More drive-by reporting on Comcast’s usage caps.

When the media covers Internet Overcharging schemes like usage caps and consumption billing, it is often much easier to take the provider’s word for it instead of actually investigating whether subscribers actually need their Internet usage limited.

Comcast’s planned reintroduction of its usage caps on South Carolina customers begins Friday. Instead of the now-retired 250GB limit, Comcast is graciously throwing another 50GB of usage allowance to customers, five years after defining 250GB as more than generous.

The Post & Courier never bothered to investigate if Comcast’s new 300GB usage cap was warranted or if Charleston-area customers wanted it. It was so much easier to just print Comcast’s point of view and throw in a quote or two from an industry analyst.

In fact, the reporter even tried to suggest the Internet Overcharging scheme was an improvement for customers.

The newspaper reported Comcast was the first large Internet provider in the region to allow customers to pay even more for broadband service by extending their allowance in 50GB increments at $10 a pop. (Actually, AT&T beat Comcast to the bank on that idea, but has avoided dropping that hammer on customers who already have to be persuaded to switch to AT&T U-verse broadband that tops out at around 24Mbps for most customers.)

Since 2008, the company’s monthly limit has been capped at 250 GB per household. When customers exceeded that threshold, Comcast didn’t have a firm mechanism for bringing them back in line, other than to issue warnings or threaten to cut off service.

“People didn’t like that static cap. They felt that if they wanted to extend their usage, then they should be allowed to do that,” said Charlie Douglas, a senior director with Comcast.

Charleston is the latest in a series of trial markets the cable giant has used to test the new Internet usage policy in the past year. As with any test period, the company can modify or discontinue the plan at any time.

During the trial period in Charleston, customers will get an extra 50 GB of monthly data than they’re used to having. If they exceed 300 GB, they can pay for more.

“300 GB is well beyond what any typical household is ever going to consume in a month,” Douglas said. “In all of the other trial markets with this (limit), it really doesn’t impact the overwhelming super-majority of customers.”

The average Internet user with Comcast service uses about 16 to 18 GB of data per month, Douglas said.

Customers who use less than five GB per month will start seeing a $5 discount on their bills.

“We think this approach is fair because we’re giving consumers who want to use more data a way to do so, and for consumers who use less, they can pay less,” Douglas said.

Data caps are designed to stop content piracy?

The Charleston reporter asserts, without any evidence, “data-capping is a trend many Internet service providers are expected to follow in the next few years as the industry aims to reduce network congestion and to find safeguards against online piracy.”

Suggesting data caps are about piracy immediately rings alarm bells. Comcast and other Internet Service Providers fought long and hard against being held accountable for their customers’ actions. The industry wants nothing to do with monitoring online activities lest the government hold them accountable for not actively stopping criminal activity.

“It’s not about piracy, per se,” said Douglas. “We don’t look at what people are doing. The purpose is really a matter of fairness. If people are using a disproportionate amount of data, then they should pay more.”

Comcast’s concern for fairness and disproportionate behavior does not extend to the rapacious pricing and enormous profit it earns selling broadband, flat rate or not.

MIT Technology Review’s David Talbot found “Time Warner Cable and Comcast are already making a 97 percent margin on their ‘almost comically profitable’ Internet services.” That figure was repeated by Craig Moffett, one of the most enthusiastic, well-respected cable industry analysts. That percentage refers to “gross margin,” which is effectively gravy on largely paid off cable plant/infrastructure that last saw a major wholesale upgrade in the 1990s to accommodate the advent of digital cable television and the 500-channel universe. Broadband was introduced in the late 1990s as a cheap-to-deploy but highly profitable, unregulated ancillary service.

How things have changed.

Just follow the money….

Customers used to being gouged for cable television are now willing to say goodbye to Comcast’s television package in growing numbers. Today’s must-have service is broadband and Comcast has a high-priced plan for you! But earning up to 97 percent profit from $50+ broadband isn’t enough.

A 300GB limit isn’t designed to control congestion either. In fact, had she investigated that claim, she would have discovered the cable industry itself disavowed that notion earlier this year.

In fact, it’s all about the money.

Michael Powell, the head of the cable industry’s top lobbying group admitted the theory that data caps are designed to control network congestion was wrong.

“Our principal purpose is how to fairly monetize a high fixed cost,” said Powell.

