AT&T is accelerating the demise of its own landline business with a new wireless home phone product that is cheap for voice calls but could spell the end of your DSL service in certain cases.

AT&T Wireless Home Phone service provides contract-free unlimited nationwide voice calling for $20 a month ($10 if you are already an AT&T wireless phone customer sharing your Mobile Share minutes).

The service includes a base station ($99.99 prepaid or free with two-year contract) that receives AT&T’s wireless signal and integrates with your existing home telephones. The landline replacement includes caller ID, call waiting, three-way calling and voice mail. There is a $36 activation fee, a “Regulatory Cost Recovery Charge” of $1.25 per month and all the local taxes and surcharges that go with your current landline. Unless choosing the prepaid option, an early termination fee up to $150 applies. The restocking fee for customer returns is up to $35.

In certain cases, forfeiting your landline could mean the end of your DSL service if you do not remind the phone company you want to keep your broadband service intact. If you don’t AT&T and other phone companies might disconnect all of your services.

There are other caveats:

• Call quality is only as good as AT&T’s network and reception in your home;
• Caller ID only includes the calling party’s number. No name information is provided;
• Emergency 911 calls lack exact geographic information, which could make locating a caller more difficult;
• The service is unregulated and has no local or state government oversight to guarantee call quality and reliability;
• If power fails, an internal backup battery can keep the system running for up to 36 hours or 3.5 hours of talk time;
• The service cannot be used with home security systems, fax machines, medical alert systems, credit card terminals, dial-up Internet, or other data services.

Verizon Wireless offers their own version of this service: Wireless Home Phone Connect, for about the same price. It gets mixed reviews from owners because of complaints about call quality.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/ATT-Wireless-Home-Phone 3-27-13.flv[/flv]

AT&T’s product promotion of its wireless home phone service. The pricing information in this video was intended primarily for existing AT&T wireless customers and is slightly outdated. (1 minute) 

Grab this bargain: Frontier’s website accidentally placed two different DSL packages on our order despite only requesting one. We didn’t ask for the phone line or satellite TV either, but there they are.

Frontier Communications is in the process of redesigning their website — a project long overdue in an age where customers can pre-qualify themselves for service and schedule installation from most cable operators without ever picking up the phone.

But judging from some e-mail from Frontier employees working on the project, the forthcoming “upgrade” is about to make a bad situation much worse.

Frontier is the sixth largest phone company in the country with customers in 27 states, but they have never run a modern, well-functioning website. Frontier’s service pre-qualification tool has never worked properly in Rochester, N.Y., the largest city where Frontier provides service, and placing an order for service is fraught with confusion for customers who don’t speak telecom jargon.

Based on a reader tip, we tested the website this afternoon here at Stop the Cap! HQ.

Placing an order for DSL service is currently based on your street address, but the order process gives no indication if the company can actually provision service at the speeds requested.

As a customer journeys through a cumbersome 10-step order process, it becomes easy to be sidetracked with endless promotional tricks and traps in numbers I haven’t seen since last ordering a domain name from GoDaddy. The shopping cart also erroneously added two different broadband service packages on our order, despite only selecting one.

Step 1 offers murky promotions such as the impenetrable “Shop Promo VISA CD 100 2Y Challenger.” Promotions do not clearly disclose their terms up front. This one only discloses the two year service agreement with a steep early termination fee with the designation: “2Y.” Avoiding promotions still did wonders for our monthly bill, especially considering we were just looking for broadband service. We found Frontier quietly added a “digital unlimited phone” we could care less about for $30.99 a month, America’s Top 120 (presumably satellite TV we did not request) for $44.99 a month, Broadband Max (the slower DSL service we did not want) for $34.99 and Simply Broadband Ultimate (the service we did) for an extra $59.99. Our out the door price for what was supposed to be broadband-only service? A low, low $170 a month minus a $5 service loyalty credit for taking two services.

