Avoid Cable and Phone Company Money Grabs

Category: Finance

Approximately 44 percent of U.S. broadband subscribers get their phone, TV or high-speed Internet from one of the top ten companies. Many, probably most of them, pay far more than they should for those services. Here’s why, and how to avoid money grabs from your phone company or cable operator...

Save Money on TV, Phone and Internet Service

Telcos (and other large corporations; cable companies are no different) employ legions of MBAs and consumer psychologists to divine how best to pull the wool over people’s eyes and tap them for as much money as possible. Regularly, they get together at conferences to “share best practices” on how to prove P.T. Barnum was right. They are totally awesome at fleecing sheep.

Don’t blindly follow the “provisioning process” laid out by a large ISP or you will end up its dinner. A telco’s Web site is the first place most people go when seeking Internet service. And they find it, prominently linked on the company’s home page. When they click to enter the Internet service subsection of the site, they enter dangerous waters.

These sub-sites are designed cunningly to lead a visitor to the worst deal for him and the best for the telco. If you just follow its instructions you will get your Internet easily and quickly – you won’t even feel the hand dipping into your wallet pocket.

Save on Phone, TV, Internet

The first rule of buying Internet access online is: do not, ever, buy Internet access online. Use that sub-site only to gather information that you can use as ammunition. If you go through the online ordering process at CenturyLink, for example, you will end up with a bill that includes $99.95 for a DSL modem/router, and $14.99 for ground delivery in 2-3 business days.

Sheep shrug and say, “Well, if that’s what it costs…” and click the button to buy. The Web site gives them no alternative; you can’t question or argue with a computer. So exit that money trap and contact a live human being with whom you can negotiate. Online chat or toll-free talk will do equally well. The people on the other end are the telco’s sales people, highly trained and very knowledgeable.

But beware; in addition to knowing all the options available to you, they are also highly trained in how to steer you to the options that are most profitable for their employer and unnecessarily expensive for you. You need to take control of the conversation immediately.

(Sweet) Talking to the Customer Service Rep

“I want Internet service and I want to use my own modem/router.” Don’t add anything like, “I don’t want to (or worse, “can’t”) pay $115 for a modem/router. That will only ask the rep to volunteer the helpful information, such as "You know, you can lease a modem/router for only $6.99 per month.” Leasing is like the lottery: both are for people who can’t do math.

Instead, tell (don’t ask) the rep to give you a link to the telco’s list of modem/routers compatible with its service. You could also Google the list using “(telco_name) list of compatible modems” and it will probably be the first search result. CenturyLink’s list (http://internethelp.centurylink.com/internethelp/modems.html) is very helpful because it shows the industry-standard protocols suitable for each class of speed (up to 20 Mbps, 40 Mbps, etc.) If you know that you want 20 Mbps service, you need only focus on modems whose maximum speed is 20 Mbps; that would be VDSL2-standard modems.

Now, off to eBay, where you’ll find VDSL2 modems aplenty. Narrow your search to “auctions” and “used” items. Modems are not cars that wear out rapidly. They have no moving parts aside from their rarely used reset buttons and swivel antennas. As long as there is no obvious evidence of physical abuse, a used modem is almost 100 percent certain to be as good as a brand-new one – and much cheaper.

This very minute, I am looking at a used VDSL2 modem on eBay. It was used for only three weeks before the owner moved to a different telco’s service area and had to buy a different modem. It includes a six-foot Ethernet cable and a power supply. There is no configuration guide (user manual) in the photo but I could download it right here (http://www.actiontec.com/support/doc_files/PK5000_Alternate_Configuration_Guide.pdf) This lightly-used modem has no bids and the auction ends in 2 days, 16 hours. Its $25 minimum asking price includes overnight delivery (versus CenturyLink’s $14.99 for 2-3 day delivery).

In my opinion, it probably won’t get any bids, even though it could save someone $90 off CenturyLink’s exorbitant charges. Why? Because it’s a “G” modem; it supports the WiFi protocols 802.11 a/b/g, but not the latest “n” standard. That means your device’s WiFi connection to the router won’t exceed 54 Mbps. Clearly, it’s inferior, obsolete, and should be passed by, right? Wrong. CenturyLink doesn’t offer Internet speeds greater than 40 Mbps. So there is no reason at all to be concerned about the WiFi speed of a modem beyond that limit. As for range and signal strength, a “G” modem covers a 2,000 square-foot house with 4 bars, at least, upstairs and basement.

As an example to the contrary, I should mention that Verizon's FIOS service comes with a free wifi router and "premium" installation. The Verizon tech spent several hours installing my FIOS service, which included running cables around my house, and drilling through the wall to get the set-top box where I wanted it. A few years later, I added a second box upstairs, and to my surprise the service tech ran the cabling up into the attic, crawled around up there, and found a way to drop the cable where it was needed, without destroying the ceiling or walls. No charge for any of that, but that's not the typical consumer experience when it comes to buying telecom services.

