The television screen went dark a month ago as Daniel Fitzgerald watched “American Pickers” on the History Channel.
Perplexed, he grabbed the remote and surfed through CNN, Disney, Comedy Central and the rest of the standard cable lineup. Many of them were gone, too. In their place was a black background with a small block of text advising him that his subscription no longer provided those channels.
“I thought, ‘What the hell? I just paid the cable bill,’” Fitzgerald recalled last week in the tiny Lexington apartment he shares with his disabled 16-year-old son.
Fitzgerald called Spectrum, the subsidiary created last year when Charter Communications of Stamford, Ct., acquired Time Warner Cable, which was then Lexington’s cable provider. A Spectrum representative told Fitzgerald that he hadn’t been paying Time Warner enough for the standard cable package. If he wanted those channels back, his monthly bill for cable and Internet would jump from $103 to $139, effective immediately.
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Also, he would need to pay a $24 service fee for a technician to replace his old Time Warner cable box, which worked fine an hour earlier, with a new Spectrum cable box.
Fitzgerald tried to haggle — Time Warner usually cut you some slack on price increases in order to keep your business, he said — but the representative stopped him. This is Spectrum’s deal. Take it or leave it.
“It was bull crap,” Fitzgerald said. “They don’t give us any notice, they just spring it on us in the middle of the month. And then they tell us we’re getting an ‘upgrade.’ This isn’t an upgrade, it’s the same channels we already had!”
Fitzgerald was snared in what Charter Communications described, in a subsequent email to Lexington city officials, as “a recent sweep of customer accounts.” He was being “repackaged.” He later learned that others in his Alexandria Drive apartment building were also swept and repackaged.
It comes down to money: Charter wants more. Time Warner wasn’t charging its cable subscribers enough, Charter chief executive officer Thomas Rutledge told his company’s shareholders in a conference call last November. Rutledge pledged to roll out higher cable prices this spring as the remaining Time Warner customers in places like Lexington formally became Spectrum customers.
Price hikes can be risky, Rutledge acknowledged on the call. Charter had lost about 47,000 cable subscribers in the previous three months, mostly inherited Time Warner customers who decided to go elsewhere rather than deal with the new company. (Charter has among the lowest customer satisfaction scores of any cable provider in the country, according to J.D. Power.) However, he said, “new pricing and packaging” will more than make up for the “churn activity.”
Nationally, Charter has nearly 25 million customers who pay for cable, Internet or phone service or some combination thereof, with a respectable profit margin of 13 percent.
“It’s a difficult thing to model,” said Rutledge, whose 2016 pay package was $98.5 million. “But we’re coming at it both ways, both from creating a value proposition in the pricing and packaging we have, and doing those smart things that you can do with an existing customer base that’s been mispriced to move them in the right direction.”
Charter moving prices “in the right direction” is why ESPN abruptly went black at Ximena McCollum’s home in Lexington in the middle of the NCAA men’s basketball tournament. McCollum called Spectrum and was informed that restoring her cable service would cost her an extra $45 every month.
Spectrum’s representative “kept telling me that the channels I claimed I was getting were not part of my subscription, so if I had been getting them, I shouldn’t have been getting them,” McCollum said last week.
“I told her that I’ve lived in this house for seven years. I’ve always had the same channels. She kept insisting that I wasn’t supposed to be getting these channels unless I paid them some ridiculous price. You could tell that she was confused and reading from some sort of script they had given her.”
“Finally, I said, ‘Just cancel my subscription,’” McCollum said. “I cut the cord.”
‘Repackaging’ the customers
Most cable television rates are not regulated by the federal, state or local governments. Charter does have a franchise agreement with the Lexington-Fayette Urban County Government to operate in the city. It sets minimum standards for customer service. But city officials say they don’t have the legal authority to block price hikes or require better channel selections.
Still, roughly a dozen Charter customers complained to the city this month about their television screens going black, with the company demanding a price increase before it would restore service, said Roger Daman, the city administrative officer who took the complaints. Separately, members of the Urban County Council say they’ve been hearing similar grievances from their constituents in recent weeks.
Even some of the city government’s televisions have gone dark.