Step 2 piled on another $5 fee for satellite-delivered local channels for the satellite package we never asked for, but the duplicate broadband service was gone. Now we were stuck with the slower Broadband Max. Step 3 forced us to wade through more than a dozen phone feature packages for the phone line we don’t need. Step 4 sticker-shocked us with installation fees ranging from $50 for a self-install kit to $175 for a home installation of DSL and Wi-Fi. Those fees can be waived with a perpetually-renewing two year service contract (up to a $135 credit). At that point we had enough and bailed on the order.

This represents Frontier’s online shopping experience today. A Frontier employee who wishes to remain anonymous warns Stop the Cap! things could get much worse.

Our source tells us Frontier has outsourced much of the work on its forthcoming redesigned website to third party contractors who are now reportedly in over their heads, unaware that Frontier operates with a range of very different products and services depending on the service area. For them, one-size-fits-all seemed good enough:

[These contractors] don’t understand products or how those products interact with each other, yet they have been put in charge of creating the ability for customers to order them based on where they live.  The company has current issues with their website in that they can’t figure out how to get the right products to display for a customer in Rochester, N.Y. vs. a customer in Fort Wayne, Ind. Instead, Frontier has products configured by region, then broken down by zip code, and then by the customer’s phone exchange.

Unfortunately, new customers don’t know what phone number they will be assigned and that leaves them unable to determine what products are actually available to them. The products offered should be based on the customer’s actual service address, but these contractors don’t appear to have the expertise to make that adjustment.

The shopping cart application has also proved a problem, according to our source. Internal testing of the new site’s functionality has proved distressing because components of the site are still being developed. Recent tests found customers could not correctly select products available in their area or the site could not properly apply them to the shopping cart (a problem we found ourselves using the live site available now).

Our source tells us Frontier’s project manager is hell-bent on bringing the site up by Feb. 9, ready or not.

“We have brought up the fact that there are HUGE navigation issues that are completely not friendly to the customer,” says the employee. ” They are not concerned with any of those issues at the moment, just getting the product to launch. We have been told to manipulate the processes we are to use in order to be able to get any testing done.”

The whistleblower informs us customers are likely to have a range of problems using the new site if it launches in its current state:

• Customers will be able to place orders for products they can’t get;
• Customers will receive inaccurate information about the products and pricing;
• Customers will not be able to get any promotions that they can currently get on the existing Frontier.com application;
• Customers may not be correctly informed about installation charges or taxes, deposit requirements, credit validations, etc.

Frontier needs to take a lesson from some of their competitors that have greatly simplified the ordering process for consumers that can get quickly confused. Frontier should de-emphasize the tricks and traps from the many add-ons and service commitment agreements thrown at customers. Efforts to repeatedly up-sell customers on products and services should be managed separately, perhaps in a follow-up verification phone call where a customer service agent can handle any order changes required. With customers getting a choice between a cable, satellite, or a telco provider, those overwhelmed by one company’s website will simply find another provider.

In the meantime, those with questions or concerns about Frontier might do better just calling them directly at 1-800-921-8101.

Riding away with your phone subsidy.

T-Mobile USA has thrown down the gauntlet, announcing it intends to end the kind of phone subsidies that have allowed customers to pick up pricey smartphones like the iPhone for as low as $99, with a two-year contract.

Wireless subsidies have been part of the North American wireless experience for nearly two decades. In an effort to bring new customers on board, carriers wanted the upfront cost to consumers to be as low as possible. Until expensive smartphones arrived, consumers were assured they could get a new, cutting-edge phone at contract renewal time for very little money. Carriers tolerated the subsidy even for existing customers because the difference between the company’s cost and the amount consumers paid wasn’t large enough to negatively affect a carrier’s balance sheet.

Companies gradually earn back the subsidy over the course of a typical two year contract by artificially inflating prices for service plans and add-ons. Because wireless rates have been set with the assumption a customer has received a subsidized phone, it made sense to keep getting new equipment every two years, because customers pay for it on each monthly bill.

In most countries outside of North America, it works very differently. Most customers either pay for a phone outright or agree to finance its purchase through a wireless company, paying monthly installments for smartphones that often cost more than $600. Some companies offer more aggressive discounts if one agrees to a 1-3 year contract, but buyers still cover much of the cost themselves. In return, wireless companies abroad typically charge much lower rates for service and do not force people into lengthy contracts. Customers also find they can switch companies as easily as replacing a SIM card, activating an old phone on a new carrier’s network.

