Comcast, Time Warner Cable, and Bright House Networks sold AWS spectrum in areas shown here to Verizon Wireless, virtually guaranteeing the cable industry will not compete in the wireless phone business.

Two years ago, Cox Communications was hungry to get into the wireless phone business.  It announced it was launching “unbelievably fair” wireless — an oasis in a wireless desert of tricks and traps on offer from competing wireless companies.  No more expiring minutes, the option of affordable flat rate service, and no hidden fees or surcharges were all supposed to be part of the deal.

“Our research found that value and transparency are very important to consumers when choosing a wireless service plan, but they are not finding these qualities in the wireless plans offered today,” Stephen Bye, vice president of wireless said back in 2010, introducing the service. “Total loss of unused minutes as well as unforeseen overage charges on bills are just two examples of what our customers have told us is just unfair.”

Those same issues still exist for wireless customers today, but Cox won’t be a part of the solution.  The company announced this past May it was exiting the competitive arena of wireless and would simply resell Sprint service instead.  Last month, it announced it wouldn’t even bother with that, and will transition its remaining wireless customers directly to Sprint.

What changed Cox’s mind?  The cost of building and operating a wireless network to compete with much larger national companies.  It simply no longer made sense to build a small regional wireless carrier and rent the rest of your national coverage area from other providers, who set wholesale prices at a level high enough to protect them from would-be competitors.

The lesson Cox learned first has now been taught to America’s largest cable operators Comcast and Time Warner Cable (and its sidekick Bright House Networks).

All three cable operators have effectively signed a non-aggression treaty with Verizon Wireless, agreeing to sell their unused wireless spectrum acquired by auction in 2006 at a 50% markup to Big Red.  In return, Verizon will market cable service to wireless customers.  It’s the ultimate non-compete clause so wide-reaching, Verizon stores will soon be selling Time Warner Cable right next to Verizon FiOS, something unheard of in the telecommunications marketplace.

It’s a win for Verizon Wireless, which accumulates additional wireless spectrum and peace of mind knowing the cable industry will not enter the wireless communications business.  Cable companies get to profit from their purchase of the public airwaves and see the potential of a dramatic reduction in customer poaching, as cable and phone companies stop fighting each other for customers.  Ultimately, it means customers could eventually pay the cable or phone company for all of their telecommunications services from television and broadband to wired and wireless phone service.  What consumers enjoy in one-bill-convenience may eventually come with higher rates made possible from reduced competition.

Verizon Wireless' currently unused AWS spectrum favor the east coast, but not for long.

Verizon will pay $3.6 billion to Comcast, Time Warner and Bright House Networks for the spectrum.  The deal has stockholders cheering because that payment represents a tidy profit for cable operators who did absolutely nothing with the spectrum they purchased five years ago.  It also makes AT&T even more intent on completing its own spectrum merger with T-Mobile USA.

The agreement has concerned consumer advocates because it seems to signal Verizon is content making money primarily from its wireless business, and will repay the favor from the cable industry by pitching phone customers on cable service.  That could ultimately spell big trouble for Verizon’s stalled FiOS fiber-to-the-home network.  Verizon may find it easier and cheaper to end its aggressive entry into Big Cable’s territory by simply reselling traditional cable television products.  It can still market wireless products and services to cable subscribers and not endanger the new atmosphere of goodwill.  Rural broadband, where cable never competes, could be served through wireless spectrum, for example.

For now, Verizon says it intends to continue competing with its FiOS network, but the company stopped deploying the service in new areas nearly two years ago.

The deal will go before regulators at the Justice Department and the Federal Communications Commission for review.  What will likely concern them the most is the appearance of collusion between the cable companies and Verizon.

“A flag is raised when two rival networks move to start selling each other’s services,” a person familiar with the concerns of federal antitrust officials told the Washington Post. “They lose their desire, impetus, to compete. That is a big antitrust flag.”

Mark Cooper, the director of research for the Consumer Federation of America, expressed serious concern as well.

“Verizon was supposed to be the great competitor for Comcast in the video space, while Comcast has been looking for a wireless play to match the Verizon bundle,” he said. “The deal signals bad news for consumers, who can expect higher prices for video, fewer choices and higher prices for wireless.”

Who owns what

Four years into the deal, consumers may not know what company they are dealing with, as cable operators will be able to market Verizon Wireless service under their own respective cable brand names.

The deal is also trouble for lagging Clearwire, which had been providing wireless broadband service to both Comcast and Time Warner Cable.  Under the agreement, both cable companies will end their relationship with Clearwire, which is particularly bad news for the wireless company because of its ongoing financial distress.  Sprint, which has heavily invested in Clearwire, may ultimately find itself with an investment gone sour, troubling news for the third largest wireless company manning the barricades against a nearly-complete duopoly in wireless service between AT&T and Verizon Wireless.

