Customers promised big savings from dropping their old Verizon plans found tricks, traps, and speed reductions.

Beware of telemarketers bearing gifts.

Frontier Communications has embarked on a sales push to convince customers adopted from Verizon Communications to “upgrade” their grandfathered Verizon broadband plans to new offerings from Frontier.

But Stop the Cap! has received more than a dozen complaints from customers who discovered their broadband speeds were slashed, sometimes significantly, after taking Frontier up on one of their offers.

“Whenever you call Frontier customer service, they always have an offer for you that they claim will save you money and I fell for it,” Tim Falston says.

Falston has been a Stop the Cap! reader since he learned Frontier Communications was buying out his Verizon landline in 2010.

“Frontier promised me nothing would change after they took over from Verizon, but of course a lot changed when I agreed to switch to a new bundled service package Frontier was offering for my phone and Internet service,” Falston writes.

Falston thought he was keeping his 8Mbps DSL service Verizon had been selling him for nearly five years, only now he would save at least $10 a month bundling some of Frontier’s other products into his package. A few days after signing up, he found his broadband speeds were lacking. It turned out Frontier reduced his speed to just under 3Mbps. A few days later, the company also mailed him a new DSL modem/router that he later learned came with a monthly fee that more than wiped out his “savings.”

“This was the worst decision I ever made, and Frontier never warned me the package I was signing up for cut my speeds more than half and stuck me with a modem I don’t want or need,” Falston said.

Unfortunately, when Falston called Frontier to switch back to his old plan, he was told it was no longer available and he had to choose from Frontier’s current services that came with higher prices and term contracts.

Surprise! Modem rental fee!

“It’s bait and switch and should be illegal,” Falston said. “I was told that everything about my service was to stay the same if I agreed to their bundle, and I think they figured most people have no idea about speeds and just accept what they are given, but I was never told about the modem or the rental fee that comes with it, and my old Verizon equipment worked just fine.”

Frontier won’t even sell Falston 8Mbps service, even though he had it for half a decade.

“They want to sell me 3Mbps and tell me that is all my line will support,” Falston complains. “That was after I finally convinced them to talk to me — the account is in the wife’s name and Frontier blocked me because of ‘security reasons’ until they spoke with her.”

Stop the Cap! recommended Falston schedule a service call and speak to a local technician about the problem. Experience shows employees on the ground far away from the customer service department can often cut through Frontier’s red tape. That worked for Falston who quickly got his old Verizon plan back after the technician made a few phone calls from Falston’s home.

“The tech shook his head and said he deals with these problems all day long and has managed to get customers back on old plans Frontier’s customer service says are long gone,” Falston said. “He told me specifically ‘do not change any plans you signed up for with Verizon — all of the offers from Frontier come at higher prices and fewer features.'”

So if Frontier has an offer you cannot refuse, refuse it anyway, at least if your old phone company was Verizon Communications. You are probably better off with what you have today.

Phillip "An Ex-Frontier Customer" Dampier

The other week while sitting in the dentist’s office waiting for my wallet to be drilled, I overheard a conversation at the reception desk over the latest effort by Frontier Communications to shoot itself in the proverbial foot.

“I decided to get rid of my phone line the other day and when I called Frontier to disconnect, I was told I would owe them more than $150 in disconnection fees for a contract I never knew I had with them,” opened the conversation.

“That happened to my sister as well, and she couldn’t believe it because nobody ever told her she was on a contract,” came the reply.

“I never knew I was either, and I told the representative they needed to show me where I signed up for anything like that or else I’m not paying it,” insisted the latest victim of Frontier’s phantom service contracts.

Within a minute or two, all had decided they were done doing business with the phone company that got its start more than 100 years ago as the well-regarded Rochester Telephone Corporation.  In 2012, there was no turning back after $150 “disconnect” penalties and other insults.  They were intent on being rid of Frontier once and for all.

With customer unfriendly policies like that, it comes as no surprise Frontier has been losing customers in the Rochester market for years, mostly to cell phone providers or Time Warner Cable — the latter which delivers more value and far superior broadband speed in western New York communities not served by Verizon FiOS.

Surprise... you're on a contract with a $150 cancellation penalty.

Twenty years ago, Rochester Telephone delivered excellent value, charging about half what then-NYNEX customers in Buffalo and Syracuse paid for telephone service. But as Frontier has increasingly disengaged from being an aggressive contender for telecommunications services in Rochester, people in this region of one million noticed, especially when Verizon’s fiber to the home service arrived in Buffalo, Syracuse, Albany, and beyond.

What did Frontier offer? Not much. Frontier’s local general manager Ann Burr, who used to be in charge at Time Warner Cable locally, told local media Rochester didn’t need faster broadband speeds. That’s a fitting argument for a company that doesn’t deliver them and believes 3Mbps broadband is plenty fast enough.  If you don’t like it, feel free to leave, so long as you aren’t trapped with that long-term service contract you never knew you had. (The New York Attorney General’s office has already spanked Frontier once for the practice, forcing them to issue refunds, and judging from last week’s conversation, it appears the problem has not abated.)

The fact is, Frontier offers little compelling to the landline customers they have left.

Rochester’s experience with Frontier seems apropos when contemplating the phone company’s latest quarterly results, which one analyst called “ugly.” Having listened to at least a dozen of Frontier’s quarterly conference calls with investors over the past three years, there seems to be no shortage of promises of better days to come.  Frontier is among the few companies I have heard call customer losses of 5-11% every quarter “an improvement.”

As one investor put it, the management at Frontier should win an Academy Award for feigned optimism.

This week, the company announced first-quarter earnings fell 51% thanks to lower revenue earned from the dwindling number of residential and business customers. But better days are ahead, really.

Road to nowhere?

Frontier has spent the last year treating their “system conversion” for ex-Verizon territories as the telecom equivalent of the Holy Grail.  Once achieved, the company can do anything. The reorganization underway internally at the company is supposed to improve its lackluster customer service, generate more marketing opportunities, save the company money, and open the door to a new chapter of a unified Frontier family, with ex-Verizon and always-Frontier employees coming together to do things “the Frontier way.”

How much longer investors will stick around waiting for the promised land remains an open question. The stock has already achieved a 52-week low, and if the company cuts its dividend — the primary point of attraction for investors — it will drop much lower.

Frontier’s management decisions have effectively left the company between a rock (Wall Street) and a hard place (its dwindling customers).  Much of the company’s success is predicated on rural broadband/landline service, where the company expects to face little competition.  But Verizon, the company that sold them much of their inherited network, has a little surprise for them.  After selling off the “junk” (a deteriorating copper landline network they no longer care much about), the company’s wireless division is coming back to town to poach Frontier’s customers.

Verizon’s grand plan is to pitch two products:

1. Home Phone Connect: Verizon’s landline replacement works with the customer’s home phones over Verizon Wireless’ network. Customers can share minutes on an existing Verizon Wireless plan for $9.99 a month or get unlimited calling for $19.99 a month. It comes with most popular calling features included.
2. Verizon HomeFusion Broadband: Verizon Wireless has excess capacity in rural areas, especially on 4G LTE-equipped towers, so why not put it to use? While commanding a premium at $60 a month for just 10GB of usage, customers who value speed over money may tolerate that diamond price.  If Verizon finds a way to relax that usage limit and lower prices, it could present a real competitive threat to phone companies delivering lower end DSL service.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/Home Phone Connect – Home Phone Transfer Verizon Wireless.flv[/flv]

Verizon Wireless introduces Home Phone Connect, a product designed to tell landline companies like Frontier to take a hike.  (2 minutes)

While Verizon isn’t likely to immediately grab major market share with either product, it foreshadows an intent to leverage their rural wireless network to remain a player, even in places where they have abandoned selling landline service.

How to Stop the Erosion

Turning things around? Frontier contemplates licensing U-verse from AT&T

Even in a barely-competitive marketplace, companies must invest to keep up. But that investment annoys Wall Street, which can depress the stock (and the all-important dividend). But improved service retains customers (and may even win a few ex-customers back). So news that Frontier was considering licensing U-verse technology to upgrade their major markets is a logical first step to stop the bleeding. Frontier is irrelevant delivering broadband at speeds of 3Mbps at out the door prices that meet or exceed what the much-faster cable competition charges. U-verse would allow Frontier to deliver faster broadband (up to 24Mbps is plenty fast for a lot of consumers), build its own IPTV offering instead of relying on satellite dish reseller agreements, and maintain landline customers, assuming the company prices its bundle correctly.

