Comcast sneaks in back-door rate increase by increasing “equipment charge”

By | October 19, 2009

UPDATE: If you would like to help me call attention to this, Comcast’s most recent attempt to cheat its customers, please Digg this article.

In a classic Gotcha Capitalism strategy, Comcast in Boston has just informed their VoIP and Internet customers that they are raising their monthly rate by $2 without actually admitting they’re doing it.

Note the text circled in red on my most recent Comcast bill:

comcast

Here’s what it says, in case you can’t read the picture (and for the benefit of search engines):

IMPORTANT NOTICE: Effective with your next billing statement the monthly equipment charge for your Comcast CDV and/or Internet modem will increase from $3 to $5, excluding applicable taxes and fees.  This change does not affect your monthly CDV and/or Internet service prices.

Let’s translate that into English: “We’re going to start charging you more for your service, but we won’t be charging you more for your service.”  Wow, it sounds stupid when you put it that way.

Maybe I’m confused, but I thought that when there was a separate line item on a bill labeled as an “equipment charge,” that line item was supposed to represent the actual cost of providing the equipment to the customer.  Since the CDV modem in my basement is the same one I’ve always had, and since the $3/month fee I’ve been paying for it up to now has probably repaid Comcast for the actual cost of the hardware several times over, how exactly is it reasonable for Comcast to raise the equipment charge?

If the charge is not, in fact, tied directly to the cost of the hardware provided to the customer, then it’s not really an equipment charge.  Rather, it is part of the service price, and it should be included in the service price rather than listed as a separate line item.  But then, of course, Comcast would have to advertise a higher monthly rate, which would scare away some customers.  And as everybody knows, if being honest about the cost of your service scares away customer, the right strategy is to be dishonest instead!  It’s a standard move for vendors competing in confusopolies.

I called Comcast and asked why they were increasing the charge.  The rep put me on hold for a few minutes and then came back on the line and explained that they hadn’t raised that charge in a long time but had to raise it to keep up with increased equipment costs.  In fact, the cost of this kind of hardware is probably going down, not up, because the US economy is flat, but I didn’t try to get into that with the rep on the phone.

Instead, I pointed out to her that the this charge was supposed to represent the cost of my Comcast equipment, and since Comcast had not replaced my equipment, nor was there any reason for them to do so since it’s working just fine and replacing it would not provide any new functionality, there was no justification for raising the fee for me.

In response, she said (no, I’m not making this up), “I’m sorry about the inconvenience of your having received this notice on the bill, and I understand that with the economy in the shape it’s in, it can be difficult to deal with increased expenses, but again, we haven’t raised this charge in a while, and we need to raise it to keep pace with new technology.”

In response, I pointed out that since the charge clearly was not directly tied to the equipment provided to me by Comcast, it was not actually an equipment charge, but rather part of the service price, and that listing it as a separate line item was therefore deceptive advertising.  She disputed this characterization, and I did not argue the point further.

Instead, I told her that I understood this was neither her decision nor her fault, but I would like her to pass on to her superiors the fact that not all Comcast customers are stupid, and that I intended to file complaints about this backdoor rate increase with both the state Department of Telecommunications and Cable and the Mayor’s office of Cable Communications (which I have since done).  She promised to do that.

UPDATE: According to Comcast’s 2008 annual report, they had 14.9 million high-speed Internet customers at the end of last year.  If they increase everyone’s “equipment charge” by $2 per month, that’s a $358 million increase in annual revenue, tax free (since it’s an “equipment charge” and since taxes are levied separately on customers’ bills) with zero associated cost. That’s quite a bump in Comcast’s bottom line for doing nothing, eh?

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28 thoughts on “Comcast sneaks in back-door rate increase by increasing “equipment charge”

  1. Pingback: The State of the State - Page 3

  2. jik Post author

    …but apparently in some cases these modems do fail, a lot. I’m using FiOS and I’m on my third modem now in less than 2 years at this address.

    FiOS uses fibre, not coax. The modem technology is totally different. There’s no way to extrapolate from the failure rate of FiOS modems to the failure rate of Comcast cable modems.

    Not to mention the fact that Verizon and Comcast are different companies, so for all we know Verizon may have just chosen to use crappier modems than Comcast.

