Frontier Communications faced unhappy investors Thursday after announcing it was slashing its dividend nearly in half in an effort to raise money to sustain the company’s cash flow and reduce its debt.

The company’s earnings fell 8.1% as customers continued to leave for the competition, seeking better service and lower prices.

The poor earnings results and the dividend cuts delivered a one-two punch to Frontier stock, which slid to $4.20 a share, down 16 percent in the last three months.

Among Frontier’s biggest challenges remains the quality of its broadband service to customers.  Where competition exists, Frontier DSL continues to lose the speed battle, and recent junk fees padding customer bills, including a “High Speed Internet surcharge,” and increasing modem rental fees have alienated some customers.

Frontier’s chief operating officer and executive vice president Dan McCarthy told investors 83 percent of Frontier’s service area has access to the company’s broadband product.  However, fewer than 20% of Frontier’s customers have access to speeds as high as 20Mbps.  Only just over half can access the Internet at 6Mbps.  Many of Frontier’s customers can only access lower speed service (66% can choose 4Mbps, 76% — 3Mbps, and the rest 768kbps-3Mbps).

“We’ll be investing throughout the year to improve speed-reaching capability in all our markets,” McCarthy told investors on a conference call last week.

In the second half of 2010, Frontier is expected to increase the amount of Ethernet in its middle mile network, which McCarthy expects will allow the company to deliver faster speeds over VDSL2 and VDSL2 bonding as means of driving both speed increases in the residential and the commercial markets.

However, Frontier’s preoccupation with an internal system conversion, to integrate its acquired Verizon service areas with the rest of its network, has stalled much of the company’s marketing.  Promotions, in particular, have been anemic over the last several months and will likely remain that way until later this year.  Where competition exists, cable operators have successfully been picking off Frontier’s customers.

• Broadband and satellite TV additions are down, in part due to the lack of promotions and marketing;
• FiOS video losses continue as the company shuns its fiber video service in favor of satellite TV cross-marketing;
• Line loss rates remain very high: 8.3% of Frontier’s customers disconnected their landline service in the last quarter, 5.9% in areas that were not acquired from Verizon.
• Once customers leave, they rarely return.  Churn rate of Frontier customers coming and going is at just 1.6%.

As with similar Verizon landline sales in the past, initial revenue growth from acquired customers starts out high, boosting revenue numbers and often the value of a company’s stock.  But the heavy debt load incurred from acquisitions and ongoing line losses to the competition eventually take their toll, and Frontier’s revenue now reflects the reality of a company trying to sell more services to a declining number of customers.

Morningstar notes the company’s debt problems are significant:

Frontier has struggled to bring leverage down and hasn’t successfully placed new debt since closing the Verizon transaction in 2010. Management has talked about taking care of the $580 million maturity it faces in early 2013 for the better part of a year, with no result to date. Yields on the firm’s existing debt have increased over the past year, despite the sharp decline in Treasury rates.

Standard & Poor’s Ratings Services reduced its outlook on the company from stable to negative, noting the competition is increasingly hurting Frontier’s capability to raise revenue.

The company’s decision to slash its dividend in an effort to reduce debt has created consternation for some investors who stuck with the company when the share price was above $7 and the dividend was declared safe for two years.  Neither seems to the be case any longer.

CenturyLink has unveiled its own discounted Internet access program for the income-challenged, loaded with tricks and traps buried in the fine print.

Dubbed CenturyLink Internet Basics, the 1.5Mbps DSL service is available to those who currently qualify for Lifeline Affordable Telephone Service, a federal program that provides discounts on basic monthly telephone service to eligible low-income consumers.  The service sells for $9.95 a month, before taxes and fees.

