Marilyn Castro decided she did not need her landline phone any longer.  The Virginia Beach resident learned her provider would be happy to oblige her request to disconnect service, but she is still required to pay her phone bill, even without the service, for at least the next 25 years.

Woodland Park, Virginia resident Allan Pineda got a similar story when he wanted out of Cox Cable’s landline service.  Yes, Cox will schedule a visit to disconnect service at his convenience, but he’ll still have to pay his cable bill, including landline charges, every month.

Frederic Martin, who lives at a Mid-America Apartment Communities-owned complex in Dallas, learned he was on the hook for cable-TV service, even though he has not owned a television set for more than a decade.

In Weston, Florida, some 15,000 homeowners pay for cable television whether they want it or not and if they don’t pay, their homes are at risk from foreclosure.

It’s all thanks to the concept of “bulk billing,” a practice growing in popularity that delivers mandatory cable, phone, and broadband service to renters and homeowners whether they want the services or not.  It’s a multi-million dollar racket, and thanks to the Federal Communications Commission, it may be coming to your community or apartment complex soon.

For almost five years, mandating cable service has become a growing problem in many parts of the country, especially in Florida and Virginia.  Most of the controversy comes when large housing management and homeowner associations, builders, and corporately-owned apartment complexes cut “discount deals” with a cable company to wire a community or complex for service.  Their mission is not always altruistic.  Many builders receive generous signing bonuses and ongoing kickbacks earned from condemning residents to mandatory cable service contracts that may not expire in their lifetime.

Some apartment complexes have added charges for cable-TV service to the rent. Many earn ongoing compensation from grateful cable companies who pay 3-5 percent of revenue back to the complex.  Even homeowner associations have gotten into the act, adding cable-TV costs to required association dues for upkeep and maintenance.  For those who can’t or won’t pay, liens and even foreclosure can soon follow.

LM Sandler of Virginia Beach, a Virginia builder, is a typical player.

Sandler has built entire neighborhoods of new homes across Virginia, most of which are covered by a “bulk billing” contract with Cox.  When residents buy or rent a Sandler-built property, a triple-play package of phone, cable, and Internet service comes along with the deal.  It’s not cheap, running $146 a month.  Even worse, your grandchildren could still be paying Cox Cable if they stayed in the family home, because Sandler’s contract with Cox runs up to 75 years.

Although residents are not required to take service from Cox, they are required to pay for it, in full, every month.

It gets worse for residents in Florida.  Most contracts with cable operators include provisions that can terminate service for entire communities if even a single homeowner is 60 days past due.  To keep that from happening, homeowner associations aggressively pursue slow-paying residents.  JMB Partners, who built much the residential housing in Weston, and the governing bodies in Weston committed residents to an agreement that has enormous implications if they miss a payment:

Between Jan. 1 and Dec. 17, 2004, the Town Foundation, Weston’s homeowner association, filed liens against more than 200 homes in the city. Most of these, according to Broward County court records, are for unpaid cable TV bills, which until 2003 were collected by the foundation. The city utilities department now handles that task.

One of the upset residents is Vincent Andreano, whose mother, Lita Andreano, was faced with the predicament of losing her Weston Country Club Home for a $109 cable bill that he said had been left outstanding by the previous owner.  The Andreanos said that when closing on the home about a year and a half ago, they came upon the outstanding debt and sent a check.

”No one ever contacted me or my mother afterwards to tell us they had not gotten the check or that the debt was still outstanding,” said Andreano, an attorney. “Then a year and a half later, they slap my mother with a foreclosure lawsuit. It’s legal brutality.”

Andreano said he tried to reason with Town Foundation attorney Douglas Gonzales, whose signature appears in the lawsuit paperwork, to no avail. He said he was told to pay the debt, plus legal fees billed at a little more than $200 per hour, in addition to court filing fees and other miscellaneous charges. The final tab: more than $1,500.

In the Tampa area, mandatory cable service bills for some neighborhoods and planned communities have increased by an eye-popping 44 percent because of the foreclosure crisis.  That’s because of mandatory payment clauses many have with providers like Bright House that demand full payment even when homes are unoccupied.  When a resident’s home is in foreclosure or a resident refuses to pay, all of the remaining area residents pick up the tab for unpaid cable bills.  This wreaks havoc with homeowner association budgets, who must find the money to pay the cable company, in full, every month.  Many have slashed security, road maintenance, refuse collection, landscaping, and other quality-of-life expenses just to keep the cable company happy.

