From Wired comes a report that AT&T’s 2nd quarter new installation results have cratered. What I mean by cratered is a drop of 90%. Give a read –

Att AT&T posted its second-quarter report this morning, and boy, was it a doozy.

The company added a modest 46,000 broadband subscribers during the quarter, a screaming decline from 491,000 additions in the first-quarter 2008; and down sharply from the 400,000 subscribers added in the second quarter 2007.

We’re not sure what the problem is, but there are two possible explanations: Either people are less willing to pay more than $30 per month for broadband service; or people are less willing to pay AT&T for broadband service.

Well that’s troubling. It will be interesting to hear what Verizon’s results will be. My gut says a combination of factors are in play here. 1) AT&T has plumbed all of its existing LATA territories. 2) Rap on poor service and subpar speeds. 3) Inept marketing. 4) and Finally, the economic conditions. Look broadband as the Duopoly sells it is treated as a premium alternative to off the air broadcasting services. In that guise, in the consumers eyes it gets labeled ‘Entertainment’, not ‘Information’. So when the times are tight the luxuries are turned off. What is happening to Starbucks is probably going to happen to some segments of broadband as well.

Yes Dear Reader, we are back to the Third Pipe argument of selling the consumer plain dumb pipe. So long as you wrap yourself in the ‘Entertainment’ category you the provider run the risk of being kicked to the curb. Give us transport only options, no mail, websites, or other goofy services like ‘The Fan’. Residential data cable, we buy the modem, $15/month. FIOS speeds, same conditions, for $30/month. Oh I can hear the roars, but our staff levels! RIF them. You were going to do it anyway and lumber on with crippled services. Dispense with the Land of OZ mentality. It will only garner you more bad press.

On a related note. Readers if you know of a good provider in the Plano Texas area that provides a good price for T1 or SDSL at 768kbps I would like to hear from you!

Linky.

Dear FCC and Congress: Tell me again how the marketplace has become competitive enough to dump local loop unbundling. Darth V’s FIOS product faces so little competition in either speed or price, that they’ve been able to incrementally bump prices on a regular schedule. The average big bundle FIOS customer pays around $150 for what can be had for $40 in Paris. Before we start hearing excuses, France has a more antiquated legacy infrastructure, more labor union control of business, higher taxes, higher salaries and a shorter work week.

Discussing this morning’s earnings, Verizon CFO Doreen Toben told investors, analysts and reporters on a conference call today that FiOS users can expect a new round of price hikes this quarter. “You may recall we increased prices for selected products in the first quarter last year,” said Toben while discussing FiOS (see transcript (pdf)). “We anticipate increasing prices once again in certain products and bundles in the second quarter this year.” Which FiOS products and bundles was not specified.

Verizon has consistently nudged up the price of FiOS broadband, especially for customers who refuse to sign up for long term contracts or add additional bundled services. Standalone broadband service jumped $5 in many markets last fall, while double and triple play bundles have consistently increased anywhere from $5 to $20 since FiOS was launched (depending on the product market). (Broadband Reports)

The Consumerist has the inside scoop here. The ‘memo’ came via fax from someone who purports to be on the inside at a Verizon contact center. Sadly that person maybe looking for work shortly as logs are kept of all communications at VZ facilities. But if what is being offered his is even half true then the mess in both billing, operation, and marketing is more than we have alludded to here, and here.

Apologize for the quality of the doc but the original was murky.

The key point it appears is that offers are sometimes bogus from the start because the marketing is off on the timing. Other cases the VZ agents are uninformed of the current PROPER offers. Misapplying one offer invalidates another that the customer may rightly or wrongly be qualified for. Another words meltdown.

Some of the issues are simply people not talking. That was my experience in that company. Marketing was successful if they met their target audience numbers, be damn if the CSR’s were alerted in time. The problem I suspect relates to Billing. The ‘Bobs’ in the company were not into gathering requirements. Not only that they essentially just wrapped the potholes that are NOCV with components of COFEE. Worse yet the programming staff would, rather than go thru bug testing push that off to UAT to correct [not their job by the way]. Then they would just consider the project ‘complete’.