But buried in the fine print are a number of surprises that deliver higher prices and some nasty surprises (underlining ours):

• Listed High-speed Internet rate of $9.95/mo. applies for first 12 months of service (after which the rate reverts to $14.95/mo. for the next 48 months of service), and requires a 12-month term agreement or 24-month term agreement (if purchasing Netbook);
• Customer must either lease a modem/router from CenturyLink for an additional monthly charge or purchase a modem/router from CenturyLink for a one-time charge, and a one-time High-Speed Internet activation fee applies;
• A one-time professional installation charge (if selected by customer) and a one-time shipping and handling fee applies to customer’s modem/router;
• Taxes, Fees, and Surcharges – Applicable taxes, fees, and surcharges include a carrier Universal Service charge, carrier cost recovery surcharges, state and local fees that vary by area and certain in-state surcharges. Cost recovery fees are not taxes or government-required charges for use (which means they are little more than bill padding junk fees). Taxes, fees, and surcharges apply based on standard monthly, not promotional, rates;
• The first bill will include charges for the first full month of service billed in advance, prorated charges for service from the date of installation to bill date, and one-time charges and fees described above.
• Netbook purchase must be paid in full to CenturyLink prior to shipment. Shipping and handling fees, and applicable taxes will apply. If customer purchases Netbook as part of the CenturyLink Internet Basic service, all warranty and support for the Netbook and accompanying equipment will be covered by the manufacturer or other identified third party, not CenturyLink.
• No software applications or wireless service are included with the Netbook.
• An early termination fee will apply based on the applicable monthly recurring service fee multiplied by the number of months remaining in the minimum service period, up to $200.

Unlike Comcast, CenturyLink claims it will provide equivalent discounts for faster speeds — an important consideration for those with school-age children at home who may need multimedia capability for research and studies.

CenturyLink also offers a netbook computer for an additional $150, plus shipping and taxes, at the time of enrollment in the program.  The service also includes educational training, a 30-day money back guarantee, Norton Security Suite, and parental controls.

“While the Internet has become part of daily life for most Americans, many still aren’t connected because the cost is beyond their reach. CenturyLink is pleased to introduce this new program that offers affordable High-Speed Internet service and computers to those who need help getting online,” said CenturyLink CEO and President Glen F. Post, III.

That and the fact the company was required to offer discounted Internet service as a condition for the approval of their acquisition of Savvis, a web hosting company, according to Broadband Reports.

Like Comcast, participation in the program requires meeting a number of terms and pre-conditions:

Verizon Wireless provides evidence AT&T already has more spectrum than any other carrier -- spectrum they are not using.

AT&T’s alternate reality of the wireless universe is on full display as the company makes statements promoting its proposed merger with T-Mobile that, in some cases, retreat from the facts or otherwise distort them.

AT&T CEO Randall Stephenson has been visiting with journalists, often from the business press, to talk up the merger’s potential.  The company has supplemented those PR tours with a 400-page filing with the Federal Communications Commission that has won converts among some non-profit groups, many of which receive direct funding from AT&T.

Stop the Cap! felt a fact check was in order, so we reviewed Stephenson’s recent claims made in an interview with USA Today:

Claim:  In the last four years, the volume of (traffic on) these (wireless broadband) networks is up 8,000%. We believe that we’re going to go up, in five years, eight to 10 times from where we are today. We don’t have the spectrum position to accomplish that.  T-Mobile’s spectrum is very compatible with ours. In cities like New York, we put the two companies together, and we get a very quick lift in capacity of about 30%. That means fewer dropped calls, better service quality, and it gives us a path to do something that neither one of us could do independently, and that is deploy fourth-generation mobile broadband to 95% of the U.S.

Fact: Although wireless broadband traffic is up, AT&T holds more wireless spectrum than any other carrier, a good deal of it unused.  In fact, some of AT&T’s competitors and critics suggest the company is hoarding spectrum, and its insatiable appetite for more could get fulfilled if the company can sell Congress on its “shortage theory.”  Although some of that spectrum is being reserved for the company’s future LTE network, critics contend AT&T spent a lower percentage of its revenue on network expansion (despite being the exclusive holder of the Apple iPhone during the period) than its competitors.

