Angry customers were seen turning in their cable equipment this week as Bright House Networks switched off its analog and unencrypted signals in central Florida as part of a digital upgrade.

Customers had until Tuesday to pick up a set-top box for every cable-connected television in the home. Bright House is supplying up to two boxes for free until the end of this year after which basic adapter boxes are expected to cost customers $2 a month each.

“They’ve come up with a new scheme to sell us another piece of equipment we don’t necessarily need,” Bright House customer Chris Brown complained to WFTV. He canceled his cable service.

So did customer Steve Cartaya.

“I’m canceling my service with Bright House today,” Cartaya said. “Bills go up every month.”

“We’re transferring from an analog signal to a digital signal here in Central Florida,” said Donald Forbes, senior director of corporate communications for Bright House Networks. “In order to get that digital encrypted signal, you’re doing to need that digital adapter.”

“I say this is the biggest bunch of garbage that has ever been bestowed on the public in this county,” said Kenneth Harter. “Because I have $1,000 worth of TVs at home with built-in features, they have intentionally designed this system so I can’t use it, to where at the end of 12 months they can collect revenue on this equipment.”

[flv]http://www.phillipdampier.com/video/WFTV Orlando Bright House customers without boxes losing signals 4-30-14.flv[/flv]

WFTV in Orlando talked with some Bright House customers arriving with equipment in hand to cancel their cable service over a digital conversion that will encrypt every cable channel. (1:28)

[flv]http://www.phillipdampier.com/video/WKMG Orlando Bright House Customer Digital Conversion 4-28-14.flv[/flv]

WKMG in Orlando explains more about the digital adapters being distributed to Bright House customers and those unhappy they are now forced to use them. (3:30)

The Pinellas County Sheriff’s Office released this mug shot of Leonard I. Solt, 49, of Land O’Lakes, one of three people accused of defrauding the federal Lifeline program out of more than $32 million.

A lack of robust state oversight of independent contractors and resellers may have cost the Universal Service Fund and nationwide Lifeline program up to $1 billion in waste, fraud, and abuse.

This month, three men were accused of stealing more than $32 million in Universal Service Fund (USF) money that supported lavish lifestyles including the purchase of multiple luxury automobiles. The federal government wants the money back.

Leonard I. Solt, 49, of Land O’Lakes, Fla.,Thomas Biddix, 44, of Melbourne, Fla. and Kevin Brian Cox, 38, of Arlington, Tenn., all face federal criminal charges for allegedly padding the number of customers signed up for Lifeline phone service through five companies all connected to the men: American Dial Tone, Bellerud Communications, BLC Management, LifeConnex Telecom and Triarch Marketing.

In some cases, Lifeline cell phone service was completely subsidized by USF funding, allowing customers to sign up for free cell phone service. Average Americans cover the costs of the program through a surcharge on monthly phone bills.

The indictment charges the defendants with one count of conspiracy to commit wire fraud and 15 substantive counts of wire fraud, false claims and money laundering.

In an 18-month period from 2009 to 2011, the phone companies obtained more than $46 million through the Lifeline program.

Regulators have been suspicious of the companies and the men who ran them since at least 2010 when the Florida Public Service Commission noticed a dramatic spike in Lifeline reimbursement requests from Associated Telecommunications Management Services, LLC., the parent company of the five entities. The Florida PSC accused AMTS of misrepresenting customer enrollment when claiming reimbursement. It was not until June 2011 that the Florida PSC approved a settlement of $4 million from AMTS and an agreement to stop doing business in the state.

The case illustrated several ostensibly-independent companies were created to market service across Alabama, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Wisconsin. Many had ties back to AMTS management. Despite the Florida settlement, the firms continued to do business in multiple states. Many of the states involved have deregulated the telephone business and have cut staff at state agencies tasked with oversight issues.

By the time the federal government moved in to prosecute, the three men had used USF funds to buy a private jet, a 28-foot boat and six luxury cars, including an orange Lamborghini, a red-bronze Chevrolet Corvette, a black Cadillac Escalade, a Chevrolet Suburban limo, a black Mercedes Benz S63 and a blue Audi R8.

Last week, government agents seized the vehicles from Biddix’s Melbourne-based pawn shop, Outdoor Gun and Pawn.

