Modem fees are back for some customers.

Spectrum appears to be sneaking modem fees back into the equation three years after telling regulators one of the benefits of Charter Communications’ acquisition of Bright House Networks and Time Warner Cable was that Spectrum customers don’t pay modem fees.

Effective April 1st, new Spectrum customers are being charged a one-time fee of $9.99 to either pick up or have shipped a cable modem for self-installation. If a technician installs it for you, the fee is $49.99.

“The one where you’re essentially paying them to go to the store, wait in line, get the modem, and then go home to install it all by yourself is especially nifty,” writes ‘rseiler,’ a forum participant on DSL Reports.

“Just wait for the ‘Bring your own modem’ $9.99 one-time activation fee, since that will be next,” predicted user ‘Techguru30.’

For now, however, the only way to avoid this fee is to activate your own customer-owned modem.

Comcast and Charter Communications are losing money on their cell service plans because their partner, Verizon Wireless, sets its wholesale rates too high, making certain the two companies cannot cannibalize Verizon’s own customers for long.

MoffettNathanson analyst Craig Moffett claims the cable industry’s 2012 $3.9 billion sale of wireless spectrum to Verizon Wireless, which included an agreement allowing the two cable operators to resell Verizon Wireless service, turned out to benefit Verizon more than Comcast and Charter.

The problem is Verizon set its own price for service high enough to guarantee the two cable operators will have a hard time outcompeting Verizon Wireless. Moffett estimates Verizon is currently charging the two operators about $5/GB and around $5/month per customer for unlimited voice and texting. According to Moffett’s calculations, only the pay-per-gigabyte plans have any chance of marginal profitability. Comcast charges $12/GB for its pay-per-usage mobile plan; Charter charges $14/GB for essentially the same service. Both plans include unlimited voice and texting.

Things quickly get unprofitable when a customer signs up for Spectrum Mobile’s or Xfinity Mobile’s Unlimited plan (both $45/mo). Once a customer uses more than 8GB of 4G LTE data per month, Verizon’s wholesale price, including the cost of voice and texting, reaches the same amount those companies are charging customers for service. That does not include any of the ancillary costs Comcast and Charter have to pay to support and market their wireless plans.

Moffett believes the two companies overestimated how often subscribers would offload traffic to Wi-Fi, and the future potential for more solid Wi-Fi coverage “looks cloudy.” The problem, as Moffett sees it, appears to be the cable industry’s loss of interest building out their metro Wi-Fi networks. Moffett called the joint CableWiFi project between Comcast, Charter, Cox, and Altice USA “a bust” because the members of the coalition have largely stopped investing in new hotspot installations. That leaves about 500,000 working hotspots around the country, a number that has remained unchanged for two years. Only in-business Wi-Fi continues to grow, as business cable broadband customers are offered the opportunity to provide Wi-Fi service for their customers. But those hotspots don’t typically offer outdoor coverage.

Comcast has grown its Xfinity Mobile service to 1.2 million lines since launching in 2017 and Spectrum Mobile, which began in last September, had attracted almost 134,000 customers by the end of 2018.

Windstream Holdings filed a suit against Charter Communications (d/b/a Spectrum) on Friday, claiming the cable company is trying to poach its customers with a “despicable” false advertising campaigned designed to make people believe the phone company’s days are numbered.

“Shortly after Windstream filed for Chapter 11 protection, Charter commenced a false and misleading advertising campaign designed to cause irreparable injury and damage to Windstream’s reputation and business,” the lawsuit filed with the U.S. Bankruptcy Court for the Southern District of New York states. “Charter targeted Windstream customers in Alabama, Georgia, Kentucky, Ohio, Nebraska, and North Carolina, which are several of Windstream’s top performing states.”

“On the envelopes for the advertisement, Charter intentionally utilized Windstream’s trademark and signature color pattern to mislead Windstream customers into believing that the advertisement came directly from Windstream. Indeed, Charter’s advertisement stated that it was ‘Important Information Enclosed for Windstream Customers.’”