Back in 2008, when Florida first began a downward housing spiral, the impact was already being felt:

The Chapel Pines subdivision in Wesley Chapel found itself stuck in a cable contract that requires $15,000 a month payment to Bright House, and is seeing the strain of foreclosed homes no longer paying their fees. That payment represents nearly half their total association budget.

The South Fork 1 development in Riverview has a 15-year contract with Bright House that requires a $9,700 a month payment, roughly one-third of the neighborhood’s total budget.

“We still have to foot the bill whether people live in those homes or not,” said Fred Perez, the former president of the South Fork association. “You end up with a big, bad debt line item on the budget.”

With the problem worsening, that homeowner’s association even contemplated bankrupting itself just to free it from obligations to Bright House.

Other communities are levying “special assessments” on homeowners to cover cable bills in high foreclosure areas:

To cement a good deal, the community, South Bay Lakes in Gibsonton, years ago signed a bulk contract with Bright House Networks to provide cable TV in the neighborhood, in exchange for a regular fixed payment.

That arrangement worked out fine when the neighborhoods filled up and residents paid their association fees – and the association turned over the cable TV payments to Bright House. The problem occurs when neighbors go into foreclosure and stop paying their fees.

The South Bay Lakes homeowners association still must pay about $140,000 a year to Bright House, even though there’s less money coming in from homeowners.

Because about numerous homes in the 300-home development are in foreclosure, South Bay Lakes had to issue “special assessments” on residents.

Fees rose from $150 a quarter to $216, and that probably won’t cover the shortfall, according to association officials. The Bright House bill represents almost half of the association’s annual budget of $261,000.

To make matters tougher, the community is locked into that deal with Bright House until 2019, with cable rates that rise “from time to time” according to the contract.

Earlier this year, Stop the Cap! covered the story of residents in Tennessee and Texas who discovered the corporate owners of their apartment complexes were making cable-TV mandatory and adding the resulting charges to lease agreements.

Defenders of these bulk billing arrangements claim they deliver savings residential customers could not obtain on their own and ensure that complexes and planned living communities are fully wired for service.  Besides, they claim, there is no obligation to use the services provided and customers can obtain service from another provider.

But they still face paying for service they don’t use.  In some communities, it is service many don’t want to use.

John Carter, who lives in Weston, told the FCC as a senior on a fixed income he cannot afford to pay a second cable bill, even though his existing service is terrible.

“I am stuck with poor programming options, outages during stormy weather, slow Internet speeds of 15kbps and poor customer service,” he wrote the agency.

In other instances, sweetheart deals fuel incentives for builders to sign lucrative contracts with providers even before a homeowner’s association is formed.  In some cases, the provider turns out to be a family member or associate of the developer.  In many others, perpetual kickbacks through “royalties” and fees are paid to the builder or complex owner as long as the agreement remains in place, even long after the builder is no longer on scene.

For impacted residents like Castro stuck with landline service she didn’t want, it was time to fight back.  She launched Ban Bulk Billing, an online forum for those who oppose mandated cable-TV service. Castro asked consumers to join her in protesting the fees with the FCC.  But it’s hard to keep a movement going when giant corporate providers and other special interests have the resources to shout down consumers.

In March, the FCC collected its thoughts and submissions from property owners, apartment complex management companies, cable and phone companies, and consumers and rendered its decision — which threw consumers under the bus:

We conclude that the benefits of bulk billing outweigh its harms. A key consideration for us is that bulk billing, unlike building exclusivity, does not hinder significantly the entry into an MDU by a second MVPD and does not prevent consumers from choosing the new entrant. Indeed, many commenters indicate that second MVPD providers wire MDUs for video service even in the presence of bulk billing arrangements and that many consumers choose to subscribe to those second video services. We find it especially significant that Verizon, which more than any other commenter in the earlier proceedings argued that building exclusivity clauses deterred competition and other proconsumer effects, makes no claim in its filings herein that bulk billing hinders significantly or, as a practical matter, prevents it from introducing its service into MDUs. Bulk billing, accordingly, does not have nearly the harmful entry-barring or -hindering effect on consumers that exists in the case of building exclusivity.

In other words, because Verizon didn’t have a problem with these bulk billing arrangements, they’re fine by the FCC.  Verizon wants into this arrangement themselves, so it’s hardly a surprise they are not objecting.  The significance of Verizon’s change in position is hardly a mystery — the earlier barriers the FCC wrote about were designed to keep Verizon out of apartment complexes and condos.

