Like many cable companies, the results for cable television subscriptions continue to be challenged by the downturn in the economy.  So cable operators are increasingly looking to their broadband and “digital phone” divisions to make up the difference in revenue.

Comcast also believes that “pure content” is the place to be, to avoid becoming the owner of “dumb pipes” that simply pass through someone else’s content.  Comcast, the nation’s largest cable operator, is seeking to leverage that content through a reported offer to acquire NBC-Universal.

CNBC explores the likelihood of the deal going through with Tuna Amobi, senior media & entertainment equity analyst with Standard & Poor’s.

[flv]http://www.phillipdampier.com/video/CNBC – Comcast NBC Merger Outlook 11-4-2009.flv[/flv]

CNBC’s Martin Soong reviews Comcast’s third quarter earnings results and discusses the chances Comcast will pull off its interest in acquiring NBC-Universal.  (11/4/09 – 4 minutes)

Charter Cable, which has been in Chapter 11 bankruptcy since March 28, has been among the worst hit cable operators by an American economy in trouble, accusations of poor service, excessive executive compensation, and spiraling debt.  Before entering bankruptcy protection, the company had $21 billion in debt — a significant amount for a cable operator serving just 5.5 million customers in 27 states.

Company founder Paul Allen, a co-founder of Microsoft who controlled 91 percent of Charter Cable before bankruptcy, will control just 35 percent of the company as it emerges from reorganization in the coming weeks.  Allen’s attention will then turn to the bankruptcy of another one of his concerns – Digeo Inc., which is best known for its Moxi HD DVR.

Despite the bankruptcy, Charter Cable aggressively continues to upgrade its broadband service to DOCSIS 3 in many of its service areas, introducing new faster broadband products to customers.  But broadband service from Charter is just one of three services they offer customers, and many are not satisfied with the service they are getting.

Beyond bankruptcy, Charter Cable continues to face bad press for providing poor service, hassling customers with aggressive telemarketing calls, dramatic rate increases, and in one shocking incident this week, a Charter Cable technician in Victorville, California was attacked and killed while on a service call.

Authorities are still searching for a motive for Monday’s unprovoked attack on 25-year-old Trevor Neiman, of Phelan, California.  After surviving three tours of duty in Iraq, Neiman was killed with a small hammer in a Victorville home.  Police say the attack came from a relative of the homeowner who was visiting at the time of the assault.  The suspect, Hesperia resident Johnny Acosta, 45, was arrested on suspicion of murder a short time after fleeing the scene.

“There was no exchange of words. There was nothing that occurred before the unprovoked attack,” said Jody Miller, a spokeswoman for the San Bernardino County Sheriff’s Department told KTLA News.

[flv width=”600″ height=”336″]http://www.phillipdampier.com/video/KABC Los Angeles Charter Cable Installer Killed With Hammer 11-10-09.flv[/flv]

KABC-TV Los Angeles shares the tragic story of Charter Cable technician Trevor Neiman, and the devastating impact Monday’s attack had on his wife and family. (2 minutes)

Beyond that horrific incident, Charter Cable has been irritating subscribers with a series of rate increases and annoying marketing campaigns across the country.

In West Covina, California Charter Cable is ridding itself of senior discounts and also dramatically increasing rates.  Broadcast basic cable customers face a whopping $10 monthly increase in their cable bill, and the more popular expanded basic service will increase by $5.25 a month.  The company claims the rate increases are part of “an investment in improving the overall customer service experience.”

Resident Hermine Deemer, 83, told the San Gabriel Valley Tribune her bill will increase to $67 a month from $53 – a 26 percent hike.

“That’s a big increase,” Deemer said. “Nobody gets that big of an increase. I know things go up but not that much.”

Charter Cable is calling customers trying to market bundled services including broadband and telephone, claiming the savings from bundling services together would be “higher than the senior discount ever gave.”

Deputy City Manager Chris Freeland said the city has received several calls on the increases but there is little they can do about it.

“We would much rather have the senior discount,” Freeland said. “It’s really beyond our control. The economy is tough and every little dollar for seniors is so precious.”

Customers commenting on the rate increase have encouraged seniors to cancel service and switch to DISH Network satellite service, and several seniors lament they are housebound and television is their primary window to the outside world.  With no increase in Social Security in 2010 and increasing medical costs, many seniors will face difficulty coping with the rate increases.

