Ft. Wayne, Indiana

Outrage over enormous price increases for Frontier’s fiber optic television service in Indiana are being met with little more than a shrug of the shoulders by one company executive, who seemed to dismiss as an afterthought the state-of-the-art FiOS network it acquired from Verizon.

Frontier Communications’ president of its Midwest division, Don Banowetz, has been making the rounds with Fort Wayne-area reporters over news the phone company intends to boost prices for its FiOS TV service by $30 a month for most customers.

But Banowetz has done little to defend the price increases or the fiber network the company acquired with its purchase of landlines from Verizon.

“Look, we bought the whole company, right? All the assets. The FiOS part was part of that, so it was part of the deal,” said Banowetz.  “We couldn’t ride the previous arrangement. So in essence, it was what it was.”

WANE-TV reporter Aishah Hasnie seemed stunned with Banowetz’s response, finally asking what customers should do if they can’t afford the rate increases.

“Get DirecTV,” came the reply.

Starting February 18th, customers who subscribe to a FiOS TV basic package will see their rates go by up $12 per month. Customers who subscribe to other FiOS TV packages will see a $30 increase. The increase does not affect customers under a price protection plan.

That kind of price increase would normally provoke blanched faces in a corporate boardroom over fears of a mass exodus of customers.  But not Frontier.

“The FiOS TV part of our business is actually a very small part of our business. It’s about three percent of our revenues,” said Banowetz.

But Frontier’s satellite package, pitched as an alternative, brings plenty of tricks, traps and other hidden fees inside the box.  In addition to signing a two-year service commitment with DirecTV, customers also have to sign a three-year “price protection agreement” with the phone company, which is another way of saying “contract.”  The total price adds up:

• Customers opting for Frontier’s “free TV” promotion will face a three-year contract term with a $400 early cancellation fee;
• Frontier’s satellite TV promotion has a three-year contract term with a $300 early cancellation fee;
• “Care and handling” fees amounting to $69.99 apply to the “free TV” offer;
• A $34.99 Frontier “video setup fee” applies to customers getting satellite service from the phone company;
• DirecTV requires customers to pass a credit check and sign a contract with a 24 month commitment;
• If you change any aspect of your programming package, you may forfeit the “free service” offered as part of the promotion.

In northwest Washington state, Frontier’s rate increases are alienating the company with one member of the state’s congressional delegation.

U.S. Representative Rick Larsen (D-Wash.) sent a letter to Frontier complaining about the huge rate hikes, telling the company it needs to find better alternatives for many of his constituents who cannot install a satellite dish.

“Folks in Northwest Washington are concerned about the future of cable service offered through Frontier Communications, and rightly so,” said Rep. Larsen. “I am calling on Frontier to offer consumers better and more affordable options for cable service in the region.”

Rep. Larsen’s letter to Frontier Communications:

Dear Mr. Mason:

I am writing to express concerns that I share with many of my constituents in Northwest Washington about Frontier’s plans for cable service in our region. The Everett Herald recently published an article, “Switch to a Dish or pay more, Frontier tells FIOS customers,” that highlights some of the problems that people in Northwest Washington have with Frontier’s announcement that it will alter the existing framework of its fiber-optic television service. Specifically, Frontier’s decision to offer its customers a choice between continuing with their current FIOS television service—with a rate increase of 46 percent or switching their cable television service to the satellite provider DirecTV.

I am concerned with Frontier’s decision to substantially raise its cable television rates for its existing customers in the Pacific Northwest. Last September, Frontier Communications Chief Executive Maggie Wilderotter was quoted in The Oregonian newspaper stating that Frontier would distinguish itself from larger cable companies by holding down prices for its customers. I find it troubling that less than six months later Frontier is dramatically raising its cable television rates.