Powell mentioned costs like digging up streets, laying cable and operational expenses. Except the cable industry long ago stopped aggressive buildouts and now maintains a tight Return On Investment formula that keeps cable broadband out of rural areas indefinitely. Operational expenses for broadband have also declined, despite increases in traffic and the number of customers subscribing.

[flv]http://www.phillipdampier.com/video/CNBC Internet v. Cable 8-20-10.flv[/flv]

Don’t take our word for it. Consider the views of Suddenlink Cable CEO Jerry Kent, interviewed in 2010 on CNBC. (8 minutes)

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” said Suddenlink CEO Jerry Kent. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Unfortunately, Charleston residents don’t have the benefit of reporting that takes a skeptical view of a company press release and the spokesperson readily willing to underline it.

If Comcast seeks to be the arbiter of ‘fairness,’ then one must ask what concept of fairness allows for a usage cap almost no customers want for a service already grossly overpriced.

Comcast has expanded its 300GB usage cap to Internet customers in Huntsville and Mobile, Ala. and Charleston, S.C.

In these cities the XFINITY Internet allowance includes a $10 penalty for each 50GB segment customers exceed the arbitrary allowance. Alabama and South Carolina join customers in parts of Georgia, Kentucky, Mississippi and Tennessee now subject to a usage allowance.

Comcast is also offering a new Flexible Data Option for Economy Plus customers that use less than 5 GB per month.

Customers who do not want the new usage caps can register their displeasure by calling Comcast Customer Security Assurance at 1-877-807-6581, contacting the local news media, or writing to your federal elected officials.

Cable operators and publicly owned utilities in Tennessee are battling for control over the prices companies pay to use utility poles, with facts among the early casualties.

The subject of “pole attachment fees” has been of interest to cable companies for decades. In return for permission to hang cable wires on existing electric or telephone poles owned by utility companies, cable operators are asked to contribute towards their upkeep and eventual replacement. Cable operators want the fees to be as low as possible, while utility companies have sought leeway to defray rising utility pole costs and deal with ongoing wear and tear.

Little progress has been made in efforts to compromise, so this year two competing bills have been introduced by Republicans in the state legislature to define “fairness.” One is promoted by a group of municipal utilities and the other by the cable industry and several corporate-backed, conservative front groups claiming to represent the interests of state taxpayers and consumers.

Some background: Tennessee is unique in the pole attachment fee fight, because privately owned power companies bypassed a lot of the state (and much of the rest of the Tennessee Valley and Appalachian region) during the electrification movement of the early 20th century. Much of Tennessee is served by publicly owned power companies, which also own and maintain a large percentage of utility poles in the state.

Some of Tennessee’s largest telecom companies believe they can guarantee themselves low rates by pitching a case of private companies vs. big government utilities, with local municipalities accused of profiteering from artificially high pole attachment rates. Hoping to capitalize on anti-government sentiment, “small government” conservatives and telecom companies want to tie the hands of the pole owners indefinitely by taking away their right to set pole attachment rates.

The battle includes fact-warped editorials that distort the issues, misleading video ads, and an effort to conflate a utility fee with a tax. With millions at stake from pole attachment fees on tens of thousands of power poles throughout the state, the companies involved have launched a full-scale astroturf assault.

Grover Norquist’s Incendiary “Pole Tax”

Conservative Grover Norquist, president of Americans for Tax Reform wrote that the pole attachment fee legislation promoted by public utilities would represent a $20 million dollar “tax increase” from higher cable and phone bills. Even worse, Norquist says, the new tax will delay telecom companies from rushing new investments on rural broadband.

Norquist

In reality, Americans for Tax Reform should be rebranded Special Interests for Tax Reform, because the group is funded by a variety of large tobacco corporations, former clients of disgraced lobbyist Jack Abramoff, and several wealthy conservative activists with their own foundations.

Norquist’s pole “tax increase” does not exist.

The Federal Communications Commission (FCC) provides guidelines and a formula for determining pole attachment rates for privately owned utilities, but permits states to adopt their own regulations. Municipal utilities are exempted for an important reason — their rates and operations are often already well-regulated.

Stop the Cap! found that pole attachment revenue ends up in the hands of the utility companies that own and keep up the poles, not the government. Municipal utilities stand on their own — revenue earned by a utility stays with the utility. Should a municipal utility attempt to gouge other companies that hang wires on those poles, mechanisms kick in that guarantee it cannot profit from doing so.

