Time Warner Cable subscribers who are passionate about their hockey and basketball won’t be watching all of the Buffalo Sabres or New York Knicks games, thanks to another year-end programming dispute primarily affecting cable subscribers in New York State.

MSG terminated their program feed for approximately 2.8 million Time Warner customers early Sunday, leaving the cable operator to make amends with irritated subscribers.

Once again, the cost of sports programming was the issue. MSG has raised prices at least 70 percent over the last five years, according to cable research group SNL Kagan.  The package that includes MSG and MSG Plus now sells at a wholesale price of more than $4.50 per month, rivaling the most expensive sports network ESPN, which will charge $5.06 a month in 2012.  Time Warner reportedly balked at a renewal deal for 2012 that would have increased prices well beyond the six percent the cable operator offered to pay.

Time Warner has e-mailed subscribers indicating MSG pulled the plug, and is offering some replacement programming to ease the suffering of sports-addicted subscribers:

At Time Warner Cable, we’re sports fans too – that’s why we fight hard to keep the sports you love on the air at a price you can afford.

With the game clock running down, MSG Networks rejected all proposals, refused to engage in any meaningful way, and refused to allow us to keep the channel on. In the end, MSG pulled the plug on Time Warner Cable customers. We regret that MSG Networks has taken away their sports programming, but remind fans that even without MSG, Time Warner Cable will carry nearly 20 percent of this season’s remaining Sabres games, and dozens of other NHL and NBA games and most of the NHL and NBA playoffs. For information on where to find your favorite teams, visit www.twcconversations.com/MSG.

We don’t think that MSG’s actions are fair to sports fans, so Time Warner Cable is offering the following in appreciation of our customers:

•

A special month-long preview of the Time Warner Cable Sports Pass, a package of more than 15 sports-oriented channels. This package—which normally costs $5.95 per month for residential customers—will be available from January 1 – 31, 2012. (Visit www.timewarnercable.com/sportspass to see the full list of channels and channel numbers.)

•	A free preview of the NBA League Pass premium sports package which offers up to 40 live games per week. This offer is good through January 8th and more details are available at www.twcconversations.com/MSG.

•

The launch of YNN Hockey Tonight, a new nightly hockey show, premiering January 2nd on YNN in Western New York, including the Buffalo and Rochester areas. YNN Hockey Tonight will feature live interviews & analysis, plus scores, standings and information from all around the world of hockey, every night at 11:15 PM through the end of the NHL season.

We think MSG is being unreasonable – and unfair to fans. They continue to demand a 53% price increase for their programming, which just doesn’t make sense. We do want MSG to return to our channel lineup, and we will continue to work hard to reach an agreement that gives you the sports you love at a price you can afford to pay.

Don’t forget: every TV provider is at risk for blackout threats. Last year MSG pulled the plug on DISH – so switching is not a solution. If MSG really cared about the fans, they wouldn’t be holding your sports hostage.

Thank you for your patience and continued loyalty.

Tell MSG to Get Real and Do the Deal.

MSG is telling Time Warner customers to cancel their cable service and sign up for Verizon FiOS TV or one of the satellite dish providers instead.  But those alternative providers are not happy with the rising cost of sports programming either.

DirecTV’s Michael White and Dish Network Corp. Chairman Charlie Ergen have both repeatedly criticized price inflation for sports networks, and both have fought their own battles over the issue.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WHAM Rochester MSG Pulls Programming Disappoints Sports Fans 1-1-12.mp4[/flv]

WHAM-TV in Rochester talks with irritated sports fans about the loss of MSG Networks on Time Warner Cable.  (3 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Harrigan Says Time Warner-MSG Deal Will Take Time 12-30-11.mp4[/flv]

Bloomberg News reports that wholesale rates for sports programming have grown so great, cable operators may be prepared to drop sports networks off cable television altogether.  (4 minutes)

Want to turn your Xbox into a glorified set top box for Verizon FiOS TV?  Soon you can.

Through a collaboration between Verizon and Microsoft, customers who are Xbox LIVE Gold members and who subscribe to both FiOS TV and Internet service will be able to view select live channels through their Xbox consoles.  No extra hardware is required.  And for the first time, these customers will be able to integrate their TV experience with voice and gesture commands through Kinect for Xbox 360.

FiOS TV customers will have access to an app on their Xbox consoles, which will become available for download next month.  Once customers download the Verizon FiOS TV app on their console, they can begin watching live streaming FiOS TV channels – without the need to pay for another set-top box.  Customers must subscribe to both FiOS TV and Internet services.  Initially, 26 FiOS TV channels will be available, depending on the customer’s TV package.

A special discount offer for new customers also accompanies today’s announcement.

