Phillip "An Ex-Frontier Customer" Dampier

The other week while sitting in the dentist’s office waiting for my wallet to be drilled, I overheard a conversation at the reception desk over the latest effort by Frontier Communications to shoot itself in the proverbial foot.

“I decided to get rid of my phone line the other day and when I called Frontier to disconnect, I was told I would owe them more than $150 in disconnection fees for a contract I never knew I had with them,” opened the conversation.

“That happened to my sister as well, and she couldn’t believe it because nobody ever told her she was on a contract,” came the reply.

“I never knew I was either, and I told the representative they needed to show me where I signed up for anything like that or else I’m not paying it,” insisted the latest victim of Frontier’s phantom service contracts.

Within a minute or two, all had decided they were done doing business with the phone company that got its start more than 100 years ago as the well-regarded Rochester Telephone Corporation.  In 2012, there was no turning back after $150 “disconnect” penalties and other insults.  They were intent on being rid of Frontier once and for all.

With customer unfriendly policies like that, it comes as no surprise Frontier has been losing customers in the Rochester market for years, mostly to cell phone providers or Time Warner Cable — the latter which delivers more value and far superior broadband speed in western New York communities not served by Verizon FiOS.

Surprise... you're on a contract with a $150 cancellation penalty.

Twenty years ago, Rochester Telephone delivered excellent value, charging about half what then-NYNEX customers in Buffalo and Syracuse paid for telephone service. But as Frontier has increasingly disengaged from being an aggressive contender for telecommunications services in Rochester, people in this region of one million noticed, especially when Verizon’s fiber to the home service arrived in Buffalo, Syracuse, Albany, and beyond.

What did Frontier offer? Not much. Frontier’s local general manager Ann Burr, who used to be in charge at Time Warner Cable locally, told local media Rochester didn’t need faster broadband speeds. That’s a fitting argument for a company that doesn’t deliver them and believes 3Mbps broadband is plenty fast enough.  If you don’t like it, feel free to leave, so long as you aren’t trapped with that long-term service contract you never knew you had. (The New York Attorney General’s office has already spanked Frontier once for the practice, forcing them to issue refunds, and judging from last week’s conversation, it appears the problem has not abated.)

The fact is, Frontier offers little compelling to the landline customers they have left.

Rochester’s experience with Frontier seems apropos when contemplating the phone company’s latest quarterly results, which one analyst called “ugly.” Having listened to at least a dozen of Frontier’s quarterly conference calls with investors over the past three years, there seems to be no shortage of promises of better days to come.  Frontier is among the few companies I have heard call customer losses of 5-11% every quarter “an improvement.”

As one investor put it, the management at Frontier should win an Academy Award for feigned optimism.

This week, the company announced first-quarter earnings fell 51% thanks to lower revenue earned from the dwindling number of residential and business customers. But better days are ahead, really.

Road to nowhere?

Frontier has spent the last year treating their “system conversion” for ex-Verizon territories as the telecom equivalent of the Holy Grail.  Once achieved, the company can do anything. The reorganization underway internally at the company is supposed to improve its lackluster customer service, generate more marketing opportunities, save the company money, and open the door to a new chapter of a unified Frontier family, with ex-Verizon and always-Frontier employees coming together to do things “the Frontier way.”

How much longer investors will stick around waiting for the promised land remains an open question. The stock has already achieved a 52-week low, and if the company cuts its dividend — the primary point of attraction for investors — it will drop much lower.

Frontier’s management decisions have effectively left the company between a rock (Wall Street) and a hard place (its dwindling customers).  Much of the company’s success is predicated on rural broadband/landline service, where the company expects to face little competition.  But Verizon, the company that sold them much of their inherited network, has a little surprise for them.  After selling off the “junk” (a deteriorating copper landline network they no longer care much about), the company’s wireless division is coming back to town to poach Frontier’s customers.

