Comcast: The Don’t Care Bears are back for more

Comcast broadband only customers in select markets will soon be paying $74.95 a month for Comcast’s 25 Mbps internet service, the lowest-priced internet-only tier that achieves the FCC’s broadband speed standard.

Comcast is among the top cable operators under pressure from Wall Street analysts who argue broadband service is too cheap for a limited competition marketplace, and they have urged providers to raise prices to as much as $90 a month to take advantage of higher revenue possible from a service many consider an essential utility.

Most cable operators are reserving their largest rate hikes for internet-only customers who do not subscribe to a television and/or phone package. Companies hope to recapture some of their lost TV revenue by charging broadband-only customers premium pricing.

Comcast’s Performance tier, priced at $64.95 a month for much of 2017, has already increased to $69.95 in many markets in late 2017. The Comcast website now prices that tier, delivering 25 Mbps service, at $74.95 a month after any promotions expire. An additional modem rental fee of $11 a month also applies if you do not own your own equipment.

The rate changes are all part of Comcast’s annual rate hike parade (noticed by DSL Reports), which gradually rolls across the country and Comcast’s many service areas. Here is an example of a rate hike notice impacting most services in northern New Jersey:

Comcast rates for Performance (25 Mbps) tier, as found on Comcast’s website.

Comcast is being sued for deceptively advertising cable packages at a low price, but actually charging much more because of compulsory “junk fees” that customers cannot avoid.

Plaintiffs’ lawyers Dan M. Hattis of Bellevue, Wash., and Jason Skaggs of Palo Alto, Calif., jointly brought the class action case against the cable company, asking a judge to force Comcast to stop charging the fees and return all of its “unjust profits” to impacted subscribers.

“Comcast promises to charge customers a fixed monthly price for the service plans, but in fact Comcast charges a much higher rate for those plans via concealed and deceptive ‘fees’ which Comcast intentionally disguises in both its advertising and in its customer bills,” the attorneys complain. “These illegal and deceptive fees, which Comcast calls the Broadcast TV Fee and the Regional Sports Fee, earn Comcast over $1 billion each year, accounting for approximately 15% of Comcast’s annual profits.”

But in fact Comcast’s bill padding goes well beyond its TV and sports programming surcharges. No other cable company has mastered the art of the surcharge and fee better than America’s largest cable operator. Consumer advocates in California complain those fees can now cost an average subscriber in that state more than $40 a month.

“Although Charter Communications and Cox — California’s other major cable operators — also charge many of these fees, Comcast pioneered most of them and charges more than any other cable operator,” claimed Geoff Nawasaki, a San Mateo resident that has filed complaints against Comcast for several years. “A class action lawsuit is long overdue.”

Once Comcast establishes a new fee or surcharge, the company often boosts those fees dramatically over a very short time. Vaughn Aubuchon has been tracking Comcast’s rates in the Monterey Bay area of central California since 2010 and has documented Comcast routinely increasing its junk fees by as much as 1,000%. But most regulators and members of Congress may not realize how much customer bills are increasing, because the rate card Comcast shares with Washington and the general public doesn’t typically include the extra fees.

Aubuchon has documented significant spikes in Comcast’s prices, even though the company is still promoting packages costing $79-89 a month for new customers. But once those customers open their first bill, the advertised price no longer matters.

Hattis and Skaggs’ 2016 lawsuit documents Comcast’s online order system making no mention of its mandatory surcharges and fees. In fact, even Comcast’s fine print fails to mention the exact amount customers will pay in surcharges. According to Comcast, you have to already be a Comcast customer to review your local rates.