New customers who sign up online for FiOS TV service can take advantage of a special offer that includes triple-play service with FiOS TV, FiOS 35/35 Mbps Internet service and Verizon voice service, starting at $89.99 a month.  In addition, the offer includes a 12-month Xbox LIVE Gold Membership and the “Xbox Halo: Combat Evolved Anniversary” game.  The discounted offer is available through Jan. 21.

Verizon did not disclose any restrictions that could limit where you can watch.  Some providers limit online and console viewing to the home address where the account (and broadband gateway) is registered.

Frontier Communications continues to lose access line customers at a rate of 8.5 percent overall, 9.8 percent in the former Verizon service areas they acquired more than a year ago.  The company’s third quarter results show lackluster performance as revenue declines of 30 percent impacted both their residential and business customer units.

Company officials spent most of the question and answer session responding to Wall Street concerns about revenue, spending, promotions, customer churn, the company’s pension fund, and the outright defection of Frontier FiOS TV customers away from the fiber network the phone company inherited from Verizon.

Mike McCormack of Nomura Securities suggest the weak figures should concern investors because it may show Frontier unable to compete effectively with cable companies, which also offer phone service.

Frontier CEO Maggie Wilderotter put her best face forward trying to promote the company’s successes, particularly bringing DSL broadband to former Verizon service areas:

“Our broadband expansion reached an additional 126,000 new homes in the acquired properties during the quarter, bringing our year-to-date total to 352,000 which is on track to reach our 2011 goal of increasing broadband availability to more than 400,000 additional homes. Broadband availability in the acquired properties is now 80%, a significant increase from the mid-60% range when we acquired them. As a result of our expansion and sales efforts, we had a very strong quarter for broadband growth, adding 16,900 total DSL subscribers, a 38% sequential increase from Q2. We also added 2,300 wireless data customers. This growth reflected the effectiveness of our local engagement model, as well as organic demand for broadband in both legacy and acquired properties.

“We have also largely completed our efforts to migrate middle mile congestion, which now gives us the ability to more effectively market higher speeds in markets that were already enabled.”

Frontier executives sought to portray West Virginia as their biggest success story.

Daniel J. McCarthy, Frontier’s chief operating officer and executive vice-president, claims Frontier’s installation of 12 integrated fiber rings throughout the state provides broadband capacity and integrated network capability beyond what is available anywhere else in the United States from a state-wide perspective.  McCarthy claims Frontier is on track to turn West Virginia from one of the least connected states in the nation to one of the most connected.

But Margaret Kings from MacArthur, W.V. says she’ll believe it when she sees it, and she hasn’t seen it yet.

“My extended family has experienced endless problems dealing with Frontier in this state, and I have relatives in the Panhandle to boot,” Kings says. “We have collectively won more than $300 in service credits for out of service broadband and phone service, slow speeds when it rains, and missed appointments, billing errors, sneaky charges, and contract disputes.”

Kings’ immediate family left Frontier for Suddenlink more than a year ago when she moved.

“Why pay Frontier more for phone service and 1.7Mbps broadband when I can pay Suddenlink less for their phone service and 10Mbps Internet access,” she asks.

Frontier hopes to win back former customers with new broadband services, such as their newly-introduced “Second Connect” service, which delivers a second DSL line for existing broadband homes for what the company claims is $14.99 a month.  Frontier says a few thousand customers have signed up for the service, which is now being pitched aggressively by Frontier’s call centers.

But some customers who have signed up for the service are accusing Frontier of billing fraud for wildly misleading customers about the true cost of the service.

The $14.99 price tag Frontier advertises omits modem rental fees, taxes, surcharges, and other fees customers first discover on their monthly bill.

Chris Photoni discovered, after five calls and a combined two hours on hold, the true out-the-door price for Frontier Second Connect is actually $48 for him.  The Broadband Reports reader elaborates:

Don’t waste your time. Even after the ‘corrections’ the Second Connect line cost around $48. I say ‘around,’ [because] I haven’t met a staff member yet that could correctly calculate tax. How convenient for you Frontier. Their computer system can calculate it for your bill, but is unable to calculate it when inquiring about the service.

The new ‘taxes’ come to $27.64!

Frontier is one of the worst phone companies. They have terrible customer service, and the wait times usually seem to be 20-30 minutes per call. Most issues take at least THREE calls to resolve. I’ve actually have been on hold for 25 minutes as I’m writing this.

Kings said she wouldn’t have bothered inquiring about Second Connect in the first place.

“Let me understand this,” she writes. “The same phone company that offers 1.7Mbps to my house wants another $15 a month to ‘double my speed?’  I could pay $100 a month to Frontier for 3Mbps broadband along with my phone line or pay Suddenlink $100 for 10Mbps broadband, phone and cable-TV service.”

