.

AT&T also announced it was slightly reducing the cancellation fee for its basic phones by $25 to $150, decreasing by $4 every month a customer remains with AT&T.  That’s not much of a concession considering many basic cell phone users are dumping contract cell phone service plans for prepaid service, where significant savings can be had.

“It is ironic indeed that news of AT&T’s early termination fee hike falls one day after the FCC’s report on the wireless industry highlighted the substantial obstacles to effective competition and the restricting effect this has had on consumer choice, service quality and price, said M. Chris Riley, Free Press policy counsel. “AT&T’s move to further price-gouge consumers is evidence of its market dominance and the need for real reform of wireless markets. The FCC needs to take action to spur competition, which will lead to lower prices and more choices for consumers who don’t wish to be bogged down in long-term contracts.”

Holding customers to two year contracts dramatically reduces subscriber churn — the practice of customers jumping from one phone carrier to another.  That means stable revenue and reduced marketing expenses aimed at signing up new customers.

Verizon Wireless already doubled their early termination fee from $175 to $350 last November.

On Friday, AT&T released an “open letter” to customers which was written as if to suggest the increased fees benefited consumers: