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A Tale of Two Homes in Spectrum Territory: What Competition Does to Pricing

Phillip Dampier May 26, 2021 Charter Spectrum, Competition, Consumer News 5 Comments

Competition is a wonderful thing. A case in point is the enormous difference Charter Spectrum charges new customers in areas where competition exists, and where it does not.

Charter’s offers are address sensitive. The cable company knows its competition and almost exactly where those competitors offer service. That is why the company asks for your service address before it quotes you pricing.

Stop the Cap! compared promotional new customer offers in the metro Rochester, N.Y. market where Spectrum faces token competition from Frontier’s slow speed DSL service. Then we checked pricing in neighborhoods where a fiber to the home overbuilder called Greenlight also offers service.

In neighborhoods where Spectrum enjoys a broadband monopoly, here are the offers for internet-only service available to new customers. Notice they expire after 12 months:

Spectrum promotional prices in non-competitive service areas.

Just one street away, where Greenlight offers customers the option of gigabit speed over a fiber to the home network, Spectrum’s promotional prices are quite different. Notice these offers last 24 months, twice as long as in non-competitive neighborhoods:

Spectrum promotional prices in some areas where customers can choose a competitor offering fiber to the home service.

Spectrum does not even bother offering new customers its entry-level 200 Mbps plan in areas where it has significant fiber competition. For $20 less per month, you get double that speed. Gigabit service is $20 less in competitive areas, too.

Spectrum charges a hefty $199.99 compulsory installation fee for gigabit service in non-competitive neighborhoods. Where fiber competition exists, sometimes just a street away, that installation fee plummets to just $49.99.

Note similar pricing variability exists in Spectrum service areas around the country, with the most aggressively priced offers reserved for addresses also served by a fiber to the home provider or multiple competitors (e.g. cable company, phone company, Google Fiber or other overbuilder). Current customers typically have to cancel existing service and sign up as a new customer to get these prices.

Greenlight Networks has four internet plans that range from $50-200 a month. They do not offer promotional prices, instead marketing “what you see is exactly what you will pay” pricing. As a relatively new company, they charge an installation fee that helps recoup the investments they are making to dig and string fiber cables in neighborhoods across Rochester (and Buffalo as well, where they are expanding). Spectrum (and its predecessors) use pre-existing cable lines that have been there for decades.

Greenlight Networks pricing

Charter’s promotion strategy is designed to undercut the competition on price, believing customers will choose 400/20 Mbps service for $29.99 a month over Greenlight’s 500/50 Mbps service for $50 a month. Of course, after two years Spectrum’s regular prices can kick in, more than tripling the cost to around $94.99 a month, although customers usually get a less attractive secondary promotion after the original one expires, usually offering around $10 off per month.

$50 Emergency Broadband Benefit Is A Windfall for Telecom Companies, a Headache for Consumers

Confusion, frustration, and fine print are all a part of the deal signing up for the $50 Emergency Broadband Benefit, customers complain.

The Biden Administration’s efforts to help economically challenged Americans with their broadband bills is actually a windfall for some of the nation’s largest telecommunications companies, which will pocket the money earned while forcing some customers off discounted promotional and legacy plans they claim do not qualify for bill relief.

The Emergency Broadband Benefit (EBB), rushed through in the early days of the new administration, is a $3.2 billion program that will offer qualifying consumers $50 off their monthly internet bill, at least until this fall when the money funding the program is expected to run out. Internet service provider participation is voluntary, but with billions of free money to be collected, most cable and phone companies are on board with the program. In fact, several are using the new benefit to earn even more money, by writing program rules that cynically exploit their income-challenged customers.

To qualify for the benefit, an individual is eligible if one member of the household:

  • Is a participant in one of the qualifying Lifeline programs: Medicaid, SNAP, SSI, FPHA, Veterans and Survivors Pension Benefit;
  • Is a resident on a Tribal reservation and participates in one of the following programs: Bureau of Indian Affairs general assistance; Tribally administered Temporary Assistance for Needy Families (Tribal TANF); Head Start (only those households meeting its income qualifying standard); or the Food Distribution Program on Indian Reservations (FDPIR);
  • Has applied for and been approved to participate in the National School Lunch Program: receives benefits under the free and reduced-price school lunch program or the school breakfast program, including through the USDA Community Eligibility Provision;
  • Has gross household income at or below 135% of the federal poverty guidelines;
  • Received a Federal Pell Grant during the current award year;
  • Experienced a substantial loss of income since February 29, 2020, and the household had a total income in 2020 below $99,000 for single filers and $198,000 for joint filers. This includes those who are unemployed or experienced unemployment in 2020 and/or were furloughed.

Stop the Cap! has received a few dozen letters from consumers that thought qualifying under the ‘substantial loss of income’ condition would be easy. Instead, they are sharing horror stories about providers unilaterally rejecting their applications, quietly canceling promotional packages, forcing some off less expensive, grandfathered service packages no longer being sold, or requiring customers to upgrade to more costly packages that ultimately left them with a bigger bill than they started with.

In some cases, poor training of customer service representatives seems to be the biggest impediment between you and a cheaper monthly bill. Some companies, including Sparklight, did not seem to even be aware of the highly publicized program. Others, notably Charter and Comcast, gave different answers depending on the representative you reach.

The most cynical provider of them all, however, is Verizon. No ISP makes participation in the EBB program more difficult. The phone company dominates as the largest wireline phone company in the northeast and Mid-Atlantic states and Verizon Wireless is one of the three major wireless carriers. It appears to be using the EBB as a marketing opportunity to upsell customers or drive them off older legacy plans that cost less, even if that is the only plan available.

“Verizon told me flat out ‘no’ that DSL customers cannot receive the $50 discount,” said Ted Rogers. Verizon is his only option for internet service, and only barely so. “We get about 6 Mbps from Verizon, no cell signals at all, and cable internet is just a dream. We live almost a mile from the nearest neighbor.”

Rogers lost his job as a result of the pandemic and is now working two part-time jobs to make ends meet. He told us the broadband benefit would be nice, but in the end is not worth fighting the phone company to get.

“You really have nowhere to go when they reject you, because the program is voluntary,” Rogers told us. “The FCC just passes the complaint back to Verizon and the PSC says it does not regulate internet service.”

Collect the $50, and then even more by forcing customers to switch to more expensive service plans.

Early FiOS customers who signed up for plans they have kept for years are also running straight into a firm “no” from Verizon. The Washington Post shared the stories of several Verizon fiber customers who were told they must upgrade to a more costly plan to qualify for the $50 discount. One customer in Massachusetts would have to give up his internet-only plan costing $62 for basically the same service under a different name — for $79 a month. While the $50 discount will make his internet bill much lower through the summer, when funds run out, he will end up paying $17 more a month indefinitely.

A Virginia customer was told she would have to walk away from her current Verizon internet plan costing $79 a month and switch to a new one for $95 a month, just to get a $50 discount over the next 3-6 months. That is a $16 more a month. In Pennsylvania, a Verizon customer was told she could not get the $50 a month broadband benefit unless she signed up for a costlier TV package and start renting some set top equipment as well. Her bill, after the EBB benefit expires, will be “at least $50 a month higher.”

“In my case, it seems like EBB only benefits Verizon,” she told the Post.

Unlike most telecom companies that claim these kinds of stories are simple misunderstandings or confusion on the part of their customer service team, Verizon spokesman Alex Lawson stepped up to boldly confirm that yes, indeed, the $50 benefit was only good on “qualifying plans.” For everyone else (our phrase): tough luck. But Lawson claims these newer plans allow customers to drop home phone service and typically save customers money. But not always, especially on legacy plans that include all the services a customer wants and special promotional packages which are lost when customers switch plans.

For the record, Verizon limits EBB benefits to these service plans. Notice DSL is excluded and prepaid wireless customers have to speak to a representative to find out if they can qualify:

Mobile:

Verizon Mix & Match Unlimited
Start Unlimited
Play More Unlimited
Do More Unlimited
Get More Unlimited
Above Unlimited
Beyond Unlimited
Go Unlimited (Some Go plans may not be eligible- inquire with rep.)
Standalone Mobile Hotspot plans
Unlimited and Unlimited Plus plans (Standalone mobile hotspot service offerings are those without a smartphone line on the account).

