The cable industry’s public affairs network — C-SPAN, gave a friendly reception to a top telecom industry lobbyist over the weekend, responding to soft ball questions about rural broadband and telecommunications public policy debates.

Jonathan Spalter, president and CEO of USTelecom appeared on C-SPAN’s “The Communicators” to answer questions about broadband service in the era of COVID-19. USTelecom’s members, primarily telephone companies, have been strong proponents for government funding of rural broadband expansion, are opposed to telecom industry regulation and net neutrality policies, and argues that the more oversight and regulation the industry deals with, the less investment Wall Street will direct towards broadband networks.

Spalter was asked about how American broadband networks handled the work/learn-from-home requirements during the coronavirus pandemic. Spalter said networks handled the increased traffic well, but noted many rural Americans still lack access to high-speed internet. Some Democrats have proposed regulating broadband service as a utility to deal with issues of access and affordability, an idea that Spalter rejects.

“To wrap it in the red tape of regulatory strictures, the overhang of bureaucracy that would be required if we were to make it a utility, would take us backward,” Spalter said, adding he prefers “light touch” regulation. But Spalter had no objection to spending taxpayer dollars to pay for-profit telephone companies to expand broadband service in high-cost rural areas. Spalter called estimates that it would cost $100 billion to bring high speed internet service to all Americans “adequate.”

Jonathan Spalter, USTelecom’s president and CEO, talked about the coronavirus’s impact on telecommunications, regulatory issues, and solving the problems of rural internet access. (28:52)

Telecom companies are cutting investment in their networks despite promises by Republican members of the FCC that repeal of net neutrality would inspire increased investment.

Charter, Comcast, AT&T, and Verizon have surprised Wall Street with dramatic cutbacks in spending and investment in their networks, with one provider admitting improving profit margins are now a bigger priority.

As a result, Wall Street analysts are revising down capital expenditure (Capex) estimates in reports to their investor clients.

“Comcast and Charter missed [third quarter] expectations for Capex and guided 2019 lower than previously planned,” reported Nomura in a note to investors. “We have lowered our combined 2019 Capex forecast for Comcast and Charter from $14.6 billion to $14.2 billion.”

AT&T’s drop in network spending was the most dramatic among the country’s top telecom companies. AT&T has declared an end to fiber broadband expansion and slashed spending forecasts from the $23 billion the company spent this year to as little as $20 billion next year, despite claiming it would dramatically expand its 5G service to over two dozen cities over the next 12 months.

In a recent conference call with investors, AT&T CEO Randall Stephenson said “now it’s time to reap the rewards of what we’ve been doing [and] begin to reward to shareholders these investments that we’ve been making over the last few years.”

Over the next three years, AT&T will pay shareholders $45 billion in dividends and spend $30 billion on buying back shares of AT&T stock to retire debt racked up buying Time Warner (Entertainment). In fact, AT&T will devote 50-75% of its free cash flow exclusively on retiring shares of AT&T stock, which is expected to benefit shareholders.

Verizon reported spending $4.4 billion in the third quarter on network upgrades, approximately $100 million less than expected. That is a concern because Verizon is trying to expand its costly 5G network, but is not devoting the investment dollars required to make such an upgrade happen without cutting investments elsewhere in the company. Verizon has told Wall Street analysts to expect stable Capex spending of $17-18 billion annually for 2019-2021. That will either mean Verizon’s 5G expansion will be modest or the phone company will have to slash investments in other areas, such as wireline, fiber to the home, or business services.

Many analysts expect 5G will be a top spending priority for AT&T and Verizon over the next several years, leaving little room in budgets for upkeep of the company’s legacy landline networks or its other products. Charter and Comcast have effectively stopped spending on large upgrade projects, also as part of improved profit-taking.

The spending realities are in direct conflict with the promises made by Republican members of the FCC. Trump-picked FCC Chairman Ajit Pai repeatedly claimed that banishing net neutrality would lead to significant increases in investment by the nation’s top telecom companies. In fact, the opposite has happened.

Jeff Kagan is a name familiar to anyone that follows the cable industry. For over 30 years, Kagan has been tracking consumer perceptions about the telecom industry and offering insight into the challenges these and other businesses were likely to face in the future. More recently, Kagan has been fretting about the growing trend of retail businesses paying more attention to cultivating their relationships with Wall Street while targeting their customers for abuse.