Between 2008 and 2010, AT&T’s FCC filing said it spent $21.1 billion in capital expenditures to upgrade its wireless network.　That’s less than the $22.1 billion spent by Verizon Wireless over the same period. As a percentage of revenue, AT&T’s total was a little higher, at 13%, to Verizon’s 12.8%. Even so, given its congestion problems, AT&T should have spent significantly more. Complaints about congestion were apparent at least two years ago, yet in 2009 AT&T increased wireless capital expenditures by only 1% to Verizon’s 10%.

AT&T has admitted it has faced congestion issues in several large cities — an especially serious problem for a company using GSM technology, which combines voice and data traffic onto a single wireless pipe.  When the network gets overcongested, data sessions fail and voice calls drop.  CDMA networks like Verizon and Sprint have two virtual pipes, one for data and one for calls.  If one gets congested, it doesn’t necessarily harm the other.

Additionally, although T-Mobile will provide some additional capacity in selected urban markets, some of their towers are remarkably close to AT&T’s own towers, effectively making them redundant.  Because T-Mobile uses different spectrum, in some cases AT&T customers will see no benefit from the combination of the two networks, unless they buy new equipment capable of accessing both.

AT&T using T-Mobile as the key to deploying fourth-generation mobile broadband is more than a little hard to believe, considering the German-owned carrier is dwarfed by AT&T.

Claim: Anybody who opens the newspaper or watches TV sees this as a fiercely competitive industry — maybe the most competitive in the United States.  The large majority of Americans, when they go to buy cellphone service, have a choice of at least five providers. In 18 of the top 20 markets, the customer has a choice of five different competitors. It’s a fiercely competitive market today. It will be a fiercely competitive market after this deal is done. We don’t see that changing.

Free Press characterizes AT&T's claims of more competition by absorbing a competitor to be the equivalent of chucking your smartphone down the rabbit hole.

Fact: If ad purchases were evidence of a robust, competitive market, we could say phone and cable companies were hot competitors.  Both advertise heavily, but charge similar prices for similar service — a classic case of duopoly market pricing power. In the cell phone business, the overwhelming majority of Americans subscribe to either AT&T or Verizon Wireless.  Sprint is a distant third at around 12%.  After T-Mobile, all other carriers represent just 1-2% of the remaining market share.  Many cities don’t have access to smaller providers like Cricket, US Cellular, or MetroPCS, either.  In those areas, the choices are usually AT&T, Verizon, and perhaps Sprint.

How does this marketplace concentration impact customers?  Loss of innovation.  Typically, smaller carriers have to innovate to attract attention and compete successfully with larger providers.  AT&T and Verizon have long track records of locking up access to the most innovative phones, so smaller providers have to create unique service plans, offer lower prices, or provide attractive bundles.  Sprint sells unlimited access in a marketplace full of restrictive data caps or calling minute allowances.  T-Mobile provided some of the least expensive plans around, especially for families.  Cricket offers pay-per-day prepaid calling plans that can make a wireless phone affordable for anyone.  US Cellular has stellar customer service.

All competitors are not equal.  Anyone who lives or visits rural areas understands the implications of relying on Cricket, MetroPCS, or even Sprint for cell phone service well off the main highway.  With coverage being a major factor, many quickly decide there are only two realistic choices for robust service — AT&T and Verizon.

AT&T’s myopia aside, eliminating T-Mobile, one of the market’s most fiercely innovative providers, will do nothing to benefit consumers.

Q&A Claims:

Q: There are small companies in the market, but one commentator said that they’re like grocery stores trying to compete with Walmart.

A: Everybody has their analysis. We can evaluate the numbers nine ways to Sunday. At the end of the day, the Justice Department will do the fact gathering and data gathering and will evaluate it market by market, then make those determinations. Based on our analyses, this is a deal that should be approved.

Q: If the market is so competitive, why might two companies have 70% of the business?

A: We all make technology decisions. We all put marketing plans into place. We all make decisions that drive how effective we are in the marketplace. I think we’ve done pretty well. I think Sprint has done a remarkable job over the last couple of years and will do very well tomorrow.

