Menino

Boston Mayor Thomas Menino has problems with Comcast.  The cable operator, long a dominant player in the city of Boston, has been raising basic cable prices for the last several years, and the mayor’s office has had enough.  This week Menino filed a petition asking the Federal Communications Commission to give the city “emergency control” over the price of basic cable service in Boston — the only control permitted in the largely deregulated cable television marketplace.

Menino waved a study done at the behest of the city showing residents were paying substantially higher prices for the lowest level of service from Comcast.  Basic Service, which includes 37 local over the air stations and a handful of shopping and public access channels costs $15.80 inside city limits — up from $9.05 in 2009.  In nearby Cambridge, the same service costs $7.30 a month.  What’s the difference?  Cable rates are completely deregulated in the city, but smaller communities around Boston lack sufficient meaningful competition, so they are permitted by law to continue regulating rates for the lowest tier: Basic Service.

Now Menino wants those rates brought back under control for the benefit of seniors and low income residents, among the 10,000-15,000 local homes that subscribe to the economy service.

It’s just the latest challenge for Boston, which is among a few cities along the coast of the northeastern United States not benefiting from aggressive broadband and video competition between the phone and cable company.  Just over 200 miles away, metropolitan New York and the bedroom communities in that state, as well as New Jersey and Connecticut, have access to super fast broadband from Verizon FiOS, Time Warner Cable, Cablevision, and Comcast — the latter predominately serving greater Philadelphia.

Boston has been bypassed for Verizon FiOS, is ignored by other potential cable competitors, and is stuck with poor-performing cable overbuilder – RCN, which has focused most of its efforts on multi-dwelling apartment and condo units in the city.  The rest of Boston gets ‘take it or leave it’ service from Comcast or DSL from Verizon.

Comcast was quick to respond to Menino’s call for reregulation, noting they provide $5 senior discounts for their cable customers and offer cheaper service than the alternatives — $17.50 a month from RCN or between $30-35 for promotions from DirecTV and DISH Satellite.

Menino’s dealings with telecommunications companies in Boston have run hot and cold for years.  In February, Menino appeared with Comcast senior vice president Steve Hackley to celebrate the opening of a Digital Connectors program for up to 2,800 low income households, paid for by federal stimulus grant money.  Under the program, students who complete computer training courses receive discounted Comcast Internet service for $10.95 a month for the first year and $15.95 for the second year.

Boston

Menino’s office has often been a watchdog when it comes to Comcast fulfilling its franchise obligations, and the city had high hopes competition from RCN would extend a choice of cable providers to most city residents.  That has not happened.

The city’s other telecommunications provider, Verizon, has been in contention with the city for several years.  The trouble began in 2007 when Menino declared war on property tax exemptions for utility poles dating back to 1915, granted to telecom companies like Verizon.  Four years later, that battle has culminated in Verizon literally wiring its fiber optic FiOS service around the city of Boston, refusing to deliver service inside it.

The promise of Verizon fiber has often gone unfulfilled or delayed in many larger cities, subject to bureaucratic delays not experienced in smaller communities.  Some towns and villages in Massachusetts signed franchise agreements just a few months after the company came knocking.

One local official, not authorized to speak publicly on the matter, told Stop the Cap! many communities welcomed Verizon’s fiber optic initiative with open arms.

“You have to understand there is a different mentality among government officials in smaller towns than there is among larger cities,” the official tells us. “In our town of 35,000 when Verizon offered to wire competitive service in our area, we wanted to know where to sign and when they could get started.”

The official says the local government was concerned about making sure Verizon repaired any damage to local infrastructure, abided by local zoning rules, and guaranteed they would not bypass parts of the town.  Negotiators also fought for funding to upgrade equipment for the community’s public access channels, but never went into the negotiations thinking about how much they could extract from the phone company.

“In larger cities in this state, there is a definite mentality that Verizon represents a golden goose ready and willing to lay golden eggs in return for franchise agreements,” the official told us.  “Maybe that is true, but when you are in a smaller town, you recognize the degree of willingness to invest capital to tear out old wires and replace them with fiber is far less here than a city like Boston, which has the potential of many more customers.”

Boston, like other large cities, prepared for protracted negotiations with the phone company over the new fiber service.  At the same time, Mayor Menino infuriated Verizon when he won his property tax lawsuit against the company, collecting $5 million in tax payments that one city official rubbed in.