The incentives for providers earned from these bulk billing contracts are enormous:

• The cost of collections and billing are passed on to local government, homeowner associations, rental companies, or other agents.  The risk of non-payment by a homeowner’s association or city government is nearly non-existent;
• Marketing expenses and customer promotions can be slashed because customers already have the service when they move in;
• Competition is diminished, especially from capital-intensive wired competitors.  Would you contemplate wiring a community for competitive service knowing existing residents are held captive by mandatory cable contracts?;
• Innovation expenses can be curtailed because the customer is already captive to the existing level of service;
• Rate increases are built-in, allowing companies to raise rates and still keep all of their existing customers.

Residents of Staples Mills Townhomes in Richmond, Virginia understand this only too well.  When the new corporate owner, PRG Real Estate moved in a few years ago, they brought Comcast with them, mandating every resident pay for basic cable service as part of their rent.

PRG’s website highlights Staples Mills as an example of “an institutional equity partnership:” (underlining ours)

The PRG model for improvement is two-pronged — pay close attention to the details of management with a well thought out capital improvement plan. Imbedding [sic] PRG’s professional management structure would mean the implementation of aggressive PRG policies and procedures, taking virtually all contract services in-house to save the profit margin being captured by contractors. The upgrade to PRG-trained site personnel would particularly enhance the marketing effort. Although the property was 97% occupied we anticipated that, after the capital improvements, the same occupancy rate would be maintained with significantly higher rents.

[…]It was crucial that we succeed, not only in terms of return to our investor, but in terms of building our relationships and profile with other institutional investors. We needed to hit this one out of the ballpark.

Residents called a foul ball, one writing, “Residents were slapped in the face with the news that they will be forced to pay for mandatory cable (an extra $34 per month on the rent) from Comcast regardless if they don’t want it, already have satellite, or don’t even have a TV under the guise of ‘lowering cable rates.’ It’s called subsidizing the people who want it by juicing those who don’t.”

PRG may have succeeded in making their investors happy, but they alienated a number of tenants in the process, most of whom assumed Comcast was their only choice and wouldn’t contemplate paying another cable bill from a competitor.

The FCC’s decision recognized that competitors could enter a bulk-billed service area, but ignored the reality most won’t.

Indeed, the FCC itself recognized the impact of these bulk-billing arrangements on the competitive landscape in their own decision, quoting from a submission:

One bulk billing cable operator states that fewer than 5% of an MDU’s residents subscribe to another video provider. It estimates that if it lost its bulk billing contract, it would raise its prices substantially for the remaining 95% because of higher programming and labor costs per customer. The combined savings for 5% of the MDU’s residents would be dwarfed by the increased expenses for the 95%, making the MDU’s residents significantly worse off than they were before as a whole.

This proves two points:

1. The FCC still cowers in fear from threats issued by providers that any attempt to rein them in will do everything from raising prices to killing jobs and innovation, despite the fact only five percent of customers in the cited case took service from a competitor.  A five percent loss of customers would create conditions for a “substantial” rate hike only in their minds.  AT&T U-verse has captured far more than 5 percent of cable customers in markets where it competes with cable, yet somehow cable manages to keep the lights on and their doors open;
2. The FCC pretends that these agreements don’t impact the marketplace when the 95 percent “take rate” for service plainly indicates otherwise.  Do 95 percent of residents in non-bulk-billed neighborhoods also take cable service?  Of course not.

Despite the FCC’s industry-friendly ruling, many impacted consumers are not giving up.

Martin, the Dallas renter paying for cable-TV even though he doesn’t own a television, is taking the fight to state Attorneys General, hoping a group effort on the state level will dislodge at least some consumers from being forced to pay for something they don’t want or need.

Martin believes it’s manifestly unfair to deliver mandated “discounted service” to some on the backs of others who don’t want a cable bill at all.

“No one should have the right to force you to buy what you don’t want from someone you don’t like,” Martin says.

He points out under Mid-America’s terms, even blind and deaf residents are forced for pay for cable service.

The only thing cheaper than a discounted cable bill is no cable bill at all.  Now that represents real savings.

Martin’s vociferous objections and intervention from his Texas state representative eventually managed to get him off the hook with Mid-America’s mandatory cable bill.  His rent was lowered by an amount equal to the monthly cable fee, but the cable company is still getting paid on his behalf.

For Martin, that’s just plain wrong.

