Internet providers are preparing to cut off late-paying and non-paying customers as early as June 30, as the Federal Communications Commission’s “Keep America Connected” pledge expires next week.

In March, FCC Chairman Ajit Pai invited providers to agree to waive late fees and put off disconnections and usage overlimit charges for several months as a result of the sudden economic shutdown due to the COVID-19 coronavirus. As the pledge expires, Pai is asking providers not to immediately disconnect customers who are past due, if they agree to enroll in payment plans to pay off accrued balances. But Pai ultimately stood on the side of the nation’s multi-billion dollar phone and cable companies as he expressed his understanding why some customers will be cut off anyway and turned over to collection agencies as early as next week.

“Broadband and telephone companies, especially small ones, cannot continue to provide service without being paid for an indefinite period of time; no business in any sector of our economy could,” Pai said in a statement.

Some customers have accumulated past due balances of over $1,000 in the past four months, when one combines wireless, cable-TV, internet, and landline charges. As a result, some large providers recognize the need for long-term repayment plans if they hope to preserve customer relationships. With unemployment over 13%, even their most loyal customers may find it difficult to keep up on bills that often exceed $100 a month, and are often much more.

Those customers that lose service for non-payment may forfeit future participation in low-cost internet programs for those on public assistance, and cannot restart service without coming to terms on past due balances. That could leave desperate customers at risk of losing access to job-seeking information, education, and news about the ongoing pandemic.

Some providers are gradually announcing new programs designed to keep service on, but only if customers contact providers and agree to commit to a repayment contract.

AT&T: The company disclosed 156,000 customers are currently enrolled in Keep America Connected-related programs. AT&T expects full payment of past due charges as early as June 30, or up to 90 days after the first past-due notice was issued, whichever is later. Customers can also keep service turned on by contacting AT&T and setting up an alternate payment arrangement.

Charter/Spectrum: The company has announced it will forgive a portion of past due balances and not require full repayment, if the customer or his/her job was directly impacted by the coronavirus. Spectrum’s offer of 60 days of free internet service introduced in March was accepted by at least 400,000 customers. But for most, the offer has since expired. Spectrum has worked to convert those at the end of the free offer into paid customers, but won’t disclose how much success they have had.

Comcast: Customers enrolled in the Xfinity Assistance Program are being given the option of repaying past due amounts in up to 12 equal monthly installments. After a repayment arrangement is made, some customers are persuaded to downgrade service to more affordable plans until past due amounts are repaid. Comcast’s offer of 60 days of free internet service has ended for most customers that enrolled shortly after it was introduced. Comcast has not announced a date when its 1,000 GB usage cap is scheduled to return in most service areas.

T-Mobile: For many, service will terminate if an account is well past due. Customers who want to keep their service must call T-Mobile to make payment arrangements, but T-Mobile did not disclose any formal repayment plans or payment forgiveness. It is imperative that customers call and discuss past due accounts before service is switched off.

Verizon: Verizon will continue service for “hundreds of thousands of customers” that enrolled in the Keep America Connected pledge program, as long as they agree to make regular payments as part of a special repayment plan that will be introduced for these customers in July. Customers will be billed a portion of their past due amounts along with current service charges until repayment has been made in full.

Of the country’s largest providers, only Charter/Spectrum has agreed to forgive some past due balances outright. Others will expect to be repaid and are likely to suspend service quickly if repayment plans also fall past due.

AT&T shareholders are frustrated. They are not getting the dividend payouts and shareholder value they expected after AT&T put itself $170 billion in debt last year — the highest debt load of any non-financial American corporation.

As AT&T has bet big in recent years on video-related acquisitions, including DirecTV and Time Warner (Entertainment), investors are skeptical AT&T can properly monetize its video business. Many have sold shares after criticizing company executives over the company’s strategy and high debt, driving AT&T’s market capitalization down to around $225 billion, comparable with considerably smaller Verizon Communications.