Q: Consumers only have two places where they can get an iPhone.

A: But there are RIM (BlackBerry) devices. There are Windows (Phone) 7 devices. Android devices tend to be doing very well throughout the market — in fact, we are having a lot of success with Android. Metro PCSand a lot of our competitors are having a lot of success there. So there are plenty of options for the customer.

Q&A Facts:

1. AT&T’s in-house analysis decides what is best for AT&T, not for individual American consumers.  The Justice Department and the Federal Communications Commission are subject to political pressure and are not independent arbiters of competitive fairness.
2. Sprint has lost customers for years and is only now attracting some of them back.  While charitable to Sprint, Stephenson’s remarks are not welcomed by them.  They consider this deal anti-consumer and anti-competitive.
3. Perhaps with the exception of the Evo, available first from Sprint, almost every other cutting-edge phone launches exclusively with AT&T and/or Verizon.  Other carriers get to sell these popular phones much later, or sell stripped down models that don’t deliver the same features.  Just review the phones available to Cricket and MetroPCS customers and compare them with what is on offer from Verizon and AT&T.

Claim:  History tells you that prices in this industry have come down for 10 years. In the last 10 years, there’s been a significant number of business combinations in this industry, and prices have come down by 50%. And prices continue to come down. We have a history, when we acquire one of these companies, we map their rate plans into AT&T. So if somebody chooses to stay on that rate plan, those rate plans are available. I don’t see why we would change it for this case. It’s just a customer-friendly thing to do.

Fact: More and more customers are no longer simply buying voice plans, on which Stephenson’s claims are based.  Instead, they are upgrading to smartphones, where they discover carriers’ mandatory add-on fees for data services.  Although prices for voice plans have not increased, rates for text messaging, data, and other add-ons have.  That can add $25 a month or more per phone.  Many carriers are reducing their discounts on new phones while adding new “junk fees” to their bills to cover “regulatory costs” as well.

AT&T also doesn’t specifically promise to retain T-Mobile’s innovative rate plans.  Instead, they propose to grandfather existing customers on those plans until they purchase new phones or switch carriers.  That does not mean existing AT&T customers can jump to a T-Mobile plan.  It also doesn’t mean those plans will still be available for new customers.

AT&T has a track record of not being particularly customer-friendly, either.

Claim: T-Mobile will continue to operate their business exactly like they have. They’ve demonstrated that they’ve had a lot of success. They market directly against AT&T. I envision them to continue marketing against AT&T in the marketplace.

Fact: T-Mobile is so successful, they have been shopping around for a buyer for some time to allow them to exit the business.  A success story that is not.

Claim: Q. If the deal goes through, would you offer all of the AT&T handsets to T-Mobile? A: Of course. If you’re a T-Mobile customer, that’s one of the great advantages. The handset selection that AT&T offers would become available to T-Mobile customers.

Fact: This proves our point T-Mobile customers do not have access to the latest and greatest equipment available to AT&T customers.

AT&T has also claimed the deal will create new jobs and stimulate economic growth.  Tell that to the T-Mobile employees who will be collecting unemployment shortly after being deemed redundant by AT&T.  Virtually all of T-Mobile’s current service areas overlap AT&T.

Free Press’ Tim Karr compares the consolidation of the cellular industry to the railroad mergers of the 19th century.  By locking up competition, carriers can raise prices and call the shots in the marketplace.  While a handful of competitors could eke out their 1-2% market share in such a duopoly, all will be starved for capital and considered a risky bet in light of the domination by AT&T and Verizon.

Karr is asking Americans to put their elected officials on notice they don’t want this anti-consumer merger:

So should it be left to Washington and one exceedingly powerful company to decide the fate of our communications? (If you’re thinking “no,” you can help stop this merger by contacting the members of the Antitrust Subcommittee and urging them to grill AT&T next Wednesday.)

