Upgrade or else.

AT&T is now forcing some of their customers relying on the company’s traditional DSL service to upgrade to AT&T U-verse or face service suspension.

The latest customers impacted by AT&T’s forced upgrade are in parts of Connecticut.

“This is a reminder that within the next 30 days, your current service will change to AT&T U-verse High Speed Internet,” reads the letter mailed to customers facing the mandatory transition. Unfortunately, customers have to call AT&T to arrange for new equipment if they want their service to continue uninterrupted — existing DSL modems don’t work with U-verse.

Callers who dial the toll-free number in the letter get to order the U-verse equipment for free, but they routinely endure a hard sales pitch selling U-verse video and phone service as well, at a corresponding higher price. Customers are sent self-install kits at no charge and are offered the same rate they currently pay for DSL, sometimes with faster speeds on the U-verse network. But after one year, regular U-verse prices apply, and they are often significantly more expensive than traditional DSL service.

A Broadband Reports reader in Conn. shared a copy of the AT&T U-verse upgrade letter posted on that site's AT&T forum.

The promotional prices offered to Stop the Cap! reader Ralph were not as good as what he was currently paying for basic DSL on a promotion he purchased earlier.

“I am now paying $14.95 a month under the promotion I am on now and AT&T first tried to sell me a plan that cost $5 more,” Ralph writes. “They quickly agreed to keep my current promotional price after I told them about it, but what they will not tell me is what I will pay after the one year is up, nor can I find U-verse regular pricing on AT&T’s website.”

This special offer bundle comes with a surprise after the promotion ends -- a much higher bill.

AT&T is currently promoting Internet-only promotional pricing as follows: Basic Internet: $19.95, Express Internet: $19.95, Pro Internet: $19.95, Elite Internet: $24.95, Max Internet: $29.95, Max Plus Internet: $34.95, Max Turbo Internet: $44.95. We could not find a disclosure of what the regular prices would be after the one-year contract expired, and that bothers Ralph.

“I realize they are going to match my 3Mbps service on U-verse, but somehow I suspect the regular U-verse price is going to come higher than the DSL service I have been using,” he says.

Ralph’s intuition is correct. Stop the Cap! called AT&T at the number provided on the letter and spoke with a customer service representative at the AT&T Web Sales Center. Although AT&T will ship the required equipment (a wireless router/modem combo) at no charge, AT&T will eventually make that money back charging customers higher prices for Internet service.

Current regular pricing for Ralph’s DSL service after his promotion ends will cost him $24 a month for 3Mbps service.  U-verse charges $38 a month (off promotion) for the same speed service — a $14 monthly difference.

“That sucks,” Ralph said after we shared the news. “Why should I have to change what works fine right now?”

AT&T says keeping DSL in certain U-verse upgrade areas is not possible. In fact, AT&T’s letter warns, if customers do not call to arrange for the U-verse “upgrade” by a certain date, their broadband service will be suspended. That could be a problem for customers who also use their broadband account with an Internet-based phone line.

“There goes 911 or any other emergency calling,” Ralph reminds us. “Thanks, AT&T.”

Some customers who have completed their U-verse upgrade report AT&T messed up their subsequent billing, charging full price instead of an agreed-upon promotion. Slickdeals members report AT&T often requires constant reminding to fix billing errors that generally hand customers higher bills than they expected.

“I am trying real hard to figure out how this represents the ‘next evolution of communications’ AT&T writes about in their letter,” Ralph concludes. “All I am going to eventually get is a much higher bill for a service I don’t want or need. I guess it’s time to call the cable company again.”

Just over a week after Verizon Communications announced it would stop selling DSL service to customers without landline voice telephone service, the company today confirmed it plans to stop selling DSL to customers who live in an area also served by the company’s fiber optic FiOS network.

New customers looking for broadband from Verizon will have to sign up for FiOS to get it.

The announcement came as part of a quarterly conference call with Wall Street investors.

Some consumers looking for the cheapest Internet access packages have gotten them from the phone company, often years earlier, and are grandfathered in at those prices.  Verizon says it does not intend to disconnect existing DSL customers, who can keep the service indefinitely, but will not sell the slower broadband service to new or moving customers.

No exact timing for the new policy to take effect was given.

Verizon’s broadband success story has been with its fiber optic network, which continues to add customers.  The same cannot be said of their DSL service, which continues to lose business to Verizon’s cable competitors, especially in areas where FiOS remains unavailable.  FiOS was designed to protect Verizon’s landline business and it seems to be doing exactly that.  At least 63% of Verizon’s landline-associated revenue now comes from its fiber optic service.