A 2007 study by the state government in Tennessee effectively undercut the cable industry’s argument that publicly owned utilities are overcharging cable and phone companies that share space on their poles. The report found that “pole attachment revenues do not increase pole owners’ revenue in the long run.”¹

The Tennessee Valley Authority, which supplies electricity across Tennessee, regularly audits the revenues and costs of its municipal utility distributors and sets end-user rates accordingly. The goal is to guarantee that municipal distributors “break even.” Any new revenue sources, like pole attachment fees, are considered when setting wholesale electric rates. If a municipal utility overcharged for access to its poles, it will ultimately gain nothing because the TVA will set prices that take that revenue into account.

Freedom to Distort: The Cable Lobby’s Astroturf Efforts

Freedom to distort

Another “citizens group” jumping into the battle is called “Freedom to Connect,” actually run by the Tennessee Cable Telecommunications Association (TCTA). Most consumers won’t recognize TCTA as the state cable lobby. Almost all will have forgotten TCTA was the same group that filed a lawsuit to shut down EPB’s Fiber division, which today delivers 1,000Mbps broadband service across the city and competes against cable operators like Comcast and Charter Cable.

One TCTA advertisement claims that some utilities are planning “to double the fees broadband providers pay to the state’s government utilities.”

In reality, cable companies have gone incognito, hiding their identity by rebranding themselves as “broadband providers.” No utility has announced it plans to “double” pole attachment fees either.

TCTA members came under fire at a recent hearing attended by state lawmakers when Rep. Charles Curtiss (D-Sparta) spoke up about irritating robocalls directed at his constituents making similar claims.

“What was said was false,” Curtiss told the cable representatives at the hearing. “You’ve lost your integrity with me. Whoever made up your mind to do that, you’re in the wrong line of work.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TCTA Pole Attachment Fees Ad 3-13.flv[/flv]

TCTA — Tennessee’s cable industry lobbying group, released this distorted advertisement opposing pole attachment fee increases.  (1 minute)

The Chattanooga Free-Press’ Drew Johnson: Independent Opinion Page Editor or Well-connected Activist with a Conflict of Interest?

Johnson (Times Free Press)

In its ad campaign, the TCTA gave prominent mention to an article in Chattanooga’s Times-Free Press from Feb. 27: “Bill Harms Consumers, Kills Competition.”

What the advertisement did not say is it originated in an editorial published by Drew Johnson, who serves as the paper’s conservative opinion editor. Johnson has had a bone to pick with Chattanooga’s public utility EPB since it got into the cable television and broadband business.

That may not be surprising, since Johnson is still listed as a “senior fellow” at the “Taxpayers Protection Alliance,” yet another corporate and conservative-backed astroturf group founded by former Texas congressman Dick Armey of FreedomWorks fame.

Johnson’s journalism credentials? He wrote a weekly column for the conservative online screed NewsMax, founded and funded by super-wealthy Richard Mellon Scaife and Christopher Ruddy, both frequent donors to conservative, pro-business causes.

TPA has plenty to hide — particularly the sources of their funding. When asked if private industry backs TPA’s efforts, president David Williams refused to come clean.

“It comes from private sources, and I don’t reveal who my donors are,” he told Environmental Building News in January.

Ironically, Johnson is best known for aggressively using Tennessee’s open records “Sunshine” law to get state employee e-mails and other records looking for conflicts of interest or scandal.

Newspaper readers may want to ask whether Johnson represents the newspaper, an industry-funded sock puppet group, or both.  They also deserve full disclosure if the TPA receives any funding from companies that directly compete with EPB.

The Institute from ALEC: The Institute for Policy Innovation’s Innovative Way to Funnel AT&T and Comcast Money Into the Fight

Provider-backed ALEC advocates for the corporate interests that fund its operations.

Another group fighting on the side of the cable and phone companies against municipal utilities is the Institute for Policy Innovation. Policy counsel Bartlett D. Cleland claimed the government is out to get private companies that want space on utility poles.

“The proposed new system in HB1111 and SB1222 is fervently supported by the electric cooperatives and the government-owned utilities for good reason – they are merely seeking a way to use the force of government against their private sector competitors,” Cleland said. “The proposal would allow them to radically raise their rates for pole attachments to multiples of the national average.”

The facts don’t match Cleland’s rhetoric.

