After more than a year of aggressive promotions for new customers and those threatening to switch to a competitor, Time Warner Cable has pulled back to boost revenue and make greater profits.

CEO Glenn Britt told Wall Street investors on this morning’s quarterly results conference call that the cable operator is moving in a different direction.

“It’s based on a simple premise: sell people what they want and what they can afford in the first place,” Britt said.

In February, Stop the Cap! noted that Time Warner Cable’s new customer promotions had dramatically changed for the worse. The package prices remained the same — around $80 for a double-play or $89-99 for a triple-play package of cable, broadband, and/or phone service, but customers received a lot less for their money. For example, last year’s promotions bundled Standard/Turbo Service broadband (10-15Mbps) with most offers. Starting this year, only 3Mbps Internet is included. Equipment fees are still extra, but more costly than ever – $8.99 a month for a traditional set-top box, $21.94 a month for a DVR-equipped box and service.

Robert Marcus, Time Warner Cable’s chief operating officer now admits it was all part of the plan, and the company now earns 15-20% more from customers subscribing to the less-aggressive new customer promotions.

“In January we implemented a new pricing and packaging architecture that’s designed to drive greater [new customer revenue] and profit,” Marcus told investors. “We still advertise the same beacon prices, but the product packages are leaner, with lower speeds and fewer channels and features. Once our beacon offers get the phone to ring, our inbound sales reps are trained to help customers select options that are important to them, like faster broadband or a DVR. As a result, customers are up-sold into packages that better meet their needs.”

This year’s promotions largely only bundle 3Mbps broadband instead of the standard 10-15Mbps bundled last year.

Marcus admitted the trade-off is customers shopping around for the best deal who read the fine print are likely to consider an offer from a competitor more closely. Others are disconnecting service when their promotion expires.

Marcus

“By and large, when were talking about triple play disconnects, they are going to our telco competitors,” Marcus said. “When we’re talking about single-play video disconnects, they, by and large, leave us for satellite. We’re increasingly finding that phone customers are dropping landline phone for wireless-only, and there are video customers who are leaving — and broadband customers for that matter, who are leaving the category, and that’s probably more of an affordability issue than anything else.”

Verizon FiOS is Time Warner’s most dangerous competitor because it beats the cable operator on broadband speed and promotional pricing. Time Warner faces some of the highest disconnect numbers in FiOS areas. AT&T U-verse is also having a greater impact because AT&T recently decreased the price of both their triple and double-play promotions and has increased broadband speeds in some areas, Marcus reported.

Marcus said Time Warner is handling the subscriber churn fine, and the cable company now cares more about higher revenue and profits than attracting deal-hunters who shop on price.

“Last year’s aggressive triple play offers drove significant connect volume, which led to the highest quarterly subscriber net adds we’ve had over the last several years,” Marcus said. “But in large part, we were attracting discount seekers who are more likely to [switch after the promotion ended]. In many cases, we caused customers who didn’t need or want phone to take a triple play offer just to get the low triple play rates.”

What new customers Time Warner did attract largely took one or two products from the cable company, usually cable television and broadband. New phone service customers have declined year-over-year as a result of less attractive pricing. Instead, Marcus noted customers are spending on incremental broadband speed upgrades, which cost Time Warner much less than delivering phone service.

Nobody needs 1Gbps, argues Britt.

With the looming threat of Google Fiber in both Kansas City and Austin, Britt seemed generally unconcerned about the impact the gigabit broadband provider would have.

“At the end of the day, what we’re doing is not any different than an overbuilder, and we’ve had overbuilders for the last several decades in this business so that’s what they appear to be doing,” Britt said. “They appear to be very aggressive on price. They’re even giving some tiers away essentially for free, and we’ll see where that goes. Despite the glow and all of that, the products are essentially the same others are offering today in a practical sense.”

Britt said gigabit speeds probably won’t have the impact many customers think they should because most websites are not built to deliver content at those speeds.

Marcus noted that in Kansas City, Google has only passed 4,000 homes so far, about 2,000 of which are Time Warner Cable customers.

“The number of defections we’ve seen is de minimis at this point,” Marcus said.