Verizon’s grand plan is to pitch two products:

1. Home Phone Connect: Verizon’s landline replacement works with the customer’s home phones over Verizon Wireless’ network. Customers can share minutes on an existing Verizon Wireless plan for $9.99 a month or get unlimited calling for $19.99 a month. It comes with most popular calling features included.
2. Verizon HomeFusion Broadband: Verizon Wireless has excess capacity in rural areas, especially on 4G LTE-equipped towers, so why not put it to use? While commanding a premium at $60 a month for just 10GB of usage, customers who value speed over money may tolerate that diamond price.  If Verizon finds a way to relax that usage limit and lower prices, it could present a real competitive threat to phone companies delivering lower end DSL service.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/Home Phone Connect – Home Phone Transfer Verizon Wireless.flv[/flv]

Verizon Wireless introduces Home Phone Connect, a product designed to tell landline companies like Frontier to take a hike.  (2 minutes)

While Verizon isn’t likely to immediately grab major market share with either product, it foreshadows an intent to leverage their rural wireless network to remain a player, even in places where they have abandoned selling landline service.

How to Stop the Erosion

Turning things around? Frontier contemplates licensing U-verse from AT&T

Even in a barely-competitive marketplace, companies must invest to keep up. But that investment annoys Wall Street, which can depress the stock (and the all-important dividend). But improved service retains customers (and may even win a few ex-customers back). So news that Frontier was considering licensing U-verse technology to upgrade their major markets is a logical first step to stop the bleeding. Frontier is irrelevant delivering broadband at speeds of 3Mbps at out the door prices that meet or exceed what the much-faster cable competition charges. U-verse would allow Frontier to deliver faster broadband (up to 24Mbps is plenty fast for a lot of consumers), build its own IPTV offering instead of relying on satellite dish reseller agreements, and maintain landline customers, assuming the company prices its bundle correctly.

While we are big proponents of fiber-to-the-home service, it is clear Frontier will never spend the money to deliver it, even to their largest service areas. They will prefer the cheaper route of fiber to the neighborhood, relying on existing copper infrastructure to connect individual homes to the service. It represents a reasonable first step.

Frontier also must continue aggressive investments in their broadband network in more rural areas. Some of the company’s regional backbones remain woefully congested, and the company just doesn’t deliver the speeds it markets on its website in too many areas.

High speed should really mean "high speed"

Jameson, a Stop the Cap! reader, is a good example. He signed up for “Frontier Max DSL” which claims it can deliver up to 6Mbps in his part of east-central Indiana.  He ended up with 1.6Mbps instead, in part of because Frontier’s records were inaccurate.

I called Frontier tech support after reading some stuff on Stop the Cap! and another site, learning that since I live under 5000 feet from the DSL termination point (the Frontier building down the road) that I shouldn’t have any problems getting their highest speeds. I got lucky and got a customer support agent who understood my problem, and a tech support guy who genuinely seemed concerned about my issue. The tech guy checked Frontier’s records and I was labeled as being 30,000 feet from the building, but I’m really only around 4200 feet away, and my speeds were provisioned at 1.6mbps down and around 450kbps up. He put in a support ticket to have my speeds automatically raised up to the max I’m paying for.

Jameson ended up with around 7Mbps — a little better than the advertised speed, but only because he thought to ask and reached the right people at Frontier to follow through.

Some of our readers in West Virginia are not so lucky, having the mediocre speeds they fought to receive reduced further when a technician suddenly remotely adjusts speed provisioning on customer equipment to reduce their maximum broadband speed.

Frontier’s DSL problems don’t just exist in rural areas. We experienced it first-hand in 2009 when the company advertised up to 10Mbps speeds in Rochester, and delivered 3.1Mbps to us instead.

Consumer Reports documents this is not an isolated problem, with only two-thirds of Frontier customers getting the broadband speeds they pay to receive. If and when a competitor does better, Frontier loses another customer.

Finally, Frontier must improve its customer service. The company is notorious for giving inconsistent answers to customer questions, doesn’t always follow through on commitments, and maintains far too many “gotcha” terms and conditions on contracts that leave customers exposed to unjustified early termination fees.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNET Verizon HomeFusion Broadband May 2012.flv[/flv]

CNET shows off the equipment used with Verizon’s new HomeFusion wireless broadband service.  (2 minutes)

Consumer Reports today released its 2012 list of America’s best phone, broadband, and pay television providers (subscription required), giving top scores to fiber-to-the-home and cable broadband and exposing some familiar phone and cable companies which year-after-year deliver “bottom of the barrel” scores.