The Wall Street Journal reported in 2013 that the FCC’s own data showed that more than 40% of the six million subscribers at five of the program’s top carriers were either ineligible or failed to show that they qualified for subsidized service. As more independent companies win authorization to start pitching Lifeline landline and mobile phone service to the poor, the cost of the program has skyrocketed to $2.2 billion last year, up from $819 million four years earlier.

The companies are reimbursed for providing service, providing an incentive to sign up as many as possible.

In Alaska, a GCI subsidiary, Alaska DigiTel hired a marketing company to help it sell Lifeline cell phone service. The company quickly began signing up patients in hospitals, using hospital addresses as their residence. It also encouraged applicants to list phony addresses. For four years, GCI profited from questionable  reimbursements filed with the FCC. GCI finally agreed to pay a $1.5 million settlement that includes no admission of liability.

Other providers simply used telephone directories to collect names and mailing addresses of “customers” and sent them unsolicited cell phones for which they requested reimbursement.

An Oklahoma provider that regulators suspect got exceptionally greedy allegedly signed up so many Oklahoma residents to Lifeline service, the state is likely to exhaust the supply of phone numbers remaining in the 405 area code sooner than expected.

True Wireless received nearly $46 million under the program in 2012, bringing questions from Oklahoma’s Corporation Commission as to whether enrolling that many residents was mathematically possible. A cursory review found some customers had signed up multiple times in violation of federal rules.

In Wisconsin, the state Public Service Commission eventually revoked Midwestern Telecommunications Inc.’s ability to receive Lifeline funding after its overworked staff discovered MTI was mailing phones to customer that never requested them, billing the USF Fund for reimbursement. Some turned out to be children.

The scheme eventually began to unravel when a former Public Service Commission staffer received an unsolicited Lifeline phone. The alleged fraud was so great, MTI went from receiving 1% of Lifeline reimbursements in Wisconsin during the second quarter of 2010 to 33% of disbursements in the same quarter the following year.

The fraud also extends to Lifeline recipients, some who have bilked the program for free phones. A review of the Lifeline customer database revealed many customers had multiple Lifeline accounts, including some sent more than 10 free phones that were later reportedly resold on street corners.

Nationally, the $1.8 billion Lifeline Program subsidized phone service last year for 14.5 million low-income customers.

Customers are usually eligible if they are already enrolled in income-based programs such as Medicaid, food assistance or public housing, or if household income falls below 150 percent of federal poverty guidelines.

[flv]http://www.phillipdampier.com/video/WSJ Lifeline Fraud 2-18-13.flv[/flv]

WSJ’s Spencer Ante has details of a $2.2 billion government program to give cell phones to poor people that resulted in phones winding up in the hands of people ineligible for the program. (1:13)

Gov. Cuomo

New York State is hardly overwhelmed with excitement over the merger of the nation’s largest and second-largest cable operators and is taking steps to give regulators enough power to derail the merger.

New York Governor Andrew Cuomo has decided the state will not be a bystander as the $45 billion deal is reviewed by federal regulators and is seeking new powers for the state’s Public Service Commission that could force Comcast and Time Warner Cable to prove their merger is pro-consumer.

The New York Post reports the new approach would be the opposite of current rules that force the PSC to carry the burden of proof that a deal hurts the public interest.

“[The proposed changes] are very important arrangements, and the state has a valid role in making sure that the consumer is protected,” Cuomo said at the State Museum in Albany.

A source told the newspaper the rules change “could essentially kill the deal.”

Since the federal government deregulated the cable industry in the 1990s, state and local officials have had little oversight over cable service and pricing, but in many states regulators still have a voice in mergers and other business deals.

The Cuomo Administration denied the rule changes were specifically aimed at Comcast, claiming that the state was simply mirroring the type of regulations impacting gas and oil companies doing business in New York.

If the deal fails to win approval in New York, it would mean Comcast could not assume control of Time Warner Cable’s lucrative franchises in New York City and most of upstate New York. Analysts speculate Comcast is especially interested in aligning its operations in northern New Jersey with those of Time Warner Cable in New York — both part of the largest television market in the country.