Inside the envelope was an ad for Charter Spectrum:

Windstream Customers,

Don’t Risk Losing Your Internet and TV Services.

Windstream has filed for Chapter 11 bankruptcy, which means uncertainty. Will they be able to provide the Internet and TV services you rely on in the future? To ensure you are not left without vital Internet and TV services, switch to Spectrum.

With a network built for the future, Spectrum is here for the long haul.

Goodbye, Windstream.
Hello, Spectrum.

Windstream’s future is unknown, but Spectrum is here to stay—delivering internet and TV services you can count on. . . .

Windstream told the Bankruptcy Court the ads were evidently effective, based on call transcripts and messages sent from customers to Windstream’s customer service department. Windstream’s attorneys attached multiple examples:

“I got a letter in the mail saying that ya’ll were going bankrupt and for me to go with Spectrum so I have gone to Spectrum and I have just called to have the services of Windstream disconnected.”

“I’ve got Spectrum over here so they go everything hooked up and so they told me not to call you until they got everything going like it’s supposed to be but I got that letter in the mail from Windstream and told me to get with you guys – to get with Spectrum so that’s what I did.”

“Oh, well I was just going there because it says hello I mean goodbye Windstream and uh..to got to Spectrum.”

“Oh lord, well I’ve been [Inaudible] on ‘em honey. I thought the letter was from you cause it said Windstream Corporation.”

The lawsuit complains Windstream had to take 160 calls regarding the Charter mailers over a 10-day period.

The phone company is demanding compensation for a number of reasons, but in part because it was forced to offer inquiring customers a better deal in order to convince them to stay with Windstream.

“As a direct result of Charter’s advertising campaign, Windstream has been forced to expend substantial time, money, and resources to combat these false claims. When distressed customers have called in, Windstream has offered upgrades, which many customers have taken,” the lawsuit states. “Windstream has also incurred costs and resources to educate its customer care associates on how to provide a comprehensive response to Charter’s false claims, which includes an explanation of the true effects of the Chapter 11 proceedings. In addition, as a direct result of Charter’s advertising campaign, Windstream has undertaken an extensive mailing and advertising campaign, at significant cost and expense, to counter Charter’s false and misleading advertising campaign. Windstream’s Legal department has also expended extensive time and effort in researching and responding to this matter.”

Windstream also complained Charter somehow disconnected service to approximately 350 Windstream customers on March 14, 2019, without notice to the phone company. The phone company also alleges Charter has told customers that Spectrum is buying out Windstream.

“When Windstream customers contacted Charter to have their services reinstated, they were told by Charter that service was not being reinstated because of Windstream’s failure to pay certain amounts due to Charter,” the lawsuit claimed. “Windstream, however, is not currently authorized to make any payments to Charter on account of prepetition debt as a result of the Chapter 11 filing.”

Keith

Windstream sent two angry letters to Charter complaining about the mailers.

“This misconduct is unacceptable and will not be tolerated,” Windstream’s deputy general counsel Carol Keith wrote. “This goes beyond a mere marketing decision made in bad taste and is clearly an illegal targeting of Windstream’s services and/or business in the marketplace using ‘false and misleading’ representations. Furthermore, when given the opportunity, Spectrum employees have been directed to double down and outright lie to Windstream customers that Spectrum has a contract to buy Windstream out.”

When Windstream took their complaints straight to Charter, their claims were rebuffed.

“On March 26, 2019, Charter responded to Windstream’s letters, contending that its advertisements were not false or misleading, and that it was proper to describe Windstream’s bankruptcy as creating an ‘uncertainty.’ According to Charter, a Chapter 11 bankruptcy filing ‘creates ‘uncertainty’ regarding Windstream’s future until the bankruptcy is resolved.’”