Nearly 70,000 readers of the consumer magazine participated in rating their local telecommunications providers for value, reliability, customer service, and broadband speed.  No provider scored higher than “average” for value, but wide discrepancies in broadband speed and the quality of service made choosing winners and losers easy.

Top-rated WOW! (formerly WideOpenWest), is the 15th largest cable provider in the United States, but regularly wins top scores from Consumer Reports readers for the quality of its services. WOW! currently serves mostly suburban subscribers in a handful of cities in Illinois, Ohio, Michigan and Indiana. But the provider will soon be coming to several new locations thanks to its April purchase of cable overbuilder Knology, which provides service in multi-dwelling units and administers some community-owned broadband networks around the country.  This could provide relief for customers dealing with onerous usage caps in cities like Lawrence, Kan., where Knology’s buyout of Sunflower Broadband kept that company’s Internet Overcharging scheme in place. WOW! has no usage limits on their broadband service.

Verizon’s FiOS fiber to the home network is also a consistent winner in the ratings, especially for its fast broadband service.

AT&T’s U-verse also scored high in the ratings for broadband.  AT&T’s fiber-to-the-neighborhood service still works with existing copper phone wiring inside the home and delivers 20+Mbps broadband, a major improvement over AT&T’s traditional DSL service, which usually tops out at 7Mbps.

Among top-rated cable companies you have heard of, Bright House Networks scored a major coup, winning third place for its broadband service.  Ironically, consumers gave very high marks to Earthlink delivered over Time Warner Cable, scoring it fourth place for broadband. But Earthlink’s performance on Time Warner Cable is actually slightly less than the cable company’s own broadband service. Although both services share exactly the same network, Time Warner adds “speedboost,” a temporary speed increase for downloads. But the cable company got no respect from customers, who put TWC in 19th place.

Other findings of interest:

• TDS, an independent phone company serving primarily rural areas scored a very high fifth place in broadband, despite offering only traditional DSL service (except in limited areas where it has built fiber networks to stay competitive with community-owned providers and cable companies).  But the company won high marks for service reliability;
• Frontier Communications’ inherited FiOS fiber to the home services in Indiana and the Pacific Northwest were that company’s only bright spots for broadband, putting both systems in sixth place.  Everywhere else… forget about it. The company’s traditional DSL service was rated a lousy value and delivered mediocre speeds, earning 24th place.
• Satellite fraudband providers Wildblue and HughesNet continue to torture their customers, scoring dead last for lousy value, speeds, reliability, and everything else.
• Still awful after all these years: Mediacom, Charter, and FairPoint Communications all continue their dubious distinction scoring at the bottom of the barrel for broadband. It’s nothing new for any of them, and it appears nothing is likely to change those rankings in the immediate future.

Americans still hate the big boys.  Outside of AT&T and Verizon’s shorter history delivering triple-play-packages of cable, phone, and Internet service, the legacy of lousy pricing and service from the country’s largest cable operators still hold them back in the ratings.  Comcast managed only 24th place, dragged down by terrible customer service and worse value.  Cablevision did better at 16th place with higher marks for everything but value.  It was the same story for 12th place Cox Cable.

What was the top choice for telephone service in 2012?  Ooma, a Voice over IP phone company that works with an existing broadband connection.  Phone companies that have been in the business of phone service for decades (or longer) were all bottom-rated: AT&T, Verizon, FairPoint, and Frontier Communications.  Only Mediacom, a cable operator, kept Frontier from scoring dead last.  And they wonder why Americans can’t wait to disconnect traditional landline service?

In fact, Consumer Reports says no other industry alienates consumers more than America’s telephone and cable companies.

But you can fight back and score a better deal.  Stop the Cap! was quoted in the magazine piece with our advice to play hardball with cable and phone companies who charge too much and deliver too little.

