Resort communities like Wildwood, N.J. become near ghost-towns when the lucrative summer season comes to an end.  But Comcast expects motel owners to keep paying for cable service even after they lock their doors and shut down during the winter.

Now more than three dozen area independent hotel owners have told Comcast to take a hike — they are switching to satellite.

For owners, Comcast has added insult to financial injury with higher rates and new requirements for year-round service that nobody watches from October-April.

It wasn’t always this way.  Comcast formerly grandfathered seasonal service into contracts for area resorts.  No converter boxes were required either, making it easy to install in hotel rooms.

But no more.

The cable company claims it needed “rate consistency” in the region and raised prices.  Plus, Comcast has notified hotel owners they’ll need to accommodate digital set top boxes — one to a television, something owners considered the final straw.

James “Jimmy” Johnson, owner of the 48-room Imperial 500 told the Philadelphia Inquirer he invested almost $60,000 for flat panel televisions in his rooms that Comcast now wants to slap cable boxes on.  Johnson is not happy about that, because guests could walk off with them and their accompanying remote controls.

“I go through remotes like you go through underwear,” Johnson told the newspaper.  Comcast charges substantial fees for lost or stolen cable equipment.

Comcast also sought pricing changes that would charge motel owners for service per-television, instead of per-room.  Several motels have multiple televisions in each room, substantially raising prices.

As a result of the rate increases and what many owners have called the cable operator’s intransigence, they are kicking Comcast out, installing satellite television from DirecTV instead.

After an initial investment of $6,400 for the satellite equipment, many owners expect significant savings from DirecTV’s seasonal service contracts, although some guests may find regional sporting events exclusive to Comcast unavailable in their satellite-TV equipped rooms.

But for Johnson, the savings are worth it.

“I’m renting rooms; I’m not running a sports bar. . . . With computers now, you can get a lot of games on your computer, or your phone,” Johnson told the Inquirer.

[Important Update — 7:53am ET 4/7 — Because of a technicality, it is important for everyone to reference H.129 when calling your state senators.  Members of the Senate Finance Committee are still evaluating the House version of the bill — H.129, so senators will more readily identify the bill we are opposing when we reference the House version (and not S.87).  You can also call it the “Level Playing Field” bill, but with disgust.  Include the fact you found the name highly ironic, since the only thing it will “level” are the state’s community broadband networks — right to the ground.  If you already called, why not just send a follow-up e-mail opposing H.129.]

Stop the Cap! has learned lobbyists for North Carolina’s cable and phone companies are growing concerned over increasing opposition to their custom-written duopoly protection bill that will ruin community broadband developments across the state and threaten ones already up and running.  Now they’re in a mad dash to push S.87 (the Senate version of H.129) through the Senate Tuesday before you have a chance to call and express outrage over this corporate protectionism.

Our sources tell us the bill has been yanked from the Senate Commerce Committee and is moving faster than North Carolina’s cable and DSL broadband to the Finance Committee, where bill sponsors hope for a quick voice vote and no public comment allowed.

The engineer of the legislative railroad in the Senate is Sen. Tom Apodaca (R) who serves the western North Carolina counties of Buncombe, Henderson, and Polk — areas with broadband challenges of their own.  Apodaca’s lead role pushing an anti-broadband bill is ironic considering his campaign website lists his priorities as:

• “Great schools for our children.” Western N.C. residents without broadband service at home are forced to resort to sitting in their cars in school parking lots or spend hours at overburdened public libraries to access Wi-Fi networks to complete homework assignments.  Great schools in a digital economy require great broadband – both in school and at home
• “Better paying jobs.” Digital economy jobs are always in demand and bring good salaries.  But those with inadequate broadband will find the kind of entrepreneurial experience and independent study required to excel in these fields hampered by satellite fraudband service or dial-up that limits possibilities and leaves North Carolina behind.
• “Let people keep more of the money they earn.” It’s a great idea, and competition for big cable and phone companies guarantees it.  In Wilson, consumers don’t face annual rate hikes for their cable service.  Can your community say that?  When their network is paid off, Wilson’s GreenLight will start paying off for local residents as well, keeping money in the community.
• “And access to quality health care.” As Google intends to prove in Kansas City, Kansas — great health care and excellent broadband go hand-in-hand to deliver better patient outcomes at a cheaper price.  Every health care provider wants faster broadband to increase efficiency and reduce costs and medical care errors.  S.87 delivers the equivalent of just another metal filing cabinet and fax machine to the back office.  Allowing communities to build fiber broadband changes everything.

What has proven so perplexing to consumers across the state is how a bill written by and for the cable and phone companies that does not deliver a single new broadband connection is getting such love and care from a legislature that is supposed to represent the interests of voters, not multi-billion dollar out of state corporations.  It confuses some of America’s high tech companies as well, including Google, Alcatel-Lucent, and Intel.  They’ve all signed a joint letter opposing H.129/S.87.

In fact, one of the reasons Google picked Kansas City, Kansas for its 1Gbps network is the friendly working relationship it has established with local utilities, which are all owned by the community of Kansas City.  It no doubt speaks volumes to Google that the North Carolina legislature would rather be at war with their towns and cities for the benefit of Time Warner Cable, AT&T and CenturyLink, than allowing communities to build their own broadband networks.  At a time when the FCC has ranked North Carolina worst in the nation, members of the Senate are being asked to guarantee that will remain so for years to come.

So What Should I Do?

Get on the phone -and- e-mail your state senator and demand a NO vote on S.87. If you are shy, you can call before or after business hours and leave a message on their voicemail. It takes less than five minutes.  Your calls make a huge difference because so few constituents ever call state legislators.  Here are your talking points:

Apodaca

1.  At a time when we need all the broadband improvements this state can muster, S.87 destroys those efforts for the benefit of a handful of out of state phone and cable companies. It’s classic protectionism — the same companies that helped write this bill are fully exempted from its onerous requirements.  The practical reality for rural North Carolina is either waiting for existing companies to deliver service they were always free to provide (and won’t), or allowing communities to do it themselves where appropriate.  Why should rural North Carolina have to depend on out of state corporations for basic broadband service many still don’t have?

2.  Not a single company has been harmed by community broadband projects in North Carolina.  In fact, it has created incentive to improve products and services while keeping prices stable, a welcome relief for consumers enduring annual rate increases far outpacing inflation.  Why is the state Senate trying to pass legislation that will guarantee higher bills and worse service?

3.  North Carolina’s fiber networks are not economic failures risking taxpayer dollars.  In fact, protections for taxpayers are already a part of the state code.  The General Assembly has already established: (1) rules governing Public Enterprises (NCGS Chapter 160A, Article 16); (2) strict rules in the Budget and Fiscal Control Act governing all municipal budgets and expenditures, including hearing and disclosure requirements (NCGS Chapter 159, Article 3); and (3) strict oversight of municipal borrowing by the Local Government Commission (NCGS Chapter 159).  S.87 attempts to micromanage public projects to the point where they simply cannot function and pay off bondholders and will, for future projects, ensure they never get off the ground.

4.  Now that the FCC ranks North Carolina dead last in broadband, isn’t it be time to allow new entrants to shake up the market and deliver some competition? Since when is legislating for less broadband better for this state?  The communities of Wilson and Salisbury now have the tools to compete with any wired city in America to attract new digital economy business and jobs.  S.87 sends exactly the wrong message — telling business the state wants to wait for the cable or phone company to eventually (if ever), deliver service other states now take for granted.  Businesses cannot wait.  We cannot wait.

5.  Provisions of this bill are unconstitutional.  By placing illegal regulatory burdens on only public providers of communications services (defined broadly) H.129/S.87 will harm municipal convention centers, public safety networks, smart grid systems, tower leasing contracts, and even make seemingly free public Wi-Fi networks vulnerable to lawsuits if the large incumbents want in on those services.

