Easy as counting in the dark.

Suddenlink customers in West Virginia who have been dealing with the aftereffects of a damaging derecho for a week found a nasty little surprise from their cable company when the lights cut back on — gigabytes of usage recorded on the company’s suspect “usage meter,” despite the fact customers were without power for up to a week.

Broadband Reports readers have begun to check back in after extended downtime to report Suddenlink is racking up usage whether customers are using their broadband connection or not:

• “Tylr” reports he was without power for two days but Suddenlink’s usage meter kept the party going, recording 12GB of phantom usage during the two days the customer was without service;
• “Jdmm72” found exactly the same thing, shocked to discover he racked up 10.8GB of usage on a day when he and his fellow neighbors in Nitro, W.V., were completely in the dark.

Suddenlink’s usage meter is not verified by any third-party or government agency to ensure its reliability and the company is under no obligation to change this policy. But customers are expected to cover any overlimit fees Suddenlink imposes for “exceeding your allowance.”

Does the company need the extra money? Not really, according to Suddenlink president and CEO Jerry Kent, who earlier admitted the days of expensive system upgrades were over and it was now time to rake in profits:

“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,” Kent said. “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.”

KJRH’s newsroom has been spending a lot of time this spring dealing with viewers ripped off by their telecommunications providers.  When Tulsa residents can’t get satisfaction from the local cable or satellite company, they often call Channel 2’s Problem Solvers for help.

DirecTV’s Phantom Gift Cards: The Promised Rebate That You Qualify For, Until You Don’t

Satellite TV companies are increasingly aggressive pitching discounts and rebates to win customers away from traditional cable TV or the phone company’s new IPTV service.  In addition to cheap teaser rates, many providers also sweeten the deal with high value rebate cards for customers signing multi-year service contracts.

Local resident Michael was attracted to DirecTV’s $200 Visa card rebate offer and signed up for satellite service.  Weeks later, with no rebate card in hand, he called the company to find out why, only to be told he did not qualify.  When Michael tried to cancel service because the company didn’t deliver what it promised, the customer service representative informed him he would owe $480 in early cancellation penalties.

DirecTV's fine print: Emphasis ours.

DirecTV initially stonewalled KJRH when they called on Michael’s behalf, eventually claiming he was told he did not qualify for a rebate a week after signing up for service.  But when KJRH asked to hear a recording of the call DirecTV routinely makes when customers sign up for service, they changed their tune.

“The next day, we were told Michael had been given the wrong information about the promotion and he could cancel without that $480 penalty,” the Problem Solvers’ team reports.

Michael says it is important to get everything in writing — including the names of representatives you speak with — because that can make all the difference when a company tries to squeeze out of its own promotional promises.  He’s now an ex-DirecTV customer for free, and decided to watch his favorite shows over local broadcast TV.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KJRH Tulsa TV gift card 3-19-12.mp4[/flv]

KJRH got called by Michael when DirecTV reneged on a $200 rebate offer that locked him into a contract that could cost him $480 to escape.  (2 minutes)

Suddenlink: Suddenly Owe $400 in April for Service You Canceled In January

Tulsa resident Lucille got the shock of her life this month when she opened a bill from Suddenlink charging her $400 for cable service she canceled in early January.

The past due bill came without warning and Lucille says she never received any phone call, bill, or letter notifying her charges were still accumulating on her account.

When she called Suddenlink, they told her that service was never discontinued, and she owed the money.

Lucille may have been born at night, but not last night.

Angered by Suddenlink’s intransigence, she called KJRH for help.  The station went to the top — calling Suddenlink’s corporate headquarters.

In short order, a company representative researching the dispute found Lucille’s cancellation request, as well as the customer service representative who never processed it.

That representative will be attending Customer Service 101 re-training classes, and a company executive called Lucille directly to apologize.

Not only that, a local Tulsa Suddenlink worker arrived with a $100 refund check — the credit balance owed her for service she paid one month ahead to receive.

While both Lucille and Michael benefited from the threat of both companies being portrayed in a bad light on the evening news, an unknown, uncounted number of customers may not win similar satisfaction.

Many customers simply give up pursuing unpaid rebate promotions (or forget about them altogether), and DirecTV’s nearly $500 early termination fee is a strong incentive to grudgingly stay with the satellite provider until your contract runs out.  Lucille, 88 years old, was not going to be intimidated by Suddenlink’s insistence she owed the money (or the implications of being called a past due deadbeat — an especially scandalous notion for older Americans).

Both consumers did something else: they wrote down names, times, and dates of their communications with the companies.  That can go a long way to winning satisfaction. So can filing complaints with the Better Business Bureau, which can usually prompt a contact from a higher-level customer service representative more willing to give a complaining customer the benefit of the doubt.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KJRH Tulsa Past due cable bill 4-18-12.mp4[/flv]

KJRH got a call from Lucille about an unexpected $400 Suddenlink cable bill for April… for service she canceled in January.  (2 minutes)

Won 1.1 million new customers in 2011

Comcast and Time Warner Cable collectively picked up more than 1.5 million new customers in 2011, with most of the growth coming from dissatisfied DSL subscribers seeking better broadband speeds.