Other highlights from the conference call:

• Frontier is getting into the home security business in a two state trial with ADT and Protection 1.  Customers will be strongly encouraged to bundle the home security service with other telecommunications products to hold them in contracts and provide discounts up to 15 percent;
• Frontier will begin to resell AT&T wireless voice and data services in bundles with existing products. Frontier plans to trial this service during the first half of 2012 before expanding it nationally.  This service is only going to be available to bundled service customers.  Why customers wouldn’t pursue an agreement with AT&T themselves, without the phone company’s involvement, isn’t well-explained;
• The company plans no significant high-value promotional offers for the 4th quarter.  They didn’t pitch any during the 3rd quarter either.  Customers with pre-existing promotions, including “free satellite TV for 2011” or “six months of free DSL” will find their bills rising considerably as those promotions expire in the next few months;
• Frontier’s pension plan is not in the best shape.  The company had to contribute $58 million of real estate to the plan fund to manage investment losses for the year;
• Frontier’s $500 FiOS installation fee has effectively kept new customers away from the fiber network.  Although the company claims it wants to maintain support for FiOS, video customers have left in droves and a smaller number of broadband customers have left as well, primarily for Comcast;
• Frontier plans to continue investment in its middle mile network to handle broadband traffic growth in 2012 and 2013.

Now selling for the "go away" price of $500 for installation.

Frontier Communications has proven it can successfully herd customers off the award-winning advanced fiber network it inherited from Verizon Communications just by increasingly gouging customers until they call and cancel.

The phone company reports success in ridding itself of 9,900 FiOS TV customers in the third quarter alone, and 3,100 FiOS Internet customers left with them in Indiana and Oregon.

Frontier CEO Maggie Wilderotter and other company executives made it known last spring that FiOS fiber optics was the unwanted stepchild best left forgotten when telling investors the company considered the fiber network unprofitable.  The company has since taken to hike rates and raised the price for service installation to as much as $500.  The combined increases have made the cable competition — Comcast — blush and look downright cheap by comparison.

Where did Frontier’s customers go?  Several left for Comcast, but others were persuaded to switch to an aggressively-priced satellite TV promotion, at least until it expires.  Frontier added 12,200 satellite subscriptions nationwide last quarter and 16,200 new DSL customers, many in ex-Verizon service areas that currently have no other choice for broadband.

Losing customers.

A year after Frontier Communications assumed control of Verizon’s assets in the Pacific Northwest, customers are fleeing the company’s inherited fiber-to-the-home service FiOS, after announcing a massive (since suspended, except in Indiana) 46 percent rate hike for the television portion of the service.  A new $500 installation fee has kept all but the bravest from considering replacing customers who have left for Comcast and various satellite TV providers.

Frontier’s second-quarter financial results revealed the company has lost at least 14,000 out of 112,000 FiOS TV customers in the region (and in the Fort Wayne, Ind. market, where the service is also available.)

Early reaction to the original rate hike announcement started customers shopping for another provider — mostly Comcast, which competes in all three states where Frontier FiOS operates.  Even after the rate hike was suspended in some markets, intense marketing activity by Frontier to drive customers towards its partnership with satellite provider DirecTV managed to convince at least some of those customers to pull the plug on fiber in return for a free year of satellite TV, although an even larger number presumably switched to the cable competition.

D.A. Davidson, a financial consulting firm, told The Oregonian the message was clear.

“They would love to get rid of the FiOS TV customers,” Donna Jaegers, who follows Frontier, told the newspaper. “They’re programming costs are very high compared to the rates that they charge.”

Jaegers said Frontier Communications completely botched their efforts to transition customers away from FiOS TV towards satellite, because most of those departing headed for the cable competition, attracted by promotional offers and convenient billing.

Many others simply don’t want a satellite dish on their roof, and are confounded about Frontier’s message that satellite TV is somehow better than fiber-to-the-home service.

Frontier admits its FiOS service is now underutilized, but claims it will continue to provide the service where it already exists.

Wilderotter

Frontier Claims Its DSL Service is Better Than Cable Broadband

Frontier’s general business plan is to provide DSL service in rural areas where it faces little or no competition, and most of Frontier’s investment has been to upgrade Verizon’s landline network to sustain 1-3Mbps DSL service, for which it routinely charges the same (or more) for standalone broadband service that its cable competitors charge for much faster speeds.

But Frontier Communications CEO Maggie Wilderotter says their DSL service is better than the cable competition.

“A key differentiator between our network and cable competition is that you consistently get the speed you pay for,” Wilderotter told investors on a conference call. “There’s no sharing at the local level. High demand for bandwidth-intensive applications like video are putting pressure on all wired networks. To that end, we want to make sure that we have more than enough capacity to satisfy the expectations of our customers. We’re spending capital in all parts of the network with specific emphasis in the middle mile, which will enable us to consistently deliver a quality customer experience for our customers of today and tomorrow.”