Shayagan, Fari, you listening? That’s your tarbaby that is getting ready to explode. I wonder if some hot shot NJ AG might want a notch on his belt.

It looks like the world is not Verizon’s oyster. At least not down in Tampa right now. All sorts of operational issues are cropping up for the carrier.

Sam Miller came so close to tossing his Verizon cable TV box to the curb outside.

After signing up in November for Verizon’s $99 a month deal for FiOS cable TV, Internet and phone service, Verizon was still sending him bills for $130 or more. He called to complain each month, but eventually his bill was stacked with $265 in extra fees.

One time he called Verizon, “they told me we didn’t have an account. I told them they could pick up their stuff at the curb,” Miller said. By calling random phone numbers at Verizon, he eventually found a helpful marketing clerk in a branch office to untangle his bill. He still hasn’t gotten the free TV for signing up — that’s going to take months.

“The TV picture reception is noticeably better,” Miller said. “It just seems like they grew so fast they could not keep up with customer demands.”

Unfortunately for Verizon, Miller is not alone in having complaints.

As Verizon signs up thousands of new customers a month in the Tampa Bay area, company officials say they’re working to correct problems with customer service: firing some sales workers, retraining the rest, and restructuring how they deal with customer complaints.

Then there is this fella in in NY who seems none too entertained by his FIOS service. [Content warning ahead]

I find it interesting that NOW Verizon is having problems with FIOS. Much of this was test bedded in Keller, Tx two years ago with a great deal of success. The TBO article seems to allude to operational issues not technology. But tech issues are cropping up.

Linky.

Well I picked on AT&T in a post below. Verizon’s turn in the barrel. Verizon had a satisfied customer in FIOS till he signed up for FIOS TV service. Part of the sad tale below –

For a detailed history of all the problems I have experienced with FiOS since March 2007, see my full review of the service at dslreports.com: according to technical support, I have 55 unique support tickets under my name, the majority of which are related to problems with FiOS TV.)

Since March 2007, I have been forced to use the “nuclear option” - contacting Verizon’s “Presidential Appeals” department - on two separate occasions, as their first-level technical support was unable to resolve anything in a timely manner. So far, the appeals department is 0 for 2 - each time, the problem was not resolved.

I contacted the presidential appeals department because HBO video on demand would not function properly; signs of tiling would appear every few minutes. Numerous technicians were dispatched and were unable to resolve the situation. Several weeks passed before the representative working for the appeals department came across an internal Verizon document stating that this was a “known issue” and a fix would be implemented in August 2007. To this day, this has not yet been fixed; according to a Verizon employee who posts on the FiOS TV message board, a fix is supposedly still being tested.

Weeks later, I was forced to contact presidential appeals for a second time when the normal levels of support were unable to resolve issues with the image quality; once again, several technicians were dispatched but were ultimately unable to resolve the issue. At one point, in an act of desperation, the local group decided to replace most of the components up to and inside the home. The measures were ineffective; the problems continued. A local manager was eventually dispatched out to the home; he claimed that the sub-par image quality was a result of “electrical issues” having to do with the wiring inside the home. End of discussion, case closed. (A visit from an electrician several weeks later would show that this claim was incorrect.)

The litany of his complaints is detailed in this DSLReports thread. Sadly, one of the reasons that Verizon took the plunge with fiber was to be able to reduce costs. Unlike copper, fiber is unaffected by most environmental issues. But this guys tale seems to indicate that though the fiber line is less vulnerable, the ancillary support equipment is not. Nox Nix?

HT: Consumerist

[Piling on Update]: Looks like VZ Calif has pooped the pooch. 74k customers can’t retrieve voicemails — link.

When we last left this saga, a Verizon FIOS customer had the opportunity to see another customer’s billing. Alas so did the other guy! It appears that Verizon does have a kind spot in their heart for not being made fool of –

A little under two weeks ago, we made a long-standing issue that we had with Verizon public. The fact that they had ignored our request to fix a huge oversight that resulted in our private FiOS account info to fall into the wrong hands for over 8 months was starting to upset us just a tad. We knew that if we shared it with you, our readers, that Verizon would have no choice but to respond quickly. At least, that was the hope.