If Congress, the FCC and Department of Justice hear from enough people like you and me, they can muster the courage to ask the right questions of AT&T.

Next Wednesday’s hearing on the Hill is our first chance to expose this merger for the nightmare that it is, and save our smartphones from following AT&T down the rabbit hole.

AT&T Mobility thinks it has a winning strategy when it took away unlimited data plans, forcing new customers to choose high-priced, usage-limited alternatives.  But a new survey from Wall Street research firm Sanford Bernstein found AT&T customers will grab, claw, and scream to keep the peace of mind that comes from having the choice of an unlimited use plan.

Sanford Bernstein’s study found a large number of customers willing to abandon any carrier that takes unlimited data away from them.  About a third of the more than 800 people responding said AT&T’s move toward usage-based billing left them with a bad impression of the wireless carrier.  That’s particularly bad for AT&T, which already scores as America’s lowest-rated wireless company according to Consumer Reports.

AT&T mitigated some of the potential damage by letting existing customers keep their unlimited data plans when they ceased selling the unlimited option this past June.  New customers are forced to choose between two limited-use plans — $15 for 200MB or $25 for 2GB of usage (a tethering option is also available.)  Existing customers will only face that hard choice if or when they change phones, presumably in the next year or two.

Had they not grandfathered in existing customers, Sanford Bernstein’s research suggests a large proportion of customers forced to give up unlimited data would quit AT&T even if it meant buying a new phone and paying a higher bill just to get the unlimited data option back.  When AT&T eventually forces these customers’ hands, Sanford Bernstein predicts trouble.

According to the study, more than 58 percent of the lowest data users said they would dump AT&T overboard and switch to another provider with an unlimited plan. For heavier users, more than two-thirds are prepared to take their business elsewhere.

But even with overwhelming evidence like that, AT&T and some Wall Street analysts think Internet Overcharging schemes do customers a favor.

AT&T's mandatory data plans

“Customers generally have strongly negative perceptions about Usage-Based Pricing, and these are often not correlated with self-interest,” Bernstein analyst Craig Moffett said in a research note analyzing the findings of the survey conducted this past summer. “It is fashionable to argue that loyalty to carriers is dead (except perhaps to Verizon Wireless, whose service level is perceived to be markedly higher than that of its competitors). The new conventional wisdom is that carrier loyalty has been replaced with loyalty to the device. But high inclination to switch carriers and phones to maintain an unlimited plan suggest that perhaps the plan itself is more important than either one.”

The Wall Street firm’s research is hardly news to consumers, who have repeatedly expressed loathing contempt for Internet Overcharging schemes like so-called “usage-based billing,” “data caps,” and speed throttles that kick in when carriers decide customers have used the service enough.

Consumers are willing to pay a higher price just knowing they will never face dreaded “bill shock” — a wireless company bill filled with hefty overlimit fees charged for excessive data usage.  They also have no interest in being penalized by arbitrary usage limits that punish offenders with speed throttles that reduce wireless speeds to dial-up or lower.

AT&T was the first major carrier to throw down the gauntlet and force customers into choosing between a “budget plan” that is easy to exceed at just 200MB of usage per month or an inadequate, overpriced 2GB tier that costs just five dollars less than the now-abandoned unlimited use plan.

Wall Street firms like Sanford Bernstein worry their investor clients may be exposed to a revenue massacre when competing carriers like Verizon Wireless, which retains an unlimited plan for now, unveils its own version of the popular Apple iPhone.  The result could be a massive stampede of departing customers headed for top-rated Verizon Wireless, even if it means paying early termination fees.

AT&T spokesman Mark Siegel sees things very differently however, telling CNET News AT&T’s new limited option plans deliver more choice and flexibility for data-hungry users.

Charter's dumping ground for sneaky rate increases can be found in the Adjustments, Taxes and Fees portion of your monthly bill.

Charter Cable is literally passing the buck onto its cable TV subscribers.

Effective this October, Charter Cable customers will pay about a dollar more per month thanks to a new junk fee the company is adding to subscribers’ bills.

Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

For most customers, the fee will average $0.94 per month, but in some areas it will be as high as $1.31 per month.  Charter argues the fee is not arbitrary. claiming it represents the average price the company pays – per subscriber – for local broadcast stations in the communities it serves.

Stop the Cap! contacted Charter this morning and learned the company intends to impose this new fee even on customers with Charter’s Price Guarantee Package, which is supposed to guarantee customers no change in pricing for up to two years (see notes at the end of the article for an update).  A Charter representative we contacted claimed the company will impose the fee on all customers, including those on contract, because of a clause in the terms and conditions which says, “The guaranteed price does not include the cost of installation and equipment, any applicable franchise fees, taxes or late fees, or costs for other ancillary services that you may order.”

Of course, the new fee is completely arbitrary and is neither a franchise fee or tax, nor is it for an “ancillary service.”  We predict a closer review of Charter Cable’s thinking on this matter by state regulatory agencies and Attorneys General.

Charter’s FAQ seeks to pass the blame for the new fee to the federal government and local broadcasters:

Federal law treats [cable networks and over-the-air TV stations] differently. Unlike cable TV networks, local broadcast TV stations distribute their signals over the air, using free spectrum granted to them by the federal government. In effect, taxpayers are subsidizing the distribution of broadcast TV signals. These same broadcast TV stations are then allowed by the government to charge for their signals — and if we don’t agree to pay, broadcasters can force us to drop their channels, thereby adversely impacting our customers.

“Given cable’s well-documented history of raising rates 4-6 times the annual rate of inflation, it seems rather disingenuous for them to now claim their rate hikes are coming as a result of broadcast TV stations, which provide the highest-rated entertainment and local news programming on the cable line-up,” National Association of Broadcasters Executive VP Dennis Wharton told Multichannel News in response to Charter’s move.

The new Broadcast TV Surcharge will appear in the Taxes and Fees section of your bill, joined by other junk fees Charter has invented to pass along the ordinary costs of doing business to cable subscribers while claiming they are not increasing rates:

Charter’s “It’s Someone Else’s Fault We Charge These” Junk Fees

• TV and Internet Late Payment Fee — A late fee will be assessed for past due unpaid Charter TV and Internet charges.
  
• Phone Processing Fee — This fee is assessed when Charter does not receive payment for the full balance of your phone charges.
• Regulatory Cost Fee — The cost of doing paperwork and whatever else the company deems.
• State Telephone Relay Charge — Funds a Telecommunications Relay Service for hearing impaired/speech disabled residents.
  
• Federal Communications Commission (FCC) Fee — The FCC charges an annual regulatory fee for cable operators.
  
• Franchise Fee — Local communities collect a percentage of revenue from cable operators in return for doing business in the community.
  
• Public Education and Government Channels (PEG) Fee — Many cable franchise agreements ask cable operators to help fund the operations of these channels.
  
• Public Utilities Commission (PUC) Fee — Some states ask regulated providers to defray the costs of utility commissions that oversee providers on the state level.
• County 911 Charge (9-1-1 fee) — Some counties ask telephone providers to help pay to administer emergency 911 service.
  
• Telephone Right Of Way Fee (Municipal right-of-way fee) — A fee used to compensate municipalities for the use of their rights-of-way.
• E911 Equalization Surcharge (9-1-1 equalization fee) — A fee charged in wealthier, urban areas to help subsidize the costs of 911 service provision in rural and poor areas.

(Those fees in blue represent completely optional “junk fees” that hide revenue enhancements.)

(Those charges in red are fees mandated by government entities, but traditionally deemed “the cost of doing business.”  Nobody requires these fees be billed directly to subscribers on a line-by-line basis, and most cable operators used to include them in the monthly price for service.  But in a quest for increased revenue, cable companies began breaking them out of cable package pricing, charging for them independently.  That effectively raises your total bill without changing the price of the programming package.  It’s comparable to an airline charging for your airline ticket, but then padding the price with a Seat Rental Fee, a Boarding Fee to enter and exit the plane, an FAA Cost Recovery Fee to pay the Federal Aviation Administration for its services, a Flight Plan Filing Surcharge to cover the costs of filing a flight plan, and a Control Tower Charge to defray the expense of dealing with air traffic controllers.  Snacks and soft drinks are extra.)

