Comcast is running “welcome back” ads in Chattanooga that still claim they run America’s fastest ISP, when they don’t.

EPB, Chattanooga’s publicly-owned utility that operates the nation’s fastest gigabit broadband network, has already won the speed war, delivering consistently faster broadband service than any of its Tennessee competitors. So when facts are not on their side, competitors like Comcast and a conservative “watchdog” group simply make them up as they go along.

Comcast is running tear-jerker ads in Chattanooga featuring professional actors pretending to be ex-customers looking to own up to their “mistake” of turning their back on Comcast’s 250GB usage cap (now temporarily paroled), high prices, and questionable service.

“It turns out that the speeds I was looking for, Xfinity Internet had all along,” says the actor, before hugging an “Xfinity service technician” in the pouring rain. “But you knew that, didn’t you?”

The ad closes repeating the demonstrably false claim Comcast operates “the nation’s fastest Internet Service Provider.”

“I see those commercials on television and I’m thinking, I wonder how much did they pay you to say that,” says an actual EPB customer in a response ad from the public utility.

It turns out quite a lot. The high-priced campaign is just the latest work from professional advertising agency Goodby Silverstein & Partners of San Francisco, which is quite a distance from Tennessee. Goodby has produced Comcast ads for years. The ad campaign also targets the cable company’s other rival that consistently beats its broadband speeds — Verizon FiOS.

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

Comcast tried to ram their “welcome back” message home further in a newspaper interview with the Times Free Press, claiming “a lot of customers are coming back to Xfinity” because Comcast has a larger OnDemand library, “integrated applications and greater array of choices.”

Comcast does not provide any statistics or evidence to back up its claims, but EPB president and CEO Harold DePriest has already seen enough deception from the cable company to call the latest claims “totally false.”

In fact, DePriest notes, customers come and go from EPB just as they do with Comcast. The real story, in his view, is how many more customers arrive at EPB’s door than leave, and DePriest says they are keeping more customers than they lose.

EPB fully launched in Chattanooga in 2010, and despite Comcast and AT&T’s best customer retention efforts, EPB has signed up 37,000 customers so far, with about 20 new ones arriving every day. (Comcast still has more than 100,000 customers in the area.)

Many come for the EPB’s far superior broadband speeds, made possible on the utility’s fiber to the home network. EPB also does not use Internet Overcharging schemes like usage caps, which Charter, AT&T, and Comcast have all adopted to varying degrees. Although the utility avoids cut-rate promotional offers that its competitors hand out to new customers (EPB needs to responsibly pay off its fiber network’s construction costs), its pricing is lower than what the cable and phone companies offer at their usual prices.

Comcast claims customers really don’t need super high speed Internet service, underlined by the fact they don’t offer it. But some businesses (including home-based entrepreneurs) do care about the fact they can grow their broadband speeds as needed with EPB’s fiber network. Large business clients receiving quotes from EPB are often shocked by how much lower the utility charges for service that AT&T and Comcast price much higher. It costs EPB next to nothing to offer higher speeds on its fiber network, designed to accommodate the speed needs of customers today and tomorrow.

The competition is less able. AT&T cannot compete on its U-verse platform, which tops out shy of 30Mbps. Comcast has to move most of its analog TV channels to digital, inconveniencing customers with extra-cost set top boxes to boost speeds further.

The fact EPB built Chattanooga’s best network, designed for the present and future, seems to bother some conservative “watchdog” groups. The Beacon Center of Tennesee, a group partially funded by conservative activists like Richard Mellon Scaife through a network of umbrella organizations, considers the entire fiber project a giant waste of money. They agree with Comcast, suggesting nobody needs fast broadband speeds:

EPB also offers something called ultra high-speed Internet. Consumers have to pay more than seven times what they would pay for the traditional service — $350 a month. Right now, only residents of a select few cities worldwide (such as Hong Kong) even use this technology, and that is because most consumers will likely not demand it for another 10 years.