Ronald W. Rakow, Boston’s commissioner of assessing, told the Boston Globe at the time: “We will actually be sending a bill to them for that later today,’’ Rakow said. “Don’t want to let the ink dry.’’

No Verizon FiOS for Boston

The argument over property taxes may have been the final straw for Verizon FiOS in Boston.  Menino suspected as much, telling the Globe “they insinuated that we weren’t going to get it because of my position on telecommunications.’’

Even then-Verizon CEO Ivan Seidenberg warned the city during a speech at the Boston College Chief Executives’ Club of Boston “to be careful when considering new taxes or regulations.”

Verizon has since stopped expanding its FiOS service to new cities.

“We knew as the financial crisis grew we were smart to sign up earlier rather than later, because if we didn’t, we would never have the service today,” the local official tells us.  “I have sympathy with local officials in every city trying to do what is best for their residents, but anyone who understands wired telecommunications should know these kinds of projects are exceedingly rare — grab them when you have the chance.”

Just a few years later, the impact of earlier decisions not to hurry competition into the city of Boston and the city’s tax policies have become clear:

• Comcast may be forced to reduce their Basic Service rate, but nothing prevents them from increasing Digital Service cable rates to make up the difference;
• RCN’s network has languished, providing competitive choice to just 15,000 local residents.  Comcast serves at least 170,000;
• Verizon has no plans to offer FiOS in the city indefinitely;
• Menino’s victory claim that Verizon should pay its fair share in property taxes seems less victorious today as the phone company began passing on the new taxes to ratepayers as a “Massachusetts Property Tax Recovery Surcharge” in March, 2010.
• No other competitor has appeared on the horizon willing to take on Comcast in the city of Boston.

With Time Warner Cable’s broadband now running as high as $50 a month for standard, stand-alone service, getting the best deal possible can save you as much as $20 a month off those prices.  Time Warner Cable has been repricing their services to deliver the most value to customers who bundle all of the company’s products into a single package.  But if you don’t want television or telephone service from the cable company, you are going to pay a lot more than your service-bundled-neighbors for Road Runner High Speed Internet.

Stop the Cap! presents our strategy to help broadband-only customers get the best possible prices from Time Warner Cable:

Choose Earthlink

Customers paying Time Warner Cable’s regular prices for broadband service are paying too much.  Time Warner currently charges just short of $50 a month for Standard 10/1Mbps service (speeds are slower in some areas).  That’s up from years of charging $40 a month, slightly higher if you were a broadband-only customer.  But with the help of Earthlink, you can cut that broadband bill to $29.99 a month for the first six months.  Earthlink co-exists with Road Runner, Time Warner Cable’s own broadband service.  With just a few mouse clicks and a quick phone call, Time Warner can switch your regular price Road Runner to Earthlink without any equipment changes.  Billing and service will continue to be provided by Time Warner and the change literally takes less than five minutes by phone.

Earthlink’s broadband service is indistinguishable from Road Runner — same speeds, same level of service, with two exceptions:

• Earthlink does not benefit from PowerBoost, which delivers temporary speed increases during file downloads
• You will forfeit your rr.com e-mail address

We recommend you avoid using ISP-provided e-mail addresses when possible, because they help tie you down to an existing provider.  Instead, sign up for a free e-mail account from Google’s Gmail, or Yahoo! Mail, or any of the dozens of other web-based e-mail providers.  Or, purchase your own domain name from GoDaddy or 1and1, which includes e-mail, and either read it on those sites or forward it to a web-based e-mail provider.  Domain names can be had for under $10 a year and deliver maximum flexibility for those who want the freedom to change Internet providers.

After Six Months, Switch Back to Road Runner

When your Earthlink promotion expires at the end of six months, your price will increase to $41.95 per month.  Just before that happens, switch back to Time Warner Cable’s Road Runner service.  You qualify for new customer pricing promotions.  As of this week, Time Warner Cable in western New York is offering one year at $29.99 per month for 10/1Mbps service.  Other areas may have different pricing promotions.

After the year is up, you can start all over again, heading back to Earthlink for another six month promotional term.  Earthlink has offered its promotional plan for more than two years, and it shows no signs of ending anytime soon.