In Pendleton, Oregon, the city attorney blasted Charter Cable for a $5 increase in broadcast basic service (providing local broadcast channels and some public affairs cable networks) and a $3 increase in expanded basic, claiming it unfairly falls on those least able to afford it, all to subsidize discounts on their bundled service packages.  Peter H. Wells wrote an open letter to Charter Cable published in the East Oregonian:

Per-channel costs for Charter Cable in the Pacific Northwest

By imposing the same $5.00 increase for all service tiers and, in fact, a lower increase for those with expanded basic service, the basic tier customer is paying for a greater portion of the company’s total costs than before the fee increase.

Through February 2005, less than five years ago, basic tier service cost the customer $12.91 per month. The rate change effective in December to $24.99 per month is such that those customers will have had a 93 percent rate increase in the past five years. It also appears that Pendleton’s basic tier customers are paying the same for less service than basic tier customers in other nearby service areas.

Charter representatives claim that the service charge increases over the past few years were to compensate the company for upgrades to the physical plant in Pendleton. I believe that argument is not appropriate. The physical plant upgrades were to allow Charter to provide additional services of telephone, digital cable and Internet. The cost of those upgrades should be borne by the users of those services, not the basic tier customers on whom the increase is being disproportionately imposed.

Unfortunately, Charter Cable’s rates are not within the control of the city management, so Wells could only ask that concerned residents contact Charter Cable and complain.

At least one customer fed up with Charter’s marketing practices found g0ing to a local TV station’s consumer watchdog reporter was even more effective.

Carole McGuire of Madison, Wisconsin turned down Charter’s relentless marketing of their “digital phone” product, which she doesn’t currently purchase.  Despite her disinterest, the visiting salesman left an application, and called her the next day to see if she changed her mind.  After that, McGuire began receiving a barrage of automated phone calls from Charter claiming she ordered the service, and needed to obtain third party verification to meet Federal Communications Commission obligations and process her order.

Not having placed an order, she ignored the calls, but they kept coming… over and over.

Exasperated, she turned to WISC-TV’s On Your Side reporter Erick Franke to see if he could get Charter to stop calling her.

[flv width=”530″ height=”316″]http://www.phillipdampier.com/video/WISC Madison Charter Cable Telemarketing 11-3-09.flv[/flv]

WISC-TV Madison’s On Your Side segment from November 3rd helps a Madison resident put a stop to annoying Charter Cable telemarketing efforts. (3 minutes)

Unfortunately, not even TV stations are immune from dealing with problems with Charter Cable.  About a month ago, residents in Clarksville, Tennessee discovered WKAG-TV in nearby Hopkinsville, Kentucky missing from their cable dial.

Charter Cable had removed the low-power 18,500 watt station claiming it couldn’t obtain a strong enough signal to carry it.  WKAG-TV happened to be the only station in the entire region that produced news programming for Clarksville residents, and had consistently served the community of 100,000 with local newscasts, sports coverage, weather, and public affairs programming.

WKAG management was surprised by the decision to drop the station, and mounted a public campaign to dispute Charter’s poor signal strength assertions.  Charter Cable ignored the station’s first press release and has now been confronted with embarrassing video evidence that the station can be received with a good over-the-air signal with just a two foot antenna from the top of a building at a location even more distant from Charter’s TV reception tower, and from a lower overall height.

[flv width=”640″ height=”480″]http://www.phillipdampier.com/video/WKAG Hopkinsville Charter Cable Dispute 11-5-09.flv[/flv]

WKAG-TV Hopkinsville, Kentucky prepared a web video showing evidence Charter Cable could restore the station to the cable dial in nearby Clarksville, Tennessee. (11/5/09 – 5 minutes)

Charter Cable used to import WKAG from a direct fiber feed, but dropped it several years ago in an apparent cost-cutting move.

Despite complaints from Clarksville residents, Charter continues to ignore customer demands for WKAG’s restoration.

From one side of the country to the other, Charter Cable’s finances are not the only challenge the company faces.  Providing affordable, responsive, and quality service to customers apparently also remains a challenge Charter Cable has yet to surmount.

Despite challenging economic conditions, Time Warner Cable CEO Glenn Britt told CNBC broadband from the cable operator has remained strong during the downturn.  The company reported the addition of 117,000 new Road Runner customers during the third quarter, many switching from rival telephone company-provided DSL service.

A CNBC anchor who visited a conference recently and absorbed cable industry talking points about consumption-based pricing asked Britt about whether Time Warner Cable’s network had the capacity to handle skyrocketing data consumption.

“Our physical plant is very capable and we invest in it in a steady way, so I think we’re able to keep up with demand.  I think the other question you’re really raising is who pays […] is an evolving thing.  Also the history has been everybody pays the same for unlimited access.  I suspect that will change going forward to some more usage based model, but that in itself is controversial so we’ll have to see what happens,” Britt said.

Britt’s comments about investments in their network are challenged by the company’s own financial reports which showed a decline in those investments and in the cost of obtaining network bandwidth.

