AT&T has been mailing letters to customers caught tethering without the benefit of an add-on plan that if they don’t stop, they will be automatically enrolled in a $45 tethering-data plan this Saturday.  But Stop the Cap! has learned some tethering customers have already been scheduled for enrollment in the pricey plan, even though they abandoned the use of the tethering application that got their account flagged.

The warning letter, dated May 31st, gave Stop the Cap! reader “K” less than 10 days to notify AT&T they are not authorized to make any plan changes without our reader’s explicit consent.  When “K” called AT&T, the company explained the account had been flagged for the ‘tethering violation’ and was scheduled to be enrolled in the $45 DataPro 4GB for Smartphone Tethering data plan this Saturday.

“K” is not the only reader discovering AT&T has plans to change their account this weekend, resulting in dramatically higher bills.

Kai from San Francisco noted he started receiving text warning messages about tethering starting last month, discontinued use of the app that allowed him to avoid paying AT&T’s tethering prices, and still received AT&T’s letter and further text message warnings anyway.  He says it is a good thing he called AT&T.

“I didn’t believe AT&T’s claim that I would not be auto-enrolled in this tether plan if I stopped the tethering, especially after receiving their letter,” Kai writes.  “Sure enough, AT&T had already scheduled my enrollment, which I was able to stop by calling them.”

AT&T is quoting some callers portions of their terms and conditions:

The company has also told some callers complaining about the tethering crackdown that use of third party applications to tether without payment to AT&T already represents a breach of the customer agreement, so waiving an early termination fee may not be an option.

Stop the Cap! recommends consumers who have received text warning messages from AT&T about unauthorized tethering call AT&T and explicitly opt out of any data plan changes scheduled by the company.  This is particularly important for customers grandfathered in AT&T’s unlimited smartphone data plan, because once forfeited (even by AT&T’s own actions), the company has declared you cannot get it back.

See the entire letter from AT&T below the jump.

… Continue Reading

When Stop the Cap! reader Nancy learned earlier this year AT&T was pushing yet another deregulation bill in the Michigan legislature allowing the company to abandon landline service if and when it chooses, she called AT&T and her state representatives to protest.

“When I called AT&T, the representative literally told me if the company ever did decide to stop offering basic phone service in Michigan, I should just ‘get a cell phone,'” Nancy reports.  “Naturally they tried to sell me one of theirs and I replied I was not likely to be loyal to a company that was willing to abandon me and hundreds of thousands of other rural customers.”

As in Wisconsin, AT&T’s lobbying efforts follow the same basic playbook: use friendly legislators and dollar-a-holler groups financed in part by AT&T to push deregulation as “improving competition” and making the state “business friendly.”  But as Nancy learned from experiences in Wisconsin, those are empty promises when rates go up.

“These same people pushed to deregulate cable in Wisconsin so they could offer AT&T’s cable TV service, promising lower prices if we had AT&T competing against Time Warner Cable,” Nancy remembers.  “Time Warner and AT&T raised their rates for both services, instead.”

Nancy has a good memory.  So do we.  Yet again, AT&T’s chief Astroturfer is Thad Nation, this time under the name of the Midwest Consumers for Choice and Competition.  While consumers get ignored, Nation gets time to testify before the House Energy and Technology Committee.

Nation, who runs a lobbying firm, told legislators companies like AT&T should not have to invest in old copper-lines that consumers don’t care about.  He claims it prevents AT&T and other companies from investing in broadband and wireless.

The only thing missing from this group are actual consumers. Instead, their "partners" include: AT&T, groups funded by AT&T, and several chapters of the Chamber of Commerce.

In reality, legislation pushed by AT&T will allow them and other phone companies to abandon providing even basic landline service in the rural areas they no longer care about. There is no evidence (and no regulation) AT&T will invest in either broadband or improved wireless service in rural areas where the company is unlikely to quickly recoup its investment.

Our friends at the Michigan Telephone Blog pointed us to a piece in the Huron Daily Tribune, a newspaper at ground zero for rural Michigan’s potential loss of landline service should the deregulation bill pass.