While we are big proponents of fiber-to-the-home service, it is clear Frontier will never spend the money to deliver it, even to their largest service areas. They will prefer the cheaper route of fiber to the neighborhood, relying on existing copper infrastructure to connect individual homes to the service. It represents a reasonable first step.

Frontier also must continue aggressive investments in their broadband network in more rural areas. Some of the company’s regional backbones remain woefully congested, and the company just doesn’t deliver the speeds it markets on its website in too many areas.

High speed should really mean "high speed"

Jameson, a Stop the Cap! reader, is a good example. He signed up for “Frontier Max DSL” which claims it can deliver up to 6Mbps in his part of east-central Indiana.  He ended up with 1.6Mbps instead, in part of because Frontier’s records were inaccurate.

I called Frontier tech support after reading some stuff on Stop the Cap! and another site, learning that since I live under 5000 feet from the DSL termination point (the Frontier building down the road) that I shouldn’t have any problems getting their highest speeds. I got lucky and got a customer support agent who understood my problem, and a tech support guy who genuinely seemed concerned about my issue. The tech guy checked Frontier’s records and I was labeled as being 30,000 feet from the building, but I’m really only around 4200 feet away, and my speeds were provisioned at 1.6mbps down and around 450kbps up. He put in a support ticket to have my speeds automatically raised up to the max I’m paying for.

Jameson ended up with around 7Mbps — a little better than the advertised speed, but only because he thought to ask and reached the right people at Frontier to follow through.

Some of our readers in West Virginia are not so lucky, having the mediocre speeds they fought to receive reduced further when a technician suddenly remotely adjusts speed provisioning on customer equipment to reduce their maximum broadband speed.

Frontier’s DSL problems don’t just exist in rural areas. We experienced it first-hand in 2009 when the company advertised up to 10Mbps speeds in Rochester, and delivered 3.1Mbps to us instead.

Consumer Reports documents this is not an isolated problem, with only two-thirds of Frontier customers getting the broadband speeds they pay to receive. If and when a competitor does better, Frontier loses another customer.

Finally, Frontier must improve its customer service. The company is notorious for giving inconsistent answers to customer questions, doesn’t always follow through on commitments, and maintains far too many “gotcha” terms and conditions on contracts that leave customers exposed to unjustified early termination fees.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNET Verizon HomeFusion Broadband May 2012.flv[/flv]

CNET shows off the equipment used with Verizon’s new HomeFusion wireless broadband service.  (2 minutes)

New York State Attorney General Eric Schneiderman is convinced Verizon Communications is abandoning quality landline service for millions of New Yorkers while diverting money and resources to its more profitable cell service Verizon Wireless.

Last week, Schneiderman blasted the state’s largest landline provider for mounting complaints about poor service that now impact 92 percent of its customers, calling deregulation a failure for consumers and businesses in New York.

“Verizon customers deserve the high-quality service they’ve been promised,” Schneiderman told The Associated Press.

The attorney general reports that the number of customers enduring service outages for more than 24 hours has increased, while landline infrastructure — particularly wiring — is allowed to deteriorate.

Schneiderman suspects Verizon is shortchanging landline service as an increasing number of wired phone customers disconnect service, often in favor of Verizon’s more lucrative cell phone service.  The state Public Service Commission (PSC) fined Verizon $400,000 in March for similar concerns, pointing to the company’s intentional workforce reductions lengthening repair windows and creating repair backlogs in some regions.

Schneiderman’s office filed comments with the PSC requesting changes to Verizon’s Service Quality Improvement Plan, which was originally launched in 2010:

At best, New York’s telephone service market is a duopoly, and contrary to theoretical expectations of market controls, the presence of a single competitor has not in fact prevented Verizon from allowing customer service to continue to degrade. Rather than meet its obligations to provide wireline telephone customers with minimally adequate telephone service, Verizon is continuing to drastically reduce its workforce with the result that the company cannot meet its customers’ repair needs in a timely manner.