In reality, the state of Tennessee found in their report on the matter in 2007 that Tennessee’s pole attachment fees are “not necessarily out of line with those in other states.”²

In fact, some of the state’s telecom companies seemed to agree:

• EMBARQ (now CenturyLink) provided data on fees received from other service providers in Tennessee, Virginia, South and North Carolina. In these data, Tennessee’s rates ($36.02 – $47.41) are similar to those in North Carolina ($23.12-$52.85) and Virginia ($28.94 – $35.77). Rates were lower in South Carolina.
• Cable operators, who have less infrastructure on poles than telephone and electric utilities, paid even less. Time Warner Cable provided mean rates per state showing Tennessee ($7.70) in the middle of the pack compared to Florida ($9.83) and North Carolina ($4.86 – $13.64).

In addition to his role as policy counsel, Cleland also happens to be co-chair of the Telecommunications and Information Technology Task Force of the American Legislative Exchange Council (ALEC). Members of that committee include Comcast and AT&T — Tennessee’s largest telecom companies, both competing with municipal telecommunications providers like EPB.

¹ Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.23

² Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.12

Time Warner Cable announced late last week it would add 650 call center jobs in South Carolina in 2013.

Most of the new positions will be in Lexington County at a newly expanded call center in West Columbia.

The company said it was increasing telephone sales and support positions by 50 percent in the state and would make a $24 million investment in its operations this year.

Gov. Nikki Haley said Time Warner Cable chose South Carolina for its business-friendly climate.

“The ultimate celebration in South Carolina is when a company expands,” Haley said at an event announcing the expansion. “It’s the biggest compliment to a county, it’s the biggest compliment to a state because it shows that there is true commitment in taking care of the businesses that we already have.”

In July, Haley further demonstrated that commitment by signing a bill promoted by Time Warner Cable and other telecommunications companies that would make it next to impossible for communities to construct and operate their own broadband networks in a state woefully underserved by the cable company and AT&T.

As Christopher Mitchell from Community Broadband Networks points out, the new law is corporate welfare at its finest, requiring local governments to avoid undercutting the rates charged by incumbent phone and cable companies, even if the government could provide the service at reduced cost.

“It effectively prohibits municipalities from operating their own broadband systems through a series of regulatory and reporting requirements,” said Catharine Rice, president of the SouthEastAssociation of Telecommunications Officers and Advisors (SEATOA). “These practically guarantee municipalities could never find financing because the requirements would render even a private sector broadband company inoperable.”

The majority of the new jobs are expected to start at salaries under $40,000 a year. In May, Frontier Communications opened its own call center in Horry County that pays much lower salaries than the call centers it replaced.

In separate announcements, Time Warner Cable noted it planned to “consolidate” call center positions in other locations, which means employees in other cities and states will either lose their jobs or accept invitations to transfer to other facilities, potentially for lower pay.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WLTX Columbia 650 New Jobs in SC At TWC 1-4-13.flv[/flv]

WLTX in Columbia favorably reports Time Warner Cable’s forthcoming hiring spree in their area.  (2 minutes)

A very frustrated employee of Frontier Communications working in one of their Ohio offices sent Stop the Cap! a detailed report on some of Frontier’s problems with customer service, unfair fees, and other horror stories. In this second part, a look at Frontier’s fees, service commitments, and the caliber of customer service. (Stop the Cap’s comments appear in italics.)

Installation fees can be a significant component of a customer’s first bill — a rude surprise for anyone choosing a promotional offer and experiencing bill shock when that first bill arrives. That triggers complaint calls to customer service, where a Frontier representative will ultimately decide whether you will get the free installation you were promised.

How much will your first bill be? The broken promises of “free installation.”

If you order today, your installation will be free… or not.

Let me share a little secret. I believe most representatives will always quote free installation to get the sale. Most believe the payoff for the company in the long run is better than the temporary hit we take on installation expenses. It also makes our commission checks a little fatter the following month. Unfortunately, in the rush to make the sale, I believe the majority of reps fail to note what they promised on the customer’s new account, which means they get charged some expensive install fees. Many quickly call in,  accusing us of reneging on our offer.

We handle these as if we were playing some version of Russian Roulette, straight out of Deer Hunter. One out of every six customers will not get their installation fees waived simply because we refuse. Sometimes it becomes a game of using your gut and flipping a coin. Other times it is the amount of the refund.

It is much easier on us if the fees we reverse are under $100, because we have the authority to issue an immediate credit. If the fees are over $100, things get complicated because the request must be approved by a regional office manager who relies entirely on the notes left by the customer service representative. If the request is denied, it is our job to call you back with the bad news. But the good news is the odds are still in your favor if you persist asking for the fees to be reversed.