    I’ve never had a cable modem fail on me.

    Reply
  3. bonnie

    go with dish we love it as of now we are with comicalcast the quote a price and charge different had it for 4 weeks my total bill is now over 200 supposed to be 78 go figure i talked to them yada yada double talk well if its not straightened out, back to my dish and there we will stay

    Reply
  4. barnes murphy

    my ccomcast bill was charged one penney over in 2006 and i called and they never gave me credit when they said they would and most people wont call over one penny so that adds up for comcast /AT&T corp>

    Reply
  5. barnes murphy

    my ccomcast cable in 2006 was charged one penny over and i called and they never gave me my one cent credit.and that adds up if comcast did that to every customer.i

    Reply
  6. ladydi

    They just did it again. my modem rental fee went from $5 to $7. We will be buying our own modem. good thing I don’t have their VoIP service.

    Reply
    1. billy

      update on feb 2011. charge is now $7. withing 3 years I’m with comcast, it has been raised 3 times… hohoho. looking for change soon

      Reply
  7. targetpro

    I want you to pay for your site by putting some Google’s ads up, preferably Comcast ads. That way, every time, I like something that’s written I can click on a Comcast ad, crediting your site and directly debiting Comcast.

    Reply
  8. JEB

    I am looking into a new Internet / VoiP phone service with Comcast. My acct. rep said if I supply my own eMTA modem, there is still a $5/ month equipment rental fee. (?) He said he was unaware of any way to remove this fee.

    It seems this is a revenue stream Comcast plans to keep.

    FWIW,
    John

    Reply
    1. jik Post author

      Your account rep is confused.

      They can’t charge you an equipment rental fee if you aren’t renting any equipment from them. That’s, um, illegal.

      Tell him he’s wrong and you want to speak to someone who has a clue.

      Or visit your local Comcast office in person, explain the situation, and ask them to either solve the problem or put you in touch with the region’s executive customer care office so someone there can hit your account rep. with a clue-by-4.

      Reply
  9. jik Post author

    I don’t know why you had two Comcast devices. I had a single device which provided both Internet and VoIP service.

    Presumably you could purchase an EMTA, tell Comcast to configure your account to use your customer-owned EMTA for both Internet and VoIP, return the other cable modem you purchased for a refund (if it isn’t too late), return the second Comcast device in your home to Comcast, and stop paying the $5 rental fee.

    Comcast certainly should have made it clearer to you that the $5 monthly rental fee was for both devices, since it appears that you assumed that the cost of the EMTA was included in what they were charging you for Digital Voice, which was a perfectly reasonable assumption.

    Reply
  10. M

    For those who think it’s as easy as buying your own cable modem and returning the Comcast provided monthly rental, you may well need to think again. I did exactly this after the cable modem rental fee increase to $5 per month, but subsequently got a nasty surprise that was not documented anywhere in Comcast’s marketing materials (whether online or in print).

    If you also have phone service through Comcast (which many do these days) then you likely have another device in your home to provide this service over the coax run into your home (an EMTA). This device can often operate as both a phone (VoIP) terminal adapter and a cable modem, but typically is only configured to provide phone connectivity for residential consumers. Thus, you really have TWO separate pieces of Comcast rental equipment in your home, not just the one (cable modem) that you are renting each month.

    I fully expected the $5 per month equipment rental charge to disappear from my bill once I had replaced the Comcast cable modem rental unit with my own. It did not, however. When I called up to complain the charge had not been removed, I was told by the rep and her supervisor that Comcast has a policy of providing the 2nd customer equipment rental free of charge. However, once you remove the 2nd unit (as I did with my cable modem) they instantly begin charging you for the 1st unit (the EMTA for anyone who has phone service through them) when you return the 2nd. Thus, the bill is not decreased at all.

    I’m now still paying the $5 per month equipment rental charge, except they now tell me I’m paying it for the EMTA and not the cable modem (which I returned). So, I purchased my own cable modem out of pocket (not to mention the technical hassle of 3 separate calls with Comcast technical support to get it working – all issues on their end), but didn’t save a penny in monthly fees.