There are pros and cons to the subsidy model:

PROS

• Consumers get the latest phones at a reduced up-front cost up to every two-years;
• The subsidy win-back is collected gradually over the course of 24 months;
• Carriers aggressively compete on huge subsidies for popular phones;
• The reduced price of a subsidized phone brings reticent consumers into the market;
• Carriers have increased control over the equipment that is used on their network through price incentives;

CONS

• The subsidy model gives carriers an incentive to lock discounted phones to their network;
• Customers pay artificially higher prices for service, whether they take advantage of a subsidized phone offer or not;
• Consumers don’t realize the true cost of the phones and expect them to cost less than $200 regardless of their retail price;
• Customers are locked into lengthy contracts with stiff early termination fees to protect the subsidy win-back structure;
• Without a subsidy, equipment manufacturers would face natural market pressure to cut costs to remain affordable;

Legere

T-Mobile announced last week it was ending its phone subsidy program next year, and customers will be expected to bring their own phone, buy one at an unsubsidized rate, or finance a full price phone with the carrier. In return, customers will get a lower priced T-Mobile calling and data plan.

Some in the tech press are heralding the announcement as a consumer victory and a breakthrough for lower priced service plans. But before throwing the confetti, consider this.

T-Mobile is making customers bring or buy their own phones, but will still lock them into a two year contract with a $200 early termination fee.

T-Mobile’s retention of its contract plans might delineate the postpaid side of its business and its month-to-month, contract-free, prepaid business. But that does not mean much for customers.

John Legere, the new CEO of T-Mobile USA hinted the measure is designed to reduce customer churn — customers coming and going. Locking a customer in place with termination penalties assures shareholders customers are more likely to remain with T-Mobile for the life of their contract.

That represents a win for T-Mobile, but not for customers. Legere explained the benefits to investors:

“[We are going] to have a lower device subsidy obviously and overall value,” Legere told attendees at the Capital Markets Day Conference. “[… because of the] device margin — $200 to $250 — which we do not have to eat. Over a 24-month period [we get] a customer life value that is the difference between $550 on a Classic [traditional subsidy contract] plan and $600 on a Value [no-subsidy] plan.”

In other words, T-Mobile doesn’t have to front a device subsidy, still holds a customer with a two-year contract, and despite the lower-priced service plans, comes out $50 richer when the contract expires.  T-Mobile is essentially admitting it does not return the entire value of its former subsidy back to the customer.

What is more, T-Mobile may pave the way for other carriers to also drop handset subsidies, keep the traditional two-year contract, and only slightly lower prices.

Nothing peeves Wall Street more than the huge subsidy costs carriers pay up front to discount the latest smartphones. Getting rid of subsidies while only mildly adjusting prices could be the next hidden “price increase,” the perfect gift for an investor that demands higher revenue from every customer.

Despite making revenue growth the top priority at Frontier Communications, the company still managed to lose 3% in year over year revenue as another 51,800 customers pulled the plug on their Frontier landline and slow DSL service.

Frontier’s latest quarterly earnings showed a net income rise to $67 million, a major improvement over $20.4 million earned during the same quarter last year. The earnings improvement comes from reduced operating expenses, down 12 percent to $977.3 million and rate increases for certain Frontier markets in less-competitive areas.

Frontier CEO Maggie Wilderotter told investors the company has been reviewing accounts obtained from Verizon Communications, scrutinizing for “unnecessary credits, adjustments, and discounts, ” and systematically eliminating them.

“We’ve got a number of [ex-Verizon] customers that have been with us at a very, very, very low price point; they’ve been on promotions,” said Donald Shassian, Frontier’s chief financial officer. “They’ve been in existence for years and never got curtailed. And once we converted [those customers] onto [Frontier’s billing system], we identified those.”

Frontier’s plan for future growth is a temporary transition away from expanding broadband service into unserved areas, instead focusing on speed upgrades and service improvements where Frontier already serves.