6.  The only real level playing field in broadband is the one that already exists without S.87.  Tell your senator you are tired of seeing these cable company-written bills come up in the Legislature year after year when the state has more important matters to worry about.  Time Warner Cable will do just fine without S.87, just as they do well in every other state where these kinds of bills would never get passed into law (or even proposed).

Senate Representation By County

2011-2012 Session

(click on your member’s name for contact information)

Bill Shock

Time Warner Cable has redefined bill shock for two of their customers this week as an Ohio man found the cable company trying to bill his credit card $16 million dollars and the Madison County, Ky., Board of Education found their broadband rate going up as much as 1,568 percent.

One of these was a mistake, the other represents a potential nightmare.

Lt. Daniel DeVirgilio received notification from Time Warner Cable his credit card didn’t have a big enough credit limit to sustain the $16,409,107 in charges the cable company tried to get authorized.  The Beavercreek, Ohio resident was taking the billing foul-up in stride, joking with the Dayton Daily News that he probably should have gotten Showtime thrown in at those prices.

Time Warner Cable Southwest Ohio officials on Thursday attributed the $16.4 million figure to human error, according to the newspaper. An employee typed in the wrong number for the amount owed, which caused the company’s automated system to generate the letter.

Unfortunately for DeVirgilio, Time Warner left him on hold for nearly 40 minutes trying to straighten out the billing mess.  No harm was ultimately done to his credit card, but the 26 year old remains concerned Time Warner could have reported the “delinquent” charge to credit reporting agencies.

Madison County, Ky.

The relatively painless resolution DeVirgilio got in Ohio is unlikely to repeated for school officials in Kentucky, reeling from news Time Warner Cable is demanding an enormous rate increase for Madison County Schools’ fiber optic-based broadband network.

The Richmond Register reports local officials were stunned when the cable operator refused to renew their existing contract, which provides service at a cost of $32,000 a year to county residents.  The cable operator instead announced it wanted the school system to pay at least 500 percent more to continue the same level of service in 2011 and beyond: $168,000 a year for county taxpayers with a five year term commitment.

School officials discovered Time Warner Cable was the only provider in the region capable of delivering the type of service the school system requires, and that has given the cable company a safe position to raise prices — dramatically.

Even worse, the Kentucky Department of Education informed the district it could not agree to a five year term even if it wanted to.  Year-by-year service was the only way forward, according to county officials.

In response, Time Warner jacked up the price again — this time by 1,568 percent, potentially costing Madison County taxpayers a whopping $504,000 annually.  Telephone ratepayers will also deliver a piece of their monthly phone bill to the cable operator from Universal Service Funds that will be diverted to cover at least another $750,000 in fees sought for an annual contract.

“It’s been a very frustrating situation from the beginning,” Superintendent Tommy Floyd told the newspaper. “This makes it very difficult for us to continue our ongoing commitment to serve children. I’m going to continue on behalf of Madison County Schools to find the lowest cost provider of services.”

Time Warner also knows time is running out for the school district.  The county must sign a new contract by June 30th or lose its fiber network.  That could be a disaster for the school district.

“We use [the network] all day long in each of our buildings,” Floyd said.

State officials wrote a letter to Time Warner Cable demanding an explanation for the rate increase and stating it was unacceptable.

The state and school officials are still waiting for a response from the cable company, which so far has yet to respond.

[Updated 11:30am ET:  Stop the Cap! received a response yesterday afternoon from Cynthia Godby, Communications Manager for Time Warner Cable in Cincinnati.  In the cause of fairness, and with her permission, we are including her response in full, below:]

Stop the Cap! has learned Comcast has had to beef up its call center staff to process orders for new and returning customers fleeing Frontier Communication’s rate increases for its fiber optic FiOS service, acquired from Verizon as part of a sale of landlines.