Verizon’s management has demonstrated that it is unwilling to compete to retain its wireline customer base, and instead is entirely focused on expanding its wireless business affiliate. It is incumbent on the Commission to take appropriate regulatory action to ensure that customers receive reliable telephone service with adequate repair performance. Therefore, the Commission should modify Verizon’s service plan to ensure customers receive adequate service quality in the future.

Verizon defended its service in New York pointing out the company has invested $1.5 billion in the state for infrastructure, including its FiOS fiber to the home network.  Verizon spokesman John Bonomo questioned Schneiderman’s claim that 92 percent of Verizon New York customers had poor service, noting 98 percent of its landline customers don’t have service problems.

Schneiderman’s highlighting of a $400,000 service fine imposed by the PSC did not account for unprecedented damage from both Hurricane Irene and Tropical Storm Lee late last summer, Bonomo added.

But the state’s attorney general notes Verizon’s service problems in New York have been ongoing well before last summer.

Service complaints, charted here from 2008-2011, show a major spike last summer and fall and remain higher than normal.

Schneiderman

“Since at least 2008, Verizon has frequently failed to meet these PSC telephone service standards essential to safe and reliable telephone service,” Schneiderman says. “Even as the number of telephone lines needing to be maintained has dwindled to half those of a decade ago (as customers choose to rely instead on wireless and/or cable telephony), Verizon’s continues to fail to meet the PSC’s service standard.”

Customers on the upper west side of New York City don’t need to be reminded of Verizon’s service failures.  Hundreds of Verizon landline customers in New York’s largest city were left without basic phone service for more than a week, only made worse by the fact Verizon told many of them they’d be without service for at least one additional week while the company worked on repairs.

Phone and Internet service went dead in multiple buildings along Central Park West April 10, but customers wanted to kill when they learned the phone company wanted more than two weeks to get service restored.

“I was like, excuse me, are you serious? Two weeks?” Iram Rivera, a concierge at 262 Central Park West, told DNAinfo.  His building was hard hit by the service outage — 80 percent of the building’s 80 apartments were affected.

“I just don’t get the feeling that there’s much of an appreciation on Verizon’s part that this is a hardship for people,” said Ken Coughlin, who lives on West 87th Street and Central Park West. “There’s no communication, there’s no updates, it’s infuriating.”

The outage only affected traditional landline service and DSL broadband over copper phone wiring. The more modern fiber-optic FiOS network that provides TV, Internet and voice service wasn’t affected, Bonomo said.

Schneiderman notes landline outages have an especially hard impact on small businesses:

In the current recession, the fragile economic condition of many small businesses puts them at risk of financial disaster if they suddenly lose telephone service, and their provider is unable to restore service promptly. Each day that these businesses are without service they lose significant revenues that many simply cannot survive without.

Small businesses depend on functional telephone service to meet the needs of their customers in numerous ways. When customers are unable to reach a business by telephone, they may assume the business is closed and purchase the goods or services they want elsewhere. Restaurants are prevented from giving reservations to prospective customers who call. Many types of businesses depend on working telephone lines for processing credit card charges, and may lose substantial sales by limiting transactions to cash or checks. Professional offices can be prevented from providing medical, legal or accounting services to their clients without working telephone service.

In Schneiderman’s view, the deregulation policies now in place in New York have failed consumers, leaving them with a duopoly of phone providers with insufficient oversight.

For competition to benefit customers with improved service, lower prices, and more innovation, there has to first be a willingness to compete, which is significantly absent from Verizon-New York’s policies and practices.

Rather than robust competition, New York’s telephone market is at best a duopoly, with as many indicators of cooperation between the two providers as robust contest for customers. Furthermore, the actual behavior of consumers in the real world is markedly different from the PSC’s theoretical assumptions about the telephone market.

When a Verizon customer experiences a prolonged service outage or installation delay, the option to switch carriers to a cable provider is of no immediate use. Finally, even if consumers wanted to compare Verizon’s service performance with cable provider alternatives, the lack of available information prevents consumers from making educated choices.

