Time Warner Cable’s shares tumbled on news that the nation’s second largest cable operator is likely to report it is losing subscribers tired of high cable prices in a tough economy.  These challenges are fueling press speculation the company is exploring a “broad alliance” with Cox Cable to join forces in an effort to reduce programming costs.

Bloomberg reports growth has slowed across the board at Time Warner.  The cable company blamed the weak economy for most of its troubles, suggesting the lack of new housing developments and home purchasers is responsible for a lot of the negative growth.

“Overall, I would say that the subscriber environment is very, very weak,” Chief Financial Officer Rob Marcus told investors at a Bank of America Corp. conference in Newport Beach, California. “We’re being negatively affected by very high rates of unemployment, high vacancy rates, both at the rental and the owned home levels, and really anemic new home formation.”

Growth has slowed across all Time Warner Cable’s businesses and because of that the company may see a loss in total customers, or what it calls primary service units, Marcus said.

Last quarter, the U.S. pay-TV industry lost basic-cable subscribers for the first time ever, according to research firm SNL Kagan.

Despite subscriber losses, Marcus calmed Wall Street reminding them the company expects to meet expectations for 20 percent growth in adjusted operating income thanks to a series of revenue-enhancing rate increases underway this year and declining costs in some areas of the business.

Reuters reported this week that Time Warner Cable was in the early stages of a discussion about a potential system swap affecting southern California that could blossom into a “broad alliance” on programming negotiations and potentially even a Time Warner buyout of Cox’s cable systems nationwide.

The Cox systems rumored to be at issue serve Irvine and San Diego and smaller properties in Santa Barbara and Rancho Palos Verdes.  Light Reading speculated Time Warner Cable wants Cox’s Irvine system to increase the size of its footprint in Orange County and Cox would get Time Warner’s San Diego system.

Reuters speculated Time Warner Cable would also negotiate programming carriage contracts on behalf of Cox, just as they currently do with Bright House Networks.  A combination of all three systems could deliver programmers carriage commitments for more than 20 million subscribers across all three systems.  That is still a few million short of Comcast, but easily worth significant volume discounts on programming.

A few industry reports shared rumors Time Warner Cable would eventually buy out the Cox family, which privately owns Cox Cable, and combine those cable properties under the Time Warner Cable name.

But in today’s political climate, and concerns about market power and concentration, such a combination would likely face considerable scrutiny from regulators.

Comcast wants you to know your bill for cable television is going to keep going up and up and up, even as the company spends more of your money on political lobbying and rebranding efforts.  As a result, more of you are pulling the plug on Comcast cable television subscriptions.

Speaking Sept. 15 at the Bank America Merrill Lynch media conference in Newport Beach, Calif., Comcast CFO Michael Angelakis warned that programming costs are continuing to increase, and the cable company is going to pass those increases on to its customers through rate hikes.

Angelakis admitted these costs represent one of Comcast’s toughest challenges, because the cable programming industry has become increasingly consolidated.  If Comcast won’t play ball over fees charged by a single network, a dozen or more other channels owned by that programmer could be withheld from the cable company.

The cable programming industry increasingly relies on “Three Musketeer”-package deals that renew carriage agreements for popular cable networks only if other co-owned channels come along for the ride.  Want USA, SyFy, and Bravo from NBC-Universal?  Then you better make room for the rest of their extended family like Sleuth, Chiller, and qubo.

Most years, these cable networks increase their wholesale prices, which shows up eventually on your Comcast bill in the form of a rate hike.

Subscribers have clamored for a-la-carte opportunities to pick and choose only channels actually watched, but that’s a scary proposition to companies like Comcast, who could see revenues plunge from a “pick your own channels” plan.  Instead, Angelakis told investors he’d rather pay less for networks that simply don’t attract many viewers.

“If programmers aren’t performing, we’d like to see rates go down,” he said.

The impact of those price increases is now more apparent than ever for the nation’s largest cable operator as subscribers reach a virtual ceiling in the price they’re willing to pay for cable television.

Comcast management reported adding 165,000 new customers after the digital television transition in the first half of 2009.  Many of those customers signed up for service with one year promotional deals that are now expiring, exposing customers to Comcast’s usual retail prices.  As a result, so far this year, 169,000 customers looking for basic cable service have canceled.

The cable industry is trying to reduce the revenue impact of subscriber losses by increasing prices for the customers that remain.  Comcast is no different, and Angelakis told investors the company’s financial performance can still be strong with increased average revenue per subscriber and cost-cutting.

One expense Comcast is not cutting: political lobbying.

In the second quarter of 2010 alone, Comcast spent $3.82 million dollars on lobbying activities — a 16 percent increase from the amount it spent at the same time last year, according to the U.S. House of Representatives clerk’s office.  Comcast made campaign contributions to elected officials, paid an army of lobbyists to promote its proposed Comcast-NBC merger, and made payments to fund front groups, astroturf projects, and say “thanks” to non-profit groups engaging in “dollar-a-holler” advocacy for the company’s political agenda.

Comcast also lobbied to stop broadband reforms like Net Neutrality, advocated roadblocks for potential competitors, added its two cents on how the government promotes broadband expansion, and sought to inhibit shareholder rights to influence executive pay.

Comcast’s biggest innovation this year is — changing its name.  The march towards rebranding the company’s cable TV, broadband, and phone products continues, with 63 percent of its cable systems now flying the Xfinity flag.  Comcast hopes customers will take a second look at Comcast’s product lineup once they see the new name.  Kevin Upton, a senior lecturer in marketing at the University of Minnesota’s Carlson School of Management says companies can use rebranding to suggest the introduction of new products and services.

Starting Monday, Minneapolis and St. Paul, Minn., customers will find the Xfinity name plastered all over the place, and Upton noted Comcast’s rebranding effort worked on him.

When Upton got a flyer about Xfinity recently, he thought it would offer faster Internet service than Comcast.

“It called attention to itself, and it got me to pay attention to the stuff I’m already overpaying for anyway.”

CNBC covered Comcast’s second quarter financial results back on July 28th in this report.  (3 minutes)

A Seattle startup launched its new “online cable TV system” this week offering a 30-day free trial of 27 live feeds of over-the-air television stations from New York and Seattle.

Dubbed ‘ivi,’ the online video service expects to charge customers $5 a month for the package of broadcasters delivering shows from all of the major American networks, plus several superstations most Americans haven’t seen on their cable lineup since the early 1990s.

‘ivi’ claims it offers more content than Hulu — providing online access to every network and syndicated show seen on New York and Seattle TV screens, and for an introductory price of $0.99 more per month, the company plans to turn your home computer into a giant DVR, capable of recording and storing any of the programming on ivi’s lineup for later viewing.

“The cable industry has spent countless millions of dollars on so-called ‘TV Everywhere’ solutions in a blind effort to prop-up outdated technology and business models” said Todd Weaver, founder and CEO of ivi, Inc. “However, ivi empowers its users to experience TV Anywhere, offering them major broadcast channels delivered live to their laptop or desktop, anywhere on the planet. Whether eventually integrated into Google TV, Apple TV, or meshed with an existing platform’s digital strategy, ivi makes the set-top-box and any ‘Web to TV’ products obsolete. Instead of attempting to bring the Web to the TV, ivi intuitively brings TV to the Web.”

The ivi TV player is currently available for download to any Windows, Apple, or Linux computer, and will soon be available on other platforms, including mobile devices, tablets, and set-top-boxes.  It allows customers to access its lineup anywhere in the world where a broadband connection exists.

The company provides over-the-air stations in both New York and Seattle to serve different time zones, but the lineup also provides viewers the flexibility of catching a network show twice — once on East Coast time and again three hours later.

The lineup covers all the bases, particularly from America’s top television market — New York City.  Spanish language programming from New York stations provides access to Estrella TV, Univision, TeleFutura, and Telemundo.  Since many stations have agreements to use their digital sub-channels to deliver additional programming, ivi viewers also get access to RTV – The Retro TV Network, Universal Sports, This TV from MGM, and a handful of specialty PBS feeds.  KONG-TV from Seattle, a classic independent station not affiliated with any network, is also included.