Aubuchon’s rate tracking shows just how lucrative Comcast’s billing tactics have become to the cable operator, especially since 2014:

• XFINITY TV cost $80.94 in 2010. As of August, the rate is now $102.98 — more than $20 a month more.
• XFINITY INTERNET cost $47.95 including the $5 modem rental fee in 2010. Today, that price is $68.95 a month, and the modem rental fee has doubled. That’s another $20 more a month.
• Comcast now charges Aubuchon $6 a month for its Broadcast TV Surcharge and $5 a month for sports programming — an extra $11 month that wasn’t there in 2010.
• After adding up all the fees and surcharges, Aubuchon’s bill went from $135.58 in 2010 to $196.65 today — $62.23 more a month.

Aubuchon

Some of the biggest recent hidden rate hikes have come from Comcast’s Broadcast TV Fee and Regional Sports Fee.

“In the Sacramento area in July 2016, Comcast increased the Broadcast TV Fee by 54% from $3.25 to $5.00, and tripled the Regional Sports Fee from $1.00 to $3.00,” the lawsuit notes. “Then, just three months later in October 2016 Comcast increased the fees yet again to $6.50 for the Broadcast TV Fee and $4.50 for the Regional Sports Fee.”

“Comcast has admitted these invented fees are actually just price increases for broadcast channels and sports channels in its cable television packages,” the lawsuit claims. “But Comcast intentionally does not include the cost of these fees in its advertised or quoted rates for those channel packages, in order to mislead customers into thinking that they will pay less than Comcast will actually charge them.”

The plaintiffs also argue Comcast is intentionally deceptive to customers questioning the ballooning fees on their cable bills.

“Comcast staff and agents explicitly lie by stating that the Broadcast TV Fee and the Regional Sports Fee are government-related fees or taxes over which Comcast has no control.”

A Guide to Comcast’s Junk Bill-Padding Fees

• Broadcast TV Fee (up to $7.50): Ostensibly the cost of retransmission consent fees required to carry free, over the air stations on Comcast’s lineup. The amount varies depending on the fees paid in each local market, with a significant likelihood Comcast rounds those amounts up in ‘friendlier’ $0.25 increments. Introduced in 2014.
• Digital Adapter ($3.99): Originally $1.99/mo when introduced in 2014, the fee covers the rental of a basic set-top box to continue receiving Comcast’s encrypted digital cable TV service on older “cable-ready” analog televisions that did not require a cable box in the past.
• Gateway Rental ($10): This is the monthly rental fee for your cable modem, “gateway,” or Wi-Fi enabled router. You can buy your own equipment and avoid this fee. Recently, Comcast has offered customers a waiver of equipment charges if they upgrade to an X1 set-top box. But in practice the rental fees are stopped for your existing equipment only because Comcast has started charging rental fees for the new equipment it bundles with the upgrade.
• HD/DVR Rental Fees (up to $10 a month for equipment you cannot buy outright yourself).
• HD Technology Fee ($9.95): for viewing HD content on a set-top box you already pay up to $10 a month to use.
• Service Protection Plan ($5.99): Was $1.45 (or less) per month for years until Comcast started hiking the price five years ago. Went from $1.99 in early 2012 to $5.99 in August 2017. Many customers sign up out of fear they will be charged between $36.50-$70 for a home visit from a Comcast technician dealing with a service problem. In reality, all the Service Protection Plan covers for certain is inside wiring that does not travel within a wall and protection from in-home service call fees.
• Regional Sports Fee (up to $5): A way to pass on sports programming costs to every subscriber without boosting the published rate for cable television.

Comcast’s Service Protection Plan = “Service Call Extortion Insurance”

Comcast’s $5.99/month Service Protection Plan has been called “extortion insurance” by some customers who buy the plan to avoid Comcast’s notorious service charges for in-home service calls. Unlike many other cable companies, Comcast charges customers to visit their homes for any reason other than a true, company-caused service outage. A 2016 lawsuit in Washington alleged Comcast’s process for determining whether a service call is charged or free is subjective and frequently at the whim of the technician, who enters “fix codes” at the end of a service call. Some “fix codes” are free, others trigger service call visit fees. The lawsuit claims, “Comcast does not formally train the technicians on what each fix code means.”