Leichtman Research Group, Inc. (LRG) found the eighteen largest cable and telephone providers in the US — representing about 93% of the market — acquired 3 million net additional high-speed Internet subscribers in 2011. Annual net broadband additions in 2011 were 88% of the total in 2010.

The top broadband providers now account for 78.6 million subscribers — with cable companies having over 44.3 million broadband subscribers, and telephone companies having over 34.3 million subscribers.

Stalled growth

Despite AT&T’s position as the second largest Internet Service Provider in the country, the company only picked up 117,000 new customers in 2011.  In contrast, Time Warner Cable, with 6 million fewer customers, added almost a half-million new broadband subscriptions last year.

Frontier Communications, which made broadband a primary target for expansion, has not seen considerable growth either.  The company only added just short of 38,000 new broadband customers last year, almost all getting DSL, often at speeds of 1-3Mbps.

Other key findings include:

• The top cable companies netted 75% of the broadband additions in 2011;
• The top cable companies added 2.3 million broadband subscribers in 2011 — 98% of the total net additions for the top cable companies in 2010;
• The top telephone providers added 750,000 broadband subs in 2011 — 68% of the total net additions for the top telephone companies in 2010;
• In the fourth quarter of 2011, cable and telephone providers added 765,000 broadband subscribers — with cable companies accounting for 82% of the broadband additions in the quarter.

Now serving 10.3 million

“Despite a high level of broadband penetration in the US, the top broadband providers added 88% as many subscribers in 2011 as in 2010,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “At the end of 2011, the top broadband providers in the US cumulatively had over 78.6 million subscribers, an increase of nearly 25 million over the past five years.”

Americans are increasingly treating broadband as an essential “utility” service, as fundamental as electricity or clean water.

The majority of consumers who lack the service either consider it irrelevant in their lives (a factor that increases with the age of the surveyed respondent), cannot obtain service from their provider because of their location, or cannot afford the service.

Sources: The Companies and Leichtman Research Group, Inc.
* LRG estimate
** Includes LRG estimates for Bright House Networks, and RCN
^ Totals prior to Time Warner Cable’s acquisition of Insight completed on 2/29/2012
^^ LRG estimate does not include wireless subscribers
Company subscriber counts may not represent solely residential households
Totals reflect pro forma results from system sales and acquisitions
Top cable and telephone companies represent approximately 93% of all subscribers

Broadband life in Frankford, Greenbrier County, W.V. may be slow, but few customers of Frontier Communications thought things could get even slower.  And then they did.

Stop the Cap! reader DJ has been frustrated with the performance of his phone company — Frontier, that took control of Verizon’s landline network across the state.  Verizon rarely got the hopes up for customers waiting more than a decade for broadband service to reach them.  Dana Waldo, Frontier’s senior vice president and general manager did, telling West Virginians Frontier would propel the Mountain State from its current rank of 47th in the country to the top 5.  Achieving that goal seems unlikely when the company quietly reduces some customers’ broadband speeds.

“We are on the High Speed Max plan which gives us, or should I say gave us 3.5Mbps,” DJ shares.  Although his phone line supported that speed, Frontier’s congested network could not, especially at night when speeds dropped dramatically.  It took several months for Frontier to upgrade local facilities in the county to better manage the broadband demands of customers who pay $110 a month for DSL and phone service.

Frontier representatives promised the Pocahontas Times further upgrades were on the way by February of 2011, DJ says. February came and went and promised speeds of 5Mbps never arrived and Frontier representatives told DJ they didn’t know a thing about a 5Mbps broadband plan.

Fast forward to last spring: Frontier’s website suddenly advertised speeds up to 12Mbps.

Frontier's Mysterious Upgrade List

“I first contacted them through their Twitter account and was told I could receive 8Mbps, went through all the processes and a few days later I was told I [already] had the maximum speed available for my area and nothing was ever done,” DJ writes.

The Phantom “Network Upgrades” List

More discouraging to DJ was the surprise appearance of a Network Upgrades listing on the company’s website that again promised better days for customers in states like West Virginia.

“The geniuses at Frontier listed us as Frankfort instead of Frankford but either way we were listed to get upgrades at the end of [this past] November,” DJ says. “The date came, the date passed. Never once did I see a Frontier truck out working. I still found myself [with] 3.5Mbps and after being lied to about upgrades for the third time in a few years I was ticked.”

Frontier representatives would later wonder where DJ obtained the Network Upgrades list, which has since disappeared from the company’s website.  Stop the Cap! has an archived copy here (PDF).

The worst part of DJ’s story came on Jan. 24, when Frontier reduced his speed from 3.5Mbps to 1.3Mbps without notice or explanation.  Frontier, the phone company that provides free speed decreases for customers, is not part of any marketing plan DJ knows about, so he began calling the company for answers.

“I was told my speed would be fixed when “upgrades” were complete,” DJ reports. Later that day, after a series of complaint calls, his old speed returned, leaving him right where he started in 2010.