But no worries, AT&T CEO Randall Stephenson, has reassured. AT&T expects those investments to yield results this year, helped by forthcoming broad price hikes for AT&T’s consumer services.

“2019 candidly is the money year,” Stephenson said in an interview with the Wall Street Journal. “This is a year when we get everything rationalized.”

According to AT&T, customers are irrationally paying too little for AT&T’s video-related services, which include DirecTV (~19 million customers) and DirecTV Now — the two-year old streaming service that has attracted nearly two million subscribers.

Stephenson

Although DirecTV has recently been extremely aggressive about offering deep discounts to convince satellite customers to stay, AT&T plans to pull back on those discounts as two million DirecTV customers see their two-year contracts end this year. Instead of granting renewed discounts for signing another contract, AT&T plans to deliver significant rate increases.

“As those customers come due, we’ll get closer to market pricing,” AT&T’s John Donovan told investors at a November investor conference. “We’ll be respectful of our customers, but [prices] will move up.”

That may prove a difficult sell for DirecTV satellite customers, who have recently been abandoning the satellite platform in favor of cheaper streaming TV alternatives. Even with package discounts, DirecTV is the pay television industry’s most expensive provider, collecting an average of $120.36 a month for its TV packages. In contrast, Dish Networks gets an average of $103.99, Charter Spectrum earns $91.14 and Comcast, $84.50.

DirecTV defections, largely over price, have been growing at an accelerated rate, with 1.4 million customers turning their back on the satellite provider over the last two years. Analysts expect AT&T will report 300,000 more lost subscribers in the last three months alone. At that rate, AT&T will lose at least $1 billion in operating profits in 2019 from its declining satellite TV unit alone.

(Image courtesy: WSJ)

DirecTV Now customers, who already absorbed a $5 rate hike last summer, and will face even more rate increases and channel reductions in 2019. Stephenson expects DirecTV Now’s price point to be in the $50-60 range, which means many customers will likely face an average of $10 in rate hikes this year. For AT&T, that would deliver “the right price” and gets the service “to where it is profitable,” according to Stephenson.

But customers are likely to balk if AT&T reduces channel lineups at the same time it raises prices. AT&T has already faced substantial DirecTV Now customer defections after last summer’s rate increase, and the company has also reduced new customer sign-ups by cutting back on new subscriber promotions, which often included a free set-top streaming device. Waiting to pick up exiled streaming and satellite customers are AT&T’s competitors, especially Google. YouTube TV has proved to be a DirecTV Now killer, now charging $40 a month for 60+ channels. It also comes with an unlimited cloud DVR feature and a complete lineup of local channels across most of the country. YouTube TV is reportedly still growing, attracting more than one million customers so far. AT&T executives claim the service is popular only because Google is suspected of subsidizing what they believe to be an unprofitable venture by around $9 a month.

Investors are also unhappy about customers slimming down their TV packages, because average revenue per customer is cut in the process, sometimes dramatically. Wall Street was accustomed to video packages bringing in at least $100 a month. In many cases, that revenue is cut in half after a customer switches to a streaming provider. AT&T hopes investor pressure on those new ventures and ongoing wholesale programming rate increases will both conspire to bring back familiar annual rate hikes for streaming services as well. Programming cost inflation almost feeds itself. As programmers set new wholesale rate records for their networks, other programmers believe there is now room to raise their wholesale rates as well.

Programming costs are not just important for consumers, either. Wholesale programming rate inflation was one of the reasons AT&T spent $49 billion to acquire DirecTV. Volume discounts for DirecTV meant the satellite provider was paying an estimated $20 a month less on programming than AT&T’s own U-verse unit, which had a much smaller customer base. AT&T’s purchase of Time Warner, which owns several popular cable networks, was also a hedge against programming rate increases because AT&T would effectively pay any increases to itself.

(Image courtesy: WSJ)

The Journal reports AT&T executives were unprepared for the speed cord-cutting has taken hold. Most most under-30 have abandoned the concept of paying for live, linear cable television at any price, preferring a combination of on-demand streaming from Netflix, Hulu, and other video streaming services with an over the air antenna to watch local stations for free. Older Americans are gradually following suit.