“I am still subsidizing an industry of which I do not wholeheartedly approve,” he writes.

Martin is now coordinator for Tenants United for Fairness and has launched an online petition demanding an end to mandatory cable-TV charges.

He has gathered more than 100 signatures from 13 states so far, and the petition is open for everyone to sign, even if they are not currently impacted.

Martin says getting signatures has proved challenging in some cases.

“It has been very hard to get tenants to sign my petition because they’re in fear of the landlords,” Martin says. “Very few of those who have signed have gone further and contacted their elected officials or the FCC to complain.”

The impact of the March decision by the FCC has given providers a green light to expand mandatory service even further.  Some communities are now finding mandatory broadband service fees being added to cable-TV charges.

The FCC’s response?  “Consumers complaining about these latest new fees are sent an unsigned form letter from the FCC advising them to “talk to your landlord,'” says Martin.

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/WVEC Virginia Beach Residents fight mandatory bundle agreement 3-16-10.mp4[/flv]

WVEC-TV in Virginia Beach covered the plight of residents struggling to understand why they should be forced to pay $146 a month to Cox for cable, broadband, and landline phone service.  (3/10/2010 — 4 minutes)

Videotron last week unveiled 120/20Mbps broadband service loaded down with tricks and traps that will cost many Canadians far more than the $149.95CDN monthly asking price.

Québec’s largest cable operator introduced Ultimate Speed Internet 120 for “users who want to experience the fastest Internet access in Québec.”  But with a download limit of just 170GB per month combined with an upload limit of a paltry 30GB per month, what many Internet enthusiasts are also likely to experience is a huge bill.

Videotron is rolling out a high-speed Internet access service that will give residents of the Québec City area the fastest speeds in Canada. As of tomorrow, Ultimate Speed Internet 120 will support download speeds of 120 mbps and upload speeds of 20 mbps, a first for Québec City.

“Ultimate Speed Internet 120 pushes back the frontier for intensive Internet users,” said Robert Dépatie, President & CEO of Videotron. “Today, we are launching the high-speed Internet service of the future. With the pace at which users’ needs are changing, we are not so far from the day when 120 mbps will be a must-have convenience.”

Astonishing capacity
As of tomorrow, Ultimate Speed Internet 120 will be available in nearly 80% of the greater Québec City area, or to nearly 310,000 households and businesses. The service will be accessible throughout the Québec City area by December 31, 2010 and will then be gradually rolled out to other parts of Videotron’s service area.

Astonishing Overcharging

Unlike many other Internet Overcharging plans from Canada’s usage cap-happy providers, Videotron’s highest-speed plans don’t limit the amount of overlimit fees customers will be exposed to once their allowance is exhausted.  In little more than three hours of usage at near-maximum speeds, overlimit fees of $1.50CDN per gigabyte kick in until your usage allows resets the following month.  That’s more than $50 an hour in overlimit fees if running the service near top speeds.

Videotron’s press release says those limits are “well in excess of the current needs of heavy bandwidth users.”

Even worse, Videotron targets its highest speed broadband plan for “traffic management,” which throttles upload speeds dramatically for customers who “have uploaded a statistically significant amount of data,” which is never defined:

Every 15 minutes, a system checks the usage rate for each upload channel (each upload channel typically serves a few dozen modems). If the usage rate has reached a threshold beyond which congestion is imminent, the system identifies the USI 120 modems on that channel that have uploaded a statistically significant amount of data. Uploading from these modems is then momentarily given lower priority. Depending on the severity and duration of the congestion, uploading speed may be slowed for these modems.  […]The above measures are applicable at all times.

That assures customers of a less-than-blazing-fast broadband experience they have paid top dollar to receive.  In effect, this means Videotron’s customers who pay three times the regular price for a concierge-like-broadband-experience are pushed to the back of the line if they actually use it.

A Videotron customer on Broadband Reports wrote, “It’s like driving a jet-car in an alley. You can probably start the engine, but don’t open the gas too much!”

Another customer from Montreal noted it takes no time at all for customers to blow through those kinds of limits:

This is merely a political play to be able to advertise as “the fastest ISP in Quebec/Canada”. Obviously such ridiculous caps are nowhere near the needs of someone who would pay $150 for that kind of speed, but they don’t mind saying things like “well in excess of the current needs of heavy bandwidth users” because 90% of the population, even the journalists themselves, have no idea what gigabytes are in the first place.