“The magic word is ‘cancel,’ ” says Phillip Dampier, of the website Stop the Cap! He suggests you schedule your disconnection date for a week or two in the future. “When you’re on their disconnect list, they are going to start calling you offering very aggressive deals,” he says.

Top-rated WOW! only delivers service in a handful of cities in the midwest, but is getting larger after acquiring Knology in April 2012.

Indeed, Consumer Reports found most providers willing to deal… eventually, but they have gotten wise to halfhearted negotiation tactics by consumers looking for a better deal. If a provider suspects you won’t follow through on a threat to change providers, they often stubbornly refuse to deal. That’s why we recommend requesting to be placed on a “pending disconnect” list — proof you are prepared to leave in a week or two if they won’t negotiate.

We’ve followed investor conference calls for most major providers over the past two years. Every provider has gotten more aggressive with customer retention offers, in part because of the poor economy and increased competition. Customers are paring back cable packages and cutting out extra channels and services they can no longer afford. Some have become expert at bouncing between new customer promotional offers. Cable operators like Time Warner Cable have tried to keep customers, even those coming to the end of promotions, with slightly less aggressive discounting.

“We have a very well-choreographed program for moving people from the most heavily discounted promos into the rational next-step pricing packages,” Rob Marcus, president of Time Warner Cable told the magazine. “Over time, that discount will decrease, but you’d probably still save 20 to 30 percent off the rack rate,” or regular price.

But we found consumers who get back on the disconnect list usually do much better than Time Warner’s “next-step” pricing, some even earning a better retention offer than what they received in 2011. The more serious customers are about their willingness to leave, the better the offer in return.

Dead last place for cable companies... again.

The magazine also offers solace for customers who literally have nowhere else to go for service:

Alan Curtis of Manchester, N.H., whose condominium is served only by Comcast, says his rates go up each year but he pushes back. “If you say, ‘We’ll have to buy less,’ occasionally they’ll come up with a cost-cutter that will apply to you,” he says. Similarly, a staffer who lives in a New York City apartment served only by Time Warner Cable more than offset a $5 increase in his overall bill by negotiating an $8-a-month cut in his DVR rental fee for 12 months.

Consumer Reports also warns customers to choose broadband providers wisely, because the speeds they advertise may never materialize. Case in point, Frontier Communications’ dreadful DSL service, which the magazine found met the company’s speed marketing claims only 67% of the time. Frontier has been struggling with a vastly oversold broadband network, causing speeds to slow dramatically during peak usage times, particularly in states like West Virginia.  The magazine recommends fiber to the home providers and cable operators for more consistent broadband performance that comes closer to the broadband speeds advertised.

At all costs, avoid satellite broadband, which remains slow, expensive, and heavily usage-capped.

"You are not subscribed... to any channels."

An angry commentator on WHP-TV in Harrisburg summed up his recent misadventures with Verizon’s customer service on the 6pm nightly news:

“Verizon Service Sucks!”

R.J. Harris was just one of thousands of Verizon FiOS customers across the northeast who found themselves without FiOS television service March 23rd, forcing many to miss NCAA basketball tournament games and the season premiere of “Mad Men.”

Because of a software glitch, Verizon’s media hubs in Buffalo and Harrisburg, Pa., shut off cable networks in FiOS cities across the northeast.  Viewers were told they were “not authorized” to receive cable networks, which brought many to the phones to call Verizon for help.

Harris joined enormous call queues that extended one, two, even three hours before most gave up.  Even worse: Verizon’s automated customer service agent provided voice synthesized non-answers regarding the FiOS outage.

“Lots of ‘press one,’ ‘press three,’ blah blah blah and then a talking computer,” Harris recounts. “One day later I tried to use Verizon’s ‘in home agent’ on my PC to get help.  Verizon took almost two hours to update my software before I could use the agent.”

Harris finally ended up in a chat session with “Sandeep,” half a world away.  But Harris found the offshore customer service agent was the first person to actually explain the problem.

“I told Sandeep I wanted management to know how I felt about my customer service experience,” Harris said. “He obliged by getting his boss Muhammad to join the chat. Muhammad — the manager — added one word to the chat: ‘OK.’ That’s it.”