Verizon’s executives have made it clear change is coming to the traditional landline business.  The company has not said what it intends to do with DSL customers in non-FiOS areas but did announce they would decommission pay telephones and discontinue long distance calling cards in the future.

Your modem needs an expensive upgrade, even if you own your own.

Stop the Cap! reader Paul in Illinois e-mailed us (along with several other readers) sharing news that Frontier Communications intends to charge their DSL customers a minimum of $6.99 a month for the rental of a DSL-ready modem-router, even if customers purchased and use their own equipment for Frontier’s High Speed Internet service.  Even worse, some customers are being told the monthly combined rental fee for the company’s wireless-ready DSL equipment is a whopping $14 a month — just for the equipment.

The bad news arrived in the form of a postcard notifying customers that their current modem is “out of warranty” and a new “modem support and warranty fee of $6.99 a month will appear on your bill as of 1/12/12.”

Frontier’s alarming notice tries to scare customers, telling them their existing outdated equipment represents a potential security risk, and explains only with their new mandatory “modem support fee” will customers get “unlimited support” and a replacement modem, if necessary.

Eric, a Stop the Cap! reader and Frontier customer notes Frontier has been piling on price increases in the form of mandatory surcharges and fees this year, including a monthly $1.99 “High Speed Internet Surcharge.”

“Former Verizon customers are now being gouged an additional $9.00 per month or $108 dollars per year,” Eric notes, adding up just the cost of the modem rental and the surcharge.

Paul is especially upset because he purchased his DSL modem direct from Verizon just before the phone company sold its business in Illinois to Frontier.

“In fact, the Verizon modem is more ‘advanced’ than the Westell equipment they want to rent me,” Paul says. “The security is better on Verizon’s unit, and I got it as part of a $29.99 ‘Internet for life’ special offer Frontier now wants to renege on.”

“Frontier is running a scam from top to bottom, offering you l0wball Internet pricing that never includes the outrageous add-on fees that you only find out about on your next bill,” Paul says.

Other Frontier customers on Broadband Reports’ Frontier forum are reporting Frontier has been inconsistent explaining the fees, and some are finding promotions that were supposed to protect them from price increases do nothing of the sort.

Stop the Cap! reader Isabella in Indiana wrote us to say her contact with Frontier customer service was likely going to be her second to last.

“Not only do they intend to collect the $7 a month from customers with their own equipment, those of us with wireless are being told it will cost $14 a month for two of their wireless routers we have on their ‘double DSL line’ promotion,” says Isabella.  “The price for their 3Mbps Internet, on special, was $14.99 a month with a multi-year agreement.  The add-on fees they never tell you about are more than the advertised price of the service.”

Isabella calls her Frontier service “bait and switch Internet” and says when the company applies any additional fees to her account, she will terminate her contract and will refuse to pay a penalty, claiming Frontier unilaterally changed the terms.

“The only ‘price protection’ Frontier offers is for the benefit of their bottom line; Frontier representatives told me there was no way for me to avoid these new fees, even though I am supposed to be guaranteed no price increase for two years,” she says.

Paul also ran into a brick wall with customer service.

“They will not exempt you from the fees — for my ‘convenience’ they will be automatically added to my bill starting next month, with or without the new equipment,” Paul shares. “I am beyond outraged.”

“I am contacting my state Attorney General on Monday to file a formal complaint against Frontier for cheating customers on ‘price protection’ plans,” Paul says.

Modem rental fees offer a lucrative opportunity for broadband providers to raise prices while still advertising a low monthly price for the service alone.  Equipment rental fees often run extra and are typically only disclosed in the fine print.  But must providers will exempt customers who purchase and use their own equipment.  Frontier is apparently ending this policy, forcing some customers to pay the fee for equipment they neither need nor want.  Frontier’s $7 a month fee is particularly steep, especially for equipment that can easily be purchased new or used for prices averaging $50 or less.  Frontier will earn back the cost of the equipment within the first year, with the rest simply padding profits.

One of our readers notified us Frontier customer service agreed to “note their account” to not send the new equipment or charge the fee, despite the fact the representative repeatedly encouraged the customer to “upgrade their router.”  But the customer isn’t so sure he believes the company, telling us an earlier victory getting them to waive the “HSI Surcharge” was hollow: Frontier simply began charging it anyway, and refused to remove it despite the earlier agreement.

“What is next — special fees for reading e-mail and visiting web pages?” asks Paul.