Located in Michigan’s “thumb” — the northeastern part of the state separated by Saginaw Bay, Tribune reporters drilled down into the implications for the loss of traditional landline service in this largely-rural area of Michigan.

Huron County Commissioner John Bodis, who chairs the Legislative Committee, said he’s aware of the bill and foresees some issues with it, particularly in regard to the provision allowing phone companies to discontinue landline service in an area where Voice over Internet Protocol (VoIP) or cell phone service is available.

“If it’s not mandated, they’re not going to do it,” he said. “So, I’m hoping the Senate version will tweak that a little bit and hold their feet to the fire, but I don’t know.”

In its May Capitol Currents, the Michigan Township Association reported its concerns center around residents losing their land-line phone services when other options are not adequate (i.e. poor cell phone coverage because of hills, trees, etc.).

In written testimony to the House Energy and Technology Committee, Brian Groom, president of the International Brotherhood of Electrical Workers, Local 1106, stated over the past decade, the Michigan Legislature has gradually removed telecommunications providers from the oversight of the MPSC, and HB 4314 would complete that process by eliminating the last vestige of regulation — the Primary Basic Local Exchange Service.

“This service, as currently mandated in state statute, requires residential service providers to offer — at the very least — a basic calling plan to customers in their service territory,” Groom stated. “In 2005, when (M)PSC regulation of larger calling plans was eliminated, proponents argued that the public would continue to be protected by the existence of a Primary Basic Local Exchange Service requirement.”

“This means telecommunication companies providing basic local exchange or toll service will be able to discontinue or deny service to any customer who has access to ‘a comparable voice service.’ Nothing in the bill ensures that such service would be affordable, reliable or of a minimum quality,” Grooms continued. “For customers living in remote areas which are of a higher cost to serve via landlines, this legislation could result in them having to depend on higher cost and less reliable forms of telecommunication services. This bill would create a telecommunications environment where large areas of the state have no access at all to traditional landline telephone service.”

“That means people like me and my friends in places like Bad Axe, Elmwood, and Minden City — communities few people outside of Michigan would have heard of, get disconnected because they are too rural to get much attention from these companies,” Nancy says.

Frontier Communications, which provides service in some areas of the state, claims monopolies don’t exist in the phone business:

In written testimony, Bob Stewart, Frontier Communications state director of governmental affairs for Michigan and Indiana, indicated the current atmosphere is no conducive toward monopolies.

“The telecommunications industry in Michigan has moved to a highly competitive environment where monopoly powers even in rural areas do not exist,” he stated. “Unneeded and outdated regulations in the Michigan Telecommunications Act are cleaned up by HB 4314. Michigan needs to celebrate the success of the MTA by declaring victory; not over regulating simply for the sake of regulation.”

But many rural Michigan residents far from cable television and strong signal cell phone service would beg to differ.

“The further inland you head on the ‘thumb,’ the worse things get,” Nancy reports.  “Much of this is farm country and they can’t even get DSL service, and cell reception might be barely adequate outside, but walk inside and your signal is gone.”

Despite consumers like Nancy getting upset when they learn the long term implications of these bills, without a public outcry it is easy for legislators to vote with AT&T.  In the House, HB 4314 passed 102-6.  The six standouts that stood up for consumers?

Reps. Vicki Barnett (D-Farmington Hills, Jeff Irwin (D-Ann Arbor), Steven Lindberg (D-Marquette), Lesia Liss (D-Warren), Edward McBroom (R-Vulcan) and Phil Potvin (R-Cadillac).

On January 27, 1878 America witnessed the establishment of its first telephone exchange run by the District Telephone Company of New Haven, Conn. In addition to bringing the first phone service to Connecticut, District Telephone also published the world’s first telephone directory.  By the early 1920s, when America’s Bell System was taking hold in most cities, the company — now named Southern New England Telephone, had spread its network across most of the state.  SNET prospered for decades until Southwestern Bell (SBC) bought the company in 1998.  SBC rechristened itself AT&T in 2005.  It has been all downhill from there for many customers.