“I have been noticing how in recent years, retail is becoming increasingly unfriendly to the customer. This is a mistake,” Kagan offers in a new opinion piece on Equities.com. “New technologies and new ideas may be good for the bottom line in the short-term. They may solve problems like shoplifting, and that may make investors happy today. However, in the long-term, these customer unfriendly trends will take their toll as customers will shop where they feel appreciated, respected and wanted. Customers shop at stores they love. Love is an emotion. So, we must think of winning the customer with emotion. This is difficult for most businesspeople to understand.”

‘My way or the highway’-type attitudes from retailers come from all sorts of businesses. Warehouse clubs make you pay for the honor of shopping there. This is by far the best warehouse, with a good structure and flooring from warehouse-flooring.uk. And if it happened that you encountered concrete floor damage, don’t hesitate to call the concrete repair professionals from a site like https://concrete-repair.uk for help. Chains like Walmart are beefing up security teams, and in some places, they now demand to see receipts from customers exiting the store. But nobody has abused customers better and longer than the telecom industry. Not even the cattle-car-like airlines.

Kagan

After literally decades of almost bragging about their “don’t care” customer service while throwing attitude and intransigence at customers unhappy with service or pricing, the nation’s biggest cable and phone companies are now experiencing long-overdue customer revenge. Kagan notes that cord-cutting is not just about switching to a competitor for service. Many customers are literally thrilled to see the back end of their long hated provider.

Decades of monopoly service made abusing customers a risk-free and very profitable strategy for companies like Comcast, AT&T, Charter, Cox, Mediacom, and Verizon. In fact, someone turned the concept of the “cable guy” into a horror movie. Did you stay home from work to wait for a service call that never materialized? Tough luck. Don’t like yet another rate increase? Too bad.

“The reason they did this was, they had no competition in their market area. That meant the customer could not leave them,” Kagan noted.

After years of getting a bad reputation, only two things threatened to scare telecom companies straight — the fear of imminent regulation, such as what happened in 1992 when reregulation of cable companies turned out to be the only bill that year to be vetoed by President George H. W. Bush and overridden by the U.S. Senate to become law.

The other, much more scary fear is competition. In the mid-1990s, the nation’s biggest phone companies including what we now know as AT&T and Verizon were contemplating getting into the video business. This proved far more threatening than the much smaller home satellite dish business, which attracted around three million Americans at the time. The cable industry spent years taking shots at satellite competitors, including sticking dishowners with the cost of buying a $300 descrambler box up front, and charging as much (or even more) for programming than cable customers paid, despite the fact homeowners had to purchase and service their own dish, often 6-12 feet wide and not cheap to install.

The cable industry feared phone companies would charge ratepayers to subsidize their entry into the television business and sought protective legislation prohibiting the same cross-subsidization the cable industry would later rely on to introduce broadband and phone service.

More recently, after the country reached “peak cable” — the year the highest number of us subscribed to cable TV, the industry recognized it was likely all downhill from there. Comcast, in particular, specialized in empty lip service gestures to improve the customer service experience. For years, it promised to do better, only to do worse. The company even attempted to shed its bad reputation by changing the brand of its products from Comcast to “XFINITY.” Customers were not fooled, but that did not stop Charter from following Comcast’s lead, introducing the “Spectrum” brand to its products and almost burying its corporate name, which it barely references these days.

Kagan notes not following through on the customer service experience made cable companies ripe for stunning customer losses as new competitors for video service emerged. Comcast and Charter are among the biggest losers of cable TV customers, but their bad attitudes persist. Their latest ideas? Keep raising prices, rely on tricky Broadcast TV surcharges that are soaring in cost, end customer retention offers for dissatisfied video customers, and make up the difference in lost revenue by jacking up the price of broadband service, which is already nearly all-profit.

“The bottom line for any business is always focus on the customer. If they are happy, your business will remain strong and growing,” Kagan warned.

At some point, customers will get more choices for broadband service. Community owned broadband solutions have been very successful in communities that have experienced the worst abuse AT&T, Comcast, and Charter can deliver. In the future, fixed 5G wireless may provide perfectly respectable internet service if it is not data capped. Next generation satellite providers, interloping independent fiber to the home providers, and mesh wireless providers may offer consumers a number of options that can deliver suitable service and perhaps finally put cable and phone companies in their place.