Actually, residents in Hong Kong, Japan, and Korea do expect the faster broadband speeds they receive from their broadband providers. Americans have settled for what they can get (and afford). DePriest openly admits he does not expect a lot of his customers to pay $350 a month for any kind of broadband, but the gigabit-capable network proves a point — the faster speeds are available today on EPB at a fraction of price other providers would charge, if they could supply the service at all. Most EPB customers choose lower speed packages that still deliver better performance at a lower price than either Comcast or AT&T offer.

The Beacon Center doesn’t have a lot of facts to help them make their case. But that does not stop them:

• They claim EPB’s network is paid for at taxpayer expense. It is not.
• They quote an “academic study” that claims 75 percent of “government-run” broadband networks lose money, without disclosing the fact the study was bought and paid for by the same industry that wants to keep communities from running broadband networks. Its author, Ron Rizzuto, was inducted into the Cable TV Pioneers in 2004 for service to the cable industry. The study threw in failed Wi-Fi networks built years ago with modern fiber broadband networks to help sour readers on the concept of community broadband.
• Beacon bizarrely claims the fiber network cannot operate without a $300 million Smart Grid. (Did someone inform Verizon of this before they wasted all that money on FiOS? Who knew fiber broadband providers were also in the electricity business?)

The “watchdog” group even claims big, bad EPB is going to drive AT&T, Comcast, and Charter Cable out of business in Chattanooga (apparently they missed those Comcast/Xfinity ads with customers returning to Kabletown in droves):

Fewer and fewer private companies wish to compete against EPB, which will soon have a monopoly in the Chattanooga market, according to private Internet Service Provider David Snyder. “They have built a solution looking for a problem. It makes for great marketing, but there is no demand for this service. By the time service is needed, the private sector will have established this for pennies on the dollar.”

Ironically, Snyder’s claim there is no demand for EPB’s service fall flat when one considers his company, VolState, has been trying to do business with EPB for two years. He needs EPB because he is having trouble affording the “pennies on the dollar” his suppliers are (not) charging.

Snyder tells “Nooganomics” his company wants an interconnection agreement with EPB, because the private companies he is forced to buy service from — including presumably AT&T, want to charge him a wholesale rate twice as much as EPB currently bills consumers. Snyder calls EPB’s competition “disruptive.”

Nooganomics calls EPB’s low priced service a “charity” in comparison to what AT&T and Comcast charge local residents, and the free market can do no wrong-website seems upset consumers are enjoying the benefits of lower priced service, now that the local phone company and cable operator can’t get away with charging their usual high prices any longer.

Deborah Dwyer, an EPB spokeswoman, told the website the company got into the business with state and city approval, followed the rules for obtaining capital and pays the taxes or payments-in-lieu of taxes as the same rate as corporate players. “We believe that public utilities like EPB exist to help improve the quality of life in our community, and the fiber optic network was built to do just that. One of government’s key responsibilities is to provide communities with infrastructure, and fiber to the home is a key infrastructure much like roads, sewer systems and the electric system.”

Snyder can’t dispute EPB delivers great service. He also walks away from the competition-is-good-for-the-free-market rhetoric that should allow the best company with the lowest rates to win, instead declaring customers should only do business with his company to support free market economics (?):

“If you are a free market capitalist and you believe in free markets, you need to do business with VolState,” Mr. Snyder says. “And if you’re highly principled, every time you buy from a government competitor, what you’re voting for with your dollars is, you’re saying, ‘It’s OK for the government come in to private enterprise and start to take over a vast part of what we used to operate in as a free market.’”

Perhaps Snyder and his friends at the Beacon Center have a future in the vinegar business. They certainly have experience with sour grapes.

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Comcast’s emotionally charged ad, using paid actors, was produced by advertising firm Goodby Silverstein & Partners. The commercial running in Chattanooga is a slight variation on this one, which targets Verizon FiOS. (1 minute)

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EPB uses actual customers, not paid actors, in its own advertising that calls out Comcast’s false advertising.  (1 minute)

Craig Moffett, a Wall Street analyst working for Sanford Bernstein, just loves Verizon Wireless’ new calling plans, which he believes will help Verizon grow profits when most Americans already have a cell phone.

Verizon’s move “is the most profound change to pricing the telecom industry has seen in twenty years,” Moffett told the Associated Press.