Comcast customers that have faced the sting of an unwarranted service call charge often readily agree to Comcast’s sales push for its Service Protection Plan, which normally waives those fees. It doesn’t take much to trigger those fees. The Washington lawsuit noted that if a Comcast technician talks to the customer about how to use their DVR, program a remote control, reset their cable modem, or use Wi-Fi, it is considered “customer education,” which results in a service call charge.

“Thus, if a technician fixes a broken Comcast cable box but also provides ‘customer education’ during the service call, the customer will be charged for the service call if the technician applies the customer education code because customer education fix codes are chargeable,” the lawsuit said. “This occurred 2,078 times between 17 June 2014 and June 2016 [in Washington State].”

Customer education fees are waived for those who pay for Comcast’s Service Protection Plan.

Former Time Warner Cable and Bright House Networks customers in Florida, Ohio, Michigan, and Wisconsin were glad to see the end of modem rental fees, something promoted as a tangible deal benefit of the merger by new owner Charter Communications. But many of those same customers are now upset to discover that up to $10 modem rental fee has been replaced with a $5 monthly fee for “Wi-Fi service.”

LuAnn Summers, a Bright House customer in Tampa, wrote Stop the Cap! in February to complain her new bill from Charter/Spectrum included a $9.99 activation fee and $5 a month for something called “Wi-Fi Service.” The same fees have since appeared on bills for some customers recently switching away from their old Time Warner Cable service plans to new Spectrum pricing and plans.

Rich D’Angelo in Wisconsin recently took Charter up on its offer to switch away from his legacy TWC plan when his promotion expired in January.

“I was able to get a big speed boost and bundle it with Spectrum’s Silver TV package, which includes two of the premium movie channels I was paying TWC $15 each for every month, and my bill was only supposed to go up $10,” D’Angelo tells Stop the Cap! “Instead, it went up $25 and I feel lied to.”

Wi-Fi sticker shock.

D’Angelo retired his old owned Motorola SB6121 modem in favor of a new network gateway supplied free of charge by Charter because his new package didn’t work with his old modem.

“My 6121 modem was a real workhorse and I bought it right after Time Warner started charging modem fees, but it cannot support Spectrum’s fastest speeds in Wisconsin and I didn’t feel like buying a new modem when Spectrum gives them to customers for free,” D’Angelo explained. “This was the device they handed me and I was not offered any other option.”

Champagne Johnson in Columbus, Ohio also took advantage of Spectrum’s new pricing plans thinking she could save her family money and get better internet speeds from the cable operator that advertises it’s a “new day” for Time Warner Cable subscribers.

“New day but the same old lies and deceit,” Johnson writes Stop the Cap! “Do these cable companies only hire thieves? I was told the cable modem was included, but now I am suddenly getting charged for Wi-Fi, which is crazy. I called Spectrum up and they told me there is a charge if I use their modem for my Wi-Fi. I told them I don’t need their Wi-Fi because I have my own router that works fine and they told me it was included inside their modem and I had to pay for something I won’t use.”

Charter assumes if you use Wi-Fi, you want their Wi-Fi Service

We contacted Charter to learn more about this new charge and what customers can do about it.

It turns out the Wi-Fi charge and activation fee applies when you use a network gateway device provided by the cable company. We learned the reason so many customers are finding this charge on their bill comes as a result of slightly deceptive sales practices when customers choose a Spectrum internet service plan.

“Do you use Wi-Fi at home?” a Charter representative asked us when we inquired about pricing for a new Spectrum service plan to replace our existing Time Warner Cable plan. When we answered yes, the representative said they would send our “free equipment” and noted we would no longer pay a modem rental charge (despite the fact we had owned our own modem at Stop the Cap! HQ for years). “You can either pick it up in a cable store or we can ship it direct to you in a self-install kit.” That equipment was a “network gateway,” which bundles a cable modem and router into a single device.