According to the Journal, AT&T’s latest tactic to slow down customer departures is to make cancellation as difficult as possible:

“There’s no way that we could make the numbers we were told to make,” said Altrina Grant, former manager of a Chicago-area AT&T call center. She said some agents would promise to call back a customer about a request to drop service rather than immediately disconnecting, which would count against their compensation. Irate customers would later call another employee to ask why their request wasn’t honored, she said.

“These reps were getting thousands of dollars because they knew how to manipulate the system,” Ms. Grant said.

Cyrus Evans, a former call-center manager in Waco, Texas, said employees’ pay could swing between $50,000 and $80,000 a year depending on their performance, which was often influenced by how many disconnection requests they could deflect. Mr. Evans said employees often got angry calls from customers who had been promised their service would end, only to receive a bill the next month. He said the incentive structure rewarded bad behavior.

Former AT&T workers said the company launched a new audit team in 2017 to crack down on support staffers making promises they couldn’t keep. Ms. Grant said this initiative led the company to fire some workers but several customer-care executives are still in their jobs.

AT&T disputes these allegations, claiming false promises to customers violate AT&T’s Code of Business Conduct and are “extremely rare.”

Frontier Communications continues to face challenges keeping customers in its legacy copper wire service areas, where only modest investments in network upgrades have proved insufficient to stop customers shopping around for better service.

Company officials reported a loss of about 30,000 residential customers during the last quarter, a drop of nearly 1% of its total customer base. Nearly 2% of Frontier’s business customers also took their business elsewhere, leaving the company with 3.1 million remaining residential customers and 294,000 business customers.

Frontier CEO Dan McCarthy blamed many of the customer losses on customers moving.

“During the summer, we do tend to see an uptick in customer [losses] that might have double play and in some cases triple play, as they move or make their decisions about moving their homes to a different location,” McCarthy said, claiming that most of Frontier’s losses overall came from voice-only customers.

As Frontier expands rural broadband opportunities, the phone company is still adding Internet customers, picking up a net gain of 27,200 broadband accounts. The company depends heavily on broadband to replace revenue lost from landline disconnects.

“We continue to see more customers choose higher-speed broadband products,” McCarthy said on a conference call to investors earlier today. “In the third quarter, 47% of the broadband activity was above the basic speed tier of 6Mbps. More than 70% of our residential broadband customers are still utilizing our basic speed tier, so we have substantial opportunity to improve our average revenue per customer as they upgrade their service.”

McCarthy offered no statistics about how many of Frontier’s DSL customers can substantially upgrade their speeds using Frontier’s existing infrastructure. Many Frontier broadband customers have complained their speeds reflect the maximum capacity of Frontier’s network in the immediate area, and many claim they do not consistently receive the speed level Frontier advertises.

Service is appreciably better in areas upgraded before being acquired by Frontier. McCarthy said some areas of Connecticut, acquired from AT&T, are now able to get speed “in excess of 100Mbps over our copper infrastructure.”

“Over time, we will be expanding the technology we use for 100Mbps in Connecticut to more of our markets elsewhere,” McCarthy promised. “In our FiOS markets, we already offer speed up to one gigabit and we have seen the benefit of offering these higher speeds as customers choose speed tiers to match their lifestyle choices.”

Frontier also separately notified the Federal Communications Commission it has no immediate plans to slap usage caps or metered service on customers.

“Frontier does not apply usage-based pricing to any of its broadband offerings,” Frontier said in an FCC filing. “Frontier has no plans at this time to offer a metered broadband service. We continue to monitor the market and continue to consider a usage-based offering as an option.”

Frontier suggested several factors would be considered when discussing usage-based billing: “the FCC’s Open Internet rules, policies of other companies, consumer demand, network capacity, and cost, among other factors.”