Additionally, it is problematic that Frontier has not offered an adequate alternative to those customers who live in apartment complexes where the installation of satellite dishes is prohibited and therefore cannot take advantage of the option to switch their cable service to DirecTV. — Rick Larsen, United States Representative, Washington State, 2nd District

Stop the Cap! reader John says he has sent a letter to CEO Maggie Wilderotter protesting the rate hikes and imploring the company to find a programming co-op to join.  Smaller providers need not pay “rack prices” for cable programming.  Municipal providers, family owned companies, and small independent cable operators have enjoyed substantial programming discounts through group buying power.  Frontier apparently is trying to negotiate for video programming on its own, a fatal mistake that has brought on this month’s rate hike.

If you want to help educate Frontier about how to run their business properly, here is their contact information:

Frontier Communications Corporation
3 High Ridge Park
Stamford, CT 06905-1390
Phone: 203-614-5600
Fax: 203-614-4602
[email protected]

When writing or calling, don’t forget to tell them to abandon their Internet Overcharging schemes — no usage caps or limits on Frontier broadband, or you will take your business somewhere else.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WANE Fort Wayne Frontier Frustration 1-24-11.flv[/flv]

WANE-TV in Fort Wayne delves into Frontier Frustration as angry customers react to news of enormous rate increases.  (2 minutes)

While Time Warner Cable trumpets upgraded broadband services in many of the states it provides service, South Carolina and some other southeastern areas are the exception.

Stop the Cap! reader Brett writes Time Warner’s broadband experience in South Carolina is so four years ago.

“Check out the paltry speeds that Time Warner Cable offers in Columbia. As far as I can tell we are the slowest region around.  The very best package they offer, with PowerBoost, is 10Mbps for downloads, 512kbps for uploads,” Brett writes.  “How sad.”

Most Columbia customers get less than that.  The standard Road Runner package has been stuck at 7Mbps down and 384kbps for some time.

While broadband speeds have not changed, the rates have.  Time Warner Cable announced rate increases throughout the Carolinas in December, boosting prices for many services.

Time Warner Cable spokeswoman Rose Dangerfield said needed upgrades were part of the reason for the rate increase.

“The company spent $380 million in the past year to upgrade equipment in South Carolina and North Carolina,” she said.

A review of Time Warner Cable’s speeds in the Carolinas and the states of Virginia and Alabama makes one wonder where the money went, because Brett shares company with other customers across most of the region.

Frontier's Fiber Fantasies

Frontier FiOS is the fiber-to-home network that gets no respect, at least from the company that now runs it.

What Verizon considers its crown jewel, Frontier Communications considers an afterthought. Since buying up several million landlines from Verizon, Frontier has reluctantly adopted the fiber-to-the-home service already up and running in a handful of areas Verizon sold off.

Frontier CEO Maggie Wilderotter said Frontier would not increase pricing on its services, in fact stating they had not had a price increase in several years.  But just months after winning approval of the deal with Verizon, Frontier stunned customers and regulators with one of the largest rate increases ever seen in the cable television industry: a $30 monthly increase for basic cable.

Understandably, angry customers have been calling Frontier in droves demanding an explanation.

Stop the Cap! reader Betsy was floored when a Frontier representative actually suggested to her its FiOS network wasn’t worth the trouble, and the representative was telling all of the customers calling they should “upgrade” to satellite TV instead.

“How do you even respond to that?  I thought I heard her wrong — I had the speakerphone on, but after the Frontier rep said it, my 87 year old mother who was listening hollered ‘that’s a bunch of bull****’ from the other room,'” Betsy shares.

“My mother almost never swears,” Betsy tells Stop the Cap! “But she was living with us when our family endured satellite’s rain fade, the neighbor’s trees, the picture freezes, and the equipment issues for almost ten years — why would we go back to that?”

In fact, it was Verizon’s FiOS network which attracted the Washington State family to take the satellite dish off the roof and toss it.  So it came as quite a shock to have a Frontier representative try and get her to rip a state of the art fiber network out to go back to DirecTV.

Frontier wants their customers to give up on this...

“Does anyone at this company have a clue what they are doing?  Using their logic, we should go back to dial or hand crank telephones,” Betsy concludes.

We wondered if this was a fluke, but then we found Frontier telling customers nearly the same thing in Ft. Wayne, Ind.