A source inside Comcast tells us the company has been busy welcoming back many customers in the Pacific Northwest who are canceling their Frontier FiOS service after learning about $30 monthly rate hikes for its fiber television service.

“We are adding call positions, diverting some orders to other customer service centers, and trying to accommodate a  jam-packed schedule of upcoming service installations all over the region as Frontier customers’ contracts expire,” our source tells us.

Frontier officially introduced its $500 installation fee Monday which many would-be customers consider absurd.

“I couldn’t believe reports were true about the installation price, so I called Frontier myself and even the customer service agent was incredulous over it,” Cate writes from his home in Oregon.  “We were actually both laughing about how ludicrous a $500 installation fee was for cable service.”

Cate tells us Frontier’s customer service representative admitted the company wasn’t expecting much new business with a steep entry fee like that.

“What it looks like to me is that they’re trying to price people out,” Newberg City Manager Dan Danicic told the Newberg Graphic.

Steven Crosby, senior vice president for Frontier never misses an opportunity to put a positive spin on a negative story.  He told the newspaper — to the contrary — the all-new $500 installation fee will help “price Frontier in,” noting each hookup costs the company $800.

Comcast, on the other hand, normally installs service for $28-40, but our source tells us the company often waives the installation fee upon request.  DirecTV and Dish also offer free installation with a contract.

“Sitting inside Comcast, everyone is talking about Frontier’s bungling and wondering whether this company is purposely trying to drive themselves out of business,” says our source.  “Even if you are not a FiOS customer, would you do business with a company that raises rates 40 percent or more and instantly raises installation fees to $500?  What will they do to their other customers?”

“Frontier: Not a winner.  Duh.”

Frontier attempts to dig themselves out.

The Oregonian has been covering the plight of Frontier customers in the Pacific Northwest who signed up for Verizon’s fiber to the home service — FiOS — and are now facing down the new owners who want to raise the price by $30 a month.

Frontier has done itself no favors in the media with an ongoing series of reports of service problems, rate increases, and now the latest signs it wants out of the television delivery business altogether.

In a letter dated March 4th, Steven Crosby — senior vice president of government and regulatory affairs, told the city administrator in Dundee, Ore., Frontier FiOS TV has been a flop.

Since Frontier Communications Northwest, Inc., acquired Verizon’s operations on July 1, 2010, it has built on Verizon’s prior actions and continued to offer a robust and aggressively priced video product to attract Dundee subscribers.  Despite these efforts, however, customer growth has been disappointing and stagnant and Frontier has not achieved a commercially reasonable level of subscriber penetration.

Frontier also admits it has been under-pricing its video service to stay competitive and attract new customers, but those days are over.  The company earlier announced its intention to raise rates by $30 a month for its standard cable TV service, making it more costly than its nearest competitor, Comcast.

Frontier recognizes the impact its enormous rate increase will have on its subscriber base, soberly noting it is likely to “further depress subscriber penetration.”

With this in mind, Frontier is exercising its right under the franchise agreement it has in Dundee to provide notice it intends to terminate its video service at a future date, after providing subscribers with 90 days advance notification.

Similar letters went to city administrators in Newberg, McMinnville, and Wilsonville.  City officials had no reservations about interpreting the meaning of the letters and plans to implement a $500 installation fee for future FiOS TV installations.

“Looking at it, you expect there will be no new customers,” Dan Danicic, Newberg’s city manager told The Oregonian. “Getting this opt-out notice is not a huge surprise to me, but we are disappointed.”

Frontier's rate increases are driving many consumers back to Comcast for their television service.

Sources tell Stop the Cap! there was considerable debate inside Frontier’s offices last week on how to implement directives from executives to shut down FiOS installations as quickly as possible.  Initial efforts to quietly raise the installation price — without giving subscribers’ advance notice — were on track until Frontier’s legal department quashed the plan.  Concerns were also raised inside the customer support units responsible for taking orders and handling customer billing inquiries over how to deal with the inevitable subscriber backlash when the first bills arrived in the mail.