Bernstein believes that cell phone companies can keep boosting the all-important “average revenue per user,” or ARPU, by shifting price hikes for services consumers are now using the most. That means wireless data which Bernstein sees as a growth industry. In contrast, customers are using their phones less than ever for making phone calls and sending text messages.

Verizon Wireless CEO Lowell McAdam agrees, telling an investor conference customers will end up paying more money to Verizon than ever before.

Moffett

“Is it going to cost them more money? Yeah, but it will probably shift their wallet spend from things they do individually into a bucket of gigabytes,” McAdam said. “The relationship will change. This will be something much more ingrained in their life as opposed to something that’s attached to their hip.”

Verizon’s “Share Everything” may become ingrained in customers’ wallets when it launches June 28, eliminating voice minute and text message allowances but increasing pricing for data. The cheapest smartphone plan will now run $90 a month. For customers who already pay for unlimited voice minutes and texting and avoid using too much wireless data, the new price will be lower than current Verizon plans. But for those who traditionally choose a calling minutes allowance and send a limited number of text messages, prices under the new plan will be going up by $10-20 a month.

Verizon also hopes to capture an increasing share of wireless data for portable devices. Consumers have typically avoided 3G/4G-capable add-ons for devices in favor of Wi-Fi-only, to avoid the separate data plans that are usually required. Verizon hopes customers will consider spending more on wireless network-capable tablets and laptops that can be added to their existing Verizon accounts. Adding a tablet will cost an extra $10 a month, $20 for a portable 3G/4G wireless modem for a laptop. Data usage will be shared from their existing data plan.

Moffett expects the new plan from Verizon, and a forthcoming one expected from AT&T, to solidify both companies’ dominance in the wireless market.

“In a household with two or three AT&T or Verizon devices — say, a smartphone and a tablet or two, and one device from T-Mobile or Sprint. Sprint doesn’t stand a chance,” Moffett said.

[flv]http://www.phillipdampier.com/video/CNBC Verizon Wireless Plans 6-12-12.flv[/flv]

CNBC talks with Public Knowledge’s Michael Weinberg about the “consumer benefits” of Verizon’s new wireless plans, which Weinberg suggests are few and fleeting.  (3 minutes)

[flv]http://www.phillipdampier.com/video/CNBC Is Wi-Fi Dead 6-12-12.flv[/flv]

CNBC wonders if Wi-Fi is dead as Verizon and AT&T encourage customers to use 3G/4G wireless data instead of more local Wi-Fi networks.  (3 minutes)

Verizon customers can expect to pay more for the company’s fiber to the home service, FiOS, even as promised higher speeds arrive.

Most customers off contract can expect to pay $10-15 more a month under the new pricing regime, or cut back on selected television channels to keep their price the same. Verizon customers currently on a promotional offer will not see any price changes until their promotion expires.

Wall Street analysts call Verizon’s rate hikes a return to “pricing rationality.” The phone company has engaged in years of aggressive pricing, promotions, and rebate offers, especially in the northeast. At one point, Verizon was offering New York-area customers up to $500 in rebates when signing up for a triple play Verizon FiOS package. As Verizon pulls back from aggressive promotions, some analysts predict cable competitors Time Warner Cable and Cablevision will be able to resume more typical rate increases common before Verizon FiOS launched. Cablevision previously announced it would not increase rates during 2012, mostly in response to Verizon’s aggressive pricing.

Verizon has significantly boosted speeds on most of its broadband offerings, with the exception of its standard entry-level 15/5Mbps package, which remains unchanged. Verizon is hoping customers will find that entry level package less and less attractive and be amenable to upgrading to faster speed service at a higher price.

“We’re expecting that 80 percent of customers will want more than 15 megabits per second,” Arturo Picicci, Verizon’s director of product management told Reuters.

Under Verizon’s new pricing, triple play customers with unlimited calling, 15/5Mbps broadband, and 290 television channels pay $109.99. The next step up, for $15 more a month, would upgrade broadband to 50/25Mbps service.

Verizon is also shaming New York area cable operators with speed increases that Time Warner and Cablevision currently cannot match.