Avoid the "All You Can Eat" Buffet

Aside from the set-top box for your Internet service, there are plenty of other things that your phone, Internet or TV provider wants to sell you. Sheep tend to eat more than they need. People tend to buy more than they need, mainly because they don’t stop to figure out exactly what they need. The sheep get fat while people’s wallets get skinny. When you chat or talk with a live agent, be aware that he or she is paid bonuses for “upselling” customers: getting them to buy things they didn’t plan to buy at first. The modem lease is one example; in two years at $6.99/month, that $100 modem will generate over $167 for CenturyLink, and the company will still own the modem.

Another example is Internet-connected devices insurance. “Only $4.95 for the first month and just $9.95 per month thereafter, you say? Full replacement value of anything connected to your Internet? Even if I drop my laptop in the bathtub?” I did ask that and the rep said, “yes.” So I went a little farther. “How about I connect my car to the Internet and drive it into a bridge buttress? I could use a new one.” Stunned silence; she hadn’t been trained for that one.

I wasn’t sarcastic or mean; we both ended up laughing out loud at the absurdity of what she had to try to sell me. Never be mean to service people. Instead, be kind. Give them the gift of laughter and they will be disposed to return the favor, as in this case. “Sir, I’m going to let you in on a secret: as your renewal date approaches they’re going to try to renew you at the much higher ‘regular’ rate. Here’s what to say to keep the low rate…” I’m sure she could have been fired for telling me that, but she was in such a good mood she forgot all about the “monitoring for training and quality purposes” thing. Unauthorized perks are the sweetest of all, and they usually go to someone who makes someone smile.

Here are some other ideas you can use to save a bundle on your TV, Phone or Internet service:

  • Don't buy super high speed Internet service (50 Mb/sec or higher) if your Internet usage is mainly for email, casual Web surfing and the occasional YouTube video. Most people will do just fine with an entry-level 5-15Mb/sec package. You can always upgrade later if your kid's online gaming is slowing your connection to a crawl.
  • Don't pay extra for phone service with 700, 1400, or "unlimited" minutes if you only talk a few minutes a day. Check your bill each month to see if any new or unnecessary services are listed. You might be paying for 3-way calling, call blocking or other upsells you'll never use.
  • Don't buy the 500 channel package with HBO/Showtime/Cinemax. You probably only watch 3 or 4 channels anyway. Check out Hulu to see all the TV shows you can get online for free.
  • Don't pay extra for "Multi-room DVR" or other optional set-top box features if you won't use them. These extra services can tack on $10-30 a month.
  • Don't "rent" movies on demand from your Internet provider. You'll almost certainly get a better deal and a wider selection by using a ROKU box to stream movies from Netflix or Amazon Prime. See my article Can Roku Replace Cable TV Service?
  • Check to see if you can combine your monthly landline and cellular bills. Some companies offer a discount for doing so.
  • Find out if there's a discount offered to employees of your company. You may be able to save 10 to 25% on your bill.

If you're near the end of your contract, tell the rep you're thinking about downgrading or cancelling your service. Sometimes those magic words will get you transferred to another rep that has more leeway to offer a better deal. If not, be persistent - ask for a manager, or the Cancellation Department. Have competitors' pricing info at hand, and quote it.

Got any other ideas for saving money on your TV, phone ot Internet service? Post your comment or question below...

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Most recent comments on "Avoid Cable and Phone Company Money Grabs"

Posted by:

21 Oct 2013

OK Bob, I'll bite. I have had CenturyLink for years as the only available provider in our area. I have danced the dance a thousand times with their customer service agaents. So exactly what was the phrase that the tech told you to use to keep the low rate? I want to engrave it in my brain!!!! I think I have used every variable out there so far.

EDITOR'S NOTE: Some variation of “I keep the same rate or I’m going with T-mobile wireless Internet” would work. They’ll come back with a small discount, you come up a bit. Eventually, the CSR goes to get her manager’s approval. Just like buying a car.

Posted by:

21 Oct 2013

This morning (Monday) I cancelled my Uverse which I ordered in a moment of weakness last Friday.
They were nice about it, but struggled a little. I thought it would be much worse.
I also told them I was tired of my internet bill going up so much in the last 4 months. When asked, I said I'd be shopping the market. And sure enough they found a "promotion" that would knock $15 a month off my internet bill. I felt mollified and caved.

Posted by:

21 Oct 2013

Instead of subscribing to a TV service or renting DVDs from the local "box", my wife and I check out DVDs from local the library - FOR FREE. We've watched old and recent movies, old and recent TV series (including those only available on cable). The available movies and TV shows at the library are as current as the "box", though we may have to wait our turn. Our savings are substantial.