Some other less notable stations making it to the lineup include Cedarburg TV, a public access channel from Cedarburg, Wisconsin, which spends part of its broadcast day airing NASA-TV, Radio Tele-Luxembourg, a station from the Grand Duchy of Luxembourg in Europe, CCTV-9, the English language TV network from the People’s Republic of China, and PlayTV — a music video channel.

Stop the Cap! snagged a copy of the Windows version of the player and gave the service a test run.  Those seeking a free trial can apply on the company’s website, but you will have to supply a valid credit card number to participate (if you cancel within 30 days, you will not be charged).  If you are concerned about this, consider using a “one time” credit card number, a service often available from credit card companies that generates a one-time-use credit card number.

The player, like ivi’s website, is apparently a work in progress — fairly spartan in design and looking somewhat outdated.  But the player is less than three megabytes in size, a welcome change from oversized “bloatware.”  It was also nice to see versions for Linux and the Mac during launch week, instead of the more typical “coming soon” attitude other new ventures rely on.

The player is generally intuitive to operate, letting you control how much bandwidth to use for the service.  The version we tested allows you to pause, rewind, and fast forward paused programming.  A channel guide offers basic program information customized for your particular time zone.

ivi's electronic program guide

Playback quality has issues, however.  Despite setting our player for “high definition” playback, the encoding rate was far too low to actually deliver anything close to HD viewing.  In fact, viewing artifacts ranging from shading errors to soft pixelization were readily apparent even in a reduced-size player window.  At full screen, playback reminded me of a medium-quality RealVideo stream from an earlier era.  It was watchable, but I wouldn’t call it a “cable-TV killer.”  On a large screen TV, it’s likely to be even more problematic.

Still, for $5 a month, it might be worth it, especially if you have dropped cable and don’t get reasonable reception of broadcast signals, or your local TV market doesn’t offer broadcast affiliates of the CW, MyNetwork TV, or those networks made-for-broadcast-subchannels — RTV and This TV.

Besides, if you sign up for the free trial today, you may not even have to pay a cent if the broadcasting industry sues the pants off the founders and shuts it all down before the end of the month.

Remarkably, ivi founder and CEO Todd Weaver told the Puget Sound Business Journal he was unaware of any other startup company attempting to deliver live TV feeds.

We here at Stop the Cap! do.  Weaver might want to talk to Bill Craig, founder of a very similar Canadian venture called iCraveTV in December, 1999.  We remember iCraveTV very well, because it delivered 17 channels of programming from Canadian over-the-air broadcasters and several network affiliates from nearby Buffalo, N.Y.  We especially remember the blizzard of lawsuits that promptly followed, all because the Canadian startup never bothered to get permission from the stations involved and they let Americans watch.

Weaver offers conflicting accounts about whether ivi secured permission from the stations it started streaming this week.

FierceIPTV reports the company hasn’t.

At the moment, the company has no contracts with any broadcasters, but ivi claims it doesn’t need to, since it’s an online cable system and, as long as it pays fees to the U.S. Copyright Office–which get disbursed to the broadcasters–it’s covered. Although Weaver says it’s not inconceivable that the company will face some legal challenges.

But the Puget Sound Business Journal reports the opposite:

The company has secured the rights to deliver live television feeds from local affiliates in Seattle and New York, with plans to expand to LA, San Francisco and other markets in the near future. Ivi pays the stations an undisclosed amount to pick up the signal, which it does by either placing a physical encoder device at the station or capturing it from satellite or antennae.

The folks at iCraveTV thought they were covered so long as they paid copyright fees, too.  Craig said Canadian laws gave it the right to retransmit broadcast television signals, in the same way that cable companies and satellite companies do. As long as the company doesn’t tamper with the programming and paid copyright holders for their work, he argued, iCraveTV was completely legal.

The National Football League, horrified by the prospect of this venture airing its football games to Canadian and American viewers without a contract, promptly found a judge in Pittsburgh who issued a restraining order — the beginning of the end of iCraveTV and the start of some hefty legal bills.  When it was all over, 10 Hollywood studios, the Motion Picture Association of America, three major American television networks, and three television stations in Buffalo either filed or contemplated filing lawsuits asking for at least $5 million in damages from the venture.

Considering ivi was reportedly bankrolled for less than $1 million in “angel financing,” they better have a liability policy bigger than that.

“Whenever someone first hears that we are carrying their linear feed, the knee jerk reaction is: ‘I must protect my content, always,’” said Weaver. However, he noted that some broadcasters see ivi as a means to sell more advertising and a new distribution mechanism altogether. “We do not disrupt the existing live distribution models,” he said.

While that may be true for Cedarburg, Wisconsin’s public access channel, the major American networks that own the network-affiliated stations in New York are unlikely to see things that way, unless they own and control the venture, of course.  Neither will local network affiliates, who stand to lose local advertising revenue should large numbers of viewers flock to web-based, out-of-area network stations.  Local broadcasters effectively stopped satellite providers from reselling access to distant network stations in areas where local stations already provided that service, so it’s very likely they’ll strongly oppose ivi for the same reasons.

Still unsure how the industry will react?  Consider a combined Comcast-NBC network facing an online venture that promotes itself as a “cable cord cutter” asking NBC for permission to stream its programming online so viewers can cancel their Comcast subscriptions.

Enjoy ivi while you can.

Frontier's Ann Burr sat down for an interview with a Rochester television station to discuss the future of landlines.

Frontier Communications told customers in western New York not to expect FiOS fiber-to-the-home technology from them anytime soon, claiming residents in upstate New York do not need broadband speeds that fast.  That prompted regular Stop the Cap! reader Bob in Rochester to drop us a note.

Ann Burr, general manager of Frontier’s Rochester division, told WHAM-TV reporter Rachel Barnhart the company believes its current DSL service is more than adequate for residents in the company’s largest service area.  This, despite the fact Frontier recently adopted a handful of FiOS markets purchased from Verizon Communications.  While Frontier has promised to continue delivering the fiber-to-the-home service in areas already offered the service started by Verizon, they have no plans to expand FiOS.

“We’re constantly upgrading our local networks to make sure they can get higher and higher speeds,” Burr told Barnhart. “Fiber lines are installed in newer developments, and neighborhoods that report problems with DSL lines get attention from technicians.”

With Frontier’s DSL service already available in 95 percent of Frontier’s Rochester-area division, Burr added, there is no need to offer FiOS in Rochester.

Burr, who was formerly president of Time Warner Cable’s Rochester division from 1995-1999, has made similar remarks in the past.  In February, she told readers of the Rochester Democrat & Chronicle they didn’t need ultra-fast broadband speeds from Frontier either.

from 'The Bridge'

Yet Verizon, one of the nation’s largest phone companies, thinks otherwise.  In upstate New York, the company is still completing its fiber optic network in cities like Albany, Buffalo, and Syracuse.  Verizon FiOS remains a top-rated favorite among readers of Consumer Reports.  Frontier’s DSL managed a less impressive 12th place.

Barnhart learned about Frontier’s broadband plans as part of a larger story about how the phone company will survive the age of the cell phone, as local customers continue to disconnect their Frontier landlines in favor of wireless service from providers like Verizon and AT&T.

Burr warned customers to think twice before disconnecting service.

“Don’t do it. Because I’ve personally been in a situation where my home was without power for a couple of days and you have to recharge cell phone batteries, which you can’t do if you don’t have power,” Burr said.

Burr can’t see a day when no one has a landline phone any longer.

“I don’t see that for a long time. I think that wired phone, copper infrastructure that’s been here for many years provides [the] security [and] reliability that people want,” she said.

Burr’s beliefs are contrary to industry statistics that show Americans continue to drop landline service.  Among those under 30, it’s sometimes hard to find anyone who has a landline at all.

The Bridge reports in the second quarter of 2010 alone, just three phone companies — AT&T, Verizon, and Qwest lost nearly 1.5 million landline customers, mostly to cell phone service and competing “digital phone” products offered by the cable industry.

Consumer Reports says its readers gave top marks to Verizon FiOS for its speed, selection, and service. Frontier didn't make this list at all.