“Customers shouldn’t be mistreated. This is a troubling way for Charter-Spectrum to introduce itself to Lexington, and this flood of complaints is terribly disturbing,” said Lexington Mayor Jim Gray.
City Councilwoman Jennifer Mossotti said Spectrum told her that she would need to pay an extra $21.50 every month to maintain her cable service. To save money, Mossotti volunteered to drop her Spectrum phone service. Actually, Spectrum replied, that would cause her monthly bill to get even bigger, because it would break up her original “bundle” of multiple products.
“It’s frustrating to the Nth degree. People are calling our offices daily about this,” Mossotti said. “We felt like we at least had a little leverage with Time Warner. You could talk to them and usually you could work something out. With Spectrum, everything falls on deaf ears.”
In response to the recent complaints, Charter explained to city officials that it is “repackaging” some of its Lexington customers.
For example, a local man who lives on Social Security benefits and who received the same cable lineup for 20 years “has only been paying for the Starter TV package,” Jason Keller, Charter’s senior director of government affairs, told city officials in an April 10 email. “The most recent sweep of customer accounts is what knocked out the channels, since he wasn’t paying for them. However, we’ve now repackaged him into a new service offering that has restored the channels and provides him with a new HD box.”
Keller did not respond to calls from the Herald-Leader asking how many Lexington customers now face higher cable prices.
In a prepared statement, Charter spokesman Michael Pedelty wrote: “Time Warner Cable was providing some programming inadvertently to a small number of customers whose packages didn’t include them. We want our customers to have the best quality and most reliable video experience. Earlier this year, we started a network project that adds an element of security and ensures individual channels are encrypted and available exclusively to those who subscribe to them.”
Lexington residents who want to cut the cable cord, as McCollum did, have some options.
They can buy a relatively cheap digital antenna and pick up local network affiliates and public television, but the signal quality will depend on their home’s location. If they own their house or their landlord approves, they can install a satellite dish, although there is a credit check, and it might not be cheaper than cable. Or they can try an Internet-provided television service such as Sling TV or Windstream’s Kinetic.
About two-thirds of Lexington households have access to Kinetic based on their proximity to Windstream’s fiber network. Windstream continues to expand its capacity in Lexington, so more homes will be able to join Kinetic in coming months, said Sarah Day, the company’s president of consumer and small business.
‘Ain’t much you can do’
Fitzgerald, who is 55, said he doesn’t understand how Spectrum could accuse him of getting more than he paid for, as if he was somehow slipping one past the cable company all this time.
As instructed, Fitzgerald sent $103 to Time Warner every month for standard cable, with no premium channels or other add-ons, and Internet service. This was the understood price until Spectrum decided that it wanted 35 percent more.
That extra $432 a year, plus the one-time $24 service fee, is a great deal of money to Fitzgerald.
His son Christopher, a sophomore at Dunbar High School, is in a wheelchair because of a neurological condition known as ataxia, which limits his muscle control. Fitzgerald works odd jobs during school hours when he can find them, but evenings, weekends and summers are devoted to caring for Christopher. They live on less than $1,000 a month, most of which comes from food stamps and Christopher’s disability benefits.
Rent on their one-bedroom apartment — Fitzgerald sleeps on a mattress in the living room — is $500 a month, a reduced rate because Fitzgerald sweeps and mops the hallways in their building. So he was extremely reluctant to agree to the higher Spectrum bill. He didn’t feel like he had a choice, though. Christopher is stuck indoors when he’s not in school. The television and computer are the family’s windows to the outside world.
“I just don’t know how I’m going to pay it,” he said, staring down at the plastic television remote. “There’s no place in my budget for it.”
One of his neighbors, Marcus Sanders, poked his head through the apartment’s open doorway at that moment to commiserate. Sanders said Spectrum has raised his own monthly cable fee to $130, an $18 increase.
“A five dollar increase, OK, fine, I guess I could deal with that,” Sanders said. “But twenty bucks just because a new company comes in? This is felonious. What am I gonna do, tell Social Security that I need $20 more every month because Spectrum wants it? It doesn’t work that way.”
“There ain’t much you can do about it, though,” Fitzgerald told Sanders. “They’re the cable company.”