“There is no excuse for that kind of treatment and it has been going on for years,” DJ says. “It’s a shame we can’t get anything else; Suddenlink literally stops serving just down the road with 10Mbps service — sad.”

[Updated 3/26 2:31pm ET:  Changed piece to reflect unincorporated Frankford is actually in Greenbrier County, not Pocahontas.]

Internet Overcharging schemes bring even more profits to a cable industry that already enjoys a 95% gross margin on broadband service.

At least one major national cable company plans to implement a usage-based billing system in the coming year, predicts Sanford Bernstein analyst Craig Moffett.  Bloomberg News quotes Moffett in a piece that thinly references Time Warner Cable as that operator, whose CEO strongly believes in further monetizing broadband usage.

Moffett is among the chief cheerleaders hoping to see operators charge customers additional fees for their use of the Internet.

“In the end, it will be the best thing that ever happened to the cable industry,” Moffett said.

For customers, DISH Satellite chairman Charlie Ergen predicts it will lead to at least a $20 monthly surcharge for broadband users who watch online video, which could bring already sky-high broadband pricing to an unprecedented $70-80 a month, the same amount most cable operators now charge for standard digital cable-TV service.

The cable industry’s interest in being in the cable television business has waned recently as subscribers increasingly turn away from expensive cable packages.  Now companies that used to consider broadband a mildly-profitable add-0n increasingly see Internet access as the new mainstay (and profit center) of their business.

Time Warner Cable, for example, wasn’t even sure its entry in the broadband business in the late 90s would ever amount to much.  Fast forward a dozen years, and it is an entirely different story:

“We’re basically a broadband provider,” Peter Stern, chief strategy officer for New York-based Time Warner Cable, said Nov. 17 at the Future of Television conference in New York. “As a convenience for our customers, we package and distribute television and provide service around that.”

Bloomberg reports the cable industry profit margin on broadband is nearly 95 percent, a testament to the lack of competitive pressure on Internet pricing.  The industry is going where the money is to make up for increasing challenges to their video business, which currently “only” brings them a 60 percent profit margin.

Suddenlink, already enjoying a 12 percent increase in broadband revenue in the last quarter alone, is implementing its own Internet Overcharging scheme, charging $10 for every 50GB a customer exceeds their arbitrary usage allowance.  That, despite the fact CEO Jerry Kent admits Suddenlink’s broadband margins are double those earned from the cable company’s video business.

Complicit in the parade to Internet Overcharging is Federal Communications Commission chairman Julius Genachowski, who publicly supported usage-based pricing in public statements made last December.  Cable operators were fearful Genachowski might lump the pricing scheme in with the Net Neutrality debate.  Providers have since used Genachowski’s loophole in an end run around Net Neutrality.  If providers cannot keep high volume video traffic from competitors like Netflix off their networks, they can simply make using those services untenable on the consumer side by increasing broadband pricing, already far more expensive than in other parts of the world.

That is a lesson already learned in Canada, where phone and cable companies routinely limit usage and slap overlimit fees on consumers who cross the usage allowance line.  Canada’s broadband ranking has been deteriorating ever since.

Moffett - The chief cheerleader for Internet Overcharging

Bloomberg says such a pricing regime would discourage investment in online video products that currently are held responsible for some cable cord-cutting:

“It’s the reason why Apple or Google would inevitably be reticent about committing a significant amount of capital to an online video model,” Moffett told Bloomberg. “You can’t simply assume just because you can buy the content more cheaply, you can offer a product that’s cheaper to the end user.”

The only way around this might be video providers like Google getting into the broadband business themselves, something Google is experimenting with in Kansas City.  Google’s “Think Big With a Gig” project is partly designed to prove gigabit broadband delivered over a fiber network is practical and doesn’t have to be unaffordable for consumers.  It will also finally bring competitive pressure on a comfortable broadband duopoly, at least for residents in one city.

So far, video providers who depend on an Internet distribution model are not putting much money in the fight against usage-billing.  Instead, companies like Netflix are releasing occasional press releases that decry the practice.

“[Usage billing] is not in the consumer’s best interest as consumers deserve unfettered access to a robust Internet at reasonable rates,” Steve Swasey, a Netflix spokesman, said previously.

It is clear consumers despise usage pricing.  In every survey conducted, a majority of respondents oppose limits on their broadband usage, especially at today’s prices.  But that may not be enough to get companies like Time Warner Cable to back off.  The company has reportedly been quietly testing usage meters since last summer.  CEO Glenn Britt, with a considerable drumbeat of support from Wall Street analysts like Mr. Bernstein, has never shelved the concept of usage pricing, seeing it more lucrative than hard usage caps.  The company retreated from a 2009 plan to charge up to $150 a month for flat rate access after consumers rebelled over planned trials in Texas, North Carolina, and New York.

But without a solid message of opposition from consumers, and an about-face from an FCC chairman that should know better, they’ll be back looking for more money soon enough.

[Thanks to regular Stop the Cap! reader Ron for sharing the news.]