I hate to say it, but it all comes down to the mood of the rep you get on the line and how much he or she is willing to fill out those forms for you. It sucks, but there is no full-proof system to prevent this and it frustrates me to no end.

Stayed home all day waiting for a Frontier technician who never showed up? They marked your problem solved anyway. 

Waiting for the service technician that claims he rang your doorbell and nobody answered.

This is truly the one that bugs me the most. I deal with at least 15 calls a day (this number has increased since July) where either the technician does not call a customer to notify them they can’t make it, or simply does not show at all and writes off the service order as “completed.”

The latter irritates customers and our call center to no end. Customers are infuriated when we tell them the technician knocked on your door, nobody answered, so they left you a note. Of course, the customer insists nobody ever actually showed up and they don’t have any note. We tend to believe the customers when they tell us they do not have working service, if only because they are calling us on their cell phones.

Customer service representatives can be audited and disciplined by Frontier for not clearly including a phone number where the customer can be reached, all for the benefit of Frontier technicians. Despite this, we find our techs rarely contact the customer to keep them informed about the progress of their service call.

Our worst problems are currently in Michigan and Indiana where the majority of our missed commitments stem from. No call, no show — a technician can do this to a customer and still have his job the next day. I would get a pink-slip marked “customer mistreat” and shown the door if I pulled this trick. But many technicians just don’t care and do not have to take the angry calls from customers wondering where the hell the technician is. We see it in tech notes left on the account that say things like ‘didn’t make it to the job on time – leaving to go home.’  They never bothered to ask the customer to reschedule or call them to let them know they won’t be coming.

I understand that their job is just as stressful as ours, but they need to pull their weight as well and stop marking incomplete orders as “finished” or avoiding the customer on a missed commitment. It infuriates customers and makes the company look bad.

The Race to the Bottom: Lower wages = inferior customer service

Over the past few years, Frontier has been consolidating its call centers — moving to locations where average wages and benefits are notoriously low and politicians push a “pro-business” agenda that hands out favors in the form of tax credits and incentives to companies willing to relocate.  For Frontier, this spells doom for employees that were paid enough to earn a living in places like Coeur d’Alene, Idaho ($15-21/hr) in favor of cheap labor staffing new call centers in states like South Carolina ($11-12/hr with a five year wage freeze). That is bitter news for former Frontier employees in Idaho who saved the company an estimated $84 million successfully converting an inherited Verizon computer system to the one Frontier uses in other states. Employees were thanked with termination notices and a cheap, plastic travel mug with the company’s logo. Paying a good wage or cutting paychecks to the least amount possible may make all the difference between a good customer service experience or an embarrassment for the company.

I am going to name a call center that every other Frontier call center loathes: DeLand, Florida.

This is one of our main sources of broken promises, bad orders and misinformation. In DeLand, you are considered a lifer if you’ve worked there for more than two years. They pay near-minimum wage to fresh-out-of-high-school students to sit on the phones, most of them quitting before their six month probationary period ends. Working for Frontier customer service is a summer job to the kids down there. They could care less if they write an order for someone in an area we don’t even service, provide customers inaccurate pricing, or just cold-transfer the customer back into the call queue if they are too ignorant to help the customer out.

Thankfully, not everyone in DeLand is doing a bad job. Some of our DeLand supervisors and representatives are earnest about delivering good customer service. But too often that is the exception, not the rule. DeLand is notorious for “cherrypicking” customers. That is a term Frontier call center workers know all too well. It means picking incoming calls that are most likely to generate commission-rich sales for the employee while throwing other callers back on hold for someone else to deal with.

The drive to make the sale is so intense, representatives sometimes start writing the order before they even verify the customer is actually in a Frontier service area. We use a simple verification system called CERT to check whether a potential customer is served by us or another phone company. But the orders for customers actually served by AT&T, Windstream, Verizon or CenturyLink still show up, and the customer has to be told later. We have heard about 60 percent of the orders placed in DeLand do not actually go through, either because of this problem or customers calling back changing their mind after they discover they were mislead about something.

Management does not seem to mind the aggressive sales tactics, because it brings the opportunity for new revenue, but customers left waiting or given bad information might.

Tomorrow: Frontier’s broadband service speeds, fees and some new facts about Frontier FiOS you shouldn’t miss.