“Frontier hates dealing with FiOS and they can’t wait to be rid of it — they claim that the product is at least 10 years away from really returning any investment from its original deployment,” a well-placed source told Stop the Cap! late last week.

Frontier FiOS is an anomaly for the rural phone company, which delivers the vast majority of its broadband customers DSL service over copper wire phone lines, usually at speeds approaching 3Mbps.  Frontier FiOS “came along with the deal,” one Indiana Frontier official told local media there in response to rate hikes there.

Still, media reports that the company plans to ditch its TV customers created a small panic inside Frontier by the weekend.

“Getting customers switched over to satellite TV service in an orderly manner was the original plan, but reports the company was abandoning the service altogether risks we’ll lose our customers to Comcast, and many will take their phone lines to the cable company, too,” a second source informed Stop the Cap! this morning.  “We were told ‘orderly transition’ over and over again, so reassuring customers is today’s top priority.”

Dundee, Oregon

Evidence of this campaign was not difficult to find over the weekend, as The Oregonian amended its original story claiming Frontier does not have immediate plans to exit the video business.

Crosby told the newspaper: “Our actual implementation decisions will be business driven. At this time, there is no change in our FiOS video offerings or in our FiOS video service delivery to our customers. And this filing does not affect our FiOS high speed service.”

Stephanie Schifano, identifying herself as an employee of Frontier Communications, attempted to spin the letters sent to several Oregon communities as a simple matter of business and not a foreshadowed abandonment of television service.

“Frontier is exercising our right under the franchise agreements to terminate the franchises. The right to terminate soon expires, and if Frontier didn’t give notice now we may have been required to provide this service, with these franchises, for another 12 years. This notice offers Frontier the flexibility to continue to analyze the FiOS Video/TV business and continue to service our customers,” Schifano wrote.

But both of our sources well-familiar with Frontier FiOS say the company’s actions speak louder than its words.

“When you increase the installation fee to $500 and raise your prices nearly $30 higher than Comcast, you would be crazy not to interpret the message Frontier is trying to send — go get your satellite dish from us and get off FiOS,” our second source told us.

Telecompetitor read into some of the company’s comments about utilizing the acquired fiber network in a new way, perhaps for over-the-top Internet video content.

“That’s wishful thinking,” our second source says.  “Frontier’s only online video efforts surround its rebranded Hulu service, relabeled myfitv.”

Frontier's online video platform serves up mostly repurposed Hulu content.

“The company has no plans I am aware of for a grand video strategy — FiOS covers far too small a service area and there is no way Frontier will spend more money to increase that fiber footprint,” our source adds. “Frontier wants to meet its general obligations made as part of its deal with state regulators when it bought Verizon FiOS with the landline deal, and little else.”

Frontier will continue to offer FiOS to broadband customers for the time being, regardless of what it does with its video package.

“If it’s already there and not costing a lot of money to maintain for broadband, why not?” our source says.

One direct sales contractor for competitor Comcast suspects that train may have already left the station.

Calling Frontier’s customer service operation “a circus,” the salesman says Comcast is benefiting from Frontier’s ball-dropping.

“Many Frontier customers are unhappy with the customer service side while stating they do enjoy their phone, Internet, and video services provided by the FiOS network, but lose the business on the practically non-existing customer service side.”

The contractor says he hears stories from Frontier customers all day who are fed up with the frustration of extended hold times, inaccurate or missing bills, online account access problems, excessive call transfers to deal with service issues and high fees.

For regulators, the aggravation is much the same.

After being promised by CEO Maggie Wilderotter that Frontier would be an aggressive competitor in a barely competitive marketplace, Frontier has raised rates by 46 percent, irritated their customers with customer service problems and outages, and now has served notice it intends to flee the TV business at an undetermined point in the future.