So far, Comcast does not seem concerned about Cuomo’s proposal.

“We are confident that the pro-competitive, pro-consumer benefits like faster Internet speeds and improved video options resulting from the transaction are compelling and will result in approval from the state,” Comcast said in a statement, adding that it looks forward to “presenting the multiple consumer benefits” of the deal for New Yorkers.

Reuters reports Florida, Indiana and Pennsylvania — home state for Comcast’s corporate headquarters — will also be taking a closer look at the merger.

Florida will be coordinating with U.S. Department of Justice’s anti-trust officials to review the deal.

“We are part of a multistate group reviewing the proposed transaction along with the U.S. DOJ Antitrust Division,” the Florida attorney general’s office said in an email.

Indiana is studying the impact of the merger on its state, and Pennsylvania promised an “independent review.”

The attorneys general group is focused on broadband instead of cable television in assessing the $45.2 billion deal, according to a source familiar with the effort who was not authorized to speak on the record.

Carbon Hill, Ala.

AT&T is seeking permission to disconnect traditional landline service in Alabama and Florida as it plans to abandon its copper wire network and move towards Voice Over IP in urban areas and force customers to use wireless in suburbs and rural communities.

AT&T’s BellSouth holding company has asked the Federal Communications Commission to approve what it calls “an experiment,” beginning in the communities of West Delray Beach, Fla., and Carbon Hill, Ala.

The first phase of the plan would start by asking residents to voluntarily disconnect existing landline service in favor of either U-verse VoIP service or a wireless landline replacement that works with AT&T’s cellular network. In the next phase of the experiment, traditional copper-based landline service would be dropped altogether as AT&T and the FCC study the impact.

“We have proposed conducting the trials in Carbon Hill, Ala., and in West Delray Beach, Fla.,” AT&T writes on the company’s blog. “We chose these locations in an effort to gain insights into some of the more difficult issues that likely will be presented as we transition from legacy networks. For example, the rural and sparsely populated wire center of Carbon Hill poses particularly challenging economic and geographic characteristics.  While Kings Point’s suburban location and large population of older Americans poses different but significant challenges as well.  The lessons we learn from these trials will play a critical role as we begin this transition in our approximately 4700 wire centers across the country to meet our goal of completing the IP transition by the end of 2020.”

The transition may prove more controversial than AT&T is willing to admit. A similar effort to move landline customers to wireless service was met with strong resistance when Verizon announced it would not repair wired infrastructure on Fire Island, N.Y., damaged by Hurricane Sandy. Hundreds of complaints were registered with the New York Public Service Commission over the poor quality of service residents received with Verizon’s wireless landline replacement. The company eventually abandoned the wireless-only transition and announced it would also offer FiOS fiber optic service to customers seeking a better alternative.

“Be ready, beware,” Jim Rosenthal, a seasonal Fire Island resident, told Bloomberg News when asked what communities need to know about the changes. “Get your ducks in order. Make the alliances. Speak loudly, make sure you’re not roadkill.”

Customers that have already dropped landline service in favor of wireless and do not depend on AT&T for broadband will not notice any changes. Neither will customers  subscribed to U-verse phone and broadband service. But those who rely on AT&T DSL are likely to lose their wired broadband service and asked to switch to a very expensive wireless broadband alternative sold by AT&T. That alternative may be their only broadband option if the neighborhood is not serviced by a cable competitor.

The biggest impact will be in rural Carbon Hill, where 55% of AT&T customers will only be able to get wireless phone and broadband service, according to AT&T documents. At least 4% of local residents will get no service at all from AT&T, because they are outside of AT&T’s wireless coverage area. The phone company has no plans to expand its U-verse deployment in the rural community northwest of Birmingham. In contrast, every customer in West Delray Beach will be offered U-verse service. That means AT&T’s DSL customers will eventually be forced to switch to either U-verse for broadband or a wireless broadband plan that costs $50 a month, limited to 5GB of usage.

AT&T promises the transition will be an upgrade for customers, but that isn’t always true.

AT&T’s wireless home phone replacement is not compatible with fax machines, home or medical monitoring services, credit card machines, IP/PBX phone systems, dial-up Internet, and other data services. AT&T also disclaims any responsibility for mishandled 911 emergency calls that lack accurate location information about a customer in distress. The company also does not guarantee uninterrupted service or coverage.