Today, AT&T Connecticut is the dominant phone company across the state, an unusual anomaly in the northeast, presided over mostly by Verizon Communications.  They also dominate the inbox at the office of the state Attorney General, who receives regular complaints about the phone company’s performance in the state:

In 2008, AT&T began installing refrigerator-sized cabinets on telephone poles and in right-of-way locations, often within feet of homes.  These Video Ready Access Devices (VRADs) connect AT&T’s U-verse fiber to copper wire telephone lines going to individual customers.  Dubbed “lawn refrigerators” by critics, the boxes are not only an unsightly 4-6 feet tall, they are also often noisy because of internal cooling fans.  More than one has burst into flames, thanks to malfunctioning power backup batteries found inside.

The perfect addition to any front yard... new boxes from AT&T. (Courtesy: Stopthebox.org)

AT&T’s often careless placement alienated residents, who complained they impeded views of turning drivers and pedestrians navigating sidewalks.  Many suggested the boxes reduced property values, especially when installed in front yards without screening or shrubbery to partly hide them from view.

One Trumbull man took his ire all the way to the state Department of Public Utility Control (DPUC), eventually winning noise dampening and two AT&T-supplied pine trees for the box in his backyard.

By 2009, AT&T was realizing “cost savings” promoted in the deal to merge with SBC — by laying off engineers and technicians responsible for maintaining the company’s landline network.  Service complaints soared, leading then-state Attorney General Richard Blumenthal to charge AT&T was cutting accountability for faulty phone lines and flimsy service.  In fact, even as service quality deteriorated, AT&T was lobbying to dispense with service standards altogether, arguing disappointed customers had other choices.

“AT&T is literally hanging up on consumers — slashing jobs and service quality, even after violating state customer service standards,” said Blumenthal. “Our message to the DPUC: don’t let AT&T off the hook. Preserve customer service standards to protect consumers.”

In 2010, service complaints had grown so bad the DPUC finally acted, by fining AT&T the maximum amount possible — $1.2 million.  Blumenthal called it a ringing wake-up call for AT&T.

But by December of last year, AT&T had still not paid the fine, and was caught by Blumenthal trying to negotiate a secret discounted settlement directly with the DPUC, cutting the state Attorney General out of the negotiations.  Blumenthal released a statement blowing the whistle on the reported talks:

Blumenthal

“AT&T’s stalling should be stopped — and the fine enforced,” Blumenthal said. “This multibillion dollar company sought secret negotiations — cutting out my office and the public — to reduce its fine for failing to meet legally required service standards. We halted its concealment; and now AT&T should stop its delay in paying taxpayers the fine that it owes.”

“AT&T was fined for failing consistently, year after year over a decade, to fix phone lines in a timely manner. Failure to repair lines quickly endangers public health and safety, especially seniors and the handicapped for whom a working line is literally a lifeline.”

Richard Blumenthal went on to represent the state in the U.S. Senate, but his successor, George Jepsen is proving to be every bit as tenacious as the state’s new Attorney General.  In March 2011, the DPUC formally imposed a fine of $745,000 on AT&T after negotiations with the phone company, which also required AT&T to meet its service standards.  The fine was reduced because AT&T had previously made refunds and settlements with customers independent of the fine.  The company is appealing it anyway.

“While I believe the full, $1.2 million penalty was warranted, the $745,000 fine sends a clear message to AT&T that it needs to improve its response to out-of-service customers.” Jepsen said. “The company’s responses in the future will be closely monitored.”

But has AT&T fixed the problems in the state of Connecticut?  Judging from press accounts, the answer may be no.

James Bruni, who lives in Hamden, had U-verse installed in his new home back in December, and there has not been a day since when the service has worked properly.

“We have had tech after tech come into our home, each one telling a different story,” Bruni says. “When our TV [picture] freezes, our phone and Internet go out as well.”

When that happens, Bruni’s home alarm, connected to his U-verse phone line, is subject to going off as well.  Many home alarm systems signal an alert if they detect a phone line has gone out of service, a possible sign of a robbery in progress.

Bruni has kept a log of AT&T’s comings-and-goings since December.  He counts 23 technician visits, working both inside and outside of the home.  When calling customer service, he is left on hold for extended periods, and often has to explain his issues repeatedly to technical support each time he calls.  He takes virtually every service AT&T offers, but not for long.

