A Comcast discount mix-up leaves customers with substantial rate hikes. (Image: KVAL News)

Several Comcast customers in Springfield, Ore. are facing a whopping $100 rate increase on their Comcast service after the cable company discovered they were getting a company-applied discount Comcast later determined they were not entitled to receive.

Elizabeth Thornton, a pensioner living on modest military and social security benefits is among them. When her latest cable bill arrived, instead of the usual $95.28, Comcast raised the price by almost $100 to $193.23.

That’s a lot more than expected, and it left Thornton upset trying to figure out how to cover the bill.

It turns out an undetermined number of Comcast customers in Springfield were given discounts for fire stations, which enjoy 50% off regular Comcast prices. Thornton agreed to a one-year contract at the lower price Comcast employees offered, even though the company later determined she was unqualified to receive that price.

Comcast has been discovering the error when customers call regarding their accounts.

Now affected customers want to know why it is okay for Comcast to lock people into price-guaranteed service contracts they later renege on.

Comcast spokesperson Theressa Davis told KVAL News the fire station discount was the company’s mistake, and the cable company will now reach out to affected customers to offer “an appropriate discount.”

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/KVAL Springfield Its not fair Springfield woman has Comcast bill mix-up 5-5-12.mp4[/flv]

KVAL News visited with the daughter of Elizabeth Thornton, who is upset because Comcast raised her monthly rate by almost $100, leaving her unsure how she’ll pay the bill.  (2 minutes)

At a time when cable operators are more reluctant than ever to overbuild into another operator’s territory, something very strange is going on in central North Carolina.

Time Warner Cable is moving into the neighborhood — one already receiving service from a community-owned cable operator.  That would be like Time Warner moving into one of Comcast’s service areas.  For some reason, those large cable companies completely avoid competing head-to-head, but where community-owned provider MI-Connection has managed to sign up around 15,000 customers for service, Time Warner Cable has also arrived.

As a result, customers north of Charlotte, in communities around Davidson and Mooresville, are getting some amazing prices for cable television, phone, and broadband.  Time Warner will even deliver an offer right to your front door.

Susan Wagner in Mooresville got her deal when she threatened to cancel Time Warner Cable and return to MI-Connection.

“(Time Warner) gave everyone a really good offer when they first came in and then drove up the price after a while,” Wagner told the Charlotte Observer.

When Wagner called to cancel, Time Warner sent an employee to her door offering to slash her cable bill by $50 a month, enough to keep her business.

Other residents in nearby Cornelius are also getting prices substantially lower than residents in cities like Charlotte, where many residents have one choice for cable: Time Warner.  Sam, a Stop the Cap! reader in the Morrison Plantation neighborhood, noted they skipped the last few rate increases from the cable company.

“You just call and tell them the rate is too high and as soon as they find out you have MI-Connection as an alternative, they lower the price,” he said. “My niece in Charlotte can’t get the same deal even when we gave her the details — it’s only good in areas where MI-Connection operates.”

That leaves Charlotte residents paying $35-50 more a month than savvy customers further north can have for the asking.

“It sounds like predatory pricing to me when the company offers a special low price that people like my niece are probably subsidizing on their higher bill,” Sam suspects.

The Observer reports Time Warner is also laying cable in other neighborhoods, such as Heritage Green, where the cable company is soliciting business from MI-Connection subscribers door-to-door.

MI-Connection’s CEO, David Auger, formerly from Time Warner Cable himself, claims he’s unconcerned about Time Warner’s aggressive overbuild of his service area.

But the state’s largest commercial cable company has been signing up some of MI-Connection’s current customer base and successfully holding its existing customers in place with significant discounts on service.  Since last July, MI-Connection signed up 667 new customers, but also lost 577 others, most likely to Time Warner Cable.

MI-Connection was launched from the ashes of a bankrupt Adelphia Cable system acquired by the communities of Mooresville and Davidson.  After investing in a needed system upgrade, the community owned provider relaunched service nearly identical technically to other cable systems.  Unlike Wilson and Salisbury, where new fiber-to-the-home systems were built, MI-Connection offers a more traditional cable package.