Well, sure enough, after the story was picked up on The Consumerist as well as made it to the front page of Digg, we received a phone call. Then an email. Then another phone call. Then a couple more emails. Verizon Damage Control had stepped in.

Most of the phone calls and emails came from different people at Verizon, but the main idea was that they would be sure to fix the problem quickly. Later on in the evening, though, I got a call from a Verizon exec named Jeff. He had a tech, named Eric, on the line with him. The call came in at 7:00 PM, and we stayed on the phone for about an hour. Jeff and Eric were committed to making sure the issue was solved during that call, no matter how long it took.

It did take a while, but the end result was that I could now log in to the Verizon control panel and see my information, as opposed to the information of someone else who lives in the same city. Even better though, was that this guy who lived across town no longer had real-time access to my information. I specify “real-time” only because I will never know if he decided to take screenshots of my personal data, but I am optimistic on that end of things.

So, now that it was fixed, I said that something needed to be done about the 8 months that I was given the run-around, as in that time, I had spent over 20 literal hours on the phone with FiOS tech support, sales, retention, and anyone else I was put on hold in order to be transferred to. Another Verizon rep, Michael, made sure I was taken care of on that end. A couple of days later, we received a phone call that our account would be credited with 10 months of free service. We are on the highest plan Verizon has for FiOS customers in our area, that being 30/15. So the credit came out to almost $1500.

So a “Thank you” goes out to Verizon. Not only did they fix the mistake that had been lingering for so long, but they also went the extra mile in compensation us for our troubles.

A great story till that last sentence. The compensation was nice, but in reality, that was saving their butts money. Had this fellows accounts been jiggered by a con man, Verizon having ignored the case for 8 months would have been had for whatever the gentleman’s lawyer could squeeze out of them. But it would have had considerably more zeros. Kudos to Verizon for finally getting it right. Kudos to the customer as well, I personally would not have had that much patience.

But I do have to ask — Why does it take a VP to sit on the line to solve this problem? Was that you Charlie Forehand? Doing a level 4’s job of handling orders yet again at a VP salary. Shayagan should compensate you accordingly.

Linky.

FIOS, Uverse, Direct TV all want the consumer to use a branded set top box for their ultimate viewing experience. But that dog won’t hunt and here is Exhibit #1 –

This is an open source effort called Entertainer. Entertainer, like Freevo, MythTV and LMC have functions that many set top boxes do not. Read blog feeds, watch YouTube, Watch TV, play any audio format and Video. If you can get it as a RSS feed or a channel option then these systems can display it.

Which brings me to me to the ultimate question — why? Why is Verizon, a company I own shares in, have hundreds on staff here and in India developing FIOS boxes? Most of these FOSS efforts are at most 3-5 core people and a bunch of volunteers. Yet they develop product comparable to and in many cases superior to the corporate effort. Why am I as a shareholder paying for all this? Why isn’t there an industry API for all this? [Don’t comment, I know why.] Why don’t I have a fatter dividend check as a consequence?

Entertainer website.
MythTV website.
LinuxMCE website.

[Update]

This is off of HitWise.. Yahoo and the Weather Channel topped every other news source on the net. All content probably not on your std STB. Yet another reason that closed end systems will lag in the content arena.

Content will not be contained. Herein is another example of the content escaping from its regularly scheduled delivery slot. From Netflix –

Netflix, Inc. (Nasdaq: NFLX), the world’s largest online movie rental service, and NBC Universal Domestic Television Distribution today announced an agreement through which current episodes of the network’s top-rated prime time series, “Heroes,” can be watched online by Netflix subscribers the day after their network airings.

The deal follows NBC Universal’s announcement with G4 and Mojo as the off-network cable homes for “Heroes” and makes Netflix the exclusive SVOD outlet for the series and the third arm of the studio’s syndication deal.