“I have had it with how I have been treated as a customer.”

Former Bridgeport city councilman Gilberto Hernandez proves AT&T doesn’t treat the well-connected any better than anyone else in the state.  Hernandez, now over 75, was so desperate to get repeating service outages fixed, he took his case to the consumer reporter at the Connecticut Post.

Hernandez’s wife is very ill, but he can’t depend on his AT&T landline to summon help in case of an emergency because it is always out of service.

Hernandez says the answer to his problem is a new overhead line installed through the neighborhood.  But AT&T won’t pay for that.  Instead of making an investment to correct long-term problems, the company prefers short-term fixes, which often fail within days. Performing short term repairs may help boost on-time appointment and service repair requirements, but when not followed up with more extensive repairs and upkeep, the problems just keep coming back.

The Post reporter sought an explanation from AT&T about Hernandez’s problems, and the phone company forwarded the matter to the company’s hired gun — the public relations firm of Fleishman-Hillard.  After a delay, the firm told the reporter Hernandez signed off on AT&T’s repairs… four days before Hernandez called to report there was a problem.

The reporter summarized AT&T’s performance in Connecticut as spotty:

During the hearing [over AT&T’s quality of service], AT&T defended its record, saying it already paid people off for the rotten service by not charging them for the time their phones were out and for crediting them and paying other penalties to the tune of $5.3 million between 2001 and 2008.

The DPUC did find AT&T was particularly good at reducing the number of troubles reported per 100,000 customers and showing up for maintenance appointments. AT&T has met appointments for repair work more than 90 percent of the time. Installation of new service is also a strong suit for AT&T, where it showed up for more than 99 percent of appointments. The company also installed new service within five days of ordering more than 95 percent of the time.

But repairing stuff, at least within 24 hours, is not AT&T’s bag. The company never managed to put better than 72 percent of repairs back in service within 24 hours between 2001 and 2008.

It’s time for every consumer across the country to help our friends in North Carolina, who are now facing the prospect of a Broadband Dark Age with the passage of a cable-industry-written bill designed to protect their monopoly prices and deliver America’s worst broadband experience.

The grand lie that is the Level Playing Field/Local Government Competition Bill (H.129) claims it will protect broadband competition in the state.  It will, if you are Time Warner Cable facing top-rated, super-fast service from community broadband networks that compete with them in communities like Salisbury and Wilson.

The power to protect North Carolina’s broadband future is now in the hands of Gov. Bev Purdue.

The North Carolina Senate abdicated their responsibility to serve the interests of state residents.  On Tuesday, they voted 39-10 for this consumer atrocity:

Yesterday, the House added insult to injury voting 84-32 for the bill custom written by and for Time Warner Cable:

Not a single Republican in the House stood up for you.

Faison

Several legislators that still remember they represent the interests of voters and not out of state big cable and phone companies were appalled.

Rep. Bill Faison (D-Caswell, Orange), who has been a champion of better broadband across North Carolina, reminded the Assembly the bill should have been named the Time Warner Cable Anti-Competition Bill, written by a New York City-based company that will prevent cities from using their collective buying authority to provide themselves (finally) with the broadband service the private sector has steadfastly refused to deliver.

Faison noted Time Warner Cable CEO Glenn Britt made $27 million in compensation last year — the same as the entire cost of Wilson’s GreenLight fiber-to-the-home cable system.

Faison openly pondered what the cable company has been paying to employ the six full time lobbyists who have been trolling the halls of the state legislature for months, and exactly how much next year’s rate increase will be to pay for their services.

Even the former chairman of the state Republican party called H.129 an enormously arrogant piece of legislation.

Luebke

Another hero for consumers, Rep. Paul Luebke (D-Durham), noted the bill’s immediate impact will be to keep rural North Carolina a broadband desert.  Luebke called H.129 a bad bill that denies service even to communities where no broadband service exists.

