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Sen. Ted Cruz’s Latest Enemy: Community Broadband; Wants State Bans Reinstated

Cruz

Cruz

Although running a distant second behind Donald Trump in the Republican presidential primary, Texas Sen. Ted Cruz is still managing to have an influence in the U.S. Senate, where his office is filing a plethora of amendments to various telecommunications bills. Among his top priorities: throwing up roadblocks to keep municipalities from offering broadband to their communities.

Cruz and Sen. Deb Fischer, a fellow Republican from Nebraska, are jointly proposing to attach an amendment to the FCC Process Reform Act that would prohibit the FCC from preempting state laws that limit or prohibit municipal broadband networks. The amendment would “prohibit the FCC from preventing states from implementing  laws relating to provision of broadband Internet access service by state and local governments.”

Several Republicans in Congress have been highly critical of public broadband, despite the fact many local governments in their districts are clamoring for better broadband solutions for their residents.

Cruz and other municipal broadband opponents are responding to FCC Chairman Thomas Wheeler’s decision to effectively overturn those restrictions in Tennessee and North Carolina. Wheeler is considering expanding preemptions in other states where lawmakers passed bills restricting or prohibiting municipal broadband expansion.

The FCC is currently defending its actions in court.

Google Fiber Offering New $15 for 25Mbps Plan for Low Income Families in Kansas City

google fiber truckGoogle Fiber has quietly unveiled its own discount Internet plan for the income-challenged that vastly simplifies the hoops consumers have to successfully jump through to enroll.

Relying on Census block and FCC broadband availability data, Google proposes to sell residents of Kansas City living in areas identified as having a sustained digital divide a 25Mbps Internet plan for $15 a month. The new plan is accompanied by totally free connections and service for residents of select subsidized housing — mostly apartment buildings.

The new service offerings will replace Google’s 5Mbps free service option, which was dropped from Google Fiber’s menu this week. Google previously charged residents a $300 installation fee to qualify for free service which proved to be an insurmountable challenge for many paycheck-to-paycheck residents who did not realize Google would also accept $10 monthly installments for 30 months.

The choice of 25Mbps happens to coincide with the FCC’s official minimum speed designation to qualify as “broadband.” Google hopes the low-priced broadband option will inspire residents living in broadband-sparse neighborhoods to sign up for service. Currently, most low-income residents not subscribed to fixed broadband rely on their cell phones for Internet access. Google makes its money providing search results and accompanying contextual advertising, and home broadband service remains an important part of Google’s ad revenue stream.

Google’s plan avoids the intrusive qualification requirements most phone and cable companies insist on to receive discounted Internet service. Comcast, among others, demands evidence of school-age children enrolled in the federal school lunch program, and forbids participation to current customers who manage to already scrape together enough to pay for broadband service. Google’s plan relies on a potential customer’s location and avoids income tests and paperwork, opening its program to childless couples, young singles, and seniors.

Google’s $15 Broadband plan features:

  • $15 a month
  • 25Mbps upload and download speeds
  • No data caps
  • No application process or contracts
  • No equipment rental and no construction or installation fees

Residents of Kansas City can determine their eligibility on or after May 19, 2016 on this website.

Oman: Broadband for All By Any Means Necessary

omanOman has declared an all-out war on the digital divide, with the country’s broadband provider pledging every citizen will have broadband access within four years, using any means necessary.

With around 50% of the population living in Muscat, the capital of the Arabian Gulf nation, Oman has a pervasive rural broadband problem. The country is hurrying to rid itself of aging copper wire phone infrastructure, replacing it largely with fiber optics, which will reach 80% of the population by 2020. The absolute monarchy that rules Oman has made it clear it considers broadband service an essential utility, as important as electricity and clean water.

Sultan Qaboos bin Said al Said, who has led the nation since 1970, decreed Oman must gradually create a knowledge-based economy, particularly as dependence on fossil fuel revenue is expected to diminish during the 21st century. Sultan Qaboos has presided over the Vision 2020 plan, which seeks to cultivate Oman’s information and communication technology economy.

oman broadband coTo accomplish this, every inch of the sultinate must have access to fast broadband speeds.

Talib Al Rashadi, business relations manager at Oman Broadband, made it clear he intends to bring Internet access through fiber optics, wireless service, and even satellite to the remotest sections of the country.

“The speed that we used to have one year ago was not more than 20 or 25Mbps,” said Al Rashidi. “Today, we have speeds of 100 to 150Mbps and even gigabit speeds. This is a very high speed, which enables some other applications, such as smart cities, smart governance and others.”

But that is just the beginning. By 2018, all major population centers of other governorates outside of Muscat will be covered with fiber to the home service. Oman is widely expected to pass the United States and Canada in broadband performance and coverage within the next four years. But it will need to do something about the cost of service to be recognized as a true world leader. An unlimited 60Mbps broadband line costs the equivalent of $156 a month. Although many Omanis’ enjoy a high standard of living, broadband at that price remains expensive.

After Waiting Forever, Boston is Finally Getting Verizon FiOS

verizon bostonThe long wait for fiber optic broadband in the city of Boston is finally over.

In a surprise announcement with Boston Mayor Martin J. Walsh and Verizon officials, Verizon announced it will commit to at least $300 million in investments over the next six years to bring fiber to the home service to residents of the metro area.