Promotional Half-Truths

Promotions come and go from Time Warner Cable, so it is wise to check with them often if the $29.99 deal is not currently running in your area.  Start by checking Time Warner Cable’s website, and remember if you are using Earthlink, you will want to select pricing for new customers.  If you find a good price on the website, you may be able to complete your order online.  Otherwise, call your local office and ask about currently running promotions.  Some common ones:

• Road Runner Turbo at 50% off for the first year;
• Road Runner Turbo free for six months;
• Road Runner with wireless router/modem free for six months to one year;
• Road Runner with free installation (especially useful if you want Road Runner Extreme/Wideband service, which carries a pricey installation fee);
• Road Runner for $29.99 for six months;
• Bundled promotions — $99 for all three services, $79 for broadband/cable or broadband/phone

Not every promotion delivers the best deal for customers, and some have been slightly deceptive, such as this speed comparison we found on the cable company’s website this morning:

Our View:

1. Time Warner Cable has been spanked before for their claims about running a “fiber network.”  In fact, their “Fiber Rich Network” is a marketing stretch.  All modern cable systems use fiber optics to help distribute their service into various communities, but coaxial copper cable delivers the signal through neighborhoods to your individual home.  Cable companies still cannot match the broadband speeds available on an all-fiber network.
2. “Powertasking” is a meaningless marketing claim.  Any high speed network will allow the entire family to effectively share a broadband connection.
3. We’re glad to know Time Warner Cable has “massive bandwidth” — more than enough to go around.  We’ll remember that if and when the company ever entertains bringing back their experimental Internet Overcharging scheme they claimed was necessary to pay for equipment upgrades to cope with broadband traffic growth.
4. It would be simpler to install Time Warner’s DOCSIS 3 upgrade if we could do it ourselves, but the cable company currently requires a mandatory service call ($67.98 fee) to install it.
5. Time Warner is being cute comparing their broadband speed with Verizon FiOS.  In fact, FiOS is faster because of what isn’t mentioned here — upstream speeds.  Time Warner tops out at 5Mbps, Verizon offers 20Mbps for uploads.  But Time Warner’s pricing is better at that download speed.  Verizon is more aggressively priced when they bundle services together.  For example, Time Warner’s $99 triple play bundle only offers 10/1Mbps service.  Verizon offers up to 25/25Mbps service for the same price.  Both include phone and television service.

The 500 channel universe has arrived for around 23,000 households around the state capital as Verizon officially unveiled its FiOS television service last week.

The company added television to its broadband service offering after securing video franchise agreements in suburban Bethlehem, Colonie, Guilderland, and Scotia.  It also expects to win approval to provide television service to the nearby city of Schenectady and the town of Colonie shortly.

The arrival of Verizon’s triple-play package begins with a $100 monthly promotional package (go to Verizon’s FiOS website and the online price can be lower) including phone, Internet, and television service for a year, rivaling a similar $99 promotion on offer for new customers from incumbent Time Warner Cable. But Verizon delivers faster broadband service and more HD channels than its cable rival, and will deliver up to 535 channels to subscribers — 130 in High Definition.

“Consumers and small businesses in these communities at long last have a better choice for TV,” said Tracey Edwards, president and general manager for Verizon’s Upstate New York region. “We’ve had great success in many other parts of the state. Now it’s time to bring FiOS TV to this part of northeastern New York and provide customers in the region a choice that is truly different from the cable TV company.”

Verizon officials also claimed the introduction of FiOS TV would result in lower prices for local residents, a claim that does not necessarily hold up when examining the rates for each company.  Both deliver triple-play promotions and retention offers that come within a few dollars of each other.

Time Warner Cable says Verizon’s service does not come with the same local commitment to the region the cable operator has provided with its local news channel YNN, and features that allow customers to start programs over from the beginning or watch live streams of 32 channels on the company’s iPad application.

But the fact a new choice is now available has delighted some of our readers.

Jeff in Guilderland says a number of Albany residents were upset when Time Warner Cable unveiled its $99 promotion which turned out not to be available to existing customers.

“They only give the best prices to their least loyal customers who are ready to cancel their service or sign up as new customers,” Jeff says.  “We’ve had cable from these guys for over a decade and when we sought a temporary price break, they wanted to give us a $20 credit — thanks for nothing.”

Now Jeff says with Verizon around, Time Warner better offer more than that.