WHAM-TV’s Rachel Barnhart talked with local residents who have disconnected their Frontier landlines and spoke with Frontier’s Ann Burr about the long term prospects for a company primarily delivering that service.  (2 minutes)

Charter's dumping ground for sneaky rate increases can be found in the Adjustments, Taxes and Fees portion of your monthly bill.

Charter Cable is literally passing the buck onto its cable TV subscribers.

Effective this October, Charter Cable customers will pay about a dollar more per month thanks to a new junk fee the company is adding to subscribers’ bills.

Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

For most customers, the fee will average $0.94 per month, but in some areas it will be as high as $1.31 per month.  Charter argues the fee is not arbitrary. claiming it represents the average price the company pays – per subscriber – for local broadcast stations in the communities it serves.

Stop the Cap! contacted Charter this morning and learned the company intends to impose this new fee even on customers with Charter’s Price Guarantee Package, which is supposed to guarantee customers no change in pricing for up to two years (see notes at the end of the article for an update).  A Charter representative we contacted claimed the company will impose the fee on all customers, including those on contract, because of a clause in the terms and conditions which says, “The guaranteed price does not include the cost of installation and equipment, any applicable franchise fees, taxes or late fees, or costs for other ancillary services that you may order.”

Of course, the new fee is completely arbitrary and is neither a franchise fee or tax, nor is it for an “ancillary service.”  We predict a closer review of Charter Cable’s thinking on this matter by state regulatory agencies and Attorneys General.

Charter’s FAQ seeks to pass the blame for the new fee to the federal government and local broadcasters:

Federal law treats [cable networks and over-the-air TV stations] differently. Unlike cable TV networks, local broadcast TV stations distribute their signals over the air, using free spectrum granted to them by the federal government. In effect, taxpayers are subsidizing the distribution of broadcast TV signals. These same broadcast TV stations are then allowed by the government to charge for their signals — and if we don’t agree to pay, broadcasters can force us to drop their channels, thereby adversely impacting our customers.

“Given cable’s well-documented history of raising rates 4-6 times the annual rate of inflation, it seems rather disingenuous for them to now claim their rate hikes are coming as a result of broadcast TV stations, which provide the highest-rated entertainment and local news programming on the cable line-up,” National Association of Broadcasters Executive VP Dennis Wharton told Multichannel News in response to Charter’s move.

The new Broadcast TV Surcharge will appear in the Taxes and Fees section of your bill, joined by other junk fees Charter has invented to pass along the ordinary costs of doing business to cable subscribers while claiming they are not increasing rates:

Charter’s “It’s Someone Else’s Fault We Charge These” Junk Fees

• TV and Internet Late Payment Fee — A late fee will be assessed for past due unpaid Charter TV and Internet charges.
  
• Phone Processing Fee — This fee is assessed when Charter does not receive payment for the full balance of your phone charges.
• Regulatory Cost Fee — The cost of doing paperwork and whatever else the company deems.
• State Telephone Relay Charge — Funds a Telecommunications Relay Service for hearing impaired/speech disabled residents.
  
• Federal Communications Commission (FCC) Fee — The FCC charges an annual regulatory fee for cable operators.
  
• Franchise Fee — Local communities collect a percentage of revenue from cable operators in return for doing business in the community.
  
• Public Education and Government Channels (PEG) Fee — Many cable franchise agreements ask cable operators to help fund the operations of these channels.
  
• Public Utilities Commission (PUC) Fee — Some states ask regulated providers to defray the costs of utility commissions that oversee providers on the state level.
• County 911 Charge (9-1-1 fee) – Some counties ask telephone providers to help pay to administer emergency 911 service.
  
• Telephone Right Of Way Fee (Municipal right-of-way fee) — A fee used to compensate municipalities for the use of their rights-of-way.
• E911 Equalization Surcharge (9-1-1 equalization fee) — A fee charged in wealthier, urban areas to help subsidize the costs of 911 service provision in rural and poor areas.

(Those fees in blue represent completely optional “junk fees” that hide revenue enhancements.)

(Those charges in red are fees mandated by government entities, but traditionally deemed “the cost of doing business.”  Nobody requires these fees be billed directly to subscribers on a line-by-line basis, and most cable operators used to include them in the monthly price for service.  But in a quest for increased revenue, cable companies began breaking them out of cable package pricing, charging for them independently.  That effectively raises your total bill without changing the price of the programming package.  It’s comparable to an airline charging for your airline ticket, but then padding the price with a Seat Rental Fee, a Boarding Fee to enter and exit the plane, an FAA Cost Recovery Fee to pay the Federal Aviation Administration for its services, a Flight Plan Filing Surcharge to cover the costs of filing a flight plan, and a Control Tower Charge to defray the expense of dealing with air traffic controllers.  Snacks and soft drinks are extra.)

Charter Cable has been notifying subscribers about the new fee in mailings sent to subscribers.  The company’s argument that broadcasters and the federal government conspired to make subscribers pay more may have some merit, but nobody forced Charter Cable’s hand to add a new junk fee to customer bills.

Local broadcasters are in an enviable position because federal government rules have given them all the cards to charge whatever they want for cable carriage.  Government policy forbids most cable systems from taking their business elsewhere — perhaps to a station in a nearby city or network affiliate delivered via satellite that is willing to accept less than what local stations demand.  Network-affiliated stations need not compete for cable carriage because they can demand cable systems not go outside of the area for an alternative.

Broadcasters do not enjoy “free spectrum granted by the federal government.”  Television stations pay license fees and taxes just like other spectrum users and are mandated by the federal government to meet certain minimum programming standards and decency rules.  Unlike other private license holders, broadcasters are supposed to serve the public interest, although what exactly defines that has evolved and eroded over the years.  Cable programming is not regulated.

Charter Cable’s claim that “taxpayers are subsidizing the distribution of broadcast TV signals” is dubious at best.  Broadcast radio and television preceded the paid television industry by decades, and was created to deliver unique “local service” to communities where stations were licensed in the public interest.  Should Charter argue that broadcasters should bid for auctioned spectrum, they’d have much more to complain about when those costs are passed on in considerably higher broadcast carriage fees.

As usual, regardless of who wins the spat over local broadcast carriage fees, it’s Charter’s subscribers who will lose thanks to the higher bills that follow.  But not our readers.

If you follow our advice, you can save far more than a dollar a month.

Score a new customer promotion and save far more than Charter hoped to collect from its new Broadcast TV Surcharge.

Stop the Cap! has been in touch with several Charter subscribers who successfully argued their way to considerably lower monthly bills, often by $20 or more a month.  Here’s how you can let the bully boys argue over someone else’s money:

Gather Information

Get out a copy of your latest Charter Cable bill showing your packages, programming fees and the taxes and surcharges piled on at the end of the bill.  Then, visit DISH Network or DirecTV’s website and gather pricing information for a comparable video package using their promotional pricing for new customers.  Also visit your local phone company website for pricing for their phone and broadband services, taking note of any new customer promotional pricing and gifts.

On a sheet of paper, list the costs for Charter’s services on one side and the prices you would pay with their competitor(s) on the other and determine how much you would save with the competition.

Armed with this information, you’re now ready to sit down, call Charter, and talk business.

Sit Down And Make the Call

When you call Charter, select the option to cancel service or just say the word “cancel.”  This will transfer you to Charter’s “customer retention” department.  This group of customer service representatives have been specially trained to talk you out of dropping your service.

Explain that you are calling to cancel your Charter service after you received word of the latest fee increase.  Tell them it was the last straw after years of rate increases and that you’ve been comparison shopping.

A Sample Conversation

You: “My husband/wife and I carefully considered an offer we received from [competitor] last night and decided it was time to make a change.  It’s really all about the pricing.  This economy has been killing us and we simply cannot handle a higher bill.  When we looked at [competitor's] offer, we discovered we could be saving $20 (insert amount applicable to you) or more a month over your own pricing.  But I’ve been a Charter subscriber for a long time and I decided I should call and see if there was any way we could stay as a customer, if we could only negotiate a lower bill.”

Charter: “I see you have been a customer for a long time.  Did you know that Charter delivers… (expect a comparison about the differences between satellite and phone company competition and Charter at this point.  Your goal is to patiently wait until they finish and then stick to your guns that it’s really all about the monthly cost).