AT&T chose Carbon Hill, which was originally a coal mining town, because it represents the classic poor, rural community common across AT&T’s service area. At least 21 percent of customers live below the poverty line. Many cannot afford cable service (if available). AT&T selected Alabama and Florida because both states have been friendly to its political agenda, adopting AT&T-sponsored deregulation measures statewide. AT&T was not required to seek permission from either state to begin its transition, and it is unlikely there will be any strong oversight on the state level.

“We looked for places where state law wasn’t going to be an issue, where the regulatory and legal environment in the state was conducive to the transition,” admitted Christopher Heimann, an AT&T attorney, at a briefing announcing the experiment.

Verizon faced a very different regulatory environment in New York, where unhappy Fire Island customers dissatisfied with Verizon’s wireless landline replacement Voice Link found sympathy from Attorney General Eric Schneiderman, who appealed to the state PSC to block the service. Sources told Stop the Cap! the oversight agency was planning to declare the service inadequate, just as Verizon announced it would offer its fiber optic service FiOS as an alternative option on the island.

Voice Link sparked complaints over dropped calls, poor sound quality, inadequate reception, and inadequacy for use with data services of all kinds. Customers were also upset Verizon’s service would not work as well in the event of a power interruption and the company disclaimed responsibility for assured access to 911.

Carbon Hill, Ala.

Although millions of Americans have disconnected landline telephone service in favor of wireless alternatives, traditional landlines are still commonly used in businesses and by poor and elderly customers. Many medical and security monitoring services also require landlines.

The loss of AT&T’s wired network could also mean no affordable broadband future for rural residents — wireless broadband is typically much more expensive. AT&T admits it will not guarantee DSL customers they will be able to keep wired broadband after the transition.

AT&T will “do our very best” to provide Internet-based services in trial areas, Bob Quinn, senior vice president for federal regulatory matters, said in a 2012 blog post proposing the trials.

“For those few we cannot reach with a broadband service, whether wireline or wireless, they will still be able to keep voice service,” Quinn said. “We are very cognizant that no one should be left behind in this transition.”

AT&T is likely to be the biggest winner if it successfully scraps its copper network. The company wants to drop landline service completely by 2020, saving the company millions while ending government oversight and eliminating service obligations.

“It’s a big darn deal,” said AT&T CEO Randall Stephenson. “The amount of cost that it removes from our legacy businesses is dramatic and it’s significant.”

[flv]http://www.phillipdampier.com/video/ATT The Next Generation IP Network 2-21-14.mp4[/flv]

An AT&T-produced video showing a sunny future with IP-based phone service. But the future may not be so great for AT&T’s rural DSL customers. (1:31)

“Comcast has been laser focused on improving customer service and the customer experience and has become the industry leader in service reliability.”

Comcast and Time Warner Cable Merger Fact Sheet

Not so much if you happen to be a Comcast subscriber living in north Florida, where customers complain regularly about poor service, outages, and ever-rising prices…

Dear Editor:

[Your St. Augustine Record columnist] has Comcast nailed dead to rights. There must have been a huge incentive for the clown(s) who allowed the franchise. There has been a yearly rape of subscribers with the continual rate raises, not to mention the never-ending outages.

Comcast must be under the assumption that the term “customer service” is an oxymoron.

The arrogant on-line “chat” with someone on the other side of the world who gets totally confused and lost when you ask a question, is absolutely ridiculous and absurd. Just because a person speaks English does not mean he really comprehends the language.

The unkindest cut of all is the closing of the St Augustine office. Sort of tells you how Comcast feels about us. The next closest office is Touchton Road in Jacksonville — about 36 miles.

I know the distance, because I terminated my service on Friday and returned the equipment on Saturday to an office with eight service windows and people still holding tickets to be called. Many of the people there were returning equipment. I approached several about the return and most said they, too, dropped Comcast.

Every year a raise, no credit for outages, can’t get through on the phone — I had enough! The only way to teach Comcast a lesson is to drop them. I have been threatening to do it for a long time and now the time is here.

Harry Zemon – St. Augustine, Fla.