Frontier: Speed upgrades “help dispel the myth that DSL technology cannot keep up with customer demand.” Faster speeds support IPTV as well.

Frontier has targeted investment on improving speeds and network capacity for customers currently stuck with 1-3Mbps traditional DSL service. Frontier is using its fiber-based middle mile network and more advanced forms of DSL to dramatically increase broadband speeds. According to company officials, 64% of Frontier’s exchanges are now equipped with VDSL2, with speeds up to 40Mbps. At least 73% have equipment capable of bonded ADSL2+ with speeds up to 20Mbps. The target for Frontier’s fastest speeds are commercial customers. By the end of this year, 71% of Frontier’s exchanges will support carrier Ethernet service up to 1Gbps for business accounts.

Most Frontier residential customers will see more modest speed improvements. During the third quarter, Frontier expanded its higher speed offerings with more to come:

• 20Mbps service is now for sale in 34% of its national service territory. By year end, 40% will have access and 52% by 2013;
• 12Mbps service is now available to 48% of its network footprint. By the end of the year, 51% of homes will have access and 60% in 2013;
• 6Mbps is now available to 67% of Frontier-served homes, with 74% expected by year end and 80% by 2013.

“We’re seeing 100Mbps delivery in vendor labs and that should be a reality in the next 12 months in our markets,” Wilderotter said. “This should help dispel the myth that DSL technology cannot keep up with customer demand.”

Wilderotter noted that the latest network upgrades might eventually support television service.

“We think we have the opportunity to offer an IPTV-type service in many of our markets, to many of our customers,” said Wilderotter. “In our labs, we’re doing some experimentation on the DSL platform with certain types of technologies that compress the data stream, so we could actually offer a very good video experience at 6Mbps or above. We’ll be doing some experimentation with that in 2013.”

New Products, More Simplified Pricing, Bigger Promotions

To better compete with cable, Frontier has simplified many of their broadband packages, eliminating the modem rental fee and other hidden surcharges for customers. Wilderotter noted the cable industry has recently started to “nickle and dime” customers with modem rental fees and surcharges, something Frontier has also charged customers in the past.

Frontier is now staking a position in simplified pricing.

“So when a customer gets a quote of $39.99 for broadband, it includes the modem, it includes surcharges, it includes everything,” Wilderotter explained. “So they’re not surprised when they get their bill. And we think that’s a huge value selling point for our product set.”

But simple pricing is not always lower pricing.

Increases in broadband service pricing, a hike in the Subscriber Line Charge, and other surcharges introduced for departing customers helped add to the company’s bottom line. But Frontier insists it adjusts rates only after considering the competitive environment.

“You don’t necessarily see us do price increases on broadband across the board,” explained Shassian. “We also believe that the price increases should be associated with increased value to the customer, too. So in some cases, it’s incremental speeds and capability.”

In an effort to upsell current customers, and even more importantly “win back” those who left, Frontier has introduced an aggressive new promotion that will reward subscribers with up to a $450 Apple gift card when committing to a new two-year contract. The value of the gift card ranges depending on how many services a customer chooses.

Stop the Cap! found Frontier pitching a triple play promotion in Tennessee for $87.99 a month with a $450 Apple gift card for new or returning Frontier customers. The bundle includes 6Mbps DSL, Frontier residential phone service with features and long distance service, and DISH Networks’ America’s Top 120 satellite service.

But there is fine print, including a two year service agreement with a $400 early termination fee for phone and broadband service, a DISH cancellation fee of $17.50 for each month remaining in a two year contract, at least $85 in “setup fees,” a $9.99 “broadband processing fee” if a customer disconnects service, and an online bonus credit a customer has to remember to request within 45 days of service activation.