You: “I understand all that but you have to understand the only reason we are calling to cancel service is because of your prices.  I am really giving you a last chance to see if we could stay and pay a lower price.”

Charter: “Let’s review your bill and see if we can drop any services you may not be using or perhaps sign you up for a different tier of broadband service.”

You: “The thing is, with [competitor's] service, I don’t have to drop anything and I will still get a much lower price.  Let me suggest an alternative idea.  You could save our family as a customer if you could sign me up for the same kind of package pricing new customers pay.”

Charter: “I’m sorry, but those prices are only for new customers.  But perhaps if we credited your account for a year’s worth of the fee you are upset about, that would help?”

You: “No, not really.  Not after I saw what we could be paying by switching.  Again, we’ve really already decided on making this change, but I decided it would be fair to give Charter a last chance to come closer to the prices I would be paying with your competitor.  Isn’t there anything you could do to sign me up to a new customer promotion?”

Charter: “Well, let me put you on hold and talk to my supervisor.”

At this point, you may or may not get your request granted.  Sometimes the representative will try and negotiate dollar amounts, try to sell you a bundled package of services to deliver “more savings,” or offer you a lower discount.  Stick to your guns, but always remain polite.  Sometimes their counteroffer may not deliver new customer pricing, but will still leave you saving far more than when you started, and keeps you off a term contract.  If you are uncomfortable with the progress of the negotiations, or find an unsatisfactory outcome, politely end the call telling the representative you would like some time to think about it.  It’s your chance to call back and speak with someone else.

In general, the more seriously they sense you are ready to commit to the competition, the better the offers will get to stay.  Feel free to let them know you’ve already scheduled an installation with the “other guy” or would like information about where to drop off your cable equipment.  If you are queasy about playing hardball, blame it on your spouse, letting Charter know “he/she will never go for that.”  Stay friendly with the representative at all times — try to make them your advocate by encouraging them to find an even better deal for you and that you appreciate the time they are spending working with you.  It’s a lot easier to get a better offer when you are not screaming at the representative that can’t wait to get off the phone with you.

A Charter customer e-mailed this segment of their bill to clarify whether or not customers under a Price Guarantee contract would also pay the dollar fee.

If you find stubborn resistance to discounting your bill, consider showing up at the local cable office with your equipment and try negotiating one last time.

Charter Cable allows customers to cancel service and, after 30 days, sign up under a new customer promotion, so asking them to waive the 30 day requirement when it will save them money to reinstall service may be something they’ll consider.  You could also re-establish “new service” under a spouse’s name for an even faster turnaround.

As Charter has taught their subscribers, it’s all about business with them.  Turnabout is fair play, so give them the business about their pricing and demand savings.

[Updated 9:42pm ET -- A Charter subscriber e-mailed Broadband Reports a copy of their latest Charter Cable bill saying the fee would -not- be applied to customers under a current Price Guarantee contract, in direct contradiction to what a Charter representative told us this morning.  This is not much of a surprise, considering it took eight calls to Time Warner Cable last week to get the straight story about their DVR price hike in upstate New York.

Perhaps we should start calling cable companies not less than five times for answers to basic questions and then average the responses we get.  As we said last week, we'll believe the bill over what company representatives say any day.

Thanks to our reader Gabe and Broadband Reports for for alerting us to this development and helping clarify matters.]

[Update #2: 10:52am ET 9/16 -- A Charter customer on Broadband Reports shared an online chat he had with Charter that shows I'm not the only one getting inaccurate information about this fee:

Scott: I heard that charter decided to add a new fee to user bills for "broadcast tv surcharge" even for customers that have locked in rates.

TTD Straissan : Yes. That is correct. The locked rates are for the services that are included on the locked promotion. Taxes and fees are not part of the locked promotion we have.

TTD Straissan : Broadcast TV Surcharge
Federal law allows local U.S. broadcast television stations (i.e., affiliates of networks such as CBS, NBC, ABC, Fox, etc.) to negotiate with cable and satellite providers in order to obtain “consent” to carry their broadcast signals (Cable Television Consumer Protection and Competition Act of 1992).

As a direct result of local broadcast, or “network-affiliated,” TV stations increasing the rates to Charter to distribute their signals to our customers, we will be passing those charges on as a Broadcast TV Surcharge, in the Taxes and Fees section of the billing statement. These local TV signals were historically made available to Charter at no cost, or low cost. However, in recent years the prices demanded by local broadcast TV stations have necessitated that we pass these costs on to customers.

This surcharge displays in the Taxes and Fees section of the bill statement.

Scott: when will this be on my bill?

TTD Straissan : Expected increase will be around October 1, 2010 on some areas.]

AT&T unveiled it’s U-verse system Monday in the Triad region of North Carolina, hoping to poach customers from Time Warner Cable’s “triple play” package of phone, broadband, and cable service.

AT&T U-verse services, which are delivered over AT&T’s Internet Protocol (IP) hybrid fiber-copper network, offer an alternative to cable with a DVR that can record more programming than the competition, features and apps not available from the local cable company, and additional channels new to the region. AT&T U-verse can combine every AT&T service a customer subscribes to onto a single monthly bill.

The most popular Internet-only tier of service has somewhat anemic download speeds up to 6 Mbps for $43 a month — other packages range from $38 for 3 Mbps to $65 for 24 Mbps.

U-verse TV packages include “local-channel only” service for $19 a month (with a stinging $199 installation fee), to more than 390 channels for $112 a month, with a $29 activation fee.  Other packages include U-100 with 130 channels for $54 a month and U-200 with 230 channels for $67.  High definition channels, now numbering more than 130, cost $10 extra per month.  Want premium channels in HD?  That’s another $5 a month.

Like other providers, AT&T has tinkered with pricing to deliver the most savings to customers who bring all of their business to AT&T with a triple-play bundle subscription.

“Today’s expansion of AT&T U-verse reflects our commitment to make the investments necessary to bring consumers across the Piedmont Triad a new era of true video competition,” Cynthia Marshall, AT&T North Carolina president said in a statement. “Local residents have asked for more choices in television service and today we’re delivering.”

http://www.phillipdampier.com/video/ATT U-verse introduction.flv

Watch this comprehensive video from AT&T explaining the many types of services U-verse offers and helpful tips to prepare for service installation.  Then view an actual installation in a customer’s home who shows off the equipment.  Stop the Cap! recommends you let AT&T do all of the required wiring for you.  That’s why you are paying that installation fee!  (22 minutes)

Brubaker

But despite the company’s claims that competition will deliver lower prices for consumers, the evidence suggests otherwise.

AT&T credits a statewide video franchising bill passed in the North Carolina legislature for making U-verse possible in the state.  Company officials showed their thanks by inviting the two state legislators instrumental in shepherding AT&T’s agenda through the General Assembly to be on hand to take credit for introducing cable competition in the state.  They also publicly thanked them in their press release.

Seventeen term House Rep. Harold Brubaker (R-Randolph) congratulated AT&T for its accomplishments.  Brubaker received $4,000 in campaign contributions from AT&T in the first quarter of 2010.

The representative from Asheboro co-sponsored the 2006 Video Service Competition Act which stripped local oversight of cable operators and made AT&T’s entry into North Carolina effortless.  For other would-be competitors, especially municipalities seeking to build their own fiber networks, Brubaker has been far less helpful.  Most recently, he voted against an effort to bring broadband service to Caswell County in areas incumbent provider CenturyLink has ignored for years.

Adams

“Prior to the legislation, you had geographic areas where you operated in, so it kind of like took the walls down. The legislation took the walls down to allow for more direct competition for the consumer. Competition is great.  The consumer’s the one that benefits,” said Brubaker.  “AT&T’s presence in the market will very definitely save customers money.”

Rep. Alma Adams (D-Guilford), another co-sponsor, said AT&T’s arrival was exactly what she hoped for when she supported the legislation.

“As policymakers, our goal was to increase investment in North Carolina and give consumers more choices and innovative new services,” said Adams. “Today’s announcement makes that goal a reality for Triad residents.”

Adams added that AT&T U-verse also provided a safety valve for consumers who want an alternative to incumbent provider Time Warner Cable.