Considering most recent games released on Steam/D2D can be over 20GB, one HD episode is 1.3GB to stream each, 170GB is very little.

The cable operator will also throw some small bones to their existing customers effective Oct. 13:

• Customers with Videotron’s standard High Speed Internet service ($42.95CDN – 7.5Mbps/720kbps) will get a 10 gigabyte usage allowance increase — to 40GB of usage per month.  The overlimit fee remains a stunning $4.50 per gigabyte, up to a maximum of $50 per month;
• Upstream speeds on Ultimate Speed Internet 50 service ($81.95CDN – 50/1Mbps) will be doubled from 1Mbps to 2Mbps with no price increase.  Considering that plan limits consumption to 125GB per month, the faster speeds mean unlimited overlimit fees of $1.50 per month will add up even faster.

Delivering high speed broadband at premium prices with usage limits and speed throttles is a business plan disaster.  Customers willing to pay the highest prices for fast broadband don’t seek those Cadillac plans to browse web pages.  They want to leverage the fastest possible speeds to make high bandwidth applications work better and faster.  In a business environment, those faster speeds save time, which saves money.  But broadband providers who engage in Internet Overcharging schemes that limit use and charge confiscatory overlimit fees destroy demand for their own products, because few customers are willing to pay the premium prices these plans charge -and- expose themselves to overlimit fees if they happen to exceed an arbitrary usage limit.

Further south in the United States, Americans are still rejecting overpriced DOCSIS 3-premium speed broadband plans, and they come with no usage caps.  Time Warner Cable’s DOCSIS 3 expansion delivers a premium price on the resulting faster speed tiers, and the company managed to sign up fewer than 2,000 customers as of January.

Now imagine a plan that commanded a premium price -and- slapped a limit on usage.

As they say in Québec: c’est ridicule!

Australia’s planned National Broadband Network (NBN) delivering the country access to broadband speeds up to 1Gbps face many of the same criticisms American municipal providers hear when incumbent commercial providers face imminent competition from fiber broadband.

But nobody can top the venomous spray of Exetel’s CEO John Linton, who called the entire concept of public broadband for the public good “a load of crap” and those behind it a mix of ‘thugs,’ ‘pretenders,’ and generally incompetent and stupid.

Linton’s Internet Service Provider delivers broadband to most of its customers over Telstra landlines, using DSL.  But the company has grudgingly agreed to participate in the NBN project, even while still despising it to the core.

Exetel’s pricing on NBN’s fiber network charges for speed and usage.  Much like cable broadband, Exetel delivers much faster downstream speeds (up t0 100Mbps), with upload speeds maxing out at 8Mbps. The higher the speed, the higher the monthly access fee.  Users receive no usage allowance, paying fees per gigabyte for all of their usage.  Exetel still reserves the right to throttle customer speeds for certain online applications, and “traffic shape” users based on their usage.

In Tasmania, Exetel has introduced a 25/2Mbps broadband plan with no usage allowance — but no monthly access fee either — charging a flat $2 per gigabyte of usage.

Exetel Fiber Pricing In Tasmania

Plan	Speed Down	Speed Up	Monthly Access	Download Charges	Upload Charges	Contract Length	Usage Allowance
A	25 mbps	2 mbps	$0.00	$2.00 per GB	Nil	12 Months	None
B	50 mbps	4 mbps	$25.00	$1.00 per GB	Nil	12 Months	None
C	100 mbps	8 mbps	$50.00	$0.75 per GB	Nil	12 Months	None

Linton spews most of his angry commentary on his personal blog, which he closed to non-Exetel customers unless they made a $20AUS contribution to the company’s endangered wildlife protection programs.  But he rarely pulls punches in public either.

A sampler:

With wireless broadband waiting in the wings, those excited by NBN’s 1Gbps speeds are “unthinking and just plain stupid, pretty much along the same lines as the stone age cargo cult dwellers in the jungles of New Guinea are excited about the next ‘goods drop’ from the strange colored bird.”

Australia’s aging population, “who don’t play computer games or get a surrogate sex life from pornography” have zero interest in getting terabyte broadband speeds, making the whole endeavor a giant waste of money.

“The number of people who want 100Mbps are almost none today and aren’t going to be very many in five years time.   Probably 40-50% of people today will never want to use a piece of fiber […] and they’re certainly not gamers playing, or those other things.  They’re the other half of Australia that has a life rather than a half life.”

On the results of the recent election and the decision to move forward with the NBN: “God help us all.”