Charter Cable has been notifying subscribers about the new fee in mailings sent to subscribers.  The company’s argument that broadcasters and the federal government conspired to make subscribers pay more may have some merit, but nobody forced Charter Cable’s hand to add a new junk fee to customer bills.

Local broadcasters are in an enviable position because federal government rules have given them all the cards to charge whatever they want for cable carriage.  Government policy forbids most cable systems from taking their business elsewhere — perhaps to a station in a nearby city or network affiliate delivered via satellite that is willing to accept less than what local stations demand.  Network-affiliated stations need not compete for cable carriage because they can demand cable systems not go outside of the area for an alternative.

Broadcasters do not enjoy “free spectrum granted by the federal government.”  Television stations pay license fees and taxes just like other spectrum users and are mandated by the federal government to meet certain minimum programming standards and decency rules.  Unlike other private license holders, broadcasters are supposed to serve the public interest, although what exactly defines that has evolved and eroded over the years.  Cable programming is not regulated.

Charter Cable’s claim that “taxpayers are subsidizing the distribution of broadcast TV signals” is dubious at best.  Broadcast radio and television preceded the paid television industry by decades, and was created to deliver unique “local service” to communities where stations were licensed in the public interest.  Should Charter argue that broadcasters should bid for auctioned spectrum, they’d have much more to complain about when those costs are passed on in considerably higher broadcast carriage fees.

As usual, regardless of who wins the spat over local broadcast carriage fees, it’s Charter’s subscribers who will lose thanks to the higher bills that follow.  But not our readers.

If you follow our advice, you can save far more than a dollar a month.

Score a new customer promotion and save far more than Charter hoped to collect from its new Broadcast TV Surcharge.

Stop the Cap! has been in touch with several Charter subscribers who successfully argued their way to considerably lower monthly bills, often by $20 or more a month.  Here’s how you can let the bully boys argue over someone else’s money:

Gather Information

Get out a copy of your latest Charter Cable bill showing your packages, programming fees and the taxes and surcharges piled on at the end of the bill.  Then, visit DISH Network or DirecTV’s website and gather pricing information for a comparable video package using their promotional pricing for new customers.  Also visit your local phone company website for pricing for their phone and broadband services, taking note of any new customer promotional pricing and gifts.

On a sheet of paper, list the costs for Charter’s services on one side and the prices you would pay with their competitor(s) on the other and determine how much you would save with the competition.

Armed with this information, you’re now ready to sit down, call Charter, and talk business.

Sit Down And Make the Call

When you call Charter, select the option to cancel service or just say the word “cancel.”  This will transfer you to Charter’s “customer retention” department.  This group of customer service representatives have been specially trained to talk you out of dropping your service.

Explain that you are calling to cancel your Charter service after you received word of the latest fee increase.  Tell them it was the last straw after years of rate increases and that you’ve been comparison shopping.

A Sample Conversation

You: “My husband/wife and I carefully considered an offer we received from [competitor] last night and decided it was time to make a change.  It’s really all about the pricing.  This economy has been killing us and we simply cannot handle a higher bill.  When we looked at [competitor’s] offer, we discovered we could be saving $20 (insert amount applicable to you) or more a month over your own pricing.  But I’ve been a Charter subscriber for a long time and I decided I should call and see if there was any way we could stay as a customer, if we could only negotiate a lower bill.”

Charter: “I see you have been a customer for a long time.  Did you know that Charter delivers… (expect a comparison about the differences between satellite and phone company competition and Charter at this point.  Your goal is to patiently wait until they finish and then stick to your guns that it’s really all about the monthly cost).