The company’s 150/65Mbps service is now priced at $99.99 a month, down from $209.99. Customers in some areas can also sign up for 300/65Mbps service for as low as $204.99 with a two-year contract.

In contrast, Comcast charges $200 a month for 105Mbps, Cablevision prices its 101Mbps service at $104.95 a month.

Consumer reporters across the country say Verizon’s boasts of savings for consumers on their new “share everything” plans are hardly universal. Many customers face significantly higher cell phone bills switching to Verizon’s new revenue-boosting plans that eliminate voice minutes and texting allowances.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WCPO Cincinnati Verizon Savings Not So Much 6-18-12.mp4[/flv]

WCPO in Cincinnati’s John Matarese reports why Verizon’s new pricing plan will cost many customers more. (2 minutes)
 [flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WPTV West Palm Beach Verizon Share Plan 6-18-12.mp4[/flv]

WPTV in West Palm Beach talks with CNET about how consumers will need to become better educated to avoid the potential bill shock that comes from expensive, usage-restricted data plans. (2 minutes)
 [flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WWLP Springfield Verizon New Plans 6-15-12.mp4[/flv]

WWLP in Springfield, Mass. informs consumers how quickly they can burn through Verizon’s new $50 1GB wireless data plan. (1 minute)

A consumer firestorm is growing over Verizon Wireless new service plans.

As a growing firestorm over Verizon Wireless’ newly-announced plans continued today as some on Wall Street are becoming convinced Verizon has bungled the case for their new “Share Everything” concept.

Industry analyst Rob Enderle told ComputerWorld that Verizon’s handling of their pricing changes “is similar to the Netflix mistake last year that almost sunk that company.” Enderle believes the changes Verizon wants to force on the wireless market are potentially too radical to be embraced within the next two weeks, when Verizon’s new rate plans become active.

Verizon Wireless has been trying to quell the increasing criticism from consumers by reminding them they will not be forced to move to the new plans from an existing account.

“We’re allowing the existing customer base to have a choice; we’re not forcing anyone to more to new plans,” said Steve Mesnick, head of marketing for Verizon Wireless. “I take exception to [suggestions] of people leaving Verizon,” he said.

While Mesnick is correct Verizon will not force customers to choose new plans on June 28, the company will require existing grandfathered data customers to abandon unlimited data when they renew their Verizon contract or upgrade to a new discounted device.

Verizon claims it interviewed 50,000 customers before implementing the new plans and believe they will be embraced by the majority of Verizon customers.

Verizon Wireless spokeswoman Brenda Raney followed a different approach, pretending consumer complaints don’t exist: “We are very pleased with the response to our announcement as customers begin to understand how the new Share Everything Plans will save them money or provide them with more value for the same money they are paying today.”

Meanwhile, customers who have no intention of either forfeiting the unlimited data plan they have grandfathered on their account or who refuse to pay Verizon’s new asking price are busily upgrading their phones and signing new two-year contracts before June 28, buying an additional two years of unlimited data. Many others claim to be leaving, often for Sprint, which continues to offer unlimited data, or a prepaid provider.

Customers are worried about losing their grandfathered unlimited data plans.

Verizon and AT&T have a combined 38 percent of customers on grandfathered unlimited data plans and most are insistent on keeping them. News that customers could retain unlimited data by forfeiting the wireless carrier’s subsidy for new phones has gone over like a lead balloon, especially with price tags of $699 or more for popular new smartphones.

“The importance of this client base cannot be overstated–unlimited mobile data plan users are some of the most valuable subscribers in the industry,” Iain Gillott, president and founder of iGR, told Fierce Wireless. “Our research shows that these two carriers need to be very careful to offer a migration plan to replace the grandfathered unlimited plans that provides the data service, value and recognition that meets these valuable consumers’ needs.”

With popular new smartphones like the iPhone becoming available on no-frills prepaid carriers like Cricket, wireless carriers are at risk of subscriber defections.

Despite consumer discontent, Wall Street has supported the income-enhancing new wireless plans and is embracing the increased fees Verizon will likely earn as data demand rises.