That makes competition with Time Warner Cable more difficult, but the community provider is trying.  Time Warner Cable’s regular pricing in the area runs $68.49 a month for 85 basic channels.  MI-Connection sells 86 channels for $61.99.  But when customers call Time Warner to complain about their higher prices, the cable operator dramatically lowers them to keep the customer’s business.

“The regular price only matters until you call and complain about it,” says Sam.

There have been complaints, but many of them are less about the cable bill and more about politics.  MI-Connection has not come cheap either town, which had to cover some of the costs of a needed system upgrade and service installation, estimated to run about $1,000 for every new customer signed.

Last fall, mayoral challenger Vince Winegardner made local government involvement in broadband a political issue, saying the purchase of the cable system was a mistake.  He lost his bid, but the system’s money needs remain a frequent topic of discussion in all of the communities involved in MI-Connection, and earlier this year the company company asked for $1.1 million from Davidson and Mooresville to ride out the rest of the fiscal year.

Time Warner’s recent interest in invading a fellow cable operator’s service area and slashing prices for those customers has raised the question whether their overbuild is about competition or predatory pricing to drive MI-Connection out of business.

Wagner doesn’t seem to mind either way, telling the Observer it is a “win-win” for her, scoring a lower cable bill with Time Warner.

But Sam isn’t so sure the savings will last.

“It seems pretty clear to me that Time Warner isn’t hurrying to compete with Comcast or Charter — just MI-Connection and that makes me suspicious,” Sam says. “After spending all that money to ban community broadband in the state, they now seem to be trying to drive out of business the handful of companies that were exempted.”

“My niece is probably paying for this right now on her cable bill too, and once MI-Connection is out of the way, those prices will shoot right back up,” Sam concludes.

If you thought paying an average of $86 a month for basic pay television and premium movie channels in 2011 was out of line, just wait.  A new report predicts you could pay $123 by the year 2015 and $200 by 2020 — and that only includes the TV portion of your bill.

That is in keeping with typical annual rate increases, typically blamed on “increased programming costs,” which currently run an average of six percent a year.

The NPD Group, who published the findings, predicts consumers may not sit still for that kind of monthly cable television bill, especially as household incomes for the middle class continue to remain stagnant, even as high fuel and health care prices continue to march higher.

The pay television industry isn’t entirely responsible for the annual rate hikes that nearly always outpace the rate of inflation.  The real money is in programming production and distribution, which is why giant companies like Comcast, Bell, Rogers, and Viacom are buying up programming studios, distributors, and networks at a rapid pace.

With new players like Netflix, Amazon, and Redbox joining traditional pay television and broadcast network bidders, auctions for exclusive licensing agreements bring higher and higher bids.  Ultimately, consumers pay the price in the form of higher bills.  Even cable networks, sensing an increase in the value of their programming, are extracting higher monthly fees at contract renewal time.

The last to arrive at the programming money party?  Local over-the-air broadcasters that used to beg cable companies to carry their channels on the local lineup.  Now some are demanding as much as $5 or more per month per subscriber to allow the cable operator to keep carrying the stations.

“As pay-TV costs rise and consumers’ spending power stays flat, the traditional affiliate-fee business model for pay-TV companies appears to be unsustainable in the long term,” said Keith Nissen, research director for The NPD Group. “Much needed structural changes to the pay-TV industry will not happen quickly or easily; however, the emerging competition between video on demand and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay-TV industry.”

In other words, the more consumers cut cable’s cord and go find other ways to watch their favorite shows, the more unsustainable the traditional pay television business model will become.  Some industry watchers believe cord-cutting is not a major issue.  Others believe continued rate increases will drive customers to cancel service, particularly when alternatives are available. But NPD believes economic factors are the biggest reason for cable cord-cutting.  Those ex-customers are switching back to free “over the air” television, which now delivers better picture quality and often includes additional channels that increase the number of viewing options.