In New York, most customers are served by Verizon Communications, Time Warner Cable, or Cablevision.  Time Warner Cable and Verizon recently agreed to cross-market the other’s products and services as part of a wireless spectrum transfer.

Verizon Communications has agreed to full restitution, as part of a class action settlement, for unauthorized third party charges on their customers’ phone bills.

Known in the industry as “cramming,” extra unauthorized fees pop up on phone bills for voicemail, dating lines, ringtones, or 800 numbers many customers have no idea they even had.  Almost all of the charges come from independent companies unaffiliated with Verizon.  But critics charge phone companies have been ignoring abusive cramming practices, in part because they share a percentage of money billed and collected from customers.

Deceptive cramming charges are often hard to spot on phone bills replete with cleverly-named-to-be-obscure surcharges, taxes and fees.  Many crammers deliberately keep descriptions about the services they are billing as vague as possible, sometimes appearing as “special services charge,” “voicemail access,” or even “monthly charge.”  Many ratepayers assume it is all just a part of the cost of having phone service.

A class action lawsuit against Verizon accused the company of doing little to stop unauthorized third party fees, and many customers afflicted by them report getting them off their bills is not as easy at it should be.

“When I had a mysterious $14.95 monthly fee for ‘voicemail,’ a service I knew I didn’t have, Verizon required me to fight with some Bermuda-based company to get the charges reversed, and they just kept repeating I must have authorized the service because it was on my bill,” reports Stop the Cap! reader Kevin Sessly. “They wear you down until you just pay the bill.”

Sessly eventually won refunds after contacting his state’s public utility regulator.

As part of the settlement, Verizon customers will be entitled to full refunds of all unauthorized third party charges from April 27, 2005 through Feb. 28, 2012.

“Some settlement class members may have a claim for hundreds or thousands of dollars in refunds under the settlement,” class counsel Bryan Kolton said.

Verizon has also agreed to adopt an “opt in” system where customers must first allow third party charges on their phone bills before a company can bill your account.  Currently, customers are subject to third party billing unless they specifically block it with their telephone company.

“It is difficult to overstate the credit that is due Verizon for its commitment to fixing the third-party billing system as it relates to Verizon customers,” said John Jacobs, one of the lead attorneys for the class. “By this settlement, Verizon has committed to extensive and unprecedented changes that we believe will go a long way toward eliminating cramming and will change the industry.”

Crammers have used a variety of tricks to bill phone customers for services they never ordered.  Completing sweepstakes or contest forms with a phone number is one common method, asking for a cell phone number as part of a “free ringtone offer” is another.  Many services also trick customers into signing up with free offers or discounts on other products or services.  Many customers forget to cancel before the trial ends, resulting in recurring charges.

Customers will be able to recover the full amount of the unauthorized charges, if they have copies of their past phone bills, or obtain a quick $40 flat-rate refund by submitting claims at www.verizonthirdpartybillingsettlement.com or calling toll-free 1-877-772-6219.  Both services should be up and running by March 9.

Non-Verizon customers can still take steps to protect themselves from unauthorized charges by calling their provider and requesting a block on all third-party charges.  This service is provided at no charge.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ABC News Phone Cramming How to Get Money From Verizon Settlement 3-5-12.mp4[/flv]

ABC News reports on the Verizon settlement and steps consumers can take to identify cramming and obtain refunds for unauthorized charges.  (2 minutes)

...some of that juicy 700MHz spectrum Verizon is getting from the nation's biggest cable companies.

In an ironic turnabout, Deutsche Telekom’s T-Mobile USA, last year an acquisition target of AT&T, has filed comments with the Federal Communications Commission opposing Verizon’s spectrum purchase from the nation’s largest cable companies as “contrary to the public interest.”

Verizon Wireless is seeking to acquire a substantial block of unused AWS spectrum that is unlikely to provide any near-term benefits to Verizon Wireless customers (indeed, the company already holds other AWS spectrum and has not even put it to use yet). Rather, the principal impact of the acquisition would be to foreclose the possibility that this spectrum could be acquired by smaller competitors – such as T-Mobile – who would use it more quickly, more intensively, and more efficiently than Verizon Wireless. The acquisitions will limit the deployment of LTE by competitors of Verizon Wireless and the bandwidth available for such deployments.