On Communications Minister Stephen Conroy (Australia’s version of FCC Chairman Julius Genachowski): “He was his usual mixture of bewilderment, ignorance and barely concealed thuggery, but I was amused at his reference to Exetel (not by name).” Linton wrote on his blog. “While I’m grateful for the ‘free plug’ I thought it was an obvious example of “straw clutching” if it wasn’t based on appallingly bad briefing, which I would doubt, because for him to have been aware of any actual pricing would have required some sort of briefing,” added Linton.

On NBN co-chief Mike Quigley, who will help manage NBN service: “Is [Mike Quigley] god? Can he reverse 100 years of telecommunications going one way and say, ‘Oh, I’m Mike Quigley, and I haven’t worked here in 30 years, I know nothing about running major networks, but someone has paid me $2 million a year so I can pretend I can’.  The only one who can do it is Telstra. It would do it cheaper than a bloody government.”

Linton blames all of the talk about a publicly-owned broadband network for the decrepit state of Australia’s commercial broadband market, claiming it dried up private investment in new ADSL products: “The situation as I see it is that the suppliers — Telstra, Optus, AAPT — are not really investing in anything new, especially when you’re referring to ADSL type broadband products. The current suppliers are holding on to the margins they have at the moment, and if anything they will seek to increase them rather than reduce them,” says Linton.

Since nearly every broadband user in Australia knows Linton hates fiber broadband, what technology does he believe represents Australia’s future?

3G wireless.

“Most people that I know, including me, put a much higher priority on mobility than they do on speed,” he told ZDNet. “The average person needs a 100Mbps internet connection about as much as they need to have their arms amputated.”

While mobility is important, his critics charge, there is no way 3G wireless can deliver Australia its broadband future.  Service is not ubiquitous across the country, speeds are far below even what DSL offers, streaming multimedia is challenging at best, and the usage fees and limits that accompany wireless service plans in the south Pacific would create an even greater divide between those who can afford wireless broadband, and those who cannot.

A report released yesterday by the Bureau of Statistics shows Australians are downloading more data than ever before, increasing more than 50 percent in the second quarter compared to the same period last year. The amount of data downloaded every three months is now 11 times higher than March 2005 and 126 times higher than March 2002.

Australia’s National Broadband Network is open to all Internet Service providers that wish to participate, reselling their broadband plans using NBN’s infrastructure.

Frontier Communications CEO Maggie Wilderotter has bought a first class ticket to Fiber Fantasy Island, where phone companies dream of delivering fiber-optic broadband service without actually deploying fiber.  They just tell you they did.

In an interview published today in The Oregonian, Wilderotter tries to convince residents Frontier’s arrival is good news, making promises about broadband and service improvements based on a company track record an independent observer would conclude she simply made up.

If Wilderotter’s command of the facts about her own company are reflective of “a distinct, improved image in its new territories,” Oregon is in big trouble.

Let’s review:

CLAIM: “We deploy fiber to the home all across the country. We don’t call it FiOS. We call it high-speed Internet. For our customers, the technology doesn’t matter. What matters is access, speed and capacity.”

REALITY CHECK: Frontier, as far as we have been able to determine, has not deployed fiber to the home anywhere in the country, with the exception of the FiOS network it acquired from Verizon.  Frontier Communications’ deployment of fiber optics to the home is comparable to the amount of fiber found in a box of Cookie Crisp cereal.  In their largest market, Rochester, N.Y., Frontier relies on the same legacy copper wire phone network it utilizes everywhere else.  It is highly misleading for Wilderotter to represent otherwise.  Fiber to the home means exactly that — fiber optic cable brought right to the home.  This is not a case of “you call it corn, we call it maize.”

Fiber optic cable is not also known as “high-speed Internet,” just as the cute kitten on the left is not called an iguana.  For the significant number of customers who ask Frontier to disconnect their service year-after-year, technology matters very much, and this particular phone company lacks it.  Frontier relies on the same DSL technology other phone companies and customers increasingly consider yesterday’s news.

In many Frontier service areas, there is no access to broadband because line quality will not support the service.  In Brighton, N.Y., a suburb of Rochester less than a minute from the Rochester city line, Frontier could only manage to deliver 3.1Mbps DSL speeds, and until recently Frontier was crying it needed a 5GB usage allowance because of the threat higher amounts of consumption might have on its network capacity.  Access, speed, and capacity does matter, which is why Time Warner Cable is picking up the bulk of its new broadband subscribers at Frontier’s expense.

