Verizon has a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

A new study predicts an agreement between Verizon and the nation’s top cable companies to cross-sell each other’s products could cost up to 72,000 jobs in the northeastern U.S. and potentially threaten Verizon’s state-of-the-art fiber optics network FiOS.

The Federal Communications Commission (FCC) and the U.S. Department of Justice are continuing to review a proposed deal that would allow Verizon Wireless and companies including Time Warner and Comcast to cross-market each other’s products, which critics allege will eliminate competition and job-creating investment.

In the crosshairs of the deal: Verizon’s fiber to the home network FiOS, which has been stalled since 2009 when Verizon signaled it was “winding down” FiOS spending. According to the new report, produced by the Communications Workers of America (CWA), FiOS is at risk of being undercut by Verizon in favor of reselling cable-TV packages from Comcast, Time Warner Cable, and other cable companies. At worst, some critics of the deal contend Verizon will eventually abandon FiOS altogether.

The CWA has already seen the impact of Verizon’s declining interest in expanding FiOS as the company has left several major American cities in its service footprint, including Baltimore, Buffalo, Syracuse and Boston without fiber optic upgrades.

The CWA is calling on regulators to impose conditions on any deal between Verizon and cable operators:

• Prohibit Verizon Wireless and the cable companies from cross-marketing in Verizon’s landline service areas;
• Require Verizon to build the FiOS network to 95% of Verizon households in its landline footprint, including in rural and low-income areas;
• Ensure that Verizon Wireless and other cable companies are not able to lock out competitors.

If Verizon were to maintain the expansion of FiOS to non-FiOS areas, about 72,000 new jobs would be created, the CWA report found. Job growth would be concentrated in eight Eastern states and Washington D.C.

“If done right, the proposed deal would add tens of thousands of new jobs and allow underserved communities access to high quality broadband service,” said Debbie Goldman, telecommunications policy director for the CWA. “The FCC has the obligation carefully to assess this deal in terms of likely job loss.  We expect regulators to reject this deal unless the parties accept conditions that would create jobs, increase network investment, and promote consumer choice.”

Those living in Verizon service areas without FiOS are already upset that they have been effectively bypassed by the phone company.

“It’s an arrogant stand,” Buffalo Councilman Darius Pridgen said in a phone interview with the Philadelphia Inquirer. Verizon has upgraded other areas in upstate New York with FiOS, but not financially distressed Buffalo. “It’s advertised in the city, but it’s not available in the city.”

In Philadelphia, Verizon obtained a 15-year video franchise agreement with city officials and the company agreed to extend FiOS throughout the city by 2016. But residents are complaining that Verizon’s definition of “extending service” has meant wiring cables down major thoroughfares, not wiring up every home that wants the service.

City Councilman James Kenney called for a public hearing in April amid complaints that Verizon was reneging on its commitment to city officials and residents.

Cole

Baltimore councilman William Cole thinks his city was skipped by Verizon for a reason, while more affluent areas are set to get fiber upgrades. Cole told the newspaper his constituents have called Verizon after seeing local ads for FiOS service, but are told they cannot get the service.

Verizon spokesman Edward McFadden said the decision to build the FiOS network was never popular on Wall Street. “We got hammered,” he told the Inquirer, “and our shareholders were punished for this.”

Now that the network is up and running, McFadden says Verizon retains a strong incentive to maintain its FiOS business because of the huge investment and the increased earnings it brings the phone company.

But the CWA’s Goldman remains convinced Verizon has broken its word with regulators and politicians who believed promises from Verizon and other telecom companies that passage of the deregulation-packed 1996 Telecommunications Act would inspire the dawn of a new competitive era in American telecommunications. Now instead, Verizon and the cable companies want to simply sell each other’s services.

“They wanted deregulation, and they said they would compete,” Goldman said. “This marks the beginning of the surrender, this truce.”

Despite concerns from consumer groups that a deal to exchange wireless spectrum in return for collaborative marketing between two competitors will lead to higher prices for consumers, the Federal Communications Commission seems prepared to approve it, according to a report from the Reuters news agency.

Two sources familiar with the matter told Reuters the FCC has taken the lead on the “spectrum transfer” issue, which involves turning over prime wireless spectrum currently owned by large cable operators Comcast, Time Warner Cable, Cox, and Bright House Networks to Verizon Wireless. The combined licenses the cable industry holds are in the majority of major American cities, which critics charge Verizon will acquire to eliminate any potential competitive threat from a new nationwide wireless carrier.

Verizon’s recent moves to sell off its own “excess” spectrum to its current competitors has garnered favor inside the FCC, according to sources. Verizon Wireless recently agreed to transfer some of that spectrum to T-Mobile USA, which coincidentally was a fierce opponent of the deal between Verizon and cable operators. T-Mobile’s opposition has since muted.

Licenses owned by the cable industry would have been expansive enough to launch a new national wireless competitor. (Image: Phonescoop)

The deal between Verizon and the nation’s top cable companies is worth about $3.9 billion, but the Justice Department continues to signal concerns it would ultimately cost consumers more than that. According to Reuters, Verizon remains in “tougher talks” with lawyers inside the Justice Department who are concerned cooperative marketing between the phone and cable companies would result in decreased competition and higher prices.