Verizon put expansion of its Verizon FiOS fiber-to-the-home service on hold more than a year ago, stopping new cities from winning new options made possible with fiber optics.  But Verizon is still continuing to meet its commitments to communities where the network has already broken ground.  Where communities have not given Verizon video franchise agreements, Verizon markets its broadband and phone options.  But delivering video completes the triple play package many consumers want.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Albany Gets FiOS TV 3-26-11.flv[/flv]

WNYT and WXXA-TV reports some Albany-area residents can now get FiOS TV, showing Verizon is still expanding its FiOS product line in areas where fiber has already been laid.  (3 minutes)

Verizon delivers fiber-to-the-home service over its FiOS network.

Verizon Communications says it will not run an Internet Overcharging scheme on its wired broadband customers.

The company that knows about investment and upgrading their networks like few others — bringing true, fiber-to-the-home FiOS service to customers across several states — says it has no need to impose usage caps or metered billing on its wired broadband customers.

“This is something we have looked at in the past, and we’ll continue to evaluate what’s best to ensure our customers get the best broadband service for the best value,” Verizon spokesman Bill Kula told Broadband Reports. “We have no plans to implement usage-based pricing for our fixed broadband customers,” Kula says.

Verizon’s announcement provides additional ammunition against AT&T’s unjustified 150-250GB usage caps over claims it faces congestion issues.

The company doesn’t share AT&T’s “congestion problem,” probably for two reasons:

1. Because it does not exist.
2. Verizon has upgraded their network to keep up with demand, winning new customers with their top-rated FiOS fiber to the home network.

Karl Bode sees right through AT&T’s arguments:

If you believe AT&T’s claim that the new pricing is about congestion and not about protecting U-Verse revenues from a Internet video — and many don’t — Verizon’s decision to spend $24 billion on upgrading more than half of their network to fiber to the home would make a Verizon decision to follow suit a very tough sell. AT&T has previously stated their last-mile customers see little to no congestion, and Verizon’s seeing even less.

Kula notes Verizon doesn’t oppose the use of usage caps, but their TOS allows them to handle any users they deem particularly gluttonous, and even then — Verizon makes it clear to us they’ve never disconnected one of these users. “Verizon terms of service were written in a way to allow us to terminate users if they violate our acceptable use policy, and excessive use ‘could’ constitute a violation,” says Kula. “However, we’ve not disconnected any consumer, small business or mass market customers to date.”

Stop the Cap! has never objected to terms and conditions which provide an escape clause for a provider that encounters a customer creating significant problems on its network, such as e-mail spamming, illegal activity, or causing serious problems for other users.  These terms and conditions are a part of every Acceptable Use Policy, and responsible providers don’t activate those provisions on a whim.

It’s too bad some AT&T customers can’t choose an alternative to a company who promised great things with U-verse, and then put unjustified limits on customer enjoyment.

Frontier attempts to dig themselves out.

The Oregonian has been covering the plight of Frontier customers in the Pacific Northwest who signed up for Verizon’s fiber to the home service — FiOS — and are now facing down the new owners who want to raise the price by $30 a month.

Frontier has done itself no favors in the media with an ongoing series of reports of service problems, rate increases, and now the latest signs it wants out of the television delivery business altogether.

In a letter dated March 4th, Steven Crosby — senior vice president of government and regulatory affairs, told the city administrator in Dundee, Ore., Frontier FiOS TV has been a flop.

Since Frontier Communications Northwest, Inc., acquired Verizon’s operations on July 1, 2010, it has built on Verizon’s prior actions and continued to offer a robust and aggressively priced video product to attract Dundee subscribers.  Despite these efforts, however, customer growth has been disappointing and stagnant and Frontier has not achieved a commercially reasonable level of subscriber penetration.

Frontier also admits it has been under-pricing its video service to stay competitive and attract new customers, but those days are over.  The company earlier announced its intention to raise rates by $30 a month for its standard cable TV service, making it more costly than its nearest competitor, Comcast.

Frontier recognizes the impact its enormous rate increase will have on its subscriber base, soberly noting it is likely to “further depress subscriber penetration.”

With this in mind, Frontier is exercising its right under the franchise agreement it has in Dundee to provide notice it intends to terminate its video service at a future date, after providing subscribers with 90 days advance notification.

Similar letters went to city administrators in Newberg, McMinnville, and Wilsonville.  City officials had no reservations about interpreting the meaning of the letters and plans to implement a $500 installation fee for future FiOS TV installations.

“Looking at it, you expect there will be no new customers,” Dan Danicic, Newberg’s city manager told The Oregonian. “Getting this opt-out notice is not a huge surprise to me, but we are disappointed.”