Frontier Communications CEO Maggie Wilderotter defends anemic broadband additions during the 2nd quarter of 2011 and tries to convince investors DSL service is better than the cable competition. August 3, 2011. (4 minutes)
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Netflix Traffic Represents 25% of Frontier’s Broadband Traffic; Online Video — 50%

Wilderotter admitted Frontier’s broadband network is overcongested in many regions, which she partly blamed for the company’s anemic addition of new broadband customers.

She noted Netflix, which has itself consistently rated Frontier the worst wired broadband provider in the country for being able to deliver consistent, high quality access to their streaming service, represents one-quarter of all capacity usage of Frontier’s broadband network.

“Video is about 50 percent,” Wilderotter added.  In an investor conference call, she explained network congestion in more detail:

“In [the second quarter], we had many areas with unacceptable levels of network congestion, which negatively impacted our growth in net high-speed additions.” Wilderotter said. “We believe all of the major congestion issues will be fixed by the end of [the third quarter], and that will enable us to drive higher growth and net broadband activation in [former Verizon service areas.]”

“What we decided to do is to go for fixing the middle mile, which is the [central office] to the […] neighborhood and to expand that capability by 100-fold. And then also, expand from the [central office] out to the Internet and make sure that we have huge capacity to deliver and receive capability to our customers. So when we sell 6 meg, 10 meg, 25 meg, 50 meg, the customer gets what we sell them and that was extremely important for us.”

“So what we did is in the areas where we saw the congestion increase based upon usage increases, and we’ve built new households. We’ve held off on marketing to a lot of those new households until we fixed the congestion problem because we didn’t want to exacerbate what we had already. We’ve shifted capital in terms of the mix of how we’ve spent capital to fix this problem. I’d say we’re probably 75% of the way there in fixing congestion. This quarter is another big quarter for us to get all of the major issues out of the network, which will allow us in the back end of this quarter through the fourth quarter, to really start pushing the penetration levels where we’ve built new households in the areas that have been affected by congestion.”

Frontier Introduces Line Bonded DSL — Two Connections Can Improve DSL Speeds

Frontier Faster? Frontier announces line bonded DSL.

Frontier Communications also announced the introduction of Frontier Second Connect, a DSL line bonding product that delivers two physical connections to a single household.  Line bonding allows for improved broadband speeds.

“Second Connect gives our customers two exclusive connections in one household, and we’re the only provider in every market that can do that,” Wilderotter claimed.

In more urban markets, Frontier’s DSL speeds are woefully behind those available from most cable competitors.  Frontier has begun upgrading some of their legacy service areas and retiring older equipment in an effort to improve the quality of service.

“The real initiatives that we have underway are called middle mile, interoffice facilities, as well as some of the more aged equipment that’s in the network,” said Dan McCarthy, Frontier’s chief operating officer. “So as we go through, there’s about 600 projects that are underway today that will improve both the speed and capability.”

“We’ve inherited markets that there has not been upgrades to capacity in these markets for many years and fixes to the networks, plus the elements as the DSLAMs, even the DSLAMs themselves are old,” Wilderotter said. “So we’re replacing network elements in the neighborhood. We’re splitting them and moving customers to other network elements to make sure that they have a good experience.”

Frontier executives answer a question from a Wall Street banker about DSL speeds and congestion problems on Frontier’s broadband network. A detailed technical discussion ensues as the company tells investors it is redirecting some capital to fixing Frontier’s overcongested network. August 3, 2011. (5 minutes)
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Frontier Still Losing More than 8% Of Its Landline Customers Every Year

Despite broadband rollouts and incremental improvements, more than eight percent of Frontier’s landline customers disconnect service permanently every year.  Frontier called that disconnect rate an improvement over its line losses last year, which exceeded 11 percent in some areas.

“Total line losses improved to an 8.6% year-over-year decline, our lowest level since taking ownership when the pro forma loss rate was 9.7%,” reported Wilderotter. “We also improved [the] loss rate [in former Verizon service areas to] 10.1% compared to 11.4% in Q2 2010.”

Most of Frontier’s departing customers are switching to cable providers and/or cell phone service.

(Update 8-23-2011: We are now told in many areas, Frontier’s Second Connect service is not actually a bonded DSL product, but rather a “dry loop” second DSL line that carries the same speed as your primary line.  Presumably, household members can divide up who uses which DSL circuit for Internet access.  The charge for Second Connect in ex-Verizon service areas is $14.99 per month plus a second mandatory monthly modem rental fee of $6.99. If the web link does not work, it means the service is not available in your service area.)