Windstream disappointed Wall Street Friday when it reported a 16 percent income drop for the third quarter of the year, surprising investors who expected more from the Little Rock, Ark. phone company.

Windstream is attempting a makeover as it attempts to shed its image as a residential landline service provider for brighter prospects delivering business telecommunications services.  But shareholders weren’t impressed as company officials noted the company has increased spending on capital projects like data centers and wiring cell phone towers with fiber optics and the $840 million acquisition of Fairport, N.Y.-based PAETEC Holding Corporation.

Most of Windstream’s successes are tied to the company’s business products and services.  The company reported growth selling advanced Internet products to corporate customers, including virtual LAN services and dedicated Internet access.  A considerable amount of the company’s Internet revenue growth is coming from data center services such as webhosting and wireless backhaul circuits sold to cell phone providers.

Windstream’s residential customers can be split into two groups: traditional landline users who are increasingly disconnecting their service and those who are buying DSL service to accompany their existing phone line.  Windstream reported another 4.6% of their residential customers permanently disconnected service this year.  Windstream’s largely rural customer base has remained more loyal and the company added an additional 8,000 DSL customers during the quarter, a growth of 4.4%.  Windstream’s penetration rate for broadband among their landline customers is 65%.

Keeping broadband customers loyal to DSL requires regular service improvements to avoid customer poaching by cable competitors, and Windstream is attempting to keep up with a $40 million investment to improve broadband speeds, including the introduction of advanced VDSL service in selected areas.

Whittington

“We increased broadband speeds to residential and business customers that can now offer 12Mbps service to over 40% of our footprint and 24Mbps service in our most competitive markets,” said Windstream chief operating officer Brent K. Whittington. “We expanded our Raleigh data center to increase the floor space by 10,000 square feet to keep up with the rapidly growing customer base and demand for cloud-based services.”

Whittington notes customers that hunger for faster broadband speeds are using them largely to watch online video, and Windstream has begun marketing campaigns targeting video-hungry customers.  Customers using the Internet for basic web browsing and e-mail are not very interested in paying more for faster service, however.

“Customers still don’t want to pay incrementally for higher speed services,” Whittington said. “We try to position Windstream as all the speed you need, which is really trying to help make sure customers understand our parity with cable as it pertains to speeds because some of the perceptions around traditional ADSL services, they’ve used against us, and that’s working for us. But again, customers really just, we find, don’t want to spend a lot more for incremental speeds. We see that as revenue upside in the future, but not seeing a great deal of demand there right now.”

While Windstream customers will likely find current product pricing stable over the coming year, the FCC’s recent approval of Universal Service Fund (USF) reform does allow the phone company to raise rates on customers.  Some Wall Street investment firms have suggested Windstream do precisely that to boost revenues.

Timothy Horan from Oppenheimer & Co., Inc. noted Windstream’s local rates seem low.

“I don’t think they’ve been raised for a long period of time,” Horan observed. “I think you have to go through some [state regulators], but can you do that without having rate cases, and is that part of the plan at all?”

Anthony W. Thomas, Windstream’s chief financial officer, tried to put Horan at east.

“The FCC has provided a mechanism, it is our understanding, in the order that will allow us to pass along price increases up to $0.50 per month to our customers over a 5-year period,” Thomas explained.

If you are a current AT&T DSL customer, there is no reason you should be paying regular prices for their usage-capped broadband.  With the implementation of their 150GB usage cap on DSL (250GB on U-verse), now is a good time to call AT&T and tell them you are upset they reduced the value of your account with a usage limit.  But hint you may be persuaded to stay if you can sign up for the same deal some of your friends are getting.

At present, those deals include:

1. One year of AT&T DSL Elite service (typically 6Mbps) for $19.95-24.95 a month (this is the easiest deal to get and renew, even if you already took advantage of it — start by asking for the lowest price, but be willing to agree to the higher price if they won’t grant your first request — the price varies in different regions.)
2. One year of AT&T DSL Pro service (typically 3Mbps) for $14.95 a month;
3. One year of AT&T U-verse 12Mbps broadband for $25 a month.

These promotions should work for “naked DSL” (broadband service only) and for current customers who already subscribe to AT&T service.

You can get these offers by calling AT&T Retentions Department directly at:

• Midwest: 1-866-918-8377
• Southwest: 1-888-387-6270
• California: 1-877-377-0415
• Connecticut: 1-877-235-2293

If your promotion is about to expire, call and ask them to extend it.  They usually will.