You: “I understand all that but you have to understand the only reason we are calling to cancel service is because of your prices.  I am really giving you a last chance to see if we could stay and pay a lower price.”

Charter: “Let’s review your bill and see if we can drop any services you may not be using or perhaps sign you up for a different tier of broadband service.”

You: “The thing is, with [competitor’s] service, I don’t have to drop anything and I will still get a much lower price.  Let me suggest an alternative idea.  You could save our family as a customer if you could sign me up for the same kind of package pricing new customers pay.”

Charter: “I’m sorry, but those prices are only for new customers.  But perhaps if we credited your account for a year’s worth of the fee you are upset about, that would help?”

You: “No, not really.  Not after I saw what we could be paying by switching.  Again, we’ve really already decided on making this change, but I decided it would be fair to give Charter a last chance to come closer to the prices I would be paying with your competitor.  Isn’t there anything you could do to sign me up to a new customer promotion?”

Charter: “Well, let me put you on hold and talk to my supervisor.”

At this point, you may or may not get your request granted.  Sometimes the representative will try and negotiate dollar amounts, try to sell you a bundled package of services to deliver “more savings,” or offer you a lower discount.  Stick to your guns, but always remain polite.  Sometimes their counteroffer may not deliver new customer pricing, but will still leave you saving far more than when you started, and keeps you off a term contract.  If you are uncomfortable with the progress of the negotiations, or find an unsatisfactory outcome, politely end the call telling the representative you would like some time to think about it.  It’s your chance to call back and speak with someone else.

In general, the more seriously they sense you are ready to commit to the competition, the better the offers will get to stay.  Feel free to let them know you’ve already scheduled an installation with the “other guy” or would like information about where to drop off your cable equipment.  If you are queasy about playing hardball, blame it on your spouse, letting Charter know “he/she will never go for that.”  Stay friendly with the representative at all times — try to make them your advocate by encouraging them to find an even better deal for you and that you appreciate the time they are spending working with you.  It’s a lot easier to get a better offer when you are not screaming at the representative that can’t wait to get off the phone with you.

A Charter customer e-mailed this segment of their bill to clarify whether or not customers under a Price Guarantee contract would also pay the dollar fee.

If you find stubborn resistance to discounting your bill, consider showing up at the local cable office with your equipment and try negotiating one last time.

Charter Cable allows customers to cancel service and, after 30 days, sign up under a new customer promotion, so asking them to waive the 30 day requirement when it will save them money to reinstall service may be something they’ll consider.  You could also re-establish “new service” under a spouse’s name for an even faster turnaround.

As Charter has taught their subscribers, it’s all about business with them.  Turnabout is fair play, so give them the business about their pricing and demand savings.

[Updated 9:42pm ET — A Charter subscriber e-mailed Broadband Reports a copy of their latest Charter Cable bill saying the fee would -not- be applied to customers under a current Price Guarantee contract, in direct contradiction to what a Charter representative told us this morning.  This is not much of a surprise, considering it took eight calls to Time Warner Cable last week to get the straight story about their DVR price hike in upstate New York.

Perhaps we should start calling cable companies not less than five times for answers to basic questions and then average the responses we get.  As we said last week, we’ll believe the bill over what company representatives say any day.

Thanks to our reader Gabe and Broadband Reports for for alerting us to this development and helping clarify matters.]

[Update #2: 10:52am ET 9/16 — A Charter customer on Broadband Reports shared an online chat he had with Charter that shows I’m not the only one getting inaccurate information about this fee:

Scott: I heard that charter decided to add a new fee to user bills for “broadcast tv surcharge” even for customers that have locked in rates.

TTD Straissan : Yes. That is correct. The locked rates are for the services that are included on the locked promotion. Taxes and fees are not part of the locked promotion we have.

TTD Straissan : Broadcast TV Surcharge
Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

This surcharge displays in the Taxes and Fees section of the bill statement.

Scott: when will this be on my bill?

TTD Straissan : Expected increase will be around October 1, 2010 on some areas.]