Charter also told Windstream it believed the confusion over a “buyout” has to do with the cable company’s long-standing offer to pay up to $500 in contract termination fees for new customers switching to Spectrum.

JPMorgan “still believes in the potential of an eventual merger of Charter Communications with Altice USA, despite a cool-down in tie-up talk,” according to a short piece in Seeking Alpha.

The Wall Street bank favored a Charter merger with Altice, which owns Cablevision and Suddenlink, because Altice has proven its ability to ruthlessly cut costs out of the cable business, potentially bringing $2.7 billion in synergy savings from layoffs, outsourcing, and killing off employee perks.

JPMorgan analyst Philip Cusack believes the biggest merger prize would be a combination of Cablevision’s footprint in downstate New York, Connecticut and New Jersey with Charter-Spectrum, which serves almost all of New York State and already has a presence in Manhattan and other boroughs in New York City. Cusack also argues Cablevision’s Optimum business would be well served by a familiar executive. Rutledge was Cablevision’s chief operating officer before moving to Charter.

Two years ago, Altice considered acquiring Time Warner Cable, before investors forced Altice to pull back on further acquisitions that would result in even more debt for the European telecom company.

Among the likely challenges would be antitrust and regulatory roadblocks, particularly if Charter is the lead company. Charter is still in hot water with New York’s Public Service Commission and its own merger with Time Warner Cable was decertified by the regulator last summer. It could be a long leap from antagonizing New York’s telecom regulator and the attorney general to winning a green light for yet another cable merger.

Charter Communications is sending letters to consumers in some Google Fiber cities warning that the hotly anticipated fiber to the home provider is “canceling internet service in Louisville — don’t wait to be the next city.”

But no worries, Charter adds. “Spectrum is here for you.”

Spectrum is offering consumers in cities like Raleigh 400/20 Mbps internet $29.99 a month, price-locked for three years. (Image courtesy: News & Observer)

The letter includes an offer for Spectrum’s best internet deal, available only to addresses identified as already getting high-speed internet competition from at least two other providers — 400/20 Mbps internet service for $29.99 a month, price-locked for three years. In contrast, Google Fiber customers in the Triangle region of North Carolina pay $50 a month for 100 Mbps or $70 a month for 1,000 Mbps. That makes Spectrum’s offer a better deal, with for four times the download speed Google offers on its lower-priced plan.

Raleigh’s News & Observer spoke with Joe Mancini, head of sales for Google Fiber’s Triangle region. Mancini called Spectrum’s letter a “scare tactic.” Spectrum had no comment.

The letter could connect with would-be Google Fiber customers still waiting for service. Since being announced in the area in September 2006, Google Fiber’s first target was the community of Morrisville. As of today, the service is available in selected areas as far east as downtown Raleigh, and in Chapel Hill, southern and downtown Durham, and adjacent areas. But Google Fiber still has a long way to go to reach the entire region.

Google Fiber announced it was pulling out of Louisville, Ky., after a failed experiment microtrenching its fiber optic cables just a few inches underground. That proved disastrous, with cables emerging above ground as a result of incidental digging, erosion, road construction, freeze-thaw cycles, and in some cases, pets. Realizing it would have to scrap the entire project and start anew, Google instead decided to abandon the city, switching off existing customers on April 15.

Google has significantly slowed expansion of its fiber network over the last few years, and at one point signaled its future attention would focus on urban wireless mesh technology that would work like high-speed Wi-Fi. But that project seems to be dragging as well. As a result, some consumers may worry if Google is in the broadband business for the long haul. Mancini says the company is, and has continued expansion into new parts of the region earlier this year.

“I would encourage folks to disregard this obvious scare tactic. Google Fiber is here to stay,” he said in a phone interview with the newspaper. “We love it here, and we are working harder every day to bring faster internet coverage. I am knocking on doors to talk to potential customers right now, and our customer base and the network is growing every month. We served our first customers in Chapel Hill earlier this year and downtown Durham, as well.”