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Verizon's Driving Away DSL Users Intentionally With Rate Hikes
Gives DSL Users $5 Rate Hike As Thanks For Loyalty
by Karl Bode 02:36PM Tuesday Mar 05 2013
With the exception of some major cities where they're still adhering to franchise obligations, Verizon's FiOS expansion is over, and Verizon has been making it very clear that they have no interest in those customers remaining on DSL. The company last year returned to forcing new DSL users to subscriber to costly landline service, and now users in our Verizon DSL forum say they're being notified that yet another round of traditional rate hikes have arrived.

The notification thanks users for being a Verizon customer, then informs them that they'll be seeing a rate hike of around $5 for DSL service that in many instances fails to meet the FCC minimum definition of broadband (4 Mbps). Verizon claims these rate hikes are needed in order to "maintain our broadband networks":
quote:
We realize you have choices when it comes to your broadband services. That’s why we would like to take this opportunity to say thank you for being a loyal customer and for choosing Verizon as your broadband provider. We hope you understand that to maintain our broadband networks, from time to time we need to increase our rates. Your monthly rate will increase from $23.99 to $28.99 (not including additional services or, taxes and surcharges) and will be reflected on your bill within the next two months. The new rate will remain in effect for one year.
The e-mail of course is lying -- Verizon's fixed line network investment and maintenance is dropping like a stone as the company shifts its focus to wireless, where it can avoid union headaches, regulation, and can charge users much higher rates to the tune of $15 per gigabyte. Those 768 kbps to 3 Mbps lines cost very, very little to provide, and the cost of providing them certainly isn't rising. The company is intentionally driving DSL users to cable with rate hikes, but is making sure to heavily milk those users on their way out the door.

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silbaco
Premium
join:2009-08-03
USA

2 recommendations

Maintenance

I don't see how they are lying about maintenance costs. Wireless or not, that doesn't make maintenance for DSL any cheaper. And as people flee DSL, that would make maintenance costs per subscriber increase drastically. That big copper network still has to be maintained.

$28.99 is pretty cheap for DSL anyway. You would be hard pressed to find DSL in this area for that price.

Mojo 77

@184.105.146.x

Re: Maintenance

I don't see how they are lying about maintenance costs.

Insisting that 1.5 Mbps DSL needs to be $5 more expensive because of maintenance cost is total BS.

That big copper network still has to be maintained.

They don't spend much on maintaining it (ask West Virginia) and they're in the process of gutting it.

$28.99 is pretty cheap for DSL anyway. You would be hard pressed to find DSL in this area for that price.

You're easily pleased. Many of those users are getting 768k/128k. 128 kbps upstream. That total doesn't include fees and the now-forced landline many users have to bundle in. a 768 kbps line costs Verizon hardly anything. Certainly not worth a $5 hike.
Crookshanks

join:2008-02-04
Binghamton, NY

3 recommendations

Re: Maintenance

said by Mojo 77 :

a 768 kbps line costs Verizon hardly anything. Certainly not worth a $5 hike.

A 768kbit/s line probably costs them more than a 10mbit/s line. The 768kbit/s line is likely rural, or at least a long loop suburban line, and longer loops are never going to be as cheap to maintain as shorter ones. Additionally, the 768kbit/s line has a lower margin even after they raise prices. My old 10-15mbit/s service was $60/mo and undoubtedly provided them with a higher margin than a $28 1.5mbit/s or less circuit.

The major expense here is the maintenance of the copper plant. Backhaul bandwidth is trivial, and for that cost there is likely very little difference between a 768kbit/s line and 10mbit/s one. Particularly when you account for the fact that the vast majority are idle at any given time, even in the IP video era.

AnonMe

@comcastbusiness.net
The interesting thing is that as an iLEC in many areas, they still need to maintain much of the copper plant to provide residential POTS, unless of course they've got FIOS in your neighborhood.