Efforts by New York’s largest cable operator to deregulate telephone service in New York, potentially cutting off delinquent ratepayers’ phone service at inconvenient times, has run into opposition from an Albany newspaper.

The Times Union published an editorial last week opposing the measure, fearing it could leave some of the millions of Time Warner Cable phone customers without service on nights and weekends without any way to make a payment to prevent the disconnection.

Unlike other services that companies like Time Warner offer — such as TV, Internet, security and remote lighting and heating control — the home telephone holds special status. It has long been regarded as an essential utility, much like residential gas, water and electricity. The PSC regulates how and when a utility can cut a customer off such a critical service for failure to pay a bill on time.

For years, Time Warner maintained it was not a phone company and should not be bound by these rules. That changed earlier this year when it accepted the responsibilities and regulations that come with being a residential phone provider.

Now, though, Time Warner is petitioning the PSC to change the rules governing home phone bills.

Some of the requests appear reasonable, such as updating language about local and long-distance calling charges. But that’s not the case with Time Warner’s request to expand the hours and days when it can disconnect services for customers who have fallen behind in their bills, including their phone service.

Specifically, Time Warner wants to deal with delinquent customers on nights and weekends.

Most other utility providers can cut service for non-payment only during weekdays, when the PSC’s staff is working and available to help broker solutions and protect consumers. The PSC has the authority to make decisions on disputed bills, revise payment plan arrangements and remedy situations where continued service is medically necessary.

Late and unpaid bills are admittedly a chronic problem for cable companies. In the past year, Time Warner sent more than 1.7 million past-due notices to residential customers in the state and shut off or suspended service to nearly 600,000 households for failing to pay bills.

Time Warner calls its proposed change a convenience to its customers. It’s really a convenience for Time Warner, which wants to handle phone bills the same as other services. But this would bypass the special safeguards for phone consumers.

The Public Service Commission is still reviewing the proposal from Time Warner Cable, which is the dominant cable provider in upstate New York and parts of New York City.

Time Warner Cable’s approval of its request to offer regulated “digital phone” service in New York has been quickly followed by an appeal for deregulation to loosen rules covering disconnection for non-payment and reduced service quality standards.

The cable operator now qualifies — as a designated Eligible Telecommunications Carrier (ETC) — for significant federal and state subsidies in return for providing discounted Lifeline telephone service for the state’s poorest residents.

The cable industry has traditionally escaped regulation and oversight with claims “digital phone” Voice over IP (VoIP) products are “unregulated information services.”

In March, the New York Public Service Commission approved a petition filed by subsidiary Time Warner Cable Information Services (NY) LLP (TWCIS-NY), to begin offering regulated telephone service to the company’s 1,235,710 phone customers in New York.

As a result, Time Warner agreed to a range of oversight and service standard requirements. But on May 1 — less than two months later — Time Warner filed a new petition with the PSC requesting deregulation and exemption from several provisions the company initially agreed to follow.

“Now that it is concededly a regulated telephone service provider, Time Warner is acting like other regulated phone companies, in that it immediately is seeking to relax the rules designed to protect customers,” writes Gerry Norlander from the Public Utility Law Project of New York (PULP), a consumer protection group.

Not so, says the cable company.

“In order to offer the best telecommunications service to its customers and expand this customer base, TWCIS-NY respectfully requests that the Commission grant the waivers discussed in this Petition,” the company writes.

The changes Time Warner requests would make it easier for the cable company to disconnect service for late or non-payment, allow Time Warner to avoid distributing unwanted paper telephone directories, and escape oversight of its phone service for all but the most critical “core” customers with special needs.