Posted by:

William Bright
21 Oct 2013

I have used the magicjack plus for several years now. It is about $30 a year. I have saved a bundle using it. The mj plus does not need your pc on, just your router.

Posted by:

21 Oct 2013

Great article, Bob. Very useful. I've written about this topic as well on my blog. I'd have loved to have seen what the CSR told you about how to keep the low rate at the renewal. I've cut the cable cord for all services other than Internet and now Time Warner is trying to raise that price. I've not been successful in finding other high-speed alternatives short of a LTE hotspot option. So any insights you can offer about high speed internet options to the duopoly (DSL/Cable) would be appreciated!

Posted by:

Bob D
21 Oct 2013

A couple of years ago, the local cable company offered a lower internet price than the phone company's DSL, so I switched to cable. A few months ago, I noticed that my cable charge spontaneously jumped from $20/mo to $29/mo, and the speed rose from 3 Mb to 15 Mb, with no effort on my part. Remedy: I switched back to DSL.

Posted by:

Bill E.
21 Oct 2013

As usual Bob, a good article and information that one can actually make use of. I'm going to be in the market for home internet and cable service in the next couple of months and plan to put your advice to the test. Thanks, for providing such a wealth of information and for doing it in a way that even those of us who are somewhat "technically challenged" can understand!

Posted by:

21 Oct 2013

I presume things are going to get much worse for consumers before they get better.
1)FCCs wings are being attempted to be trimmed and they really gravitated from their mission of protecting "airwaves" for the consumers a long time ago.
2)Public Utilities Commissions have been dogged by the internet era and just don't know what to do with Wireless technologies.
3)AT&T is trying to convince the government that their Telco (and internet + U-verse services) are at a significant disadvantage compared to non-regulated cable companies and satellite service provideds.
4)There is back-room discussions attempting to merge DishNetwork and DirectTV but SEC may just cave in and allow this merger!
I wish Google rolled out that balloon WiFi permanently in my vicinity! ;)

Posted by:

Daniel Wiener
21 Oct 2013

This is a very informative article. My own experience is that I can get a DSL-only special rate for a year (currently $22.50/month from AT&T), after which they will double the price. At that point (or sometimes just before then if I've properly entered a notation on my electronic calendar) I call the service provider and ask for a new reduced rate (and a partial refund on this month's rate hike). If the representative says that they only have that regular rate available at this time, and that they can't give me some kind of compensating discount, I tell them I want to find out what the procedure is for canceling. At that point I will be transferred to their Retention Department. Or if not, I will ask to be transferred there.

All big companies offering telephone service or credit cards or whatever have Retention Departments (although that may not be the official name of the department). THEY DO NOT WANT TO LOSE YOU AS A CUSTOMER!! The cost of customer acquisition is very high; it's much cheaper to retain an existing customer than get a new one. Their marginal cost of servicing an existing customer is miniscule (especially if you have a good track record of paying your bills on time). So they WILL deal, as long as what you're asking for is not too unreasonable.

This latest time I simply told the AT&T Retention representative that I wanted a rate equivalent to what I had been paying, or else I would find a different provider (and that I'd already done some research on the Internet). He was very sympathetic, but said the lowest rate he could provide was $22.50 instead the $21.95 I'd previously had. That's a noise level difference, and I was happy to grab the deal for the next 12 months. He also credited me for the extra charge on my current bill.

The same lesson applies to credit cards. I NEVER pay an annual fee, even on the few cards (with special Rewards deals) which normally require them. When a fee appears on my bill, I call that bank and ask if cancelling my card immediately will rescind that fee. A few minutes later a Retention representative persuades me to keep my card if they refund the fee or give me an equivalent monetary benefit.

What if you miss a credit card payment or send in the wrong amount or otherwise incur a fee or interest charge? This almost never happens to me, but once in a while I'll make a mistake. In that case I call the bank and explain the situation and offer to correct it (if I haven't already done so) and ask if there is anything they can do to reverse the charges. Since I have a generally sterling record, and they want a happy customer, they are always very cooperative.

But it is essential to ASK them to reverse the charges. You can talk all around it, and they can express sympathy, but their procedures forbid them to volunteer such a correction. You must explicitly REQUEST it before they can do anything. I learned this a few years ago, when the representative kept asking me what I wanted them to do about my complaint; she was practically begging me to make a specific request so that she could act on it (which I finally figured out).

The same principle applies to satellite TV or cell phone service. Every few months I will call DIRECTV or Sprint to whine that my bill is awfully high, and is there any way to reduce it? No, I don't want a cheaper package, because it doesn't contain all of the channels which we watch or all the minutes I need. But aren't there any other discounts available? Usually they'll end up giving me a $10 or $20 credit for the next six months, or some other special deal. It can't hurt to ask! They don't want to lose you as a customer.