NPD Group research shows most consumers don’t want to exert too much effort to hunt down online programming. Most will put up with their current provider as long as they deliver the shows they want at a price they can afford.  What could change that?  Easy-to-access to a-la-carte programming, perhaps available from services that may soon come built-in with the newest television sets.

“Pay-TV providers offer a convenient, one-stop shop for subscribers, and the majority of customers like it that way,” said Russ Crupnick, senior vice president of industry analysis for The NPD Group. “There is an open window for the industry to meet consumer needs and become to television what iTunes is to music; however, there is also a definite risk if pay-TV providers don’t capitalize on the opportunity — and soon.”

Stop the Cap! has written extensively about the American Legislative Exchange Council’s pervasive influence on state telecommunications policies long before Trayvon Martin and Florida’s “Stand Your Ground” law put a spotlight on the shadowy corporate-backed group in the national media.

ALEC’s mission is clear.  It acts as a go-between between corporate interests who customize business-friendly state legislation in their favor and the legislators willing to introduce those bills as their own. ALEC provides the cover some legislators need to protect their image in the public eye.

A handful of legislators in safe districts are bold enough to openly admit introducing legislation written by a company like AT&T.  Take Kentucky Republican Sen. Paul Hornback.  He introduced a deregulation measure in Kentucky’s state Senate that would do away with universal landline service and almost entirely deregulate AT&T’s operations in Kentucky.  When the media found out Hornback introduced legislation AT&T actually wrote, he didn’t seem to mind one bit and doubled down on the apparent conflict of interest.

Sen. Paul Hornback (R-AT&T)

“You work with the authorities in any industry to figure out what they need to move that industry forward,” Hornback said, defending his bill that would do exactly that, at the expense of Kentucky consumers facing rate hikes AT&T has pushed in other states where similar measures were passed.

Hornback is the exception to the rule.  For more timid legislators concerned about their next election campaign, ALEC is only too happy to provide cover.

When ALEC’s connection to Florida’s controversial “Stand Your Ground” law was exposed, it swept the secretive group into the Martin media tornado.  When reports surfaced connecting the dots between ALEC and some of America’s largest corporations, Coca-Cola, Kraft Foods, Intuit, and Pepsi fled ALEC’s membership roster.  No soft drink company wants to be connected to a controversial Florida gun law.

First Coca-Cola and Kraft Foods, Now AT&T

Today, Color of Change, a group dedicated to amplifying the voice of African-Americans to make government more responsive to minorities set its sights on AT&T, one of ALEC’s most prominent members.

They have a major fight on their hands.  Few corporations have used ALEC as effectively as the descendant of Ma Bell.  AT&T’s enormous lobbying machine has frequently used ALEC to help introduce deregulation measures in states across the country.

“Even after we wrote AT&T to let them know that more than 85,000 ColorOfChange members have asked that they disassociate themselves from ALEC, the company has remained silent,” says Color of Change. “It’s clear that they think we will just go away.”

Throwing away their membership in ALEC would be a major blow to AT&T’s lobbyists who are well-connected inside the group. AT&T has several leadership roles within ALEC’s various state chapters:

ALEC State Chairs Affiliated With AT&T

• Arkansas:
  — Ted Mullenix, AT&T
• California:
  — Pete Anderson, AT&T
• Connecticut:
  — John Emra, AT&T
• Louisiana:
  — Daniel Wilson, AT&T
• Mississippi:
  — Randal Russell, AT&T
• Texas:
  — Holly Reed, AT&T

How do these ALEC-involved lobbyists influence elected officials?  They wine and dine lawmakers and their families, encouraging them to introduce legislation favorable to AT&T.

Everyone Knows Randy Russell – AT&T’s Go-To-Guy in Mississippi

Beckett

AT&T lobbyist Randy Russell has been representing the interests of Big Telecom in Mississippi for more than a decade.  Originally registered as a lobbyist for AT&T predecessor BellSouth, Russell today also serves as ALEC’s state chairman in the Magnolia State.