    Comcast will not tell you this without being directly asked up front, and nowhere is it printed or otherwise divulged in their marketing information. They admitted as much during the conversations I had with them afterward, but said nothing about it when I called previous to purchasing my own cable modem to verify both the compatibility of the cable modem I was considering and that the rental charge would be removed. I only got a phone rep to explain the situation (admit) after I received the new bill indicating that I was still being charged the $5 per month (now for my EMTA equipment rental that had previously been free, instead of for my cable modem, which had now been replaced by my own purchased unit).

    This type of behavior will continue until the [practical] monopoly is stopped…

    Have a look at the ‘additional outlet’ fees they are now charging, as well, when you try to connect another TV (or other device) in your home to get around the FCC mandated compliance with cablecard charges…

    Reply
  11. Quantum Mechanic

    Sergey – What class of service are you getting from Comcast?

    I believe their 50Mbps tier requires a DOCSIS 3.x modem which as I understand it aren’t generally available.

    Reply
  12. Sergey

    I got my own modem, exact the same one made for Comcats, twin brother of what I am renting from Comcast for $5 a month now,,,,,,why? because I been told by Comcast rep to get one, to avoid renting fee and gues what……I been told today that I can not use that equipment, you have to use the one provided to you by the company, mean there is no way to save on renting fee, the only option to change provider, that is what I will be doing…………

    Reply
    1. jik Post author

      I think that either you must have misunderstood the person at Comcast with whom you spoke, or that person provided you with inaccurate information. Perhaps the Comcast representative with whom you spoke was trying to tell you that the specific modem you purchased was not compatible with Comcast, rather than that you could not use any modem you purchased yourself. Or perhaps s/he was just misinformed.

      I have first-hand knowledge that it is possible to use a customer-owned modem with Comcast, because I’ve done it myself, and I’ve heard from other people who have done it as well. So I think perhaps if you want to get to the bottom of this, you should contact Comcast again, and speak with someone else to try to get clarification.

      Which is not to say that I don’t think you should change providers. I encourage anyone and everyone to kick Comcast to the curb :-). I’m just saying that if the only reason you’re leaving Comcast is because they won’t let you use your own modem, then you might want to rethink that.

      Reply
  13. Bill

    Comcast is very deceptive in their billing practices..and THEY DON”T CARE WHAT CUSTOMERS THINK…In most cases you have little to NO other choices. That is the problem..a lack of competition. Promotional packages are eliminated and replaced by MUCH more expensive packages…you have no alternative. Frankly it is pathetic..it angers me and really makes me dislike Comcast.

    Reply
  14. Anonymous

    I to was furious about the increase. And yes you can use your own modem and dont pay a fee at all. I purchases one for 38.64 from office max…………hmmm….. comcast was already rippin us off with the 3 bucks…… Cable modems are very inexpensive and that excuse about rising equipment cost is crap. Im sure this will urge more customers to get their own or even get other service. Bad move comcast!!!! oh yes p.s, im still pissed about the nfl network incident years ago…… Chumps!!

    Reply
  15. jik Post author

    I am a Comcast CSR and YES, you can buy your own cable modem and avoid the fee.

    Well, it sure would be nice if they told you that! Nobody every told me. It’s not discussed anywhere obvious on the Web site.

    RCN, in contrast, makes it obvious.

    See the difference?

    Also, it has been more than 10 years since Comcast has raised the cost of modem rental fees…

    So what? I don’t believe the cost of the relevant hardware has gone up significantly in that time. And even if it has, the fact of the matter is that the rental fees I paid to Comcast before I got smart covered the cost of my modem several times over. I’m sure that’s true of most people who rent modems from Comcast. This suggests that the rental fee is not for cost recovery, but rather yet another way for Comcast to earn revenue. Therefore, as I said, increasing the modem rental fee was nothing more than a backdoor way for Comcast to increase its profits. And that’s not FAIR, it’s DECEPTIVE.

    Even if one were to accept your argument that the fee was raised because it hasn’t been raised in ten years, a FAIR increase would be one that is comparable to inflation during that time period. However, an increase of 66%, from $3 per month to $5 per month, is more than double the rate of inflation over that ten-year period.

    Reply
  16. ComcastCSR

    I am a Comcast CSR and YES, you can buy your own cable modem and avoid the fee. Also, it has been more than 10 years since Comcast has raised the cost of modem rental fees…hence the change. The only FAIR way to deal with the rising cost of doing business is to raise the cost for EVERYONE….makes sense to me.