If these transactions go forward, the end result will be less LTE capacity available overall and reduced competition in the provision of LTE, which would be contrary to the public interest.

T-Mobile, in particular, is upset because it owns no spectrum in the valuable 700MHz range — frequencies that can travel longer distances and easily penetrate buildings.  Verizon Wireless does, and will acquire much more if the FCC approves the deal to transfer spectrum from Comcast, Time Warner Cable, and Cox. [Correction: As one of our readers pointed out, the spectrum being acquired is in the AWS band, which T-Mobile argues in its filing is still suitable for a 4G network deployment.]  T-Mobile argues Verizon does not need the spectrum, and will effectively “warehouse” the frequencies to keep them off the open market.  Without prime spectrum, T-Mobile argues, it will be difficult for the company to deliver a 4G experience to its customers.

T-Mobile also has a bone to pick with Verizon Wireless and the cable industry over what it suspects is a non-compete agreement:

At least in effect, this has all the hallmarks of a pure horizontal allocation of markets.

From the limited information available, it appears as though Verizon, the majority owner of Verizon Wireless, has agreed (tacitly if not expressly) to halt its extensive efforts to expand into the cable business and the cable companies have, in turn, traded their control of valuable spectrum in exchange for this protection of their cable markets.

It has been publicly reported that, coincident with acquiring the cable companies’ spectrum, thereby eliminating potential new competition in mobile wireless, Verizon ended its FiOS build out plans and terminated its agreement to resell satellite television. This series of acts appears to limit Verizon’s activity as a potential competitor in the video market and limit the cable companies’ role as potential competitors in the wireless market, while at the same time foreclosing competing providers from one of the only available sources of spectrum.

As a result of this “triple play,” competition in both markets will be substantially reduced. The antitrust laws have long condemned such agreements, even among potential competitors.

Not All Frequencies Are Created Equal

Will Verizon ultimately warehouse its newest acquired spectrum?

Unless you are well-acquainted with the wireless industry, all most people know about their cell phones is that they turn them on and a signal strength meter indicates what kind of reception quality you are getting.  In fact, wireless companies use a range of frequencies across several different frequency bands to handle voice calls and data.  As an end user, you never know the difference.  But if your wireless company is forced to use higher frequencies, they often have a harder time penetrating buildings or provide only limited distance coverage.  That’s why AT&T and Verizon customers have a better chance of making and receiving calls in the middle of a supermarket or office building while others lose reception.

Clearwire has an extensive holding of very high frequencies at its disposal — frequencies the company cannot effectively use because they require considerably more infrastructure (ie. more cell towers) to provide an effective service to customers.  Clearwire customers already complain about poor reception inside buildings, a problem exacerbated by the very high frequencies the company has to use for its service.  Verizon and AT&T collectively control the majority of the best, more robust spectrum — the 700MHz band.  Verizon’s LTE network, for example, relies on spectrum that used to be used by high numbered UHF television channels.

Companies like T-Mobile rely on frequencies in the 1700MHz and 1900MHz bands.  While certainly adequate in urban and suburban areas, T-Mobile has to spend more on cell tower deployment and be especially concerned with rural coverage, especially in areas where the terrain makes “line of sight” reception from cell towers more difficult.

While today’s 2G and 3G networks have made due with current spectrum, companies like T-Mobile are having a hard time finding space to launch the next generation — LTE/4G technology — on their current spectrum.  Without LTE, T-Mobile (and others) will find themselves at a competitive disadvantage.  The company argues it should have the right to acquire some of the frequencies Verizon intends to capture from the cable industry, especially if Verizon has no immediate plans to use the spectrum.

Some of the wrangling by T-Mobile seems especially ironic because parent company Deutsche Telekom has indicated it wants to sell T-Mobile USA and leave the American wireless market.  It has shown little interest so far investing in a LTE/4G network upgrade.  Additionally, as part of AT&T’s failed merger bid, T-Mobile is expecting to receive frequencies from AT&T as part of the “failed transaction” clause in the original merger proposal.