And if they are requiring you to take POTS with your DSL, then is there really THAT much more maintenance involved?

As a side note, not sure what planet people live on, but LTE isn't replacing anyone's cable modem service in my area, even though we've had decent LTE service for a while now. There is nothing like a good, hardwired Internet connection.
thehondaboy

join:2009-07-19
Auburn, GA

1 recommendation

Yeah, not buying this one, Karl. If anything they are raising rates in DSL users to push them to FiOS. And if not available then they are not pushing people toward cable, cable is winning them with better pricing. That's called competition.

Mojo 77

@he.net

Re: Maintenance

That's called competition.

Refusing to upgrade users, jacking up prices, and then ultimately cutting users so their only option is cable (which is what's slowly happening here) is your definition of "competition?" You should get a job as a lawyer or lobbyist.
Os

join:2011-01-26
US

1 recommendation

They're not pushing them to FiOS. See how small the footprint for FiOS really is.

They're pushing them to give up home broadband for fixed LTE and wireless, which is the biggest fantasy of all but what the shareholders want.
decifal

join:2007-03-10
Bon Aqua, TN
kudos:1

1 recommendation

Heh, maybe pretend competition.. Once verizon gets rid of those peskey dsl customers cable will suddenly need to jack their rates up.. What then? Back to verizon? Assuming they even let you resubscribe? No, not likely..
Crookshanks

join:2008-02-04
Binghamton, NY

1 recommendation

I don't understand this notion that they should be obligated to maintain an expensive/dying technology or compelled to spend billions of dollars to upgrade markets where they'll see less ROI than they do on wireless. Wireless is a growth market, landline is not. They could pour billions into the landline market but that will make precious little difference as far as uptake is concerned.

People around here don't seem to grasp the concept that they are not the typical broadband user. The vast majority of "normal" people I know are still using the broadband provider they first signed up for when it became available a decade ago. Many of them are on 1.5mbit/s DSL with grandfathered pricing plans that have never changed. They don't realize (or plain don't care) that faster offerings are available. Some of them even have access to faster DSL speeds for cheaper. They could activate the new plan with a two minute phone call, but they don't realize that, or are just too lazy to pick up the phone. When they do switch it's usually because the nice salesman from the cableco knocked on their door and touted the "advantages" of a triple play.

(Advantages in quote marks because it doesn't always make financial sense for someone to switch, particularly if they aren't heavy internet/phone users and/or get suckered into a big cable package they never end up watching.)
TheRogueX

join:2003-03-26
Springfield, MO
Reviews:
·Mediacom

Re: Maintenance

If people had access to higher speeds for not much more than they're paying now, they'd make the switch (especially if the advertising was done right).

You're right, they DON'T REALIZE that faster offerings are available, because the telco is purposefully trying to keep them ignorant.

Anyway, you're right. Big business shouldn't be 'obligated' to keep up with the times. But if they decide not to, they better get the hell out of the way so someone else can do it, and they can just die off. Problem is, THEY WON'T ALLOW THAT. They lobby against pretty much anyone and everyone who tries.
Crookshanks

join:2008-02-04
Binghamton, NY

Re: Maintenance

I'm sorry it bothers you that people and organizations use our political system to lobby in their own interest. I dislike crony capitalism as much as the next guy, but you lost me when you started complaining about "lobbying". We all "lobby", this entire website is a lobby for our respective agendas.

Verizon isn't purposefully trying to keep people ignorant of faster offerings. Why would they do that? The plant and equipment is already paid for, but you think they are deliberately trying to keep people from using it?

Verizon doesn't heavily advertise or invest money into their wireline services, because wireless has a higher ROI, but they don't prohibit people from using it in the areas that already have it. Karl's crying wolf about Verizon and AT&T "hanging up" on DSL users is getting quite old. I'd like to hear a single case of someone who already had POTS and/or DSL getting "hung up" on.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
Uh, the whole thing clearly smacks of LACK of competition.
elefante72

join:2010-12-03
East Amherst, NY

2 recommendations

They may desire to get to a critical mass so they can shed the must-carry service, but by no means does Verizon WANT to give up profitable customers. That's total bs.