Your Partial Payment Will Not Necessarily Prevent Us From Cutting Off Your Phone Line

The Telephone Fair Practices Act (TFPA), prohibits regulated phone companies from shutting off phone service for late/non-payment outside of normal business hours, Fridays after 1pm, weekends, and holidays:

(d) Suspension or termination of service–time. A telephone corporation complying with the conditions set forth in this section may suspend or terminate service to a residential customer for nonpayment of bills only between the hours of 8 a.m. and 7:30 p.m., Monday through Thursday, and between 8:00 a.m. and 3:00 p.m. on Friday, provided such day or the following day is not:
(1) a public holiday, as defined in the General Construction Law;
(2) a day on which the main business office of the telephone corporation is closed for business; or
(3) during the periods of December 23rd through December 26th and December 30th through January 2nd.

Time Warner Cable claims those limitations are too much, and “for its customers’ convenience, TWCIS-NY respectfully requests […] to extend these hours.”

If approved, Time Warner claims it will make your life easier if they can cut you off at their convenience — between the hours of 8:00am and 9:00pm, Monday through Friday, and between 8:00am and 5:00pm on Saturday.

Those times coincidentally match the hours technicians are now dispatched to collect equipment and shut off service for deadbeat customers.

Time Warner says people are often busy or not at home during the day and it would make more sense to coordinate the surrender of service when people are available to hand over equipment. Unfortunately, Time Warner’s preferred hours often fall outside of the calling hours at the Public Service Commission, which maintains a ‘last resort hotline’ for customers about to have their service disconnected.

‘Time Warner Cable Punishes Late Payers With Telephone Service Suspensions and Terminations on a “Massive” Scale’

Unlike cable television and broadband, New York designates telephone service as an essential utility, and regulators take every step to maintain service wherever possible.

Under rules originally adopted when consumers chose both a local and long distance phone company that put all of your charges on a single monthly invoice, regulators sought to protect landline service when customers did not pay the full amount due. Under those rules, partial payments are allocated first to past due charges from the local phone company, then past due charges for regional long distance or local calling, then charges billed by your long distance carrier, and then everything else.

Since your local phone company has the power to cut off your dial tone for late payment, making sure they were first in line to get paid usually kept your phone line working.

“It Appears that Time Warner Has Increased its Reliance Upon Telephone Service Suspensions and Terminations as a Tool to Enforce Customer Payment Obligations.”

According to data provided by Time Warner Cable in response to PULP information requests, during the month of March, 2012 Time Warner Cable sent 68,134 shutoff notices to Time Warner phone customers in New York. The threats worked for the majority of those customers. Only 17,218 were eventually disconnected after the shutoff deadline passed.

Since then, shutoffs and suspensions have soared. By July 2013, Time Warner mailed 146,026 shutoff notices and followed through with 42,777 disconnects, increases of 114% and 148%, respectively.

“As a consequence, interruption of phone service for bill collection purposes has reached massive proportion,” says PULP. “It appears that Time Warner has increased its reliance upon telephone service suspensions and terminations as a tool to enforce customer payment obligations. In the 12 months ending July 2013, Time Warner terminated or suspended telephone service on 592,250 occasions for bill collection purposes. Of that number, telephone service was reinstated after an interruption for collection purposes on 461,268 occasions. Thus, 130,982 or 22% of the customers terminated were not promptly reinstated.”

Those figures concern PULP because it suggests many disconnected customers are now without phone service, swelling the “unacceptably large number of New York households lacking telephone service.”

New York now ranks fourth from the bottom of all states in the most recent FCC Universal Services Monitoring Report of telephone subscribers.

Verizon’s Request to “Streamline” the Payment Process Gives Time Warner Cable the Same Idea

In 2010, Verizon New York successfully petitioned the PSC to streamline that payment allocation system. Few people bother with choosing a long distance carrier these days because most phone companies now offer unlimited long distance as part of a bundled service package. Verizon asked to simplify things so that Verizon New York got paid first and everything else came second.

Time Warner is seeking a variation on that same theme, requesting the PSC allow it to allocate partial payments first to telephone service, with the rest distributed to cover charges for broadband and cable television service.

While that is good news for your Time Warner phone line, it is bad news for your broadband and television service which can still be interrupted for non-payment because your partial payment was applied to phone service above all else.