Both Britt and Marcus responded to a question about consumption billing saying nothing had changed in the company’s thinking about usage caps or charging for what customers consumed.

“We have in place in almost all of our footprint the option for people to pay less money if they wish to really consume less,” Britt said. “People who want to keep getting unlimited and pay for that, can do that. So we really don’t have anything new. It is in place in our whole footprint, I think, except one location.”

“The take rate on that offering has still been fairly modest, but we think it’s a very important principle that there’s a relationship between usage and the price that customers pay,” Marcus added.

Some other highlights:

• Time Warner Cable’s cloud-based set-top box guide is now testing in employee homes with plans to roll the new boxes out to subscribers later this year. Britt said these were the first of a new generation of all-IP boxes, which means if you have a device in your house that knows how to receive IP, you’ll get access directly via WiFi or through a cable technology called MoCA;
• Time Warner Cable will digitally encrypt its entire television lineup in New York City;
• Time Warner Cable’s recent restructuring cost 500 employees their jobs, mostly in finance, marketing and human resources.

More than six months after Hurricane Sandy did her handiwork on coastal New York, New Jersey and Connecticut, hundreds of residents are still getting phone bills from Verizon for phone and Internet service they have been without since Halloween.

Most of the outages are around the Ocean Bay development in Far Rockaway, south of Brooklyn.

For thousands of residents, the only regular communication from Verizon every month arrives in the form of a bill.

“I need that phone to make phone calls for an ambulance or long distance or the police department,” Geraldine Jones, president of the development’s tenant association, told the Daily News. “We’re tired of being without our landlines. It’s terrible. They’ve got the nerve to send me a bill every month. I’m frustrated and angry. It’s not fair. It’s not right.”

WNYC Radio reports local politicians are now getting involved in Verizon’s half-year landline outages on Far Rockaway. (1 minute)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Verizon’s response has mostly been shrugged shoulders and no firm estimate of when service will be repaired.

“Verizon is working closely with the New York City Housing Authority and together we have made good progress in restoring service to residents to of the Ocean Bay apartment complex,” company spokesman Phil Santoro retorted in a statement. “By the end of this month, we will begin restoring service to all those who live in the complex from 54th to 59th streets on our brand new state-of-the-art fiber optic network.”

But that means some of Verizon’s customers will have been without phone service for more than half a year.

“It shouldn’t take six months,” said City Councilman Donovan Richards. “Some of these people don’t have cell phones. They’re elderly. It’s a public safety issue.”

WNYC’s Brian Lehrer Show takes a close look at telecom outages after Hurricane Sandy. (17 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

AT&T continues its quest to make landline service a really bad deal with the introduction of a new bill-padding fee that wireless customers will not have to pay.

AT&T’s $1.99 “Tennessee Regulatory Inspection Fee” appeared on customer bills in March, much to the surprise of customers.

“My regular service is only 22 bucks,” Charles “Buck” Meyer told the Chattanooga Times Free Press. “If they add $2 to it, that’s almost a 10 percent increase. I’ve been on the fence about switching off my landline for some months, and this could be the thing that pushes me over the edge.”

AT&T says it is entitled to recoup the money it pays to the Tennessee Regulatory Authority. The $1.99 fee appearing on March bills is a “one-time” fee until AT&T figures out how much it plans to charge customers on an ongoing basis. Most companies subject to TRA fees build them into the monthly cost of the service. AT&T is the only phone company in the state to break the fee out on the bill and collect the money separately.

In 2009, when the company lobbied for widespread deregulation of phone bills in Tennessee, it claimed deregulation would not bring about increased rates.

Meyer does not see it that way. He considers AT&T’s new fee a stealth rate hike.

“Slip a little line item on there that’s just a couple bucks and is a one-time deal,” he told the newspaper. “Then pretty soon it’s on there every month.”

The new fee is permitted because of a 2009 change in Tennessee’s statutes that now allow companies to pass along regulatory fees on customer bills.

Companies like AT&T heavily lobbied for statewide deregulation of telephone bills that year, and spent $180,000 in campaign contributions to lawmakers, their political action committees or party organizations. AT&T hired at least 20 lobbyists to help push deregulation through the Tennessee legislature. Critics of the bill warned its passage would lead to rate increases, something AT&T denied at the time.