“If you are starting a new company in America and you want the worst customer service policy you could possibly have, model your company after Verizon.”

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WHP Harrisburg Common Sense 3-29-12.mp4[/flv]

WHP-TV commentator R.J. Harris is furious at Verizon for its FiOS and customer service failures.  (3 minutes)

Customers around the northeast shared one thing in common: they couldn’t talk to anybody at Verizon about the mishap.

Barbara Adams in Latham, near Albany, found that to be the case.  Adams called the local newspaper for help instead, which they gave her.  A Verizon FiOS customer near Buffalo ended up getting technical support from a friend’s Facebook page.

Harris

Verizon’s technical glitch required customers to follow a fairly complex set of instructions to fix the problem:

1. With the TV and set-top box on, press Menu on the remote.
2. On the TV screen scroll to Customer Support, selecting In-Home Agent.
3. Select STB Auto Correct and follow any directions after that.
4. The process should take several minutes.

Last week, Verizon began rebooting its home set top boxes remotely to reset them to working order without customer intervention.

But many customers were left without service all weekend long, unable to reach anyone at Verizon to understand why.

The company would not make a definitive statement about providing affected customers with service credits, but if you were affected, we recommend you call or write and ask for yours.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WNLO Buffalo Verizon FiOS Problems 3-27-12.mp4[/flv]

WIVB in Buffalo talked to a local Verizon FiOS customer who found a solution to Verizon’s technical snafu, from a friend on Facebook.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WBGH Binghamton Verizon Workers Protest 03-22-12.mp4[/flv]

Workers for Verizon Communications continued public protests outside of Verizon facilities in upstate New York as their unions complain the company has still not reached a negotiated contract agreement covering landline employees.  Protestors in Buffalo and Binghamton told local media they fear customer service operations will be outsourced overseas, other jobs will be cut, and benefits will be slashed.  “Verizon is not a hurting company,” noted one protestor in Binghamton.  Verizon counters its landline operations must become more competitive to compete with wireless services, although the largest provider in the country is Verizon Wireless, which has almost no unionized employees.  WBGH in Binghamton reports. (Loud Volume Warning!)  (2 minutes)

Not all mobile customers are treated equally.

That is the conclusion of a new piece in MIT’s Technology Review, which found wireless companies carefully data mine their customers in an effort to keep their best (and most profitable) customers happy, while leaving those who pay substantially less or enjoy an unlimited data plan on hold.

The concept of “big data” — the practice of collecting and analyzing customer usage, payments, and services, has become part of today’s sophisticated data analysis used by wireless companies to target their highest level of service to their best customers.

In practice this means big spenders might cut ahead of others in customer service call queues, be given priority on wireless carriers’ networks, and be pampered with discounts, service credits, and other special offers when service goes awry.

Carriers merge data about network problems—such as how many dropped calls a consumer experienced—with unstructured data such as the transcripts of complaints to customer-service representatives, deciphered by voice-recognition software and searched for angry keywords.

For customers enrolled in expensive “tiered” data plans, the carriers are vigilant to respond with refunds or discounts on re-enrollments; they tend not to be so generous to customers with resource-guzzling unlimited data plans.

The article did not name any specific carriers, but says selective customer-service treatment is “common industry practice in the United States.”

In Europe, disparate treatment goes even further.  When congestion starts slowing down a provider’s data network, some will boot customers with unlimited data plans onto inferior networks which treat the interlopers as second-class citizens, subject to reduced priority and even throttled speeds in some instances.

It is all designed to maximize profits by keeping the most profitable customers happy, even if lesser customers make due with less.

Data mining opens the door to even bigger profits in the days ahead, especially with contextual and location-based advertising that leverages your location with retailers who believe you can be enticed to stop in their stores in return for a discount offer or coupon sent to your smartphone.

“We’re at the beginning of an era in big-data analytics,” says Antonio Rodriguez, a venture capitalist who works at Matrix Partners in Cambridge, Massachusetts. “If you think about the treasure trove of data they have—it’s question of how they tow the privacy line between what they have access to and what they do with it.”