“Even if they like a particular company, they always like to know that there’s some other opportunities out there that they can look at as well, so they can do some comparing,” she said.

AT&T delivered more time and attention to North Carolina legislators at their launch event than they ever will on U-verse.  AT&T segregates Public Access, Educational, and Government channels on a single U-verse TV channel that makes for tedious viewing.  Watch this demonstration from the California Public Utilities Commission.  (4 minutes)

AT&T announced the service would initially be available in limited areas of Forsyth, Davidson, Guilford, Rockingham and Alamance counties, and we do mean “limited.”  Many Triad residents who checked to see if the service was available in their area found it was not.  In fact, AT&T refuses to disclose exactly how many customers in the region can actually sign up for the service.  We couldn’t find anyone who could order the service when it officially launched.

“There will be small pockets around most of the entire area,” Chuck Greene, AT&T’s regional director for the Piedmont Triad told the News-Record. “Once we complete the build-out, it will include parts of Davidson, Caswell and Randolph.”

AT&T lobbied hard to sweep away earlier provisions in local video franchises that committed providers to rapidly expand service to every possible customer in their respective service areas.  Under the Video Services Competition Act, AT&T can take its sweet time, perhaps for years before service becomes widely available across the region.  Some areas will never receive the service.

Time Warner Cable welcomed competition from AT&T U-verse.

“For a long time, Time Warner Cable has faced competition from satellite and dish providers,” Scott Pryzwansky, the company’s local public affairs manager, wrote to the News-Record. “We continue to invest in our network and remain committed to bring the best products and services to the Triad. We are confident we will maintain positive relationships with our customers.”

Time Warner Cable has little to fear from AT&T’s arrival.  Pryzwansky said Time Warner Cable has not lowered its pricing in any of the markets where it faces AT&T U-verse competition.  Both AT&T and Time Warner Cable have raised prices at least annually for their respective subscribers.  The only exception in North Carolina has been in Wilson, where municipal provider Greenlight has kept Time Warner Cable from increasing prices.

Time Warner Cable maintains a special website to cope with competition from AT&T U-verse and satellite providers. Hilariously, the site quotes a piece from DSL Reports about U-verse price increases. Time Warner subscribers might not want to venture too far beyond that piece, because editor Karl Bode reports on the cable company's own rate hikes as well. (Click image to visit TWC site)

Stop the Cap! reader Sam in Greensboro thinks AT&T’s arrival is much ado about nothing.

“AT&T prices their U-verse service nearly the same or more as Time Warner Cable, especially after the introductory rate expires,” he says.  “Few people are going to be bothered switching back to Time Warner after the year is up, so they’ll be paying the same high prices for cable service to AT&T instead of the cable company — a distinction with no difference.”

Sam won’t bother with U-verse because he is disgusted with AT&T’s lobbying efforts to stop consumer broadband reform and Net Neutrality.

“It’s like dealing with the devil,” Sam writes.  “Why would I want to pay AT&T my money so they can turn around and spend it working against my interests as a consumer?”

The only good thing about U-verse’s arrival is that it may stall Time Warner Cable from trying another Internet Overcharging scheme in the area.

“Time Warner has to think twice about another usage cap and overlimit fee ‘experiment’ in the Triad if customers can simply flee to U-verse, although knowing AT&T they’d love to have the same rationing of the Internet they force on their wireless customers,” Sam said.

Time Warner Cable maintains a sometimes-bizarre web campaign to convince customers not to switch to U-verse or satellite.  We’ve put together the various videos so you can watch them all at once.  (4 minutes)

Like Time Warner Cable, AT&T does not offer a-la-carte cable programming, either.  Customers can only choose from large packages of programming, not individual channels.

Triad area cable customers told local media they were tentatively glad U-verse is competing, but many are taking a wait and see approach as to whether they’ll actually see any savings.

WFMY News 2 spoke with cable customers today. One man said he feels like a “hostage” to his cable company because they have a monopoly on TV, Internet and phone bundles. A woman said cable and satellite companies drive her “crazy,” so she gave up and now simply rents movies.

“I am happy, but it’s hard times. I have three children. We live on one income,” Jamie Rettie, a Time Warner Cable customer told News 2. Whether she switches to AT&T or not, she’s said she’s hoping for a change in her bill.

“Hopefully they’ll keep competing against each another and have better and better prices for their services,” she said. “(I’ll) wait out my contract and we’ll see what happens.”

Some residents, like Thomas, are left picking the lesser of two evils:

“I don’t know who’s worse at their game, as Time Warner Cable and AT&T are both evil corporate entities that care only about their bottom line,” he writes. “Search the Internet and understand this service limits the amount of TV’s that can be used at one time.”

Watch several news reports from Triad area TV stations about the introduction of AT&T U-verse.  In order, we include reports from WXII, WGHP, and WFMY-TV.  (7 minutes)

Sezmi set top DVR box, antenna, and remote control

While most of the pay television industry forces huge basic cable packages on subscribers containing dozens of channels never watched, an innovative California company thinks it has the perfect solution for those who want to cut cable’s cord but still keep some of their favorite cable channels.

Sezmi combines a super-sized 1 terabyte DVR set-top box ($149.99) with a digital broadcast receiver to deliver every local television signals, 23 popular cable channels, on-demand movies, video podcasts, and YouTube content for $19.99 per month.  Don’t care about the cable channels or live outside of Los Angeles?  The price drops to $4.99 per month.

Sezmi’s inventors believe the marketplace is ripe for a compromise between paying enormous cable bills or simply going without popular cable series and 24/7 news.

Besides, Sezmi’s founders argue, with free digital television stations increasing the amount of programming they offer and Americans wanting to watch more of their favorite shows on-demand, Sezmi’s super-sized DVR may provide enough live and recorded programs to more than satisfy average viewers.  If not, a budget-priced package of two dozen popular cable channels could give people enough courage to cut cable’s cord forever.

At its core, Sezmi’s set top box offers an enormous capacity hard drive that can store up to 1400 hours of SD (standard definition) and 340 hours of HD (high definition) programming.  It can also record one channel while watching another, and its software gives each member of a viewing family their own personal menu to access, record, and view the programming they want.

A promotional reel introducing shoppers to Sezmi and its services.  (3 minutes)

Sezmi’s founders future-proofed their technology to be immune from broadband providers with Internet Overcharging schemes in mind.  Unlike other cord-cutting alternative set top technology that relies on broadband to access programming, Sezmi receives its live TV and cable network programming entirely over the air.  That keeps your local cable or phone company from stopping all the fun by imposing broadband usage limitations or charging steep penalties for watching too much of a competitor’s service.

Sezmi’s unique way of bypassing the local broadband provider is both innovative and challenging at the same time.  In the Los Angeles market, currently the only city where Sezmi provides cable networks, it leases leftover capacity from local stations to transmit the encrypted cable networks over the air to Sezmi receivers.  As long as you get a signal from a local station, the cable signals come along for the ride.

While that can work in Los Angeles, which has at least 26 full powered broadcast stations in the market from whom it can potentially lease capacity, most American cities have fewer than eight full power local channels.  If those stations can’t or won’t lease out their extra bandwidth, the cable programming service simply won’t work.

Part of the original business plan for Sezmi was to provide the set top box as a solution for phone companies like Frontier and other independents who want to deliver a video package without improving their current copper-based networks to deliver it.  Because the box will work reasonably well with a broadband connection of 3.1Mbps or higher, companies selling DSL broadband packages to customers could use Sezmi to deliver video content to subscribers.  In rural areas, relying on broadband delivery may prove more effective than over-the-air reception, and since the provider offers the service themselves, there is little chance they’d limit their own customers’ use of Sezmi.

Now Sezmi is directly being sold to consumers on Amazon.com and in Best Buy stores in the 35 U.S. cities Sezmi serves.

Sezmi's cable channel lineup is currently only available in Los Angeles.

Buyers are pre-qualified before purchase to determine if they’ll be able to receive a suitable broadcast TV signal required for Sezmi to operate.