The problem is that infrastructure costs while may be going down SLIGHTLY, labor is not so call it a wash. These costs need to be AMORTIZED over the customer base.

So for instance say it costs $1000 opex for 100 users ($10/user/mo), and 30 leave for cable. Now that cost is still $1000, but now only 70 people, so now it costs $14/user/mo). Guess what, profit margins need to be maintained, so prices go up. Not rocket science.

As this death spiral continues until Verizon asks for regulatory relief, and they sell off the remaining lines to some small regional player who may invest in next gen and do something with it. But make no mistake, they are riding this horse into the ground, and it is the right move. Copper is dead, so why throw good money on bad.

Verizon needs to sink their capital budgets into LTE to keep ahead, and once they complete in 2014, then they can go back and refarm and potentially add fiber to profitable areas, but they aren't going to add fiber to some farm with 2 houses per 80 acres. They are going to get LTE or whitespace, and it's going to be expensive AS IT SHOULD. If it cost verizon $1000 to wire 20 houses in my neighborhood (not true), and $2,000 to wire a farm, guess what--if you owned a business what would you do? Wire a house for $50, or $2,000?

Add to the fact that replacing copper is very expensive and moving to newer line cards/technology (VDSL2, etc) give minimal uplift especially if they are not going to do video on it.

So this is what happens when a technology is disrupted with legacy collateral damage, it dies a very expensive, ugly, and painful death.

N3OGH
Yo Soy Col. "Bat" Guano
Premium
join:2003-11-11
Philly burbs
kudos:2

2 recommendations

Re: Maintenance

IMHO, Verizon deployed Fios in all the markets they have any interest doing "land line" business in, and to hell with the rest. The people making these decisions are rather intelligent & have at least some vision for the future.

Deploy Fios in the markets where you know you can turn a profit, screw the rest. Let the copper plant decay until they can offload it, and focus on LTE & Fios.

Verizon has ZERO REASON to maintain their copper footprint. It's expensive to maintain, over regulated, and essentially obsolete.

If I were at the helm at Big Red I would be doing everything I could to get out from under that copper albatross and focus on Fios & wireless.

Less regulation & more profit. It's a no brainer.....
--
Petty people are disproportionally corrupted by petty power

cableties
Premium
join:2005-01-27

1 recommendation

Here it comes...

All the Telcos are doing this. ATT, Verizon...

Copper plant is aging and triple the maintenance (maybe even more).
Pensions are going up (not down).
No new infrastructure.
Push up prices then in 6-12 months promise newer, LTE wireless with "broadband" speeds at only double the price but 20x faster!

Verizon plans Fios and LTE. DSL and POTS are dead.

Welcome the antenna overlords!
--
Splat

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

1 recommendation

Re: Here it comes...

said by cableties:

only double the price but 20x faster!

You forgot overages! Be prepared to sign over your bank account and everything you own!

toby
Troy Mcclure

join:2001-11-13
Portland, OR
said by cableties:

All the Telcos are doing this. ATT, Verizon...

Copper plant is aging and triple the maintenance (maybe even more).
Pensions are going up (not down).
No new infrastructure.
Push up prices then in 6-12 months promise newer, LTE wireless with "broadband" speeds at only double the price but 20x faster!

Verizon plans Fios and LTE. DSL and POTS are dead.

Welcome the antenna overlords!

I keep reading on here where 'copper' is going to die, as its so old.

It can last for decades, just like the power lines going to and in our homes.

tschmidt
Premium,MVM
join:2000-11-12
Milford, NH
kudos:9
Reviews:
·G4 Communications
·Fairpoint Commun..
·Hollis Hosting

1 recommendation

Re: Here it comes...

said by toby:


I keep reading on here where 'copper' is going to die, as its so old.

