"Too rich for my blood."

Former Verizon FiOS customers now served by Frontier Communications in Oregon and Washington are receiving word of astonishing rate increases of as much as 46 percent from the phone company.  The massive rate increase is being blamed on “increasing programming costs” charged by the cable networks carried on a cable system that competes with Comcast, which charges far less for the same channels.

Frontier’s rate hikes are so dramatic — $30 a month for the popular standard 200-channel package, some customers are wondering whether the company is trying to sabotage their own fiber-to-the-home service.

“They sent us a rate increase letter stating our former standard package, priced at $65 a month, is now going up to a ridiculous $95 a month for basic cable,” says Tom, a regular Stop the Cap! reader. “That’s a rate increase only my health insurance company could love.”

New customers face the new rates immediately, but existing customers have until Feb. 18 before the new high price kicks in.  Many are preparing to move back to Comcast, which raised rates this year as well — but is now a relative bargain at $63 a month for a similar package.

“As much as I love FiOS, Frontier has managed to screw it up as badly as the rest of their services and now I am going back to Comcast,” Tom says. “You have to wonder if they are purposely incompetent or if it’s part of a larger plan to sabotage the Verizon FiOS network they inherited.  Either way, they’ve priced their service out of the market.”

When Tom called Frontier to complain, the company offered to rip out the advanced fiber network Verizon installed and stick a DirecTV satellite dish on his roof instead.

“Frontier is a real ‘Back to the Future’ kind of company — they just don’t get it,” Tom said.  “The operator actually told me she couldn’t understand why I would want to cancel service.”

Customers receiving new customer promotional discounts will get a real case of sticker shock when Verizon’s original promotional rates reset to Frontier’s new regular price.

“Washington County better beef up their hospitals because there are going to be a lot of heart attacks when that bill arrives,” Tom says.

The Oregonian newspaper reports customers are not the only ones to be shocked by Frontier’s enormous rate increase.  Regulators promised more competition and cheaper prices as part of Frontier’s purchase of Verizon landlines feel had as well.

“[Frontier’s rate hike] is essentially a white flag surrender and an exit from the head-to-head video competition,” lamented David Olson, director of the Mt. Hood Cable Regulatory Commission.

That’s a far cry from what Frontier Communications CEO Maggie Wilderotter told the newspaper in September when asked if the company would raise FiOS rates.

“That is not our plan. If I look across the board at our basic service pricing, I don’t think we’ve raised prices anywhere in the last four or five years,” she said.

The Oregonian quotes a Frontier representative who says the company’s relatively small customer base disqualifies them from volume discounts Verizon used to receive.

“Part of the challenge we have, compared to other providers, is that our footprint is so small,” said Frontier spokeswoman Stephanie Beasly. “They’re able to spread it out over a much larger customer footprint.”

That can’t be the whole story, said Fred Christ, policy and regulatory affairs manager for the Metropolitan Area Communications Commission, which regulates cable TV in Washington County.

“There’s more to it than programming costs. Anybody in the industry can pretty much figure that out. What more there is, we don’t know yet,” he said. “Unless programmers are trying to run Frontier out of business, why would they jack their rates that much?”

Smaller companies like Frontier generally do not try and buy programming on their own, but join group-purchasing plans like those offered by the National Cable Television Cooperative.  Municipal providers routinely purchase programming at substantial discounts.  It is not known if Frontier is a member, but they could be.

No rate increases are planned for broadband or telephone service.

Verizon FiOS pricing increased at less than half the rate Frontier will demand from subscribers in 2011. (Source: Metropolitan Area Communications Commission, Tualatin Valley, Ore.)

If you were late paying your Comcast bill by three months, the nation’s largest cable operator would shut your service off.  But if you decide to cancel service yourself, the company makes you wait up to 90 days for a refund of your credit balance.

ZDNet’s Dan Kusnetzky learned this first hand when he decided to give Verizon FiOS a try.

“I tried to pay the final Comcast bill at the time that I returned the company’s cable modem and set top box, but was told that I’d have to wait for the final bill to be calculated,” Kusnetzky wrote. “I was told, however, that I’d receive a credit for the unused service rather than having to pay Comcast anything.”

Despite that assertion, Comcast billed him for another month of service anyway, and he never heard about the promised credit when he called the cable company to inquire about the extra unexpected bill.

“When I called Comcast and was finally able to hack my way through the jungle of their voice response system (it took three calls before I was finally able to speak with a human being named “Jaun”), I was told that the credit would be refunded in the form of a check in late March,” according to the columnist. “That means Comcast plans to hold onto the money owed me for three months!”

Comcast’s voice response system leaves a lot to be desired according to Kusnetzky, and he openly wonders why Comcast thinks it’s fine and dandy to demand immediate payment (often in advance) for ongoing service while leaving customers waiting three months or more for their refund to finally show up.  That’s time Comcast gets to play with customers’ money, and the ZDNet author believes that is unacceptable.

Wood

Roku CEO Anthony Wood told a cable trade publication he is not worried that providers will kill the market for his online video set-top box with Internet Overcharging schemes.

Wood told Multichannel News the broadband industry faces enough competition to prevent one or both traditional providers from implementing usage caps and metered pricing for broadband service.

“What we see from a practical point of view in the marketplace is that there’s enough competition from cable, telcos and wireless so that in every market there’s an unlimited option — and the price is competitive,” he said.  “Unlimited sells — it’s just a good marketing strategy.”