Home:

Fios Mix & Match Internet, any speed
Verizon 5G Home Internet
Verizon LTE Home Internet

Comcast representatives offered a range of responses to customers inquiring about signing up for EBB.

“Talk to one representative, get one story, hang up and call back and you get a completely different story,” said Sha’qwanda, a Comcast customer in Baltimore. “They told me I don’t qualify because I am 15 days late on my bill, then another person told me the plan was only for people on Medicaid, then another person told me I would have to give up my promotion plan they rate locked for a year. My bill would have gone up $54 a month. I can’t afford that. Who is really getting rich here?”

A Philadelphia customer told us Comcast completely messed up their account trying to apply the benefit, canceling their services and charging them for unreturned equipment.

“We lost service the following morning,” the customer wrote us, wishing to remain anonymous. “When we called up, the representative couldn’t figure out what happened, except he saw in the notes we were signed up for EBB, then the account was closed. Our final bill was over $400.”

The Xfinity social media account reached out to us earlier today to clear up the misunderstanding.

If you are a Comcast customer and are having trouble enrolling in EBB, we suggest you tweet a message to @Xfinity and get assistance. We suspect the problem here is insufficient training of customer service representatives to manage enrollments properly.

Charter/Spectrum is using the EBB program as a pry lever to push stubborn customers still holding on to legacy Time Warner Cable or Bright House service plans to switch to Spectrum internet plans and pricing. If you do not make the switch, you won’t qualify for EBB benefits. This is a choice by Charter management, not a limitation imposed by their billing system. Some customers on other legacy plans were also told they do not qualify.

“I am still a subscriber of New York’s Everyday Low Priced Internet service that used to be $15 a month. They have raised the price since, but also effectively jailed me by saying I have to abandon this plan if I want to get the $50 a month off my internet bill,” said Jay, a customer in New York City. “I can never go back either they tell me. Who wrote the rules for this program? The cable companies are using this to force people like me into upgrades I do not want and cannot afford. It’s scandalous.”

Another customer wishing to remain anonymous noted the same month EBB became available, Charter announced rate increases on equipment rentals and the Broadcast TV Fee paid by cable television customers.

“They will be back to raise internet prices again soon, I am sure,” the customer predicted.

AT&T, not to be left behind, also insists that customers choose from a limited menu of premium price plans and can never return to the plan they gave up. Even worse, customers complain you have to call to enroll, and the lines are jammed:

“I waited an hour on hold and then AT&T hung up on me twice,” said Kate Derry from Chicago. “It’s busy signals or waiting on hold forever. It’s like calling the unemployment office during the pandemic. AT&T has decided it should not be easy to enroll in this and I wonder how many people just give up.”

Jon, an AT&T Fiber customer in Dallas seems to agree.

“I finally got through at around 8am Texas time and listened to a representative fumble their way through disclaimers and conditions,” Jon told Stop the Cap! “Several times she had to put her hand over the microphone and ask her supervisor for help. It took an hour to get everything set up, not including the time needed to assemble the qualifying documentation. I really doubt many people are going to go through all this for a few months of savings. There is no excuse for this not to be available for online enrollment.”

Charter Spectrum Raises Rates (Again); Broadcast TV Surcharge Reaches $17.99/Month

Phillip Dampier May 6, 2021 Charter Spectrum, Consumer News 2 Comments

Charter Spectrum is notifying customers rates are increasing once again on selected services and equipment, taking effect June 2, 2021.

The Broadcast TV Surcharge, which covers the fees charged by local, over-the-air stations, is increasing $1.54 a month — from $16.45 to $17.99/month. The surcharge applies to all video customers, including those on promotional plans.

The special tier of Spanish language channels, known as Latino View, is up $1 a month to $9.99. So is the cost of renting Spectrum’s set-top box. The old fee of $7.99/mo increases to $8.99 per box.

20% of Charter Spectrum Customers Now Exceed 1 TB of Usage Every Month

Almost 20% of Charter Spectrum’s broadband-only customers now consume over 1 TB of data per month, with the average cord-cutting Spectrum customer now reaching 700 GB of usage.