Cable stock cheerleader Craig Moffett from Sanford Bernstein seems thrilled with the prospect.  In a research note to his Wall Street clients, Moffett says AT&T could benefit from the Verizon pact with Big Cable by ending up in a “more duopolistic industry structure without paying for it.” If the FCC approves the non-aggression pact, the deal “would amount to an unmistakable step towards the duopolization of the U.S. wireless market, inasmuch it would leave T-Mobile, once again, stranded without a 4G strategy.”

Cable investors, he adds, are likely to be excited the cable industry won’t spend billions of dollars in capital building a wireless venture, and instead has agreed to work with competitors to cross-sell products and services.  With little competitive pressure, prices won’t be falling anytime soon.

That’s great news for investors, even if it is “unbelievably unfair” for consumers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Verizon to Buy Wireless Spectrum for 3-6 Billion 12-2-11.flv[/flv]

Bloomberg News explains the deal and its implications in the wireless industry spectrum battle.  (2 minutes)

Watch these shows online, if you want to risk some uninvited guests.

There is nothing new about news outlets promoting tips and tricks to lower your monthly cable bill.  We publish similar stories ourselves here on Stop the Cap!  But some newspapers take things further, openly advocating you disconnect your cable service for good and watch everything online.  This week, we found one even willing to publish website addresses that skirt copyright laws and take online video underground.

The State Press encourages Arizona State students to thumb their noses at Cox Communications’ latest offer — cable television for $29.99 a month, good for six months (regular price $70).  Instead, they encourage, take your viewing online to Netflix and Hulu — the former for movies, the latter for television series.  But with cable companies and Hollywood studios conspiring to tackle the growing problem of cord-cutting, new restrictions are finding their way to fans of both websites, including waiting periods, limited series runs, and higher subscription fees.  This means war to the State Press:

There is a dark side to these two corporate entities, however. In their attempt to slowly weasel their way into your pockets a bit more, Hulu has gone Plus and Netflix has divided their packages, limiting your viewing. Hulu has seemingly said, “You can pay a little more to watch it the day after, right? No? Well, then I guess you’re waiting five more days for that recent episode,” while Netflix has exclaimed, “Unlimited to our choosing! You’re going to have to pay up if you want every movie out there.” So we must retaliate and go a little dark ourselves.

The author advises readers there is a way around the roadblocks — visiting a website already shut down once by copyright enforcement action (but has since resurfaced with a Chinese web address), providing a list of links to other websites that host copyright-infringing videos you can’t watch on Hulu or Netflix.

While the author of the State Press story may not realize it, a brief test visit to the “pirate-streamed site” opened the door to some nefarious extras.  With the help of Malwarebytes’ Anti-Malware, we stopped unwanted browser toolbars, various intrusion attempts, and even a few pieces of actual malware that wanted in on the party.  Without the most robust security software, visits to websites with underground video content can wreak havoc, and there are not that many TV shows worth watching to make that headache worthwhile.

The website owner disclaims responsibility from just about everything:

“[This website] does not host, provide, archive, store, or distribute media of any kind, and acts merely as an index (or directory) of media posted by other webmasters on the internet, which is completely outside of our control. Whereas we do not filter such references, we cannot and do not attempt to control, censor, or block any indexed material that may be considered offensive, abusive, libellous, obnoxious, inaccurate, deceptive, unlawful or otherwise distressing neither do we accept responsibility for this content or the consequences of such content being made available.”

We encourage you to exercise caution visiting websites that are willing to skirt copyright laws.  Up-to-date antivirus and spyware detection software when visiting is a must at all times.  Many of these sites stay in business selling ad space to anyone, and those ads can come with unwanted malware that can find its way onto your computer long after the viewing is over.  Be careful.

Storm damage in eastern Massachusetts. (Courtesy: WGBH Boston)

The northeastern United States got more than its fair share of severe storms these past few months.  Remnants of Hurricane Irene caused severe flooding, heavy rainstorms that followed didn’t help.  But one of the worst of all was the Halloween Nor’easter that left serious wind damage in some areas, heavy snowfall in others, leaving customers without power, phone, cable, and broadband service for days, if not weeks.

Telecommunications companies including Cablevision, Charter Communications, Comcast, Cox Communications, Dish Network, Time Warner Cable, and Metrocast Communications of Connecticut are under fire across the region for not providing automatic service credits for impacted customers.  Charter and Comcast are both facing a class action lawsuit filed last week by a Massachusetts law firm that accuses the cable operators of “gouging” their customers by not automatically crediting affected subscribers for lost service.

Jeffrey Morneau of Springfield, Mass. law firm Connor, Morneau & Olin says up to 1.2 million Charter and Comcast customers were without service, but the companies will only provide credits on a case-by-case basis, and only if customers request them within a short time after the outage occurred.

“If you pay for a service and you don’t get it, the company can’t keep your money,” Morneau said.

Stop the Cap! readers in Massachusetts and New Hampshire report Comcast will grant reasonable service credit requests, assuming you get through to ask for them.

“Hold times are epic,” reports Tom Turlin, a Comcast customer in Massachusetts.  “I managed to get my credit by using their web contact form instead.”