CLAIM: “For high-speed, it means having speed and capacity in addition to reach. We’ll do add-on services. We have a terrific Yahoo-Frontier portal that will be a gateway on our high-speed Internet service. We are in the throes of putting together Wi-Fi hotspots that will be distributed throughout this market for customers.  If you’re a high-speed Internet customer of ours it’s free. We’re looking to put one at Hillsboro Stadium. Typically, we put them in hotels, convention centers, truck stops, trailer parks, outside parks, campuses for colleges, shopping centers, business campuses.”

REALITY CHECK:  Those “add-on services,” such as Frontier’s Peace of Mind, come with a price tag and are often required components of a bundled service discount offer.  As first impressions go, a company still relying on Yahoo! for a front end is not exactly on the cutting edge, nor are “portals.”  It’s like trying to impress new customers with free web space through GeoCities.  Actually, that is something Frontier could offer because GeoCities is now owned by Yahoo!

Frontier’s Peace of Mind Services

• Hard Drive Backup: $4.99 per month
• Hard Drive Backup + Unlimited Technical Support: $9.99 per month
• Hard Drive Backup + Unlimited Technical Support + Inside Wire Maintenance: $12.99 per month
• $50 early cancellation penalty if you get these services with a term commitment

Rochester’s experience with Frontier Wi-Fi has not been very impressive.  Most residents don’t even know the service exists.  The city and several suburbs offer limited Frontier pay-walled Wi-Fi service and a handful of free access hotspots in cooperation with Monroe County.  Unfortunately, many of the fee-based and free hotspots have fallen into disrepair and no longer function.  Signal strength is not impressive either, and many were not usable indoors.  We tested several of the free hotspots and discovered one only delivered a signal into a suburban parking lot, another only into an empty soccer field, and the third was not functioning at all.  Frontier’s record in Wi-Fi delivered more promises than actual service.

Those Wi-Fi services, by the way, are not free for all Frontier broadband customers.  Evidently Ms. Wilderotter is not acquainted with her own company’s products and services, nor Frontier’s own website:

CLAIM: “We deliver the highest value for the price you pay. We also have excellent customer service. We also don’t raise our rates every 12 months, no matter what.”

REALITY CHECK:  In Rochester, the out-the-door price Frontier charges its broadband customers is actually higher than that charged by Time Warner Cable, which delivers far faster connections.  In West Virginia, the state’s Consumer Advocate put together a chart depicting Frontier’s broadband prices.  Determine for yourself if it delivers the “highest value for the price you pay.”

CLAIM: “If I look across the board at our basic service pricing, I don’t think we’ve raised prices anywhere in the last four or five years.”

REALITY CHECK: We looked and found Frontier demanding the right to increase basic service rates in New York by $2 a month each year for up to two years.  In fact, last November, the New York State Public Service Commission, at the request of Frontier, sent the company a letter authorizing a rate hike of $2 a month for customers in the state.  Even more enlightening was Frontier’s filing in August 2005 with the PSC demanding near-complete deregulation and rate relief allowing Frontier to raise rates up to $1 per month annually indefinitely for basic service.  Frontier also wanted consumer protection rules “relaxed” and ban the PSC from investigating consumer complaints.  One of the reasons they cited is that basic phone service is not the same critical service it used to be because people can communicate through blogs instead.

In fact, consumers should be asking why Frontier’s rates haven’t decreased.  From that same filing: “Frontier believes that with the decreasing costs and increasing bandwidths of new technologies and the acceleration of intermodal market entry, the market will cause rates for non-basic services in all parts of the State to decline.”

CLAIM: Local regulators tell me they did see a spike in billing complaints after Verizon took over. Any thoughts on why? — “Whenever there’s a change — you change the name on the bill, you change the format — customers tend to look at it more closely. We always expect a spike in billing calls whenever we’ve done acquisitions. It has already (settled out).”

REALITY CHECK: As Stop the Cap! has reported, Frontier’s takeover in West Virginia has hardly “settled out.”  Service interruptions, forgotten service calls, and other problems have plagued the state to the point the PSC needed new hearings to review the situation.  Many of Frontier’s billing complaints come from customers choosing to cancel Frontier service, only to find unjustified early termination fees added to their final bills, even when customers never agreed to a term contract.  That problem was so serious in New York, the state Attorney General fined the company and ordered customer refunds.  Changing a customer’s bill by adding $100 or more to the total amount due will always get a customer to look at the bill more closely.