The Journal-Gazette reports Frontier’s rate hike in the Pacific Northwest foreshadowed similar rate hikes likely in the midwestern city that is Frontier’s second largest market, behind Rochester, N.Y.

Frontier Communications FiOS cable customers could be facing a monthly increase of $12 to $30 in coming weeks.

Many of the affected subscribers have a $99 bundle for monthly TV, telephone and Internet services. As an alternative, Frontier will offer DirecTV satellite service free for the rest of the year for customers paying for telephone and Internet, a spokesman said Wednesday.

“We will be making more information available by Tuesday of next week,” said Matthew Kelley, adding that existing customer contracts will be honored.

“With DirecTV, it really is a chance to get three services for the price of two. The channel lineups are pretty comparable.”

DirecTV offers more than 200 channels, Kelley said.

...and "upgrade" to this instead.

“Don’t sign me up,” Betsy writes when we showed her the Journal article.  “Channel lineups don’t mean much when you can’t watch them.”

Betsy’s satellite dish took a beating not only from the weather and efforts to find a clear view to the sky, but also from some birds advertising for a mate.

“The woodpeckers just loved to attack the dish — the jack-hammering sound could be heard all over the neighborhood when they got going,” she said.

Frontier’s Kelley admitted the company is small potatoes in the cable world, and simply can’t compete for good programming prices.

But even those of us at Stop the Cap! know that smaller players need not negotiate programming contracts themselves — they can join one of several groups that pool smaller providers together to grab substantial volume discounts.  Municipal players manage to find reasonable cable programming prices, but a multi-state corporate player like Frontier apparently cannot.

Bruce Getts, business manager for the International Brotherhood of Electrical Workers Local 723, shrugged off Frontier’s FiOS failures.

Getts, whose union represents 700 installers, repair technicians, customer service representatives and dispatchers at Frontier told the newspaper more people are going online to watch TV anyway, so the impact of the price hike might well become moot.

Unfortunately, Frontier is the same company testing an Internet Overcharging scheme in the Sacramento area that makes online viewing an expensive proposition, even more expensive than Frontier’s FiOS rate hikes.

“I think people will rue the day they let these bozos take over our phone service,” Betsy says.  “It looks like our family has a reason to cancel service with Frontier and head to cable.”

"Too rich for my blood."

Former Verizon FiOS customers now served by Frontier Communications in Oregon and Washington are receiving word of astonishing rate increases of as much as 46 percent from the phone company.  The massive rate increase is being blamed on “increasing programming costs” charged by the cable networks carried on a cable system that competes with Comcast, which charges far less for the same channels.

Frontier’s rate hikes are so dramatic — $30 a month for the popular standard 200-channel package, some customers are wondering whether the company is trying to sabotage their own fiber-to-the-home service.

“They sent us a rate increase letter stating our former standard package, priced at $65 a month, is now going up to a ridiculous $95 a month for basic cable,” says Tom, a regular Stop the Cap! reader. “That’s a rate increase only my health insurance company could love.”

New customers face the new rates immediately, but existing customers have until Feb. 18 before the new high price kicks in.  Many are preparing to move back to Comcast, which raised rates this year as well — but is now a relative bargain at $63 a month for a similar package.

“As much as I love FiOS, Frontier has managed to screw it up as badly as the rest of their services and now I am going back to Comcast,” Tom says. “You have to wonder if they are purposely incompetent or if it’s part of a larger plan to sabotage the Verizon FiOS network they inherited.  Either way, they’ve priced their service out of the market.”

When Tom called Frontier to complain, the company offered to rip out the advanced fiber network Verizon installed and stick a DirecTV satellite dish on his roof instead.

“Frontier is a real ‘Back to the Future’ kind of company — they just don’t get it,” Tom said.  “The operator actually told me she couldn’t understand why I would want to cancel service.”

Customers receiving new customer promotional discounts will get a real case of sticker shock when Verizon’s original promotional rates reset to Frontier’s new regular price.