A lengthy beta test in Los Angeles revealed many consumers loved the concept of Sezmi, but definitely discovered some flaws:

• There is no wireless connection supported for broadband.  You must use a supplied Ethernet cable to connect to a router;
• The remote control and its functionality was frequently reviewed as unintuitive and slow to respond to commands;
• Cable networks arrived only in standard definition video;
• Reception varied considerably depending on where one lives in relation to local broadcast transmitters.  Where TV stations use different transmitting locations, reception problems for one or more stations can be an issue unless you regularly reposition the antenna;
• Sezmi’s antenna module looks like a small bookshelf speaker and was more obtrusive than many thought necessary;
• Sezmi’s online viewing options are limited to YouTube and Sezmi-partnered content.  No Hulu or Netflix access is supported.
• Some reviewers felt charging $5 a month for a Sezmi package that only included free, over the air broadcast stations was unjustified when they also had to purchase the required set top box.  Many of these comments came when the box was priced at $299, however.  Sezmi has reduced the price of the set top box by half, so it’s likely the monthly fee includes some hardware cost recovery;
• The cable networks chosen do not include a lot of sports, although the company is currently negotiating with ESPN;
• Love it or hate it, one of America’s favorite cable channels – Fox News, is not included in the lineup although CNN and MSNBC are.  Their asking price may have been too high.

Sezmi’s co-founder probably expects that detailed level of critique considering the company’s business plan targets technology-minded “early adopters” who are well versed on technology and very opinionated about how it works.  They also feature prominently in the group of consumers that are now spending less time watching live television and less-willing to pay the asking price for it.

“The Sezmi offering is geared toward the next wave of consumers who want a very high-quality experience and the latest technology features, but are not willing to overpay for that,” said Phil Wiser, co-founder and president. “We’ve limited ourselves to really focus on that segment who are value-oriented and tech-oriented.”

Those who are value-oriented have responded positively to Sezmi.  Stop the Cap! reader John in Sherman Oaks, Calif., who notified us about Sezmi’s local media blitz says it’s exactly what he was looking for, and he’s enjoying some shows he missed from USA, TNT and Discovery.  But his wife misses her favorite HGTV and Food Network shows, which Sezmi doesn’t carry.

“I told cable to take a hike,” he writes. “I only watch perhaps a dozen channels and Sezmi has most of them covered for about 1/3rd of the cost the cable company charges, not including the fees, taxes, and renting cable’s set top boxes.”

John adds 24/7 access to live news programming was the one thing that held him back from dropping cable before Sezmi arrived.

Sezmi's Los Angeles Coverage Map (click to enlarge)

“I wasn’t going to give up CNN and MSNBC for breaking news,” he said.

Wiser’s comments to the San Francisco Chronicle seem to match John’s perceptions about the service.

“The key thing we realized with Sezmi is that consumers would not be ready to drop a paid TV experience purely for Internet offerings,” he said. “You need a bridge that includes a traditional cable experience with a more on-demand interactivity.”

Although John says he has few problems getting good broadcast signals from Mt. Wilson, where most Los Angeles-area broadcasters maintain their transmitters, some  residents further east in Riverside say their experiences were considerably worse.

“If you walked in front of the antenna, reception would drop out,” wrote one reviewer.  “A rooftop antenna is really a smart idea if you need reliable reception to make sure your shows get recorded,” wrote another.

The potential impact Sezmi could have on cable and phone company pay television packages varies depending on which analyst you choose.

Mike Jude, with Frost & Sullivan, told the Chronicle devices like Sezmi will probably remain niche products that will have trouble attracting interest from traditional cable subscribers.

But Gerry Kaufhold, an analyst at In-Stat, said Sezmi’s innovative approach could find a significant audience especially with more casual TV viewers. He said 15 percent of viewers don’t pay for TV while 35 to 40 percent of cable users pay about $40 for basic cable. Both could find a lot of utility in a product like Sezmi, he said.

“Anyone that gets a big digital cable (package) is unlikely to leave, but people who get basic cable may be willing to make that jump and cut some 20 bucks off their bill,” Kaufhold said. “They can also get people who don’t pay for TV to try it.”

With a Yankee Group study looming that estimates one in eight Americans will disconnect or downgrade their paid TV services by April, devices like Sezmi could threaten industry profits even sooner than some analysts think.

Service Coverage – Click links for respective channel lineups

Sezmi Explained: This series of videos walks you through all of Sezmi’s features and services.  (12 minutes)

http://www.phillipdampier.com/video/Sezmi Setup.flv

Sezmi’s setup is explained in this video, guiding you through the process of hooking up the equipment.  (10 minutes)

Anita Brown (left) watches as a January fire took everything she owned, including her two beloved cats.

A Reno, Nevada woman has learned that even after a disaster, Charter Cable wants their money and will stop at nothing to get it, even if it means holding your personal e-mail hostage.

Anita Brown lost everything in January after a tragic fire, started by another tenant in her building who left a candle burning unattended.  While she watched nearby as all of her possessions burned in the fire, her only thoughts were for her two companions  — her beloved cats.

They didn’t survive the fire. Neither did a cable box, phone jack and broadband modem belonging to Charter Cable.

As Brown tried to contemplate starting her life all over again, the cable company found out about the fire and began demanding their equipment back.

Brown was stunned to find the local cable company so insistent about the matter, so she showed them a picture they requested of the “modern art” her cable box now resembled.  It literally melted in the fire.  She also presented the cable company with a copy of the fire marshal’s report showing the fire was not her fault.

Charter’s response?  Pay us $1,000 immediately for the damaged equipment or else.

Brown, who faced replacing every article of clothing she owned and locating a new place to live had other priorities for her dwindling financial resources.  Still, she offered to make monthly payments to cover the loss, if only to avoid Charter’s collection department and damage to her credit. They told her someone would be in touch.

That someone was a Charter technician who turned up a week later to disconnect her relocated cable service.  A payment of $25 made him go away, service intact.  A week later, while she was attending a family funeral, a technician returned and disconnected service anyway.  Then the bills started arriving.

Charter had subsequently reduced the amount owed for the damaged equipment to $500, still out of reach financially for the Reno woman.  She signed up with another provider.  Meanwhile, Charter keeps sending her bills demanding payment and Brown worries they’re on the verge of trashing her credit.

Brown's cable box literally melted in the fire

A local Reno television station reporting on Brown’s plight found Charter’s local employees less than helpful, refusing to work out a solution to the cable nightmare.  A national media representative for Charter was sympathetic, however, and the company may find its way to a mutually acceptable resolution soon.

It can’t come soon enough for Brown, who isn’t even sure she should owe a penny for a box burned in a fire she didn’t start.

Even worse, the only contact list of friends and family Brown has left is locked up in her e-mail box, now held hostage by Charter Cable, who refuses to let her access it until her current bill is settled -and- she promises to stay with Charter Cable.

Cable customers often discover they are on the hook for lost or damaged company-owned equipment.  Most cable company subscriber agreements hold customers responsible for replacement or repair costs for returnable equipment. 

Stop the Cap! strongly recommends consumers obtain a signature or receipt when returning cable equipment and hang onto it at least six months after disconnecting service.  That evidence will save you hundreds of dollars in case the company claims you didn’t return equipment.  With today’s digital cable requiring set top boxes, many homes have several.  The cost of replacing all of them could become astronomical.

If you rent, purchasing inexpensive renter’s insurance is a must to protect your possessions.  Your landlord insures the building you live in, not the things inside your apartment.  Many homeowner and rental insurance policies cover damaged cable equipment in case of a fire or other natural disaster.  Ask your insurance agent to check your coverage.

After a loss, don’t forget to claim the value of that equipment so you can reimburse cable companies that do not forgive these types of losses.

As for Brown, she is still waiting to find out if Charter has a heart.  The damage stories like this do to a company’s reputation may carry a price higher than the cost of the cable box.  Some Reno viewers saw the story and are taking their business elsewhere.

“Thanks for the heads up. We just moved here, and are weighing our cable/satellite options,” writes Diana from Sparks. “That makes my decision a bit easier.”

Kelly in Reno added, “Sounds about right for Charter – big corporate, heartless, money-sucking [profanity deleted]! What do they think is going to happen if they just void this bill, that everyone will start burning down their houses to get out of paying for equipment? Come on, have a heart Charter!”