Most providers require consumers to request credits for outages within 30-60 days of the service interruption, and time is running out for Nor’easter credits.

“Most people think they will only get 50 cents back so why bother, but actually with today’s huge cable bills, credits can be substantial,” Turlin says. “I received almost $15 back on my bill.”

Only AT&T, Connecticut’s largest phone company, agreed to automatically credit customers the company determined were without service for at least 24 hours.  Customers who don’t receive credit automatically can appeal to the company for credit they believe they are entitled to receive.

Here’s how different companies are responding:

AT&T: “We will give U-verse TV customers in Connecticut who experience a service outage for longer than 24 hours a pro-rated credit,” AT&T said. “In addition, we will voluntarily give similar credits for U-verse Voice and U-verse High Speed Internet service customers who experienced a service outage for longer than 24 hours. Customers are not required to take any action: the credits will be applied automatically on the customer bill for impacted customers within the next several billing cycles.”

Cablevision: “While state law provides for consumer credits for qualifying outages for cable service only, Cablevision has been providing a credit to customers on an individualized basis for all their services,” Cablevision said. “Customers will be credited when they notify us that they had a service outage. We are extending our normal period to request refunds to 45 days from the date of the storm.”

Charter: Customers must call or visit the cable company offices in person to request service credit.  “We are providing credit to customers for the entire time they were without service, from the time they lost power to the time their Charter services were fully restored, and we are providing credit for all services,” Charter said.

Comcast: “In order to receive a credit, a customer must contact Comcast and identify the time period during which they did not have access to Comcast services,” Comcast said.

Cox: “We need our customers to call us after their service is restored to report that they were without Cox services, and for how long,” Cox said. “We then credit their accounts from the time of the service outage until service was actually restored.”

DISH Network: The satellite provider is waiving service and equipment fees for consumers who need their equipment realigned, reinstalled or repaired due to the storm. “DISH subscribers who indicated that they were without service due to the storm were provided a credit for their time without service,” DISH said. “In addition, DISH subscribers who needed to suspend their service due to storm damage were allowed to do so at no charge.”

MetroCast Communications of Connecticut: It will provide customers with a refund on their next invoice after contacting the company. “The credit equals a prorated amount of the affected customer’s monthly charges for all MetroCast services, calculated based on the number of days during which such services were interrupted, and are included in the customer’s next invoice,” MetroCast said.

Time Warner Cable: Customers must contact the cable company online, by e-mail or phone and request credit for the number of days they were without service.  Most service credit requests that can be verified are granted within hours, and will appear on the next billing statement.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSHM Springfield City councilor Comcast disagree on cable rebates 11-21-11.mp4[/flv]

WSHM in Springfield covers the ongoing dispute city officials have with Comcast, who is refusing to automatically provide storm credits to customers impacted by the October Nor’easter.  (2 minutes)

Before the billing problems, apartment and building numbers appeared on customer bills.

Cox Communications’ third-party billing vendor decided a billing system upgrade was required to comply with post office regulations governing the bulk mail discounts the company receives when sending millions of subscriber bills.  But that upgrade caused some renters serious headaches this summer when apartment and building numbers were omitted from the envelopes, resulting in bills being returned to Cox undelivered.

Despite the billing snafus which began in June, customers were still expected to pay their bills on time to avoid late fees.  In Lincoln, R.I., one apartment complex is up in arms as residents in their 80s have been forced to drive to Cox offices just to find out how much they owe and pay their bills in person.

“At first they blamed the post office when I called,” said Cox subscriber Anita Messier.  “I’m 81 years old and I can’t see myself driving [to the cable company] this winter to pay my Cox bill.”

The problem: Cox deleted the apartment and building numbers from the billing addresses of many of their customers.  Now, only a generic street address is listed, and that is a problem for the affected Lincoln residents, many of whom live in apartment complexes with well over 100 individual families.  Mail carriers have not been equipped to guess what bill belongs in which mailbox, so Cox’s monthly statements stopped arriving.

Now they don't, and the post office won't deliver them.

The Messier family’s bill ceased arriving in June, and despite repeated calls and promises the issue would be corrected, they still haven’t received a Cox bill, and it is now October.

In frustration, Messier threw her hands up and called Providence TV station WPRI for help.

“I don’t usually ask for help,” Messier confesses.  “I usually come out of this by myself, but right now I’m frustrated with Cox.”

When the station called Cox, it appears to have lit a fire under the cable company to help finally resolve the issue.  Cox officials profusely apologized for the billing blunder, claim they will refund any late charges that result, and now Lincoln residents are wondering whether they will finally see their Cox bills return to their mailboxes before Halloween.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WPRI Providence Cox Stops Billing Lincoln Cable Customers 10-5-11.mp4[/flv]

WPRI in Providence intervenes on behalf of elderly Lincoln residents who have been forced to drive to local Cox offices to pay the cable bills they haven’t seen since June.  (3 minutes)