Frontier's rate increases are driving many consumers back to Comcast for their television service.

Sources tell Stop the Cap! there was considerable debate inside Frontier’s offices last week on how to implement directives from executives to shut down FiOS installations as quickly as possible.  Initial efforts to quietly raise the installation price — without giving subscribers’ advance notice — were on track until Frontier’s legal department quashed the plan.  Concerns were also raised inside the customer support units responsible for taking orders and handling customer billing inquiries over how to deal with the inevitable subscriber backlash when the first bills arrived in the mail.

“Frontier hates dealing with FiOS and they can’t wait to be rid of it — they claim that the product is at least 10 years away from really returning any investment from its original deployment,” a well-placed source told Stop the Cap! late last week.

Frontier FiOS is an anomaly for the rural phone company, which delivers the vast majority of its broadband customers DSL service over copper wire phone lines, usually at speeds approaching 3Mbps.  Frontier FiOS “came along with the deal,” one Indiana Frontier official told local media there in response to rate hikes there.

Still, media reports that the company plans to ditch its TV customers created a small panic inside Frontier by the weekend.

“Getting customers switched over to satellite TV service in an orderly manner was the original plan, but reports the company was abandoning the service altogether risks we’ll lose our customers to Comcast, and many will take their phone lines to the cable company, too,” a second source informed Stop the Cap! this morning.  “We were told ‘orderly transition’ over and over again, so reassuring customers is today’s top priority.”

Dundee, Oregon

Evidence of this campaign was not difficult to find over the weekend, as The Oregonian amended its original story claiming Frontier does not have immediate plans to exit the video business.

Crosby told the newspaper: “Our actual implementation decisions will be business driven. At this time, there is no change in our FiOS video offerings or in our FiOS video service delivery to our customers. And this filing does not affect our FiOS high speed service.”

Stephanie Schifano, identifying herself as an employee of Frontier Communications, attempted to spin the letters sent to several Oregon communities as a simple matter of business and not a foreshadowed abandonment of television service.

“Frontier is exercising our right under the franchise agreements to terminate the franchises. The right to terminate soon expires, and if Frontier didn’t give notice now we may have been required to provide this service, with these franchises, for another 12 years. This notice offers Frontier the flexibility to continue to analyze the FiOS Video/TV business and continue to service our customers,” Schifano wrote.

But both of our sources well-familiar with Frontier FiOS say the company’s actions speak louder than its words.

“When you increase the installation fee to $500 and raise your prices nearly $30 higher than Comcast, you would be crazy not to interpret the message Frontier is trying to send — go get your satellite dish from us and get off FiOS,” our second source told us.

Telecompetitor read into some of the company’s comments about utilizing the acquired fiber network in a new way, perhaps for over-the-top Internet video content.

“That’s wishful thinking,” our second source says.  “Frontier’s only online video efforts surround its rebranded Hulu service, relabeled myfitv.”

Frontier's online video platform serves up mostly repurposed Hulu content.

“The company has no plans I am aware of for a grand video strategy — FiOS covers far too small a service area and there is no way Frontier will spend more money to increase that fiber footprint,” our source adds. “Frontier wants to meet its general obligations made as part of its deal with state regulators when it bought Verizon FiOS with the landline deal, and little else.”

Frontier will continue to offer FiOS to broadband customers for the time being, regardless of what it does with its video package.

“If it’s already there and not costing a lot of money to maintain for broadband, why not?” our source says.

One direct sales contractor for competitor Comcast suspects that train may have already left the station.

Calling Frontier’s customer service operation “a circus,” the salesman says Comcast is benefiting from Frontier’s ball-dropping.

“Many Frontier customers are unhappy with the customer service side while stating they do enjoy their phone, Internet, and video services provided by the FiOS network, but lose the business on the practically non-existing customer service side.”

The contractor says he hears stories from Frontier customers all day who are fed up with the frustration of extended hold times, inaccurate or missing bills, online account access problems, excessive call transfers to deal with service issues and high fees.

For regulators, the aggravation is much the same.

After being promised by CEO Maggie Wilderotter that Frontier would be an aggressive competitor in a barely competitive marketplace, Frontier has raised rates by 46 percent, irritated their customers with customer service problems and outages, and now has served notice it intends to flee the TV business at an undetermined point in the future.