Our readers confirm that Charter representatives did not ask them if they have an existing in-home router, which probably already provides Wi-Fi access in the home. Nor do they disclose that accepting a network gateway, which was also interchangeably referred to as “a modem” means they are agreeing to pay a $9.99 activation fee and $5/mo ongoing fee for “Wi-Fi service.”

We called three times this afternoon as were given identical information, and no disclosure of any Wi-Fi fees.

On the fourth call, we specifically asked about Wi-Fi fees and the representative told us they did not know the answer and left us on hold for 10 minutes before finally disclosing that Charter does charge both fees. When we asked how to avoid them, we were first told we could not waive the fee if we used Wi-Fi in the home, but a supervisor later clarified that it only applied to their gateway and we could specifically request a “basic modem” or have Wi-Fi disabled on a network gateway, and neither charge would apply.

“How are we supposed to know and understand that in advance?” Johnson asked us.

“Considering more than 90% of Time Warner Cable customers were paying $10 a month for a modem without ever realizing or understanding they could buy their own and avoid that charge, how many Spectrum customers are proficient enough to tell Spectrum they want their network gateway set to bridge mode or want a traditional cable modem without router functionality? It’s clear Charter is going to make $5 a month from a whole lot of customers, and it should be disclosed up front. It even got me and I am a network engineer.”

Summers learned about the controversy of the Wi-Fi charge after googling the fee and discovered a Tampa Bay Times story about the fee.

Spectrum spokesman Joe Durkin told the newspaper the fee should not apply to customers Charter inherited from Bright House who already had internet service. He said Spectrum is reviewing cases the Times has brought to its attention to see if the charges were appropriate.

But that isn’t always the case for customers placing orders on Charter’s website or contacting customer service by phone. In both cases, Charter implied if you want to use Wi-Fi at home, you owe them an extra $5 a month:

Charter’s website suggests that you have to pay $5 a month if you intend to use Wi-Fi at home.

Getting the charges off your bill

Luckily, Charter is readily agreeing to customer requests to remove the charge(s) from customer bills and will supply equipment with Wi-Fi disabled (or not present when using a traditional cable modem). You may need to exchange equipment, however. If either charge appears on your bill, call and complain. While we no longer recommend customers invest in their own cable modems as long as Charter is providing them without a rental fee, we do suggest customers buy their own router and avoid ongoing fees for Wi-Fi service.

Also be aware that if you are still on a legacy Time Warner Cable internet plan, Charter will keep collecting that $10 monthly modem fee until you abandon your Time Warner plan for a Spectrum internet plan. You can still avoid the rental fee by buying your own modem. Charter’s list of supported modems is here.

Fixed (wired) broadband is now the most important revenue component of the TV-Internet-Phone package.

Despite ordering 41 percent more downstream network equipment in 2015 than the year before, cable operators enjoyed a 3% drop in broadband equipment expenses, according to researcher SNL Kagan.

While your cable operator blames the cost of upgrades and usage growth for your latest broadband rate hike, cable company spending on broadband actually declined thanks to lower prices and more efficient broadband networks.

ARRIS, a major supplier of cable broadband equipment, also saw its revenue from equipment sales decline as cable operators used software virtualization to cut the price of DOCSIS channels over new, more efficient converged cable access platforms.

Cable operators are feeling heat in some markets from emerging fiber-based competitors, but the imminent arrival of DOCSIS 3.1 has made meeting those competitive challenges easy and less costly than ever before.

ARRIS closed out the year as the global revenue leader in broadband equipment, grabbing 53% of total revenue among providers of cable broadband infrastructure. ARRIS benefitted immensely from the focus of its primary North American customers, including Comcast and Time Warner Cable, on dramatically increasing throughput to stay competitive with Verizon FiOS, AT&T U-verse, and Google Fiber.