It can last for decades, just like the power lines going to and in our homes.

True but maintenance (opex) cost for fiber is much lower then copper and once a company has installed FTTP the cable plant is able to deliver virtually unlimited bandwidth. At most they need to swap out electronics which is cheap compared to stringing cable.

/tom

Probitas

@teksavvy.com

Don't count on it

Up here in Canuck land, people fed up with phony costs increases over well established lines (and therefore more than paid for), are simply dropping services entirely. People would rather have nothing than pay through the nose for wireless services that cost next to nothing to support compared to physical lines.

Or if they do get a cell phone, it's prepaid with barely any services, just enough to get buy. And forget the data plans, they are a pricey joke. How the costs per GIG goes up over wireless last mile supply when the infrastructure still uses the same fibre line that was paid for years ago is outrageous.

You can't force people to subscribe to your services, all you can do is drive them away, which is what I think more people should wake up and do. Given a choice between less subscribers and milking them dry, intelligent CEOs would tend to lower prices to retain people, after all, customers are your bread and butter.
goodcow

join:2004-01-28
New York, NY

Unionize?

Every article about POTS and DSL here makes mention of the fact that the wireless side of telecom in America isn't unionized. Well, why don't they? Why isn't the CWA making this their top priority? Can we get an article those efforts and their progress in the future?
Crookshanks

join:2008-02-04
Binghamton, NY

3 recommendations

Re: Unionize?

They aren't unionized for the same reason that the Japanese auto manufacturers with United States locations aren't unionized. The employees are smart enough to look what what the union has done to their legacy competitors and don't wish to go down that path. There's a reason why unions are dying in the private sector. Their only growth market is in the public sector, where they literally get to pick their boss, which is a major reason why so many state and local governments are going broke.

And before the pro-Union crowd jumps on me for that last bit, you might consider the words of FDR on this subject, then ponder if you can dismiss him as a right-wing corporatist or whatever else the insult of the day happens to be for people who disagree with you politically.
openbox9
Premium
join:2004-01-26
Germany
kudos:2
That'll help control costs and keep prices down for consumers. Why do the Verizon Wireless workers need to unionize?
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2
CWA tried to unionize them as part of the contract negotiation during a strike (around '04 if I recall) but accepted other gains instead... big mistake in hindsight. They figured they would get another chance next negotiation but it has been down-hill since then. There is a very small portion of VZW that is unionized but the rest are considered 'management'. The turn-over rate at the Wireless stores is so high they would never be able to unionize them.

BOGBS
Premium
join:2004-05-11
AT&T's wireless side is unionized.
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: Unionize?

That's strange... I have spoken with some of the AT&T techs that come out to grant us access to their sites for equipment installs and they tell me they work for contractors. I have also seen AT&T sites being built (as well as Verizon) and they also use contractors for that. Do you know which wireless techs specifically are unionized?

Monos

@sbc.com

Re: Unionize?

The key word you failed to recognize as the most important part of your statement is contractor, if they are contractors they are not at&t employee's. the occupational employee's at&t are unionized, in both the wireline and wireless. at&t does use a large number of contractors especially, for short term projects like tower buildouts equipment installs and laying fiber/copper.
CXM_Splicer
Looking at the bigger picture
Premium
join:2011-08-11
NYC
kudos:2

Re: Unionize?

Yes, exactly my point... I have never seen an AT&T wireless tech (much less a union one) only contractors. I am aware that the wireline side has union techs but, I'll ask again, what tech positions on the wireless side are unionized? What do they do?

SonicCrash

@covad.net

All of Carriers are doing it.

ATT first slowed my service down. Then told me it was a line issue. I found out it was bad phone line. I had them fix it. Then when I tried to get my Elite service back. They told me it was unavailable. I would have to get UVerse. If they can't deliver service through copper pair how can I trust them with something bigger at a higher price.I finally dumped them after 9 years, I will never go back to ATT ever again.

scott2020

join:2008-07-20
MO

Re: All of Carriers are doing it.