    Reply
  17. Quantum Mechanic

    You’re out of luck, Samantha. Both RCN and Verizon are also all-digital and thus you have to either use converter boxes or CableCARDs (on miniscule chance your TVs have CableCARD slots).

    I can’t recall what the “additional outlet/converter” charges are for RCN and Verizon.

    Reply
  18. Samantha

    NOt only has Comcast found a back door charge for the CDV equipment now they have also “upgraded” their service and if you have more than 2 tvs you are going to pay for it!!!! I have so many problems with this but I’ll stick to my 2 problems….

    1) this “free” upgrade is unnecesary and will now force me to add a box in my kitchen which I can neither fit nor do I want in my kitchen. I spent too much money for a crappy TV because of it’s small size so that it was digital and it fit and now I have to add a box…where am I going to put it?????

    2) for my kids to watch disney and nick, my hiusband and I to watch history channel in our room, the kitchen and the kids room it will now cost us $2.99 a month (on top of the increased CDV charge) to get the service I already have – I am so angry I am now looking into Verizon – which I’m sure I won’t be much happier with!!!!!!!!!!!!!!!!

    Reply
  19. NGHIA

    I think the CEO of Comcast have made a big mistake because in business, you made one customer upset, you will lose at least 10 more customers. You thought that you can get more money or customers are stupid, 2 dollars is not big amount of money, but nobody like sneak, for example, I will tell all my family in 14 states do not use Comcast and I will stop the comcast now.

    Reply
  20. Pingback: How to lower your phone + internet cost from $80 per month to $50 per month: buy your own cable modem and kick Comcast to the curb « Something better to do

  21. JonT

    Does Comcast allow you to provide your own cable modem and not pay the charge? RCN does, and I’ve sometimes felt like a bit of a chump for not doing so, though last I checked the prices it would’ve taken 2-3 years to pay for itself.

    I believe the charge covers not just the rental of the equipment, but also the replacement of said equipment should it fail. Given that, I don’t know that a price increase might not be all that surprising, though no doubt it must be a big source of profit for the company (as similar telephone rental charges for the old Ma Bell monopoly were for AT&T).

    Reply
    1. jik Post author

      Does Comcast allow you to provide your own cable modem and not pay the charge?

      I’m looking into that, and I’m also making sure to let everyone I deal with know that the reason I’m doing this is because of their duplicity, and that by jerking me around, they’re turning a $3/month income stream into a $0/month income stream rather than the $5/month income stream they’d hoped for.

      I believe the charge covers not just the rental of the equipment, but also the replacement of said equipment should it fail.

      It is not plausible that these modems fail often enough for them to need to charge $60/year/subscriber to cover the cost of replacing the failed units. Hardware like this rarely fails. I’ve had Comcast service for well over a year, and my modem has never failed, nor do I expect it to any time soon. You can get compatible modems on eBay for well under $30.

      Granted, often when a subscriber is having a problem Comcast will blame the modem and replace it before looking for other possible problems. They did this to me when the problem wasn’t my modem, but rather a bad splitter in the box on the pool outside my house. It is neither justified nor appropriate for Comcast to charge customers for modem replacements that weren’t actually necessary.

      Not to mention the fact that the equipment charge is not an insurance pool — it is neither justified nor appropriate for Comcast to charge me because of other people’s failed modems — so if that’s indeed what the charges are about, then it would be both reasonable and appropriate for them to charge a one-time fee when installing or replacing a modem, not a recurring monthly fee that never ends.

      Reply
      1. NotLovingComCrass

        I am a huge anti-fan of ComCrass (I’d use a harsher word but…) but apparently in some cases these modems do fail, a lot. I’m using FiOS and I’m on my third modem now in less than 2 years at this address. The previous two just suddenly quit working and all the lengthy troubleshooting, “flash” from local CO, etc. didn’t help. I’ve never had that experience before but it does show me that it does happen, at least sometimes.

        As for your reasoning about it being a back door service charge, etc., I couldn’t agree more. I could write a book about all the ways I despise them (and every other ‘government approved monopoly’ I’ve been forced to do business with.)

        Reply

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