But Rep. Marilyn Avila (R-Time Warner Cable) wanted to ensure no one could say there was a broadband problem in North Carolina, so she supported an amendment that allows areas to be declared served if even a single home has broadband service in a particular census block.  That provision delivers beneficial protection to CenturyLink, who can spend their time, money, and attention on a merger with Qwest, the last remaining independent Baby Bell.  While they focus on making themselves bigger through mergers and acquisitions, the phone company faces no competitive pressure to expand service in rural North Carolina, and will face no meaningful competition for the indefinite future.

While Gov. Purdue’s office has made noises about vetoing this bad legislation, it is essential that we let the governor know we need an absolute commitment on her part to veto H.129.  We’ve seen how Big Telecom plays their dirty pool, so we cannot afford to sit back and allow their lobbyists to wear the governor down.

Gov. Purdue

When Time Warner Cable tried to slap an Internet Overcharging scheme on consumers in New York, North Carolina, and Texas in 2009, Stop the Cap! made a commitment to join forces with all of the impacted communities to present a united consumer front against provider abuses.  H.129 qualifies.  That’s why we urge everyone to contact Gov. Purdue and let her know she must veto H.129, an anti-consumer, anti-broadband bill.

Please call -and- e-mail her office:

• E-Mail: [email protected]
• Phone: +1 919 733 2391

Minor Correction Made 5/6 – 5pm ET: We made an error referring to a census tract instead of a census block in the original piece.  One of our readers dropped us a note correcting us, which we are happy to do.  A “tract” actually has many “blocks” in it.

Click to enlarge

Your cable company has a problem.  Collectively, the cable industry has lost more than 2 million video customers over the past year, and the problem may be getting worse.  Some of the largest cable companies in the United States are making excuses for the historic losses:

• The bad economy
• Housing and foreclosure crisis
• High unemployment
• Family budget-cutting

But cable companies should be rethinking their excuses, according to a new report from Strategy Analytics.

“Throughout the past seven consecutive quarters of subscriber losses, the inclination of cable has been to point the finger at various external factors,” said Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics service. “Our analysis shows that neither the economy nor the housing market is to blame for these subscriber defections. The problem is one of value perception.”

Value perception.  That’s a measurement of whether or not one feels they are getting good value for the money they pay for a product or service.  Value comes in several different forms, starting with emotional — do I feel good, safe, secure, or nostalgic using the service?  Can I imagine life without it?  What about my friends and family — will I stand out if I am not buying this product?  It’s also practical — Can I afford this?  Can I find a cheaper or better alternative?  Do I really need this service anymore?

Tied into value perception is customer goodwill.  If you have an excellent experience with a company, letting go of their products comes much harder.  If you feel forced to deal with a company that has delivered poor and expensive service for years, pent up frustration will make it much easier (and satisfying) to cut them loose at the first opportunity.

Embarq used to be Sprint's pathway to prosperity in the local landline business, until cord cutting put landlines into a death spiral.

In the telecommunications industry, value perception is a proven fact of life.  It began with phone companies.  Formerly a monopoly, landline providers have been forced to try and reinvent themselves and become more customer-friendly.  First long distance companies like Sprint and MCI moved in to deliver cheaper (and often better quality) long distance service.  Sprint even got into the landline business themselves, forming EMBARQ, which at its peak was the largest independent phone company in the United States.  When Voice Over IP providers like Vonage and the cable industry’s “digital phone” products arrived, they promised phone bills cut in half, and introduced the concept of unlimited long distance calling.

The value perception among consumers became clear as they began disconnecting their landlines.  The alternative providers offered cheaper, unlimited calling services, often bundled with phone features the local phone company charged considerably more to receive.  Even though VOIP is technically inferior in call quality in many instances, the value the services provided made the decision to cut the phone cord easier.

But local phone company landline losses would only accelerate with the ubiquity of the cell phone, but for different reasons.  What began with high per-minute charges for wireless calls evolved into larger packages of calling allowances, with plenty of free minutes during nights and weekends, and often free calling to those called the most.  Most Americans end the month with unused calling minutes.  As smartphones gradually take a larger share of the cell phone market, the accompanying higher bills have forced a value perception of a different kind — ‘I can’t afford to keep my landline –and– my cell phone, so I’ll disconnect the landline.’

The cable industry has traditionally faced fewer competitive threats and regularly alienates a considerable number of customers, but still keep their business despite annual rate increases and unwanted channels shoveled into ever-growing packages few people want.