They did the same to me. I had 6 meg service with phone, and dropped the phone for VOIP. My speed went down to 1.5 meg and they told me that was the only thing available. I said I had 6 meg before and as far as I know, my house had not been moved farther away from the CO, so there is no technical reason for this. They refused to raise my speed back up. A couple of well worded executive email carpet bombs got me in touch with the right people, and they had me fixed back up to 6 meg in a few days, like magic. After relentless rate increases, I ended up eventually dropping them for Charter, which is what they really want anyway.
--
+++ATH0
BiggA

join:2005-11-23
EARTH

1 recommendation

They're not trying to drive customers away

They've just figured out what the optimum profit point is between raising prices vs. retaining customers, and apparently a few less customers with larger margins will make them more money. Same decision most businesses make.

It is too bad that their idiot stockholders won't let them do 100% FIOS, as they got FIOS right in the places they rolled it out.

Packeteers
Premium
join:2005-06-18
Forest Hills, NY
kudos:1
Reviews:
·Time Warner Cable

1 recommendation

they only alienate future fios customers

i was one of the first verizon dsl customers in my area nearly a decade ago, and recently switched to cable ($30/mo 15mb including MagicJack phone on my own DOCSIS1 cable modem) when verizon said they would demanded you get pots service added to their existing $40/mo 5mb dsl only customers. when fios finally lights up my area in 2014 i won't ever trust their business practices again to give them any of my future business, including my wireless... i just hope TWC does not get half as greedy as "baby bell" verizon has become. my cable modem is working over a coax building wiring plant that has not been touched in 20 years - so I'm pretty sure the last mile wiring has been paid for several times over by now.

•••

Swanee99

@mcleodusa.net

Verizon is a joke, always has been, always will be...

When will Verizon realize that a paying customer, regardless if it's DSL, POTS, FIOS or otherwise, is still a paying customer? Retaining existing customers, even in this day and age, is still much cheaper than finding new customers. Every Telco has to report customer churn to the financial community every quarter and are allways "qualifying" this churn-rate with one excuse or another. This thinly veiled excuse to move customers from DSL to FIOS will drive paying customers away in droves.

As a happy DSL customer, if my service-provider (not living in a Verizon area) did this, I would happily look at other service providers or do without. After all, I only want what I want, nothing more. Most Telco customers are already looking for that last push away from wire-line services anyway, and here it might be.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

Re: Verizon is a joke, always has been, always will be...

said by Swanee99 :

When will Verizon realize that a paying customer, regardless if it's DSL, POTS, FIOS or otherwise, is still a paying customer? Retaining existing customers, even in this day and age, is still much cheaper than finding new customers. Every Telco has to report customer churn to the financial community every quarter and are allways "qualifying" this churn-rate with one excuse or another. This thinly veiled excuse to move customers from DSL to FIOS will drive paying customers away in droves.

As a happy DSL customer, if my service-provider (not living in a Verizon area) did this, I would happily look at other service providers or do without. After all, I only want what I want, nothing more. Most Telco customers are already looking for that last push away from wire-line services anyway, and here it might be.

Verizon has ways of hiding & delaying the reporting of customer churn.. for example, they don't let you out of your end of date billing. They can take 2 - 3 MONTHS to give you a FINAL BILL (and refund any OVERPAYMENT!). In which time they keep marketing to you sending you flyers phone calls and other shenanigans. Sure, they disconnect you when you cancel, but the process of "NOT BEING A CUSTOMER" can potentially be a LONG DRAWN OUT PROCESS!

However, I disagree that Verizon was always bad. The original CEO when FIOS came out did have the right course.. but it got corrupted by vodafone & shareholders & now the company will reap what they have sown.