When he isn’t spending his time in the state capital — Jackson — he’s wining and dining lawmakers who might be future supporters of AT&T’s business agenda in the legislature.

Lucky for AT&T Russell found Rep. Jim Beckett (R-Bruce).  And what a find.  Beckett is in the catbird seat, serving as chairman of the House Public Utilities Committee — the oversight committee responsible for ensuring that when someone in Mississippi picks up a phone, there is actually a dial tone.

Unfortunately for Mississippi consumers Beckett has AT&T’s Russell on his speed dial.

The Cottonmouth Blog discovered both men have spent a lot of time together:

It seems that Russell and AT&T picked up the food tab for Rep. Jim Beckett and his wife at the ALEC meeting in at the Westin Kierland Resort in Scottsdale, Ariz. from November 30 to December 2, 2011.  AT&T also paid for a few rounds of golf for Rep. Beckett while there.  All said and done, AT&T paid $565.39 to cover expenses for Rep. Beckett and his wife on their three day trip to Scottsdale.

But that’s not all.  AT&T also picked up the tab for $151.70 worth of food and tickets while Rep. Beckett and his wife were at the Spring ALEC meeting in Cincinnati, OH in late April of 2011. AT&T also paid $22.62 for food for Rep. Beckett and his wife while he attended the 2011 Summer ALEC meeting in New Orleans.

The total amount AT&T gave to Rep. Jim Beckett and his wife in 2011 through Randy Russell?  $876.85.  The names of the Becketts appear a total of 36 times in AT&T’s 2011 lobbying report, most of it while the Becketts are at ALEC retreats.

AT&T also helped more directly with $2,500 in campaign contributions to Beckett’s campaign fund.  What did all of AT&T’s money and travel vouchers buy them?

Dialing for Deregulation

House Bill 825 — ‘The AT&T Total Deregulation Act’: A bill introduced by none other than Rep. Beckett that would effectively strip what remaining oversight exists over AT&T’s operations in Mississippi.  It’s a bill very familiar to Stop the Cap!, because it includes all of the usual “bullet points” found in ALEC’s own legislative database — all of enormous interest and importance to AT&T.

Northern District Public Service Commissioner Brandon Presley, who deals with consumer complaints about AT&T’s service in the state, effectively called HB 825 an unmitigated disaster for ratepayers from Corinth in the north to Biloxi in the south:

[…] House Bill 825 would totally strip the PSC of any authority to hold AT&T accountable for rate increases and lousy landline and cell phone coverage. Presley said the bill was requested by AT&T as retaliation against the PSC for denying a rate increase and for complaining of poor cellular and residential phone service. The PSC won a case in the Mississippi Supreme Court to limit charges to customers after AT&T appealed the PSC’s ruling.

[…] Presley said the Legislature passed the first phase of deregulation in 2006 and since then complaints to the Commission about billing errors, poor service and the like have risen from 1,735 in 2006 to 4,361 in 2011 an increase of over 150%. “This is evidence enough of why this bill is bad for consumers.”

[…] Along with removing all of the Public Service Commission’s authority to investigate abuses, extortion and customer complaints, House Bill 825 also removes the Commission’s authority to designate conditions for AT&T’s receiving of millions in federal funds to promote rural cell phone service. Presley said the Commission’s authority to place conditions on those dollars has been the main tool to increase cell phone coverage in rural counties. “Rural Mississippi’s interests are gutted in this bill.” Presley said.

Cottonmouth reminds readers who may not be familiar with Mississippi that Beckett’s home district — Bruce — puts his AT&T ghost-written legislation at odds with his own constituents:

“Bruce [isn’t] exactly urban,” the blogger writes. “Matter of fact, anyone who has driven on Highway 7 right outside of Bruce and tried to make an AT&T cell phone call could tell you just how much this bill will hurt Rep. Beckett’s constituents.”