AT&T Tennessee president Geoff Morton told the Times Free Press back in 2009, “the company needs to compete with rivals and is not interested in raising rates.”

AT&T refused to say how much it will collect from the new fee, but Morton said the company is now lobbying for another law that would gut the fees AT&T pays to the TRA to oversee the quality of phone service in the state.

“In the previous administration, telecommunications inspection fees increased despite a dramatic decrease in telecommunications services regulated by the commission,” AT&T spokesman Bob Corney told the newspaper. “We are hopeful that legislation will pass this session to reduce the regulatory burden on landline telephone customers in Tennessee.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WMC Memphis ATT Mystery Fee 3-21-13.mp4[/flv]

WMC’s “Ask Andy” segment has some non-answers from AT&T about their new $1.99 “regulatory authority inspection fee.” When the Memphis consumer reporter called AT&T, the company said, “no comment.”(1 minute)

AT&T is accelerating the demise of its own landline business with a new wireless home phone product that is cheap for voice calls but could spell the end of your DSL service in certain cases.

AT&T Wireless Home Phone service provides contract-free unlimited nationwide voice calling for $20 a month ($10 if you are already an AT&T wireless phone customer sharing your Mobile Share minutes).

The service includes a base station ($99.99 prepaid or free with two-year contract) that receives AT&T’s wireless signal and integrates with your existing home telephones. The landline replacement includes caller ID, call waiting, three-way calling and voice mail. There is a $36 activation fee, a “Regulatory Cost Recovery Charge” of $1.25 per month and all the local taxes and surcharges that go with your current landline. Unless choosing the prepaid option, an early termination fee up to $150 applies. The restocking fee for customer returns is up to $35.

In certain cases, forfeiting your landline could mean the end of your DSL service if you do not remind the phone company you want to keep your broadband service intact. If you don’t AT&T and other phone companies might disconnect all of your services.

There are other caveats:

• Call quality is only as good as AT&T’s network and reception in your home;
• Caller ID only includes the calling party’s number. No name information is provided;
• Emergency 911 calls lack exact geographic information, which could make locating a caller more difficult;
• The service is unregulated and has no local or state government oversight to guarantee call quality and reliability;
• If power fails, an internal backup battery can keep the system running for up to 36 hours or 3.5 hours of talk time;
• The service cannot be used with home security systems, fax machines, medical alert systems, credit card terminals, dial-up Internet, or other data services.

Verizon Wireless offers their own version of this service: Wireless Home Phone Connect, for about the same price. It gets mixed reviews from owners because of complaints about call quality.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/ATT-Wireless-Home-Phone 3-27-13.flv[/flv]

AT&T’s product promotion of its wireless home phone service. The pricing information in this video was intended primarily for existing AT&T wireless customers and is slightly outdated. (1 minute) 

Comcast’s eMTA backup battery. (Image: David Trebacz)

Comcast digital phone customers will no longer receive battery backup and monitoring service free of charge, according to a notification mailed to customers with their bills:

“Effective February 26, 2013, a battery backup and battery monitoring will no longer be provided free of charge. For existing XFINITY Voice customers with backup batteries, Comcast will continue to monitor your current battery at no charge; however, replacement batteries and their monitoring will no longer be provided free of charge. Backup batteries (which include monitoring) will be available for purchase.  Please call 1-888-972-1261 for pricing and details. XFINITY Voice uses the electrical power in your home. If you do not have a battery backup, you will not be able to use this service, including the ability to make emergency 911 calls, during an electrical power outage.”

Comcast customers leasing eMTA modems (which supply the cable company’s phone service) report that before the change batteries were included in the box. But not anymore, even though the packaging and accompanying literature still show the battery is included.

The lithium-ion battery keeps Comcast’s phone service working during power outages, but like other rechargeable batteries, it does eventually wear out. Now customers pay to replace them, even though the modem itself is leased to the customer.

Scott, a Comcast customer in Michigan, told Comcast he was unhappy with what seems like a petty cutback:

“I’m really miffed that they would now suddenly require customers to purchase a battery for a leased device,” Scott said.