KOLO-TV in Reno told Brown’s story.  The ironic part of this story is that an advertisement preceding the clip was from none other than… Charter Cable.  (1 minute)

Although the price tag may be too rich for your blood, a municipally-owned utility today announced it was bringing America’s fastest broadband to residents and businesses in greater Chattanooga, Tenn., delivering 1 gigabit per second access for $350 a month.

That’s 200 times faster than what the average American broadband consumer receives, and just a fraction of what many Chattanooga area businesses pay other providers for that level of service

“One gigabit broadband service could be compared to the introduction of electric power in the 1930’s. At that time, most people saw electricity as an alternative to the oil lamp for producing light but the larger implications were soon realized,” said Harold DePriest, president and CEO of EPB. “We believe true high-speed Internet access, to both our urban and rural areas, will make Chattanooga the frontier of a new generation of opportunity and provide our community with a platform for engineering the 21st century.”

The mega-fast fiber-to-the-home broadband comes not from a multi-billion dollar private company like AT&T, Verizon, Comcast, or Time Warner Cable, but rather a small city-owned utility that has served Chattanooga’s electricity needs since 1939.

Just over one year old, EPB Fiber Optics is the latest service from the city’s municipal utility. EPB’s fiber broadband network was built after overcoming legal actions filed to stop it by Comcast and the state’s cable lobbyist group.

Since launching service in 2009, EPB’s fiber division has won over 169,000 residents in its 600 square mile service area in Tennessee and northwest Georgia.  This despite the presence of Comcast and AT&T’s U-verse operations, both competing with EPB for customers.  Neither the cable or phone company comes close to matching the speeds and demand EPB has managed to achieve.  In fact, AT&T’s U-verse launch week event in July was marred when an AT&T technician pepper-sprayed a local woman’s pets, and she wasn’t even a customer.

Google acknowledged the arrival of another provider extending 1Gbps broadband to Americans, noting it is still in the process of selecting locations for its own “Think Big With a Gig” 1Gbps fiber service.

“We’re excited to see enthusiasm for ultra high-speed broadband,” spokesman Dan Martin said in an e-mail statement. “It’s clear that people across the country are hungry for better and faster Internet access.”  Chattanooga now joins Hong Kong and just a handful of other cities delivering gigabit broadband.

Atkinson

A broadband industry trade group funded by large telecommunications companies was left making excuses for EPB’s thunder-stealing announcement.

“I can’t imagine a for-profit company doing what they are doing in Chattanooga, because it’s so far ahead of where the market is,” Robert D. Atkinson, president of the Information Technology and Innovation Foundation told the New York Times.

Atkinson is closely involved with several industry backed front groups, including the Alliance for Public Technology (AT&T & Verizon) and the Internet Education Foundation (Comcast & Verizon).

The irony of a telecom industry group that supposedly celebrates broadband innovation downplaying today’s achievement by EPB was not lost on DePriest.

When the Times asked DePriest why EPB would offer such a high speed service, DePriest said, “The simple answer is because we can.”

EPB’s latest announcement throws down the gauntlet against the idea that broadband innovation comes only from large commercial telecom companies.  Phone and cable operators claim their record of innovation will be harmed if municipal providers like EPB are able to offer service, claiming “private investment will dry up.”

It’s the same argument they use for deregulation and minimal oversight.  Yet it was a municipally-owned provider that established a network far superior to what Comcast and AT&T have in Chattanooga, launched America’s first residential 150Mbps service, and today launched America’s first residential 1Gbps broadband service.  EPB charges lower everyday prices for its bundle of TV, phone, and broadband services, too.

The cost to taxpayers?  Nothing.

Local residents can’t wait to get the service.

Keith in Soddy Daisy, Tenn., commented about EPB service: “I’m still waiting on it to become available where I live. It’s getting close because I see them stringing fiber all over the place. The crazy thing is that there are people in their service footprint that only have dial-up. Can you imagine going from having dial-up to having 1 Gbps symmetrical fiber as an option?”

WTVC-TV in Chattanooga investigates EPB’s newest 1Gbps broadband service.  (1 minute)

Sarasota County's current fiber networks are depicted on this map produced by the Sarasota Herald-Tribune

In many communities across America, there is more fiber optic cable on telephone poles and buried in underground conduit than you may realize.  But as a consumer, you’ll never get to benefit from it because of a broadband duopoly that works hard to keep municipal fiber networks away from your home and out of your reach.

Take Sarasota County, Florida.  The county is making preparations to build a 96-strand fiber network across the county, capable of delivering 100Gbps service over each strand, and early plans suggest they’ll use it for… controlling traffic signals and viewing traffic cameras.  Taxpayers are ultimately paying the costs to construct the $1,000-per-mile fiber network, but current plans won’t allow any of them to access it.

Why?  Because companies like Comcast and Verizon want it that way.

It’s nothing new and it’s not limited to Sarasota.  In cities across the country, enormous capacity networks are devised and constructed to deliver high speed data connections to local hospitals, schools, and public safety institutions.  Many states’ transportation departments have enormous excess fiber capacity, installed from federal and state grant money to develop intelligent traffic systems.  But almost all of these networks are strictly off-limits to the general public and small business entrepreneurs who are stuck with the far slower broadband service the phone and cable companies deliver at ridiculously high prices.

Sarasota has had ultra-fast connections for years, delivering a dedicated 10Gbps connection to one area hospital and insanely fast connections to police departments and other government buildings.  It’s managed by Comcast and was built for $3 million, paid for directly by Comcast subscribers.  Comcast built the county I-Net network with the understanding that commercial use of the network was strictly prohibited.

The result is blazing fast speeds for institutions that can’t possibly utilize all of the capacity they have, and a broadband cartel delivering less service than local residents and businesses need.

The Sarasota Herald-Tribune considered the county’s fiber future so important, it dedicated a week of coverage to municipal fiber, and the providers and politics that get in the way.

The newspaper reports that the existing broadband duopoly under-delivers access to digital entrepreneurs that need those speeds the most.

The co-called creative class — bandwidth entrepreneurs on a budget — struggle to get by on mediocre connections that are largely repackaged retail offerings.

Over and over, businesses surveyed by the Herald-Tribune pointed to the tell-tale distinction between business-class service and retail.

“Businesses upload stuff, while consumers download,” said Rich Swier Jr., who works from a Central Avenue office where the only service comes from Comcast. Swier, the only entrepreneur on the Sarasota Broadband Task Force, is not happy with what he gets from Comcast. “They are repackaging a consumer grade service as a business service and charging three times more.”

Swier is paying about $200 per month for what is supposed to be 50 megabits per second download and 5 megabits up. But in reality, it operates at half those speeds, he said.

Thaxton

The newspaper’s conclusion: Fiber access is to modern business what train stations and interstate connections used to be.

Sarasota’s fiber project has grown considerably since its original proposition — 24 strands of fiber installed for $11 a foot. Then the county received an estimate that said they could have triple the amount of fiber for just 20 cents more per mile.  Broadband enthusiasts urged the county to upgrade the network to 96 strands and they agreed.

Commissioner Jon Thaxton told the newspaper he views the planned fiber network as an insurance policy as Internet speed becomes more and more important.

“It does, at a minimum, put us in a position of not being wholly dependent on some other service provider,” Thaxton said.

The newspaper notes the economic implications of superior broadband are enormous.

Google sparked the issue when it announced plans earlier this year to hot-wire a city or cities somewhere in the United States, creating what could be a prototype for a community with the broadband speeds to more than command its economic future.

Our political leaders clearly saw the import of this. Heck, City Commissioner Dick Clapp even jumped into a shark tank to show Google the community’s spirit (yeah, they were pretty small sharks, but I wouldn’t do it, fiber or no fiber).

Businesses of the 21st century are hungry for fast speeds, and this region has been fortunate to land some with voracious appetites.

[...]Who would have pegged Lafayette, La., as a place where Hollywood would set up a first-rate special-effects studio? (Can you say the Walt Disney Co. as a customer?) But the fiber was there, and the big dogs came.

South of us, in Naples, it is private enterprise driving high-octane broadband, the work of a technology-savvy entrepreneur and a like-minded group of millionaires who want what many of us raising families in Southwest Florida are after: an economy that would allow our kids to remain here with good jobs.