Other Frontier Developments This Quarter

• Frontier began deploying the FCC Connect America Fund proceeds during the quarter to bring broadband to 92,877 new Frontier homes;
• A wireless partnership trial with AT&T began on October 8 in Washington and Minnesota. The discounted package bundle is only available to customers who also maintain Frontier broadband service;
• Over 203,000 Frontier customers signed up with legacy partner DirecTV saw their satellite service unbundled from their Frontier bills this quarter. Frontier chose DISH Networks as its satellite partner back in 2011, and the company has encouraged its old DirecTV customers to consider switching to DISH;
• Business customers constitute 52% of Frontier customer revenues. Frontier expects more than 66% of total customer revenue to come from broadband service;
• Frontier’s Simply Broadband, a broadband-only product, used to include a free landline. Not anymore;
• Frontier will begin accelerating promotions for its Apple Store gift card starting this week;
• Hughes Net Satellite service was integrated into Frontier’s systems and is pitched to customers as Frontier Satellite Broadband. It will be targeted to 750,000 households that cannot access wired broadband service from Frontier.

A very frustrated employee of Frontier Communications working in one of their Ohio offices sent Stop the Cap! a detailed report on some of Frontier’s problems with customer service, unfair fees, and other horror stories. Over the next several days, we will present excerpts of this very long and detailed open letter, starting with what it is like to work in a Frontier customer service center dealing with customers unhappy with Frontier’s way of doing business. (Stop the Cap’s comments appear in italics.)

I work for a company that I am, quite frankly, frustrated with. The company is Frontier Communications.

I am currently an employee in the Marion, Ohio office/call center, and I am a customer service representative. I handle everything in terms of selling services, troubleshooting issues with telephone service, writing orders, setting up payment arrangements, etc. We occasionally refer to ourselves as universal service representatives. The latter title would admittedly sound better on a resume if my company were to ever find out that I had wrote this and fired me. So, after spending a long while working for this company I have learned a lot. I have taken every type of call that there is to take out there, ranging from a simple billing issue to someone getting absolutely screwed because of a mistake one our other representatives made.

I understand that when you have a customer base of three million residential accounts that you will take some angry calls, statistically speaking. It happens. I imagine that happens with every company out there, whether it sells phone service or a t-shirts. You will eventually run into a dissatisfied customer. I feel with Frontier, it happens way too often.

First off, before I go any further, I would like to say my supervisor and director are very knowledgeable individuals, and in no way am I implicating them in this open letter. They do their best to curb ignorance and poor customer service. I feel that the company limits their abilities to do even more to make customer service at Frontier a much more honest experience. Even the director of our call center still has to take orders from someone.

Frontier’s Shock and Awe:  The $200 Early Termination Fee for a Two-Year Contract Customers Never Realized They Had

Frontier’s early termination fees and contracts often come as a surprise to customers who had no idea they signed up.

I have noticed a lot of people calling in (and leaving comments on numerous review sites, as well as our Facebook page) voicing their displeasure about suddenly finding out that they were in a two-year contract, unable to cancel their services without incurring a 200 dollar early termination fee (ETF). This is something that I hate to deal with, as there are almost always no notes on any of these accounts left by previous representatives indicating they informed the customer of an ETF. Unless it is a special circumstance, we are supposed to tell you that you are notified on every billing statement that you are in a contract, and there is nothing that we can do to waive your fees. Most of the time, if a customer is persistent, they can actually escape and have these fees credited.

Firstly, the systems we use to write orders (Salesforce and DPI — yes, we have two different and completely redundant systems that serve the same function — one just looks prettier) both automatically default to the option of a 1 year contract with the option of automatically renewing that contact indefinitely. Frontier does offer a no-contract plan, but then you will fail to receive any sort of promotional pricing. So, a rep will write an order, complete it, and most of the time fail to review with the customer they are agreeing to a one year contract. We get a LOT of these types of calls, the majority originating from orders written by our service center in DeLand, Fla. What frustrates me is the lack of protocol that makes sure a rep notifies the customer that they are indeed being put on a contract. The calls are recorded and could be reviewed, but there are still too many of these people who fly under the radar and get stuck with a fee when it is too late to opt out.

It sucks to no end to have to tell somebody that they will have to spend an extra $200 to cancel their phone and Internet service, and many are left bewildered over the fee. It is always  hard to tell who has really been screwed and who is trying to dodge an ETF. So we handle it with our gut. That’s the best we can do.