Posted by:

22 Oct 2013

It's really a shame that all of the cable/phone companies "play rate games" with their customers in order to lure them in.

You get a great deal for the first year, and then once the first year contract or deal is up, you are really surprised to find out how much your new service rate is going to be, and then it is up to you to get the new price down with them, or tell them that you are going to leave in order to get a better deal elsewhere.

It shouldn't be that way, where you have to tell them that you are going to leave, in order to get a better a deal. It seems like it is all just a game to them, but it is just really frustrating to those of us who are customers on the other end.

Posted by:

22 Oct 2013

I would like to know how I can get channels like MeTV, CoziTv and Antenna TV without an antenna? Also TCM is another channel I like to watch. Basically they just show older shows on these channels from about 50's thru the 70's. I don't care for most of the shows being produced today with just a few exceptions.

EDITOR'S NOTE: As far as I know, those channels are on cable only. Limited content is available on their respective websites. You can find quite a bit of classic TV on Hulu and Crackle.

Posted by:

22 Oct 2013

Bpb, I have both Netflix and Hulu, plus access to Crackle, but the shows they air are very limited from the 50's to the 70's. I have spent a lot time checking them out. What I have been doing is buying dvds of old shows & movies when they come on the market.

Posted by:

22 Oct 2013

Hi Mr. Rankin:

Another Fine Article, indeed Sir!

In Paragraph 2 of your above-stated article you write - "They are totally awesome at fleecing sheep."
I would change One word in that sentence to . . . "They are totally LOATHSOME at fleecing sheep."


Posted by:

Al S
22 Oct 2013

My smart TV has aps that include Netflix, Hulu+ with a subscription I can get them on my TV, PC's and Samsung Tablets. I can watch a show on the TV and a 2nd program on an Auxiliary TV just above and to the right of the big TV. Cost is less than $14.00 per month.

Brand new and some older movies run from $2.95 to #3.95 from my Cable provider. All those can be watched on the above mentioned devices, best of all each PC, Tablet and even cell phone can watch a different show at the same time. I will never ever purchase any DVD movie or Old TV shows when most are available on YouTube or a half dozen free internet Movie channels.

Posted by:

23 Oct 2013

I'm told that one can access U tube on TV with Twonky
Is so??

Posted by:

23 Oct 2013

@Carole MeTv and AntennaTV are channels that you get with an antenna. I'm not familiar with CoziTv but it probably is too in your area. I call these local channels and I can only get them with an antenna on my digital tv.

Posted by:

23 Oct 2013

Stephanie, I understand you can receive the channels using an antenna, but where I live, I cannot install one. I love the shows on all channels. Brings back a lot of old memories. I also watch Hallmark channels and TV Land. Those I know you need a cable or satellite to watch them. Are you a fan of old shows too? Here is information about http://www.cozitv.com/

Posted by:

23 Oct 2013

I got fed up with my cable company's ever increasing prices. I was paying $50 for phone, $58 for internet @ 14M(80 Gig limit) and $115 for cable ( no movie or sports channel add-ons). Looked around on the internet and now use Net Talk for about $25 per year, it is good service, found a third party cable internet provider for $50/mo unlimited @ 24M, excellent service. They included a free cable modem and now I stream TV on-line, $8 for Netflix, Hulu, and a host of web sites that provide free viewing. We haven't missed the cable company at all. Went from $215 per month to roughly $65!

Posted by:

24 Oct 2013

Bob, the best way to get good service, is to diverse. I have my Landline phone and Broadband with AT&T, a U-Verse router, and my TV with DirecTV. Got rid of Cable, in 1998 and haven't looked back. Now, both my phone and broadband are very reasonably priced ... It's AT&T Wireless, that is OFF the charts!!!

My DirecTV monthly bill, is priced right. I have learned how to "talk the talk" with DirecTV, but must admit, me being with them, since 1998 is a BIG plus!!! AT&T keeps sending me mailings about getting U-Verse TV ... I keep telling them, I refuse to leave DirecTV, when I get the Genie and can record 5 programs, at one time. Yes, this is a major necessity, in my home ... Dear Hubby records lots of programs, after 50 years, one must keep him happy. :)

In all honesty, I got DirecTV's NFL Ticket, for free this year, due to being a long time customer. I can't say it has been worth it, since, so many NFL games are now, shown on ABC or NBC or CBS or Fox, over the weekend these days.

As to my TV ... I have always looked upon that bill, as my Entertainment bill. I do not go to the Movies, any more and haven't for years ... Movies prices are another OFF the chart, prices!!! For those who do go to the Movies, they will spend more in one month, than I will and I will watch a whole lot more, of movies. Plus, we must have at least 2 TVs in our home, this is how our marriage as lasted 50 years. LOL :)

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