CLAIM: “One of the big opportunities that we’re working on is the ability to display Internet content and video on the television set.”

REALITY CHECK: That “big opportunity” has been available to broadband users for several years now.

CLAIM: We also have a new site that’s called myfitv.com. We carry over 100,000 titles of free television content on this site. It’s a little bit like Hulu on steroids. It’s provided free of charge to all our customers.

REALITY CHECK: MyFitv is not “a little bit like Hulu on steroids.”  In fact, it is Hulu.  Frontier simply used Hulu’s “embed” feature to take content, slap the Frontier logo on it, and add Google ads in an attempt to rake in a few extra dollars.  You can do exactly the same thing yourself.  Meanwhile, the service is added to customer bills showing an amount of $0.00, a very inexpensive way to try and impress customers with content Frontier never developed, deployed, or created — just like their phantom fiber to the home network.

CLAIM: “We think over time the Internet will also provide different packaging, different prices, different ways to buy content than the traditional viewing platform. We also think that mobility is important. We want to make sure that whatever you do you’ll be able to take it with you.  The Sling technology is interesting, too. It’s something we’re talking about DISH Network with.”

REALITY CHECK: Every time Maggie has talked about “different packaging and prices,” it has been in the context of an Internet Overcharging scheme — limited usage allowances, extremely high rate increases for those deemed to have consumed too much, etc.  And yes, Sling technology is interesting.  A company conceived of the idea, built it, developed a marketing plan, and sold it.  That’s a concept Frontier needs to understand.  You cannot transform a legacy network with words alone.  Here’s an idea.  How about conceiving of a real fiber-to-the-home network, build one, develop a marketing plan, and then sell it.  For those in markets like Rochester, it’s the only way Frontier Communications will avoid becoming the horse and buggy carriage maker of the 21st century.

CLAIM: You’re around Seattle, around Portland, but not in them yet. Is there any possibility that Frontier would build into another company’s market? — “There’s always a possibility. It’s not a priority for us. And the reason why it’s not a priority is we’ve got a lot to do, just in the service areas that we own today. When I’m humming on all cylinders there, and I’ve been able to do everything I possibly can in those areas, then I might look to extend service areas out.”

REALITY CHECK: Translation — “when pigs fly.”  Frontier would be laughed out of the Seattle and Portland markets.

Ms. Wilderotter needs to be a lot more open and forthcoming with the press.  Frontier’s business plan makes it clear the company’s future is serving uncompetitive rural markets that will be forced to tolerate the products and pricing Frontier delivers.  Where competition exists, let’s face facts.  Frontier is not gaining market share — it is losing it, eroded away year after year by uncompetitive, substandard products at high prices.

That’s a reality you are bound to miss if you spend too much time with Mr. Rourke and Tattoo.

AT&T likes to think of broadband as a tool towards economic recovery, but too often service problems end up hurting small businesses.

Ask Pat Boll, business manager of Midwest Publishing.  When his company’s AT&T business broadband connection suddenly stopped working last week, much of the business activity at the company stopped with it.  Midwest Publishing, like many small businesses, depends on the Internet to conduct business, take orders, and assist customers.

Boll spent three days trying to get answers from AT&T customer service, but only managed to learn the reason why the company’s Internet service stopped working: AT&T claimed a disconnect order entered into their systems in May was processed… in late August.  That was news to Boll, because they never asked for their service to be shut off.

What was worse is that the mysterious disconnect order remained in AT&T’s computer systems preventing the telecommunications company from re-establishing the service, costing Midwest Publishing thousands in lost business and wasted time.

Like so many stories we’ve covered on Stop the Cap!, Boll turned to local media for help.  He contacted Tulsa TV station KJRH-TV.  Their “2 Works for You Problem Solvers” got in touch with AT&T and managed to do what Boll couldn’t accomplish himself — get AT&T to turn Internet service back on.

Small businesses who depend on the Internet should never have only one provider.  Having a backup service provider can make all the difference in an extended outage.  Many small businesses maintain basic DSL service or even wireless broadband as a backup in case their primary connection stops working.  The expense is well worth it if your business depends on the Internet to stay in business.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KJRH Tulsa Internet glitch costs small business thousands 9-2-10.flv[/flv]

KJRH-TV in Tulsa shares Pat Boll’s story with Tulsa viewers.  AT&T provides DSL service through much of Oklahoma.  (2 minutes)