This pent up frustration with the cable company has led to perennial calls for additional competition.  That originally came from satellite television, which involved hardware customers didn’t necessarily like, and no option for a triple play package of phone and broadband service.  The cable industry offers both, and by effectively repricing their products to discourage defections from bundled packages, customers soon discovered the resulting savings from satellite TV were often less than toughing it out with the cable company.

As a result, satellite television has never achieved a share of more than 1/3rd of the video market.  Many satellite customers are in non-cable areas, signed up because of a deeply discounted price promotion, were annoyed with the cable company, or didn’t care about the availability of broadband or phone service.  When the price promotion ends or technical issues arise, many customers switch back to cable.

More recently, researchers like Strategy Analytics have discovered some potential game-changers in the paid video marketplace:

• The impact of broadband-delivered video content
• The Redbox phenomena
• Competition from Telco TV
• The digital television conversion

Strategy Analytics studied consumer perceptions and found customers braver than ever before about their plans to cut cable’s cord.  According to the consumers surveyed, nobody scores lower in value perception than cable companies.  Citing “low value for money,” over half of the cable subscribers surveyed told the research firm they intended to disconnect their cable TV package in the near future.

While other researchers dismiss those high numbers as bravado, there are clear warnings for the industry.

“Much ink has been spilled on the topic of cord cutting and even skeptics are now admitting that it can’t be ignored,” said Piper.

Indeed, Craig Moffett, an analyst with Sanford Bernstein who almost never says a discouraging word about his beloved cable industry, told Ad Age Mediaworks the issue of cord-cutting was real.

“It’s hard to pretend that cord cutting simply isn’t happening,” Moffett said.

Craig E. Moffett, perennial cable stock booster, even admits cord-cutting is real.

The most dramatic impact on the cable industry has been in the ongoing erosion of the number of premium channel subscribers, those willing to pay up to $14 a month for HBO, Cinemax, Showtime, or Starz!.  The reason?  Low value for money.  As HBO loses subscribers, Netflix and Redbox gain many of them.  Netflix still delivers a considerable number of movies by mail, but has an increasingly large library of instant viewing options over broadband connections.  Strategically placed Redbox kiosks deliver a convenient, and budget-minded alternative.

The loss of real wage growth, the housing collapse, and the down-turned economy do put pricing pressures on the industry, but some cable executives hope the time-honored tradition of customers howling about rate increases without ever actually dropping cable service continues.

But as new platforms emerge, some delivering actual pricing competition to the cable TV package, increasing numbers of customers are willing to take their video business somewhere else.  Some are stopped at the last minute with a heavily discounted customer retention pricing package, but that doesn’t keep them from sampling alternative online video options.  Among those who actually do leave, some are satisfied with the increased number of channels they get for free over-the-air after America’s digital television conversion.

Many others are switching to new offerings from telephone companies.  Both AT&T and Verizon deliver video packages to many of their customers, often at introductory prices dramatically lower than their current cable TV bill.  When considering a bill for $160 for phone, video, and broadband from the cable company or $99 for the same services from the phone company, $60 a month in savings for the first year or two is quite a value perception, and the inevitable disconnect order is placed with the cable company.

Ad Age‘s own survey, more skeptical about cord-cutting, confirmed that many former cable TV customers left for budgetary reasons, but many also kept their triple play packages.  They just bought them from someone else.

Also confirmed: a dramatic upswing in online viewing, sometimes paid but often ad-supported or free.

Strategy Analysts concludes in its report, available for $1,999, that the ongoing erosion of cable TV subscribers isn’t irreversible, but it requires urgency among providers to become more customer-friendly and increase the all-important value perception.

In other words: respecting the needs and wishes of your customers.

Thankfully, the cable industry is dealing with competitors like AT&T, who are willing to assassinate their current lead in value perception by slapping Internet Overcharging pricing schemes on their broadband service.  That will certainly raise the ire of their DSL and U-verse customers, many who are treating the customer unfriendly usage limits as an invitation to leave.  Their former cable companies are waiting to welcome them back.  The real question remains, will cable customers now be treated better?