Still, Time Warner Cable is upgrading some areas to DOCSIS 3 technology to market higher speed service to broadband enthusiasts.

The company continues to face significant challenges in its mainstay cable television business, losing 84,000 cable televison package customers in the last quarter, a result of the loss of home ownership during the economic crisis according to Britt, and a general downturn in the economy.  Still, through a combination of price increases and marketing bundled services, the company grew average revenue per subscriber to $102.48 a month in the third quarter.

[flv]http://www.phillipdampier.com/video/CNBC – Glenn Britt on Earnings 11-6-09.flv[/flv]

Time Warner CEO Glenn Britt is interviewed on CNBC about the company’s third quarter earnings. (11/6/09 – 4 minutes)

Stop the Cap! reader Nonya advised us about Britt’s latest appearance on CNBC.  If you find news our readers might be interested in, send us your news tip under our “Contact Us” link above.

Washington State

Saying the sale would harm customers, Washington state utilities’ commission staff is recommending rejecting a proposed sale of Verizon’s landline residential and commercial telephone business in Washington to Frontier Communications.

In raising objections to the proposed Frontier-Verizon transaction, Washington Utilities and Transportation Commission (UTC) staff members concluded the business deal is not in the public interest. The proposed purchase does not include Verizon Wireless customers.

The three-member UTC, which will make the final decision early next year, will consider whether state ratepayers would be harmed by the proposed transaction, which is part of an $8.6 billion bid by Frontier to acquire 4.8 million Verizon phone lines in 14 states.

“There may not be any way for Frontier to provide benefits to Washington customers that offset the financial harm and operational risks,” said commission staff in their written testimony. “The failure of the companies to offer adequate consumer benefits or protections puts customers at risk of being served by a company without enough financial strength to make necessary improvements to local telephone facilities and widen deployment of broadband access.”

The Commission staff believes Frontier’s proposal to improve service is loaded with risk:

• The company’s credit rating is lower than Verizon, making capital difficult to obtain in a credit-challenged economy.  Without such capital, Frontier cannot make improvements to the telephone network.
• Frontier’s ranking as a relatively small independent phone company means it will face “higher per unit” costs because of the unavailability of volume discounts super-sized companies like Verizon enjoy.
• Frontier could easily face the same fate as three other Verizon spinoffs – a fast trip to bankruptcy court, but only after providing lousy service and broken promises to customers along the way.

Frontier said it would file a formal rebuttal to the comments later this month.  The company disputes the conclusions reached by the utility commission staff, saying the company will reduce its dividend to free up financial resources and will aggressively expand broadband availability in their service areas.

But the findings from Washington state are familiar to readers of Stop the Cap! They are largely the same echoed by the campaign to stop the sale of West Virginia’s landlines to Frontier.  The Communications Workers of America issued a press release reminding West Virginians Frontier enjoys abysmal approval ratings for its broadband service, based on an independent survey done by PC Magazine we covered a few months back.  Verizon ranks number one in customer satisfaction, in part thanks to its FiOS fiber to the home service.

Union spokeswoman Elaine Harris said, “The economic growth and development of West Virginia depends on having modern, high-speed Internet access. It’s not in the public’s best interest for West Virginia to replace the leader in broadband service with a smaller company whose customer satisfaction is appallingly low.”

Frontier’s defense to union objections is that Verizon hasn’t yet wired any customers in West Virginia for FiOS, and many parts of the state don’t have any broadband, so customer satisfaction numbers don’t matter if you don’t have any service.  Frontier claims it has good customer reviews in West Virginia, but offered no evidence to back up their claim.

So far, the Washington state commission has received 93 public comments with five in favor, 40 undecided and 48 opposed to the proposed sale. Washington customers who would like to comment on the case are encouraged to send correspondence to:

Washington Utilities and Transportation Commission
P.O. Box 47250
Olympia, WA 98504

e-mail comments: [email protected] or call toll-free 1-888-333-9882.

The commission’s deadline for accepting public comments is Jan. 11, 2010.

[flv width=”640″ height=”480″]http://www.phillipdampier.com/video/Bloomberg News Frontier Maggie Wilderotter 11-4-09.flv[/flv]

Frontier CEO Maggie Wilderotter appeared on Bloomberg TV on November 4th to discuss the company’s challenges from declining wireline telephone service. Wilderotter’s spin is that disconnected dial-up residential lines and business data circuits represent some of that loss.  Wilderotter agrees with the anchor’s contention that delivering broadband in rural areas where there is not a lot of competition is good for Frontier. But is it good for consumers?(3 minutes)

Frontier Communications reported its third quarter results earlier today with an 11% increase in net profits “attributable to shareholders,” but a 6% decline in revenue, mostly due to losing an additional 34,000 consumer and business line accounts in the third quarter.  Thanks to selling add-ons like calling features and broadband, the company managed an average 1% increase in revenue per line.  Wilderotter said improved customer metrics and disciplined cost control was responsible for the increase in profits.