Even Beckett’s fellow Republicans serving the state PSC couldn’t stomach the legislation that guaranteed even more customer complaints.  Southern District Public Service Commissioner Leonard Bentz issued his own press release attacking the bill:

“This is a very bad bill for consumers in Mississippi,” Commissioner Bentz stated. “Even though AT&T will tell you that the oversight that we [PSC] have is limited, the little we do have is piece of mind for the consumers.”

“You don’t have to think very long to understand why this bill is bad. Think back to last time you called  in a problem to AT&T and the lack of customer service you received. This bill would make it worse. It is important to understand AT&T will lead you to believe this bill will affect only a small number of customers, but that is not so. As it stands right now, all customers with AT&T have the ability to file complaints with the Public Service Commission, and have the PSC on their side to help them navigate the system. The bill clearly states customer appeals will be removed from the PSC jurisdiction.

The third commissioner on the PSC, Republican Central District Public Service Commissioner Lynn Posey, hoped HB 825 would simply go away, seeking to bury it in a “study committee.”

Despite the universal opposition to the measure among those tasked with overseeing the state’s phone companies, Beckett decided AT&T knew better and quickly pushed HB 825 through his committee.  What makes Beckett an expert in telecommunications policy?  Not too much: He calls himself a lawyer on his biography page, but he’s also the owner of Beckett Oil & Gas.

Despite efforts by consumer advocates, a slightly-amended measure passed both the Republican-controlled state House and Senate and this week will be sent to the desk Gov. Phil Bryant for his signature.

“The small telephone companies in this state, many of them are opposed to this,” said Rep. Cecil Brown (D-Jackson). “If it hurts their business, it’s going to hurt your local communities. That’s all there is to it.”

The price the phone company paid to get Rep. Beckett on Team AT&T?: $2,500 + ALEC-sponsored free meals and travel.

[flv]http://www.phillipdampier.com/video/KTTC Rochester ALEC 2-3-12.mp4[/flv]

KTTP in Rochester, Minn. explores the influence of state lobbyists working with ALEC who push lawmakers to introduce legislation corporations wrote themselves.  (4 minutes)

In late February, LIN Television, owner of Norfolk’s NBC affiliate WAVY and Hampton Roads’ Fox station WVBT was engaged in a high profile battle with Cox Cable over retransmission consent fees — the price the cable company pays to put over the air broadcast stations on the cable dial.  While neither side would say exactly how much money was involved, Cox Cable customers will foot the bill starting April 2nd, when the Virginia cable operator raises rates up to 18.3% for basic cable — the fourth rate hike since 2009 and the second in 10 months.

A breakdown:

• TV Starter (broadcast basic + a handful of basic cable networks) up 18.3% — was $18, now $21.30
• TV Essential (local stations + 40 popular basic cable networks) up 5.5% — was $59.99, now $63.29
• Digital set top box rental up $1 to $6.99
• Cox Internet Essential (3Mbps) up 16% — was $24.99, now $28.99

LIN Media owns local stations around the country.

Cox officials blamed the rate increases on the cost of programming, notably for local stations.

“Programming costs are rising much faster than the rate of inflation,” Felicia Blow, a Cox spokeswoman, wrote in an email to the Virginian Pilot. “While we absorb much of the increase incurred […] we must pass on a portion of the increases to our customers.”

Local broadcasters across the country are aggressively pursuing retransmission consent fees as the traditional advertising model for free, over the air television, has been challenged by the soft economy and poor ad sales.  Parent companies that own clusters of local stations also see the fees as a lucrative new revenue stream for themselves and their investors.

Over the past decade, Cox generally has raised its prices about once a year, notes the Virginian Pilot. The company began speeding up the timetable in 2010. With the latest change coming in April, Cox will have boosted rates for at least some parts of its service – particularly the cost of its most popular package – four times since November 2009.  Approximately 90 percent of 416,000 Hampton Roads-area Cox customers will be paying more for cable service this spring as a result.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WAVY Norfolk Attention COX Communications Subscribers 2-29-12.mp4[/flv]

WAVY in February reported on its parent company’s battle with Cox Cable in this self-serving story aired on its evening newscast.  (3 minutes)