One source told Reuters regulators were hoping Verizon’s now-stalled fiber to the home network FiOS would bring major competition to the cable industry, which until then had only faced moderate competition from satellite dish providers. In return, Comcast and other cable operators were expected to invade the wireless phone marketplace, adding needed competition.

Instead, both sides have retreated to their respective positions — Verizon focusing on its wireless service and Comcast and other cable companies abandoning interest in wireless phones and sticking to cable-based products.

The idea that both would begin to cross-market each other’s products is “a problem” according to the Justice source not authorized to speak publicly.

Additionally, concerns are being raised over a proposed “joint operating entity” between Verizon and cable operators that would focus on developing new technologies that could lock out those not in the consortium.

No decision is expected from the Justice Department until August, but Justice officials have signaled they have several options they can pursue:

1. Sue to stop the spectrum transfer;
2. Force the companies to modify their proposal to reduce potential collusion;
3. Approve the deal but monitor how cross-marketing agreements impact on consumer markets for wireless and cable products.

Stop the Cap! reader Joanne wants to see the back of Frontier Communications’ DSL service so she headed to Time Warner Cable to get information about their broadband pricing. Things quickly got confusing when she opened a chat session with a support representative over exactly what the cable company was charging for service and installation. We’re going to participate after the fact (our comments are in blue):

Joanne: I am looking at basic Internet service at $19.95 per month.

TWC: Great choice!

STC: Did anyone think the representative would say anything different no matter what level of service Joanne wanted?

TWC: What kind of questions do you have regarding this one?

Joanne: Is installation included at no charge?

TWC: Not actually there is an installation of 49.99 but you can get a very special discount of $19.99, but if you are not able to pay that you can always get the recurring method of payment or auto payment and you can get free installation!

STC: What?

Joanne: Which is it – 49.99, 19.99 or zero?

TWC: I mean once you order the service we will make a discount of 19.99 for the installation, but if you want you can select the auto payment and you will get free installation.

STC: Joanne should have asked at this point for TWC to waive the installation fee so she need not reach for a bottle of Tylenol and decoder ring to figure all this out. 

Joanne: By auto payment, do you mean automatic via my checking account?

TWC: Yes, or credit or debit card as well.

STC: Joanne could also set up automatic billing on a credit card nearly set to expire and then just drop back to regular billing if she was uncomfortable with Time Warner automatically sipping money out of her accounts. 

Joanne: What is the total including taxes for this plan, per month?

TWC: $19.99 + 2.50 if you need a modem and $2 or $2.50 taxes. No more than that.

STC: Of course she needs a modem. But if Joanne plans to stick around with Time Warner, she might want to buy one herself and avoid the modem rental fee altogether. Why pay that forever?

TWC: Once they process the order you will be getting an email with all the details about it!

Joanne: Thanks, but I prefer to know the details BEFORE I sign up. If I wanted to sign up for two years, or three, could I do that at the 19.95 rate?

TWC: No, it is 12 month promotions with no contract.

STC: Just threaten to leave after the 12 months are up and watch it get extended for another year. By the way, can you say “offshore chat support center?” 

Joanne: What is the current full rate for basic service per month?

TWC: As we do not have a contract involved we do not handle prices after the promo expiration, what we have is a promotional time that will be for 12 month that way we will be always sure you as our customer are taking advantage of the earliest and best promotion by the time your promotion is about to expire!

STC: (banging head on desk)

Joanne: So you can’t tell me what the current full rate is as of today, for your current customers?

STC: Apparently not. More than two minutes passed before Joanne finally asked if the representative was still there.

TWC: Yes, I’m checking into that. Just a moment please. […] That would be 29.99 + 2.50 + taxes.

Joanne also learned there are no usage caps, for now anyway.

Our recommendations is to call Time Warner Cable by phone for anything more complex than a service credit request or address change. The time and unnecessary confusion that is saved could be your own.

Earlier this week, Time Warner Cable unveiled its new 5GB limited-use broadband plans in Austin, Tex. The company told customers it would be “listening” to their concerns on the cable operator’s “TWC Conversations” website, and many Stop the Cap! readers shared with us copies of their own two cents, submitted as comments on that website.

But so far, the conversation seems very one-sided. To date, here is Time Warner’s presentation of the opposing point of view:

This reminds us how Time Warner Cable treated customers sending in their views of the 2009 (failed) experiment, when earnest writers like “De” eventually received this in response:

Reinventing the two way conversation.

Well I eventually submitted an email to TWC about the caps on April 14th. To prove they pay attention to their customers, they sent me this reply today (Over a month later) LMAO:

To: RealIdeas
Subject: Greedy Bandwidth Caps. The truth!?
Sent: Tue, 14 Apr 2009 04:22:52 -0400<  >

was deleted without being read on Sun, 31 May 2009 01:49:12 -0400

Just goes to prove they don’t care if the consumer wants the per byte billing or not – it’s coming anyway.