Once a Frontier Customer, Always a Frontier Customer… Unless You Pay and Pray

Frontier works hard at holding onto the customers they have, either with long term contracts with heavy early termination penalties or other tricks and traps that can make departing Frontier a difficult and costly ordeal. In addition to term contracts, Frontier heavily markets extra services they claim will protect your account from mischief, but in reality makes it much more difficult to switch phone companies or terminate landline service.

Locking your phone number from third party transfers also buys you a headache if you want to switch providers.

When a Frontier rep asks you to put a free service on your account that will make sure nobody else can steal it without your permission, most people agree to it. This is called a Primary Local Exchange Carrier Freeze. Representatives have an incentive to push this free service, winning a $3 bonus to our commission if you let us add it to your account.

This service makes sure any third party companies cannot port your service over to theirs without your permission. Even with your permission, they still can’t do it until a Frontier rep removes the freeze. That requires customers to call in and speak with us. This gives us a very valuable opportunity to rescue your business and get you to change your mind. Customer retention is vital, which is why Frontier pays us extra to push a service that costs you nothing.

If a customer insists on “porting out” — keeping their current phone number but moving service to a new provider — we will remove the freeze on your account, but you will pay us for doing it.

It does not cost Frontier anything to remove the freeze, but we now charge customers a $1 fee to change your provider. Want local service with one company and long distance service with another? We charge $1 for each.

When customers accept our offer to place a freeze on unauthorized third parties messing with your phone service without your permission, we are required to obtain third party verification of your desire to have this service. Frontier uses an independent verification company that is god-awful and treats customers rudely, even yelling at some who do not follow the precise verification procedure. If they don’t like your answers, the order will not go through.

Their treatment of our customers reflects poorly on Frontier, especially when a customer’s order to obtain service never gets beyond the verification process.

I’ve heard these reps rip into customers for not answering with a “yes” or “no.” In one case, a gentleman from South Carolina had simply wanted to make sure that telemarketing calls would not screw with his phone bill/service, so I offered a freeze to ease his mind. I was absolutely appalled when he was asked by the third party verifier if he authorized the changes and he replied with the usual southern-accented “ya” and the woman on the other end literally yelled at him for not answering “yes.” The customer was completely taken aback and abruptly hung up. I would have too.

As a result, I often do not bother to include line freezes on larger orders, fearing the unprofessional attitude customers might endure could sabotage my commission and the customer’s scheduled service date. I wish Frontier would utilize a different company to process and verify orders.

So You Are Leaving? Do Exactly What We Say or Lose Your Phone Number

Listen very carefully

Oh boy, do I LOVE number porting. Of course that is absolute sarcasm. So, a port-in/out on paper sounds like a rock solid type of deal. The customer can retain his or her phone number, and check out the grass on the other side, greener or browner.

The process for handling a port-in is also fairly simple, and you would think that this would not be an issue for the customer to worry about. Of course, I wouldn’t be venting about it if this were always the case.

One big mistake routinely made by Frontier and other companies is cancelling your existing telephone service before the number port is complete. Some customers want to hurry the divorce and take it upon themselves to terminate service with their old provider as soon as the new service is turned on.

Under no circumstances should you do this, as it will absolutely screw you out of keeping your phone number. This is basic knowledge instilled in every Frontier rep during training, yet screw-ups still happen when one of our reps cuts off service before the other company has taken ownership of your phone number. That means your number is gone. Sometimes the porting process takes as long as 60 days to go through, so please be patient.

Unfortunately, with no system in place to prevent ignorant reps from screwing things up, numbers get lost. Sometimes it is our fault, sometimes it is with the customer, other times the new company created the problem. But we are often the ones left to explain to a customer the phone number they have had for 40 years is gone for good.

But it can get worse once someone else randomly grabs your old number. Imagine what happens when a grandmother’s lost number is reassigned to a porn smut peddler. Now some porn shop down the way has grandma’s number. This actually happened to a customer of a major cable provider. Imagine her friends and family trying to get her only to reach these people instead. It’s not a fun mess to clean up.

Coming Up: Wheel of Installation & Modem Fees, Adventures With Missed Appointments & Lost Trouble Tickets, and Big Trouble in Little DeLand