Wood may want to inform broadband providers of that, because several American phone and cable companies are experimenting with slapping usage limits on their customers, making his web-streaming set top box an expensive proposition.  For customers of Frontier Communications in Elk Grove, Calif., using too much Roku could mean broadband bills as high as $300 a month.

With some HD movies consuming 2-4 gigabytes per title, some companies experimenting with usage limits as low as 5GB per month would make online video the primary culprit for consumers blowing through their monthly usage allowance.  After one bill with overlimit fees arrives, the Roku box will be the first thing to go.

Netflix, a major investor in the Roku box, could see its plans to shift to online distribution of its massive DVD rental business stymied by large phone and cable providers, many of whom see Netflix and other online video services as competitors who use their broadband service to send movies to consumers.  Some cable and phone companies contend Roku, Netflix, and other online video streamers are freeloaders — using their networks “for free” and demanding additional compensation to keep carrying their content.

Wood discloses another reason why cable and phone companies could potentially adopt a hostile position towards his 100-employee operation — “cord cutting.”

Wood told Multichannel News about 12% of Roku customers say they have canceled cable or satellite TV after buying the set-top while another 12% said they reduced their service level.

The cable industry is trying to retain customers by putting an increasing amount of cable content online for subscribers who maintain their cable-TV package.  Roku gives subscribers one more reason to downgrade or cancel service, a problem that could be stopped with an Internet Overcharging scheme that makes using the product an expensive proposition.

Some Roku watchers believe Wood is making a mistake underestimating the telecom industry’s willingness to protect its turf.

Two years ago Roku VP Tim Twerdahl said the company was not worried about Comcast’s 250GB download cap.  But since then, other providers have proposed far lower caps.

Roku is best known for letting Netflix subscribers stream the video rental firm’s online titles direct to television sets.  But Roku also delivers access to Hulu, Amazon video, and a growing number of new “channels” delivering classic movies, music/music videos, news, and user-created programming.

The company offers three set-top models: HD ($60), which delivers up to 720p video; XD ($80), which adds support for up to 1080p and 802.11n Wi-Fi; and the XDS ($99), which offers dual-band 802.11n and component video and optical audio outputs.  The top model occasionally sells for as little as $79.99 when on sale from Amazon.com or direct from the manufacturer.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Introducing Roku.mp4[/flv]

A brief video introduction to Roku.  (1 minute)

Sanders

Sen. Bernie Sanders has challenged FCC Chairman Julius Genachowski’s view that a merger between NBC-Universal and Comcast would not harm America’s media landscape or consumers.  The independent senator from Vermont released a statement today blasting the chairman for rolling over for another media conglomerate:

The FCC released some very bad news for the future of American media and, in my view, for the future of American democracy.  FCC Chairman Julius Genachowski has circulated an order that would allow Comcast, the country’s largest cable and Internet provider, to merge with NBC Universal, one of the country’s largest media conglomerates.

If approved, this new media giant will be the largest cable provider, the largest Internet provider, and one of the largest producers of content in the United States.  At a time when a small number of giant media corporations already control what the American people see, hear, and read, we do not need another media conglomerate with control over the production and distribution of media content.  What we need is less concentration of ownership, more diversity, more local ownership-and more viewpoints.

By law, the FCC may only sign off on the merger if it determines that it serves ‘the public interest, convenience, and necessity.’ Far from meeting the public interest standard, Comcast’s takeover of NBCU would create a monolithic media superpower and cause irreparable damage to the U.S. media landscape and society as a whole. In addition, the merger of these two media giants would likely precipitate other media mergers and make an already bad situation of media consolidation far worse.  Despite the public interest standard, Chairman Genachowski appears to be charging ahead, pressuring his fellow commissioners to approve this deal.

Some take solace in the fact that Chairman Genachowski’s order would approve the merger only subject to certain conditions and regulations.  This in no way changes my opinion about the scope of the damage.  If this merger is approved, I have little doubt that Comcast-NBCU will retain hundreds of attorneys and lobbyists to exploit gaps and loopholes in any conditions and regulations.  Once we allow companies to become this powerful, the FCC does not regulate them.  They regulate the FCC.

Time is running out to stop this deal.  I hope the American people will take notice and stand with me to demand that the FCC change course, vote down the order, and reverse the disturbing trend of media consolidation.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Sanders on Comcast 12-2-10.flv[/flv]

Sen. Bernie Sanders of Vermont appeals to Americans to join him in opposing the merger of Comcast and NBC-Universal.  (2 minutes)

[flv width=”480″ height=”380″]HTTP://WWW.phillipdampier.com/video/KTVX Salt Lake City Comcast for the Holidays 12-22-10.flv[/flv]

Salt Lake City’s local ABC affiliate never runs out of wonderful things to say about Comcast, the area’s dominant cable company. KTVX devoted more than four minutes of airtime last week to a puff piece promoting Comcast’s cable products.

It’s just the latest example of the blurring of the line between journalism and ingratiating sponsors by lending the station’s news talent out to shill for advertisers.

Included in the ‘Good Things Utah’ segment, an extended interview with Comcast’s Ray Child, who was encouraged to rattle on about all of the wonderful things Comcast/Xfinity offers local residents.  The two cheerleaders hosts presiding over the affair offered nothing but extended praise, although one host may have touched the third rail when she mentioned “monopoly.”  (4 minutes)