Customers are unlikely to be aware of this, however. Time Warner Cable bills include a regular notice that if a customer is in arrears for any Time Warner Cable service, telephone service may be shut off.

PULP argues the cable company should let customers decide which services are most important to keep up and running during an emergency.

“For example, a customer might want to jettison cable TV and keep the Internet on to hunt for jobs during a spell of unemployment or other household financial crisis,” writes Norlander. “While the bills include separate items for cable TV, broadband, and telephone services, there is no information given in the bills on how customers can, if they are in arrears, keep the service they pay for with a partial payment.”

Indeed, there is no provision on Time Warner’s website or on its paper bill payment coupon to allocate which services a customer wishes their partial payment to be applied to first.

Time Warner Cable argues it gives late paying customers every opportunity to either make up past due payments or negotiate a payment plan before any service is interrupted.

“Customers have the opportunity to walk into the local [cable] office and make a payment during these extended hours,” Time Warner argues. “They also have the opportunity to pay online and over the phone 24 hours a day, as well as paying cable representatives directly when they arrive at the customer’s premises to disconnect service. TWCIS-NY believes that streamlining of the rules for disconnection of phone and cable services will make the Commission’s rules more consistent across the board and less confusing for customers.”

We Shouldn’t Have to Provide Printed Residential Phone Books We Didn’t Offer Anyway

Time Warner Cable wants to opt out from distributing printed copies of residential telephone directories it doesn’t publish.

When the company provided unregulated telephone service, it never had to offer customers a phone book. But in its new life as a regulated provider, New York requires phone companies to offer, upon request, a printed telephone directory:

Each service provider shall distribute at no charge to its customers within a local exchange area, a copy of the local exchange directory for that area, and one additional copy shall be provided for each working telephone number upon request. A copy shall be filed with the Commission.

Nobody has formally opposed Time Warner Cable’s proposed alternative: distributing residential listings only to customers who specifically request them in print or on CD-ROM.

Most customers don’t realize Time Warner Cable used to outsource most of its telephone service operation to Sprint. In addition to providing VoIP service, Sprint relied on dominant local telephone companies to provide phone books to Time Warner phone customers. In return, Sprint passed along customers’ names, addresses and phone numbers to phone companies like AT&T, Verizon, Frontier, CenturyLink and Windstream to be incorporated into those directories.

In 2010, Time Warner announced a four-year transition project to take its telephone service “in-house.”

Will All of This Competition, Oversight Rules Should Be Relaxed; If Customers Don’t Like Us, They Can Go Somewhere Else

Virtually every telephone company in New York agrees with the assessment Verizon has made for years — if a phone company does not provide excellent service, subscribers will simply switch to a competitor, negating the need for oversight of service quality standards.

Verizon paved the road Time Warner Cable is driving down to offer NY’ers less-regulated phone service.

The PSC agreed, reducing requirements for service outage reporting and other documented service issues. Today, Verizon only reports incidents involving “core” customers — low-income Lifeline subscribers, “special needs” customers including the elderly, those with serious medical conditions, the disabled and the visually impaired. Core customers also include those with no competitive service providers available to them.

Time Warner Cable wants a modified version of the Verizon “core customer” standard applied to its cable phone service — one that defines core customers as those with Lifeline service or special needs.

Time Warner does not want to include those without competitive alternatives and seeks an exemption from any reporting requirements until it signs up at least 5,000 accounts designated as “core customers.” That could take a while. PULP obtained records from Time Warner Cable showing as of Aug. 7 the company has only signed up 149 telephone customers it defines as “core customers.”

The cable company may be thinking of the future. Verizon Communications has made its intentions clear it wants to abandon rural landline service in favor of questionably regulated wireless Voice Link service. The idea that a cable company provides landline service in an area the local phone company no longer does is unprecedented in New York, but perhaps for not much longer.

If Time Warner Cable successfully argues “core customers” need not include those without competing alternatives, the PSC may unintentionally hand the cable operator a rural telephone monopoly without quality of service oversight in some communities.