“The imminent availability of DOCSIS 3.1 linecards and full-spectrum channels won’t slow the continued purchase and deployment of current DOCSIS 3.0 channels as cable operators must continue to increase throughput to reduce the likelihood of churn among their broadband subscribers,” said Jeff Heynen, senior research analyst for SNL Kagan.

But the costs to deliver those service improvements are now so low, providers are enjoying actual declines in their annual expenses for equipment upgrades, while at the same time many are raising prices and introducing or increasing modem rental fees and usage caps.

Motorola NVG589 gateway

AT&T customers offered free broadband service upgrades are discovering “free” means at least $7 a month in new equipment charges for some, even when the customer owns the equipment.

Jim Grant has been an AT&T ADSL 2+ customer for almost a decade, happy to get 12Mbps broadband service from the phone company while maintaining an account with DISH Network for satellite television. As part of AT&T’s expansion effort, Grant’s neighborhood recently became U-verse capable, which led to an onslaught of new customer promotions offering upgrades for broadband-only customers and packages of television, telephone, and broadband service for everyone else.

“An AT&T salesman offered me 18Mbps VDSL service for the exact same price I’ve been paying for 12Mbps, claiming the newer single-pair circuit would work more reliably than the bonded pair service I receive today,” Grant tells Stop the Cap! “What he and the installation guy failed to mention is that this ‘free upgrade’ would cost me $7 a month in equipment fees, even though I bought and own the RG (residential gateway) they now want to charge me for using.”

Grant’s Motorola-manufactured router/modem did not need to be replaced. It was always capable of supporting ADSL2+ and VDSL broadband service. Only his bill has changed.

It turns out AT&T changed its policies that used to allow certain customers to avoid modem fees by buying their own equipment. Starting Jan. 11, 2015, AT&T’s modem rental fee for customers using the company’s equipment remained $7 a month. But customers who own their own equipment in a U-verse upgraded area are also charged the same $7, only AT&T doesn’t consider it a modem rental fee. Instead, it is a combination equipment charge and extended warranty.

AT&T claims this change actually saves customers money once their purchased modems go out of warranty. AT&T used to charge $99 for a service call to a home with customer-owned equipment and a $100 replacement charge if the modem turned out to be defective. AT&T says the $7 monthly equipment and warranty fee protects customers from both charges if something goes wrong.

Modem fees apparently don’t apply if you are lucky enough to qualify for a promotion like this one offered in Austin in 2013 for AT&T’s GigaPower service.

AT&T’s explanation didn’t go over well with Grant, who only found out about the charge once the bill arrived.

“I was promised repeatedly my bill would be exactly the same and since I owned my own equipment, there was no way I should be charged a fee like this,” Grant explained. “AT&T is charging me the same $7 it would any customer using AT&T-supplied equipment.”

Most customers affected by this charge discover it after upgrading their service or when technicians replace older equipment, often accompanied by a promise there would be no extra charges or fees, something customers learn isn’t always true after their next bill arrives.

Abhijit accepted an AT&T offer to boost his U-verse Internet speed to 24Mbps. Along for the ride was a brand new U-verse gateway.

“I was told specifically that there would be no additional charge,” Abhijit complained on AT&T’s customer support forum. “After first month’s bill, I am seeing an additional $7.00 Internet equipment fee.”

Another customer in Texas was also misinformed by AT&T’s salespeople about the modem fees.

“I was informed that this $7 fee was for leasing a modem/wireless Router/Residential Gateway (RG),” wrote the customer. “However, if I have my own compatible modem, there will be no additional charge. I have purchased my own compatible modem and now AT&T service says [it will charge a] ‘$7 service fee’ instead of [the $7] equipment rental.”

Modem fees are a lucrative source of revenue from AT&T, earning the company potentially more than $84 million a month.

Some customers report success receiving service credits or other fee waivers after complaining about the undisclosed fees in complaints to the FCC.