Charter CEO Thomas Rutledge revealed the company’s increasing usage figures on a conference call with investors this morning. Rutledge pointed to a spike in pandemic-related, at-home video streaming, but also an explosion in video conferencing traffic from work-at-home customers. Video traffic constitutes the majority of consumer broadband traffic in the United States, and as video quality improves, so does the amount of data each customer consumes.

Recent pressure from some in Washington to increase upstream capacity has been noticed by company officials but largely dismissed. In fact, Rutledge claimed Spectrum had no capacity issues that it could not address with incremental capacity upgrades and neighborhood node splits.

“We don’t have any immediate need to expand the capacity of the plant,” Rutledge said, noting that Charter still has room to grow after adopting DOCSIS 3.1 technology. Rutledge added that with the majority of traffic still firmly originating from downloads and streaming, incremental network improvements could allow the company to boost some speeds, but only if market demand for it emerges.

Rutledge noted the company has the capacity to expand its existing infrastructure to 1.2 GHz by expanding network bandwidth. DOCSIS 3.1 can support multi-gigabit download speeds and 1,000 Mbps for uploads. Charter, along with many other cable companies, has been slow to move towards the next cable broadband standard, DOCSIS 4.0, which would exponentially increase speeds and capacity even further.

Another potential method of curtailing usage growth could come from data caps or usage-based billing, but Charter’s efforts to rid itself of its 2016 agreement not to impose data caps until at least 2023 (if ever) in return for approval of its merger with Time Warner Cable and Bright House Networks was withdrawn by the company after receiving significant opposition. The agreement’s expiration date remains May 2023.

Despite the usage growth, Charter’s chief financial officer Christopher Winfrey told investors the impact on the company’s capacity and costs were insignificant and remained confident Charter’s costs to deliver broadband service and expand it would continue to decline overall in the years ahead.

New York Mandates $15 Low-Income Broadband Tier Available to All Who Qualify

New York Gov. Andrew Cuomo discussed affordable internet at the State of the State address in January 2021.

Low income New Yorkers will soon be able to subscribe to internet service at speeds starting at 25/10 Mbps for $15 a month, thanks to a new law passed by the state legislature and signed by Gov. Andrew Cuomo.

To qualify, a consumer will need to show proof of active enrollment in any of the following programs:

  • Medicaid
  • Free or discounted school lunches
  • the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as “food stamps”
  • A senior or disability rent increase exemption

Almost every internet service provider of consequence in New York will be required to introduce a low income discounted internet program by June 2021. Consumers will be offered at least two options, depending on the technological capacity of a provider’s network:

  • $15/month basic service at speeds of at least 25/10 Mbps
  • $20/month enhanced service bringing download speeds up to 200 Mbps.

Rates will be fixed for at least five years, after which providers can increase prices based on the rate of inflation or by a modest percentage allowed by the state. In 2023, the New York State Public Service Commission will be permitted to require increases in the minimum download speeds offered.

The measure is part of New York’s effort to expand broadband availability and affordability across the state. Earlier broadband funding programs helped expand service into rural, unserved areas. This year, the legislature and the governor are targeting the digital divide between those who can and cannot afford internet access. The state’s largest cable operator, Charter Spectrum, already offers low-income customers its own Spectrum Internet Assist program, with similar qualifications. The company charges $14.99/month for 30/4 Mbps internet service, but excludes current customers from enrolling and may reject customers with past due balances owed in the past.

Gov. Cuomo announced the initiative at the State of the State Address in January. Critics called the plan “window dressing,” noting the state’s largest telecommunications companies including Charter Spectrum, Verizon, Altice, and Frontier already offer internet discount programs. Many also continue to question the governor’s contention that 98% of New Yorkers can now access high-speed internet and the overall cost and quality of service.

To assist residents in finding a suitable provider, the state launched an Affordable Internet website to help consumers sign up for discounted service. In some cases, additional discounts may be available.

The legislation also mandates the Public Service Commission to study and report back on internet accessibility and affordability by this time next year. The PSC will scrutinize how many New York homes and businesses still lack access to high-speed internet, as well as studying how reliable service providers are, what rates they charge, and the current state of competition in New York.

New York consumers can share their own experiences with internet service providers the state will use to guide potential future legislation.

WGRZ in Buffalo took a closer look at whether New York’s mandate for affordable internet service was a game changer or just window dressing. (2:33)

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