“Washington County better beef up their hospitals because there are going to be a lot of heart attacks when that bill arrives,” Tom says.

The Oregonian newspaper reports customers are not the only ones to be shocked by Frontier’s enormous rate increase.  Regulators promised more competition and cheaper prices as part of Frontier’s purchase of Verizon landlines feel had as well.

“[Frontier’s rate hike] is essentially a white flag surrender and an exit from the head-to-head video competition,” lamented David Olson, director of the Mt. Hood Cable Regulatory Commission.

That’s a far cry from what Frontier Communications CEO Maggie Wilderotter told the newspaper in September when asked if the company would raise FiOS rates.

“That is not our plan. If I look across the board at our basic service pricing, I don’t think we’ve raised prices anywhere in the last four or five years,” she said.

The Oregonian quotes a Frontier representative who says the company’s relatively small customer base disqualifies them from volume discounts Verizon used to receive.

“Part of the challenge we have, compared to other providers, is that our footprint is so small,” said Frontier spokeswoman Stephanie Beasly. “They’re able to spread it out over a much larger customer footprint.”

That can’t be the whole story, said Fred Christ, policy and regulatory affairs manager for the Metropolitan Area Communications Commission, which regulates cable TV in Washington County.

“There’s more to it than programming costs. Anybody in the industry can pretty much figure that out. What more there is, we don’t know yet,” he said. “Unless programmers are trying to run Frontier out of business, why would they jack their rates that much?”

Smaller companies like Frontier generally do not try and buy programming on their own, but join group-purchasing plans like those offered by the National Cable Television Cooperative.  Municipal providers routinely purchase programming at substantial discounts.  It is not known if Frontier is a member, but they could be.

No rate increases are planned for broadband or telephone service.

Verizon FiOS pricing increased at less than half the rate Frontier will demand from subscribers in 2011. (Source: Metropolitan Area Communications Commission, Tualatin Valley, Ore.)

Time Warner Cable has begun notifying western New York cable subscribers their rates are going up, effective in about three weeks.

The cable company includes the notification in customer bills arriving throughout December and early January in the Rochester and Finger Lakes region of upstate New York.

The new prices are the result of higher programming costs, the development of new innovative features, and continued investment in our infrastructure and investment.

Rates for Road Runner, Time Warner’s broadband service, are increasing as much as five dollars per month.  This represents the third increase in broadband rates for Time Warner customers in the last 13 months, and should finally bury any notion the cable operator needs to implement Internet Overcharging schemes to recoup usage costs.  Time Warner Cable’s Road Runner Turbo package was priced at just under $50 a month two years ago.  Today, the same service costs $64.90 per month for standalone customers — a $14.90 increase.

2011 Pricing: Turbo - up to $64.90, Standard - up to $54.95, Basic - up to $37.95, Lite - $25.99

Customers on bundled service packages will see rate increases of around $5 for a digital cable-only package, $7 for a cable-broadband package, $6 for a cable-phone package, and $9 for “All the Best” which delivers cable, phone, and Internet service.  Those with multiple televisions will see a doubling of rates for each additional TV hooked up to digital cable (was $0.50, now $1.00), a $0.16 decrease in the monthly rental cost of a traditional cable box, and a $0.04 increase in the cost for the remote control.

A rate increase for the Rochester, N.Y. area

Existing and new customers might find a year of savings with the company’s current Triple Play $99 promotional offer, which some report to be good for existing subscribers adding additional services.  For one year, subscribers will pay $33.33 each for broadband, video, and phone service (you must take all three).  For a subscriber with cable and broadband, adding the phone service actually will cost you nearly $20 less per month, even if you never bothered to use it:

Choose the speed that's right for you at the price that's not.

2011 Rates

• Watch N Surf: $118.99 per month
• Triple Play Promotion: $99 per month

Customers are reminded Time Warner’s retention agents are authorized to provide discounts and better offers to those threatening to take their business elsewhere.  If your rates are increasing, it might be a good time to threaten to walk and see what kind of offers the cable company provides to get you to stay.

Share your views and retention offers in our Comment section.