In addition, Netflix also offers prior season episodes of other popular NBC series including “30 Rock,” “Friday Night Lights” and “The Office.” For these shows, Netflix subscribers will have the option of enjoying them on DVD or watching them instantly on their PCs at Netflix.com.

Pretty cool huh? Let me tell you, I think so. If Netflix can get the other 2 network majors to cut a similar deal who the heck needs a Tivo? Tivo’s and VCR’s from the consumers perspective were used as time shifting schemes. With a Netflix account that becomes passe’.

For the content haulers (AT&T, Verizon, Comcast, TimeWarner) this does not necessarily make their job harder in their managed content schema at this time. But what it does do is make it less and less necessary for the end user to stay with their managed line up and Tivo like devices. But this does something else. It takes the major networks programming divisions and turns them into movie production houses. I mean come on, some MBA type at one of the 3 is going to say, “want to really cut costs. Get rid of the on air network infrastructure. Expand the deal with Netflix for distribution. Save a couple of billion a year.” Their affiliates will scream bloody murder or course, but the networks have thought of them as pains to begin with.

But the media ecosystem keeps expanding. As the content becomes more diverse and tunneled the task of developing a managed line up becomes not only harder, but the value of doing it in the eyes of the end user diminishes as the ecosystem expands.

HT: Consumerist.

Business Week. The price of FIOS is going up. Those folks that signed up for FIOS at $39.95 will be billed at $42.99 beginning in 2008. My cut says there might be some contract squabbling by some. Date based price jumps conflict with contracted lede in loss seller pricing. We shall see.

Interesting observation –

“Verizon’s price increase suggests that the risk of a price war in the Pay TV market is likely lower than investors expect,” said Craig Moffett, an analyst at Sanford Bernstein who first wrote about the price increase, in a note. “High variable costs — not sunk-cost economics — appear to be driving pricing decisions.”

Rabe said FiOS TV service will offer more content next year, and that it remains competitively priced with its cable rivals.

Moffett noted that Verizon is spending a lot of money on advertising and promotional incentives to attract customers. He said he believes the high costs make the $18 billion investment in FiOS unattractive.

Other analysts, however, have noted that the large investment is necessary if Verizon is to keep pace with cable companies, which pilfered telephone customers with their own Web-based phone service.

Keep in mind folks, FIOS is just the TV portion of the package. Verizon really wants you to buy the whole bundle — FIOS, FTTP, VoIP. The difference between 20mo vs 48mo payback for Verizon hangs in the balance. But to be fair, Verizon stuck their neck out on FTTH. They deserve kudos for taking the gamble.

Our readers are well aware that we here at Thirdpipe are of the opinion that content will be cheap or free. With the costs of digital support tools dropping all the time the capability of creating digital content is available to anyone with the talent/desire.

Well the theme rides again. This time in the pornographic industry. The take away graph –

It doesn’t make any sense!” Hirsch tells me a month later. It’s a hazy afternoon in June, and he is sitting behind his oak-slab desk, his eyes flickering between a pair of flat-screen monitors, one tuned to Bloomberg News and the other showing a YouPorn clip featuring a gaggle of naked women and an oxygen mask. “They’re giving porn away. You can’t make money on this.”

“…You can’t make money on this.”, is a fairly significant admission. Pornography for what ill you may make of it [they are significant by the way.] literally created the home video industry. When the BetaMax/VHS tape systems came out, porn was the first content. Same with CD’s, the Internet, DVD’s, etc. If there was a medium, porn was early content for the systems. The rationale of course was there was big $$ to be made. Big $$. So porn whether we like it or not has been a bellwether technology indicator.

So now the porn industry has been hit with the impact of UGC. A couple of college kids with a camera can now upload vids on sites. Free, as in Beer. No dollars to be made here. So the porn industry is headed for the skids as well on a income basis. CD and DVD sales are down.

If the pornographic industry takes a fortuitous slide to oblivion; can other videographic production houses be far behind? MGM, Sony, Paramount, do you understand? AT&T, Verizon do you still think managed content will save you?