How has Time Warner failed users? Let us count the ways

On the heels of Net neutrality and municipal broadband, a new complaint against Time Warner could put the kibosh on its merger with Comcast

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Tired of skyrocketing cable bills, bait-and-switch billing tactics, terrible customer service, and not receiving the Internet speeds promised? Well, this could be the year that telecoms get their comeuppance, as the backlash against the industry continues to grow.

A new complaint filed against Time Warner calls on the FCC to halt the company's proposed $45 billion merger with Comcast and launch an investigation into its business practices. Coming on the heels of recent calls by the agency in support of increased broadband competition and strong Net neutrality regulation, the FCC may yet surprise when it comes to a decision on a deal that would merge the country's two largest cable companies.

In a move to keep pressure on the FCC during its review of the Comcast-Time Warner deal, the complaint from telecom analyst Bruce Kushnick and Tom Allibone of telecom customer advocacy group Teletruth, points out that Comcast and TWC are two of the most hated companies in the United States, according to the American Customer Satisfaction Index. It calls on the FCC to investigate, among other issues:

  • Questionable business practices and charges, including billing errors and made-up fees
  • The "Social Contract," whereby the FCC in 1995 allowed "temporary" rate increases of up to $5 per month to enable the cable companies to upgrade their networks and provide broadband to schools; the contract expired in 2000 but Time Warner never stopped charging customers the extra fee -- nor is there evidence it wired the schools
  • Twenty two years of continuous rate increases (prices for cable service rose 306 percent from 1992 to November 2014), as evidence of a duopoly that is ineffective for controlling prices

Time Warner claims the allegations are without merit while declining to answer them specifically, but the complaints are hardly new. In fact, in the last five years more than 16,000 formal complaints have been filed with the FCC against Comcast and Time Warner, alleging deceptive advertising and billing, bad customer service, and poor cable or Internet service.

FCC chairman Tom Wheeler has said that "meaningful competition for high-speed wired broadband is lacking and Americans need more competitive choices for faster and better Internet connections, both to take advantage of today's new services, and to incentivize the development of tomorrow's innovations."

If Comcast swallows Time Warner, it would become the dominant broadband provider in 19 of the top 20 residential markets in the United States. It's hard to imagine the FCC deciding the merger is in the public interest, especially given Wheeler's comments. But the FCC need not reject the merger outright; it could opt to impose conditions that would make completing the deal unpalatable for Comcast, such as forcing it to offer services in unprofitable, underserved rural markets.

If the FCC succeeds in reclassifying broadband as a Title II public utility and bans fast lanes on the Internet -- costing telecom giants potential profits -- Comcast could withdraw its offer, arguing the Net neutrality plan was a "material adverse change" that allows it to back out of its deal with Time Warner

The FCC has stopped and restarted its informal 180-day time clock many times during its review of the planned merger -- most recently late last month after Time Warner lawyers belatedly turned over tens of thousands of additional documents relating to the deal. But regulators suggest a decision could come as early as March. The agency is expected to vote next month on Net neutrality rules and a proposal to invalidate state laws banning municipal broadband.

Amid these actions comes another sign that telecoms are feeling the heat: Republicans in the newly seated Congress moved quickly this week to defang the FCC. Proposed Internet legislation would prohibit the agency from reclassifying broadband as a Title II utility and stop the FCC from creating any new Net neutrality rules.

In response, supporters of grassroots organization bombarded the Hill with more than 16,000 phone calls during House and Senate committee hearings, demanding that Congress allow the FCC to use its authority to enforce Title II regulation on telecoms. Last year the FCC received a record 3.7 million public comments overwhelmingly in favor of Net neutrality.

Net neutrality, municipal broadband, and the Comcast-Time Warner merger: Together, these three decisions could spell the start of a perfect storm ahead for telecoms.

Copyright © 2015 IDG Communications, Inc.