More Californians are complaining to state officials about their cable television, internet, and phone service than the energy utilities implicated in causing deadly wildfires that left customers without power for days or weeks.

California’s Office of Senate Floor Analyses prepared a report for elected officials contemplating extending deregulation of the state’s top telecommunications companies. It found deregulation has not always benefited California consumers, noting that several companies have been fined for allowing traditional phone service to fall below required service quality standards. As service deteriorates, lawmakers have tied the hands of state officials trying to enforce what service standards still exist. The report found that the telecom industry has been especially good at covering itself through lobbying and litigation to isolate and disempower consumers seeking redress.

“Many companies, including telecommunications providers, include arbitration clauses in their contracts that limit a consumer’s ability to form a class with other consumers to seek remedies for unfair business practices related to contracts,” the report notes. “These clauses frequently limit consumers to a specified arbitration process that limits the types of remedies consumers can obtain for unfair business practices.”

Customers with unreliable phone service pursuing complaints on the federal level with the Federal Communications Commission have also been dealt a blow by the Trump Administration and its Republican majority control of the FCC.

“It is unclear what kind of remedies consumers can obtain since the FCC has adopted an order limiting its own ability to establish requirements for these services,” the report found.

Deregulation has not stopped Californians from trying to get help from the California Public Utility Commission (CPUC), however. The CPUC’s Customer Affairs Branch recorded 1,087 complaints about the state’s phone and cable companies in January 2019, compared with 677 complaints against the state’s energy utilities and 53 lodged against water utilities.

The CPUC’s Customer Affairs Branch reported communications-related complaints were significantly higher than other utilities. (Image: California Office of Senate Floor Analyses)

“Despite the occurrence of wildfires in which utility infrastructure was implicated, complaints regarding energy utilities remained largely consistent between November 2018 and January 2019,” the report found. “The data indicates that the communications sector generates a greater number of complaints to the CPUC than other utility sectors on average, and a much greater percentage of those complaints are for customer issues over which the CPUC has no regulatory jurisdiction.”

Earlier this year, California’s largest investor-owned utility, Pacific Gas & Electric (PG&E), filed for bankruptcy protection after estimating it was liable for more than $30 billion in damages from recent wildfires. An investigation found equipment owned by PG&E was responsible for starting the worst wildfire in California history. The November 2018 Camp Fire killed 85 people and destroyed the town of Paradise. Yet the Customer Affairs Branch received fewer complaints about PG&E than it received regarding AT&T, Charter Spectrum, Frontier, Cox, and Comcast XFINITY.

Unintended consequences of deregulation have also caused several high profile scandals among telecom companies in the state. Some of the worst offenses were committed by cable and phone companies that further traumatized victims of catastrophic wildfires. An effort to implement new consumer protections for fire victims forced to relocate met fierce resistance from cable and telephone industry lobbyists. Some of those same telecom companies continued to bill wildfire victims for months for service at addresses that no longer existed. AT&T even billed customers that died in the fires.

A recent San Francisco Superior Court decision (Gruber v. Yelp) also found another consequence of deregulation. A judge ruled The California Invasion of Privacy Act (CIPA) does not apply to calls made or received on “digital” phone lines better known as Voice over IP (VoIP). The judge found that since the CPUC does not regulate VoIP calls, and such calls are not legally defined as a traditional phone call, CIPA cannot apply.

More than six months after devastating wildfires swept across the North Bay in 2017, AT&T was still billing customers that died in that fire. KGO-TV reports. (3:31)

After promising to never again erroneously bill wildfire victims, AT&T did it again to those traumatized by the 2018 Camp Fire that killed 85 people and wiped the town of Paradise off the map. KOVR in Sacramento reports on one family pleading with AT&T to stop billing them for landline service at an address that no longer exists. (2:15)

Telecom companies that receive Connect America Fund (CAF) dollars to deploy rural broadband service will not have to prove suitable internet speed and performance until early next year, after the FCC’s Wireline Bureau today announced it is delaying mandatory testing because of telecom industry objections.

The delay puts back the schedule for proof of performance testing that was originally intended to begin later this year. The rule would require those companies getting taxpayer funding to aid in network construction costs to test whether those networks meet the FCC’s minimum broadband standard of 25/3 Mbps.

Last summer, the FCC notified internet service providers that it intended to hold all carriers, including those receiving CAF funding before the FCC established its 25 Mbps minimum speed benchmark, to the same standards.