Our opinions and views are nothing to TWC — all that matters is the $$$$. The whole PR about them listening is just to ease media and political pressure. They have made their mind up already.

Big cable and phone companies can thank 2011’s Hurricane Irene for keeping them from scoring #1 on the American Customer Satisfaction Index’s top most disliked companies in America. Those choice spots were reserved for utility companies on Long Island and in Connecticut.

But even the rain-soaker that left millions without power for weeks couldn’t keep America’s perennial hatred of cable and phone companies from the top 15 list:

#3 Charter Communications – The “Don’t Care-Bears” of Cable

America’s worst cable company delivers downright shoddy customer service and dodgy billing practices a loan shark would not dare try. The company has been flopping around like a beached whale since exiting its “stiff our creditors good with a quick trip to bankruptcy court,” and is now back to stiffing their customers instead:

“The sales rep originally promised us a $42.95 a month for services, with an introductory price of $24.95 for the first 3 months (a savings of $18 a month). After the introductory period ended, the company started charging me $56.95, when I finally caught on that they were charging me $14 more per month than what is said on the Work Order (could provide at anytime for proof), he never once mentioned that there will be a $10 more per month, and now the company says if you have no other cable service with us (Charter Communications), you are to be charged $10 more per month!!”

#4 Comcast – Hey, It Could Be Worse — At Least We’re Not Charter!

Comcast had a bad year with faulty e-mail, failing equipment, and more excuses than CVS has pills. Unprofessional contract installers also have problems keeping their hands to themselves. The largest cable operator in the country has also been known to empty checking accounts when they want their money, and there are horror stories about installers leaving wires, clips, and nails scattered on front lawns, quickly becoming projectiles when the mower runs over them.

Their cable service shampoos in mediocrity scoring 61 out of 100 and the “digital phone” service they run is the conditioning rinse, doing slightly better with a score of 67.

#6 Time Warner Cable – Always Listening to Customers, and Then Ignoring Them

Rated 63/100, Time Warner Cable managed a four point improvement over last year, which will be promptly erased if they keep experimenting with Internet Overcharging schemes.

Derided for “third world” customer service worthy of a despotic backwater dictatorship, slow Internet speeds, endless outages, and gouging rates, the ACSI has few nice things to report about America’s second largest cable conglomerate.

One customer vented, “TWC has destroyed my business and doesn’t give a damn: I first complained five weeks ago about outages and miserable upload speeds. I need to send large files to clients. I’ve had two technicians visit, who both found it was in the neighborhood. Today, I found the situation has not changed and am told there’s no further work order.”

Customers also complain about being stuck with Time Warner because there are no competing services in the area.

That being said, we’d rather have Time Warner Cable than AT&T or Comcast, and our personal customer service experience in western New York has been excellent for us, so it depends on where you live (and what competition they have in your area.)

#7 Cox Communications – Beam Me Up, Scotty!

Now we know where Time Warner’s four extra points came from — at the expense of Cox Cable, which is down by that same amount turning in a truly pathetic score of 63 out of 100.

Time Warner Cable occasionally threatens to buy out Cox, at least if industry rumors prove true, which might actually be an improvement.

Cox’s problem is time-honored for the cable industry — it gouges customers with outrageous rate increases the oil and gas industry don’t have the stomach to attempt.

Customers complain Cox is the High Priestess of Bait & Switch, signing customers up on one promotion and then shifting them to another, pretending the original offer was a figment of someone’s imagination. One customer:

 “I setup 2yr service w/Cox —1st yr @ $29.99, 2nd @ $49.99. Now after 6mon they changed it to 1st 6mon @ $29.99, 2nd 6mon @ $49.99, and 1 year @ 79.99.”

#11 CenturyLink – (Last)CenturyLink — America’s Worst Phone Company (Hey Frontier, You Get a Pass This Time)

CenturyLink, you must be so proud of your 66/100 score. In fact, add one more “6” and you’ll convince customers who already suspect you are the devil’s phone company.

“They lie about everything and do nothing,” one customer told ACSI. “I have been having issues with my Internet for a year and they have yet to help.” Another customer wrote that they’ve “had issues with CenturyLink employees flat out lying to [me] about the bill.”

Billing issues are most likely to be cited by complaining customers along with customer service representatives having less knowledge about the company’s products than customers do.

That being said, at least they don’t have the Frontier employee who insisted on telling us about the company’s wireless “wee-fee” network.  She admitted she had no idea it was “Wi-Fi.”

#14 DirectTV – Hey, We’re Looking Pretty Good Compared to the Other Guys

The satellite company managed 68/100, and the biggest problem they still have is misleading contracts and promotions that leave customers out of pocket for hundreds of dollars for deals that go un-honored and rebates that never arrive.

Discounts seem “luck of the draw” among customer service representatives:

“DirectTV raised the price for 30% after one year and said that they told me about this verbally, which is not true. My agreed price with Saha on the phone, a DirecTV employee, was $56.99 including two receivers and one HD/DVR receiver. DirecTV overcharged me on my first bill. When I complained, they said they forgot to give me my 30% discount. So over the next six months, they kept revising my bill but never got it right.”