When utilities want to “charge you for what you use,” it would be nice to trust the meter is accurately measuring your usage, California consumer advocates say.

In a growing controversy, Pacific Gas & Electric (PG&E) is now being accused of installing so-called “smart meters” that were smart for PG&E profits, but financially devastating for California consumers who face higher bills and growing questions about just how accurate those “smart meters” really are.

Customers across California who have had new meters installed, which are supposed to help consumers save energy by charging lower prices at off-peak usage times of day, report enormously higher bills from PG&E after installation.

State Sen. Dean Florez, D-Shafter (Kern County), reports he has seen bills from customers that don’t begin to make sense.

California Senator Dean Florez (D-Shafter/Kern County)

“One farmer was charged $11,857 for running a piece of equipment that was never turned on. A local attorney at the hearing clutched a $500 bill from July, a month in which she was visiting family out of state and almost every appliance in her house was shut off,” he reports.

Florez quotes the woman — “My smart meter keeps reading these spikes in usage at noon. But no one was in the house,” she said. “It’s obvious to me that this technology is not ready for prime time.”

Customers across the state with smart meters have reported similar stories, and are angry with PG&E’s response to their concerns, which can be boiled down to, “the meter is right, you are wrong, now pay us.”

PG&E claims that during its own internal reviews, it found nobody being overcharged. Spokesman Jeff Smith says “in all 1700 of those cases we have not found an instance thus far of the smart meter transmitting inaccurate information or incorrect usage information.”

The California Public Utilities Commission doesn’t think that’s enough and has begun ordering an independent review of the “smart meter” program and accuracy of meter readings.

Liz Keogh spent 14 years collecting and analyzing data at the Institute for Social Research in Ann Arbor, Michigan, and now lives in Bakersfield, California.  She has been pulling out her old PG&E bills and records showing her utility use all the way back to 1983.  What she found since the “smart meter” was installed on her home was disturbing.

Her analysis was printed in the San Francisco Chronicle:

My July, August and September 2009 bills showed the highest usage and cost in 26-plus years, even though I rarely go over “baseline usage.” The dollar difference from 2008 to 2009 was $20 to $30 each month. Billing costs are a product of usage multiplied by kilowatt-hour rates, which, like the federal income tax structure, is “tiered,” so that the more you use, the more you pay – and at higher and higher rates. Analysis of usage is the first step toward understanding fluctuations in cost.According to the smart meter installed on Sept. 12, 2007, the increase in my 2008-09 usage over 2007 was:

	2008	2009
May	+5.6%	+28.6%
June	+7.5%	+32.6%
July	+10%	+50.2%
Aug.	+3.1%	+41.1%
Sept.	-4.8%	+67.9%
Oct.	+4.9%	NA

PG&E’s own data show there was not a significant difference in temperatures for each comparable month. Why, then, did my “usage” increase range from 30 percent to 70 percent in 2009, while the 2008 increases were no more than 10 percent?

Simple answer: Meter malfunctioning, whether accidental and idiosyncratic, or, as some claim, intentional.

The suspicion that funny business is going on might be justified when considering Bakersfield residents have been through this all before.

“[Several years ago] Bakersfield is where PG&E first realized it had made a $500 million mistake, installing tens of thousands of inferior meters that would never live up to the promise. So the utility purchased a new generation of meters from Silver Spring Networks Inc. of Redwood City. PG&E insists that these new meters are glitch-free, though it concedes that it has tested only 50 out of 250,000 meters in Kern County,” Florez said.

At a time when some broadband providers want to install their own meters to overcharge customers for their Internet service, the PG&E experience is telling.  Independent oversight of any meter comes down to the enforcement mechanism available to guarantee accuracy.  But broadband service in the United States is unregulated, and no such enforcement mechanism exists.

And just when you thought you could believe the rhetoric that utility customers who conserve their usage will save more money, another electric and gas utility in San Diego filed a rate increase request that will charge customers who have managed to cut their usage even higher prices than those who have not.

[flv width=”640″ height=”480″]http://www.phillipdampier.com/video/KGET Bakersfield Senator Florez Questions SmartMeters 9-23-09.flv[/flv]

KGET-TV Bakersfield talked with Senator Florez on September 23 about the SmartMeter controversy (4 minutes)

More video coverage below the jump.

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