In the Information Age, connectivity is going to be critical in attracting the kind of companies we want, and the well-heeled folks in Collier County know that. (They also clearly know how to make a lot of money, so don’t read their efforts too much as altruism).

Then you have one of the new 800-pound gorillas of the fiber effort, Allied Fiber, a New York-based company in the midst of creating a trans-continental broadband push akin to what the railroad barons of the 1800s accomplished.

Southwest Florida has a good chance of tapping into their $500 million (or more) play.

Competition from Municipal Providers Drives Prices Down and Speeds Up (New Rules Project)

The county established a Broadband Task Force, but made the same mistake so many other municipalities make when they create these panels: consumers are not represented at all and small business representation is limited to a single participant. Consumers will ultimately be a major source of revenue from municipal broadband projects and their needs and interests must be represented.  Since incumbent commercial providers will seek to impede municipal competition by organizing consumer opposition to such projects, getting trusted consumer advocates and broadband evangelists on your side at the outset can make the difference between enthusiastic support for additional broadband choice or a mind-numbing, incumbent provider-driven sideshow about a “socialist government takeover of the Internet.”

The rest of the panel is made up of public officials from the school district, county and city government and the local hospital.

The newspaper hints these are exactly the wrong people to invite onto a Broadband Task Force.  Virtually all already enjoy the generous bandwidth already provided by Comcast’s I-Net, few are likely to be well informed on broadband technology issues, and apart from the lone businessman on the panel, the group is unlikely to grasp the commercial implications of better broadband for the local digital economy.

Since these individuals all earn a paycheck protecting their own institutional interests, the larger vision of community broadband can easily get lost in turf wars and political disputes, or interference from incumbent providers.

Providers can cut the bottom out of such task forces with rewarding side deals for friends — enhanced services at fire sale prices. For institutional opponents — intransigence and crippling rate increases.

On Florida’s East Coast, Martin County’s public service institutions learned first hand what kind of pricing Comcast is capable of bringing to the table when an existing contract expired.  Comcast demanded a whopper of a rate hike.

“We decided for the kind of money these people are asking us, we would be better off doing this on our own,” Kevin Kryzda, the county’s chief information officer, told the Sarasota paper. “That is different from anybody else. And then we said we would like to do a loose association to provide broadband to the community while we are spending the money to build this network anyway. That was unique, too.”

The last straw for county officials was the loss of a lucrative deal with California-based Digital Domain to build a Florida branch campus.  The company chose St. Lucie County instead.  John Textor, Digital Domain’s co-chairman, told the Herald-Tribune that having a local all-fiber network connection and being able to set up an all-fiber direct connection to remote servers in Miami was a key advantage of the site in Port St. Lucie.

After that, Martin County commissioners voted unanimously to obtain bids for their own network.

Martin County’s fiber network will combine a publicly-constructed institutional network and a tiny rural phone company paying part of the costs to resell excess capacity to commercial users. The downside is that consumers will not be offered service.

In Florida’s Lee and Collier Counties, U.S. Metro network has proved fiber’s ability to transform entire regions economically.

“If you build it, they will come” is a common rallying cry for fiber proponents.  In both counties, they came.  The latest arrival?  Jackson Laboratory of Bar Harbor, Maine, now being showered with more than $200 million in government grants to build a genetic research campus in Collier County.  A large portion of that money will end up staying in Collier County, stimulating the local economy and creating jobs.

Why all the clamor?  Because U.S. Metro runs a network that puts incumbent phone and cable companies to shame.  When a business requests service, owner Frank Mambuca doesn’t tell them what speeds they’ll have to live with.  Instead, he asks, “how many gigabits do you want?”

Unfortunately, U.S. Metro also only sells service to businesses, but they have some wholesale customers that do serve consumers.  Marco Island Cable and a sister company, NuVu are cable overbuilders that offer access to U.S. Metro’s broadband network at speeds and prices Comcast and CenturyLink can’t touch.

Marco Cable, a tiny independent provider, delivers faster speeds at lower prices.

Marco Cable is preparing to deliver fiber-based 75Mbps service for $99 a month, along with several other access plans that save at least $12.95 per month over Comcast’s prices, and undercuts CenturyLink’s DSL plans as well.  The company also does something Comcast won’t — it promises unlimited Internet access and email accounts.

If someone wants even faster speeds, say 100Mbps, they can call Marco Cable and request it.

The highest download speed that Verizon offers [locally] at present is 50 megabits per second for $149.99 a month, according to spokesman Bob Elek.

NuVu is currently installing competing service in condos on the mainland.  For the father and son team that run both Marco Cable and NuVu, their philosophy is radically different from most cable and phone companies — delivering as much broadband speed as customers can use at prices they can afford.

For existing providers, who have “marked up” prices for years, the competition’s lower prices threaten profits from delivering “good enough for you” speeds at the highest possible price.

For some, simply lowering prices and enhancing service to compete isn’t the answer — putting a stop to municipal competition at all costs is.

In 18 states, high priced lobbying campaigns financed by giant phone and cable operators have succeeded in restricting or banning competing providers.  AT&T has been the most aggressive, successfully impeding competition in states like Texas, Wisconsin, Missouri, Arkansas, Michigan, Tennessee, and others.  Comcast helped stop competition in its home state of Pennsylvania.

Click image to view interactive map

Year after year, Time Warner Cable and AT&T continue efforts to try and do the same in North Carolina, a potential hotbed of locally run, community-owned providers.

For some towns and cities who have spent years begging for improved service, the clock has run out.  The Sarasota Herald-Tribune used Wilson, N.C., as an excellent example.  The city of 50,000 east of Raleigh decided it was through asking Time Warner Cable to provide a platform for a digital economic revival.

Brian Bowman, public affairs manager for the city, told the newspaper the city faced economic disaster from twin blows — the loss of the textile industry and America’s waning interest in tobacco products. Giving the keys to the local cable company to drive Wilson’s nascent digital economy into Lake Wilson was simply not an option.  The town would build its own digital highway — a municipal fiber to the home system for consumers and businesses.

For both, Wilson’s Greenlight system provides up to 100 megabits per second in both directions.  Time Warner Cable residential customers, in comparison, max out at 15/2 Mbps service.

“The way we see it, you’re going to have haves and have-nots in the next generation broadband world,” Bowman said. “The fact is we wanted to invest in our own future; that’s why we did this.”

Cable and phone giants always are going to say that current speeds are adequate and that there is no need for cities to build expensive networks themselves, Bowman said.

“I have heard that here from some of the incumbents, that you don’t need to go that fast. I’m sure the folks in Florida were doing OK without I-4,” Bowman said, noting the state never would have gotten Disney World if not for that interstate access.

People in Sarasota County are about to hear all of the usual arguments against municipal service:

• “Taxpayers will pay for it.” — Not with revenue bonds they won’t.  These bonds deliver returns to investors from revenue earned by the municipal provider, not from taxpayer dollars.
• “We want a level playing field.” — This cable industry opposed providing one when satellite and phone company IPTV showed up, as they tried to withhold programming and lobbied against both.
• “The government should stay out of the private sector.” — Christopher Mitchell, writing for the New Rules Project, tore apart that argument:

Governments “compete” with the private sector in many ways on a daily basis. Libraries compete with book stores, schools with private schools, public transit with taxis, police with security firms, even lumber yards, liquor stores, municipal golf courses and swimming pools with privately owned counterparts. Without public competition in the form of the Rural Electrification Authority, much of the country would still not be wired for electricity or phones.

The focus on whether local governments, who have a wholly different motivation than private companies, are “competing” with the private sector is a red herring to distract the public from incumbent providers’ failures to build modern networks. On matters of infrastructure, a community should always have the option to build the network it needs, just as it can build roads, bridges, water systems, and other modern necessities.

Ultimately, Sarasota County residents have two choices:

1. Obtain the best traffic control and monitoring system America has ever seen, capable of delivering crisp, clear 1080p HD feeds of traffic tieups on Route 301.
2. Deliver Sarasota County 21st century broadband that will power the digital economy and bring hundreds of millions in investment dollars, create thousands of new, high-paying jobs, and save local consumers and businesses a lot of money from broadband competition.