Construction of the fiber-optic network will be completed on a neighborhood-by-neighborhood basis according to customer demand. Initially, the project will begin in Dorchester, West Roxbury and the Dudley Square neighborhood of Roxbury in 2016, followed by Hyde Park, Mattapan, and other areas of Roxbury and Jamaica Plain. The city has also agreed to provide an expedited permitting process to encourage the project.

“Boston is moving faster than our current infrastructure can support, and a modern fiber-optic communications platform will make us a next-level city,” Walsh said in a statement.

“This transformation isn’t just about advanced new fiber-optic technology — it’s about the innovative services this platform will allow people to create and use, today and in the future,” Verizon Wireline Network president Bob Mudge said in a statement.

Bringing FiOS inside the city of Boston will challenge the de facto monopoly Comcast had held for years. The only alternative most residents have is Verizon DSL.

The dramatic turnaround came six months after Verizon adamantly told the Boston City Council Verizon FiOS expansion was dead. Verizon announced it would stop FiOS expansion in 2010 to concentrate on its existing FiOS commitments and better marketing the service to attract more customers.

The sudden end to FiOS expansion six years ago caught many cities by surprise. As a result, in several areas, the fiber service is only available in select suburbs and not city centers.

Verizon’s unions have also pushed for further FiOS expansion, but today’s announcement is expected to have no impact on plans by the Communications Workers of America and the International Brotherhood of Electrical Workers to strike Verizon starting early Wednesday morning.

The partnership also covers Verizon Wireless and its plans to attach wireless equipment to city street lights and utility poles without a lengthy permitting process.

Verizon was also likely offered a much easier time securing a license to offer cable television service, a stumbling block Verizon has experienced in several large cities.

Echoing Google Fiber, Verizon will try to win itself some free marketing and buzz by giving residents a chance to compete to see what neighborhoods get FiOS first. A free online registration process will be used to assess demand and help Verizon prioritize its fiber-optic network construction schedule.

Verizon will also support digital initiatives for the income-challenged, including a $100,000 Digital Equity contribution to the city, offered to support a mobile hotspot lending program at the Boston Public Library enabling Internet access to families on an as-needed basis.

Boston neighborhoods marked "A" will be upgraded to FiOS first, followed by "B" and so on. The upgrade effort is expected to take at least six years.

Boston neighborhoods marked “A” will be upgraded to FiOS first, followed by “B” and so on. The upgrade effort is expected to take at least six years.

Attacks on Tennessee’s EPB Municipal Broadband Fall Flat in Light of Facts

latinos for tnThe worst enemy of some advocacy groups writing guest editorial hit pieces against municipal broadband is: facts.

Raul Lopez is the founder and executive director for Latinos for Tennessee, a 501C advocacy group that reported $0 in assets, $0 in income, and is not required to file a Form 990 with the Internal Revenue Service as of 2014. Lopez claims the group is dedicated to providing “Latinos in Tennessee with information and resources grounded on faith, family and freedom.”

But his views on telecom issues are grounded in AT&T and Comcast’s tiresome and false talking points about publicly owned broadband. His “opinion piece” in the Knoxville News Sentinel was almost entirely fact-free:

It is not the role of the government to use taxpayer resources to compete with private industry. Government is highly inefficient — usually creating an inferior product at a higher price — and is always slower to respond to market changes. Do we really want government providing our Internet service? Government-run health care hasn’t worked so well, so why would we promote government-run Internet?

Phillip Dampier: Corporate talking point nonsense regurgitated by Mr. Lopez isn't for the good of anyone.

Phillip Dampier: Corporate talking point nonsense regurgitated by Mr. Lopez isn’t for the good of anyone.

Lopez’s claim that only private providers are good at identifying what customers want falls to pieces when we’re talking about AT&T and Comcast. Public utility EPB was the first to deliver gigabit fiber to the home service in Chattanooga, first to deliver honest everyday pricing, still offers unlimited service without data caps and usage billing that customers despise, and has a customer approval and reliability rating Comcast and AT&T can only dream about.

Do the people of Chattanooga want “the government” (EPB is actually a public utility) to provide Internet service? Apparently so. Last fall, EPB achieved the status of being the #1 telecom provider in Chattanooga, with nearly half of all households EPB serves signed up for at least one EPB service — TV, broadband, or phone service. Comcast used to be #1 until real competition arrived. That “paragon of virtue’s” biggest private sector innovation of late? Rolling out its 300GB usage cap (with overlimit fees) in Chattanooga. That’s the same cap that inspired more than 13,000 Americans to file written complaints with the FCC about Comcast’s broadband pricing practices. EPB advertises no such data caps and has delivered the service residents actually want. Lopez calls that “hurting competition in our state and putting vital services at risk.”

Remarkably, other so-called “small government” advocates (usually well-funded by the telecom industry) immediately began beating a drum for Big Government protectionism to stop EPB by pushing for a state law to ban or restrict publicly owned networks.

Lopez appears to be on board:

Our Legislature considered a bill this session that would repeal a state municipal broadband law that prohibits government-owned networks from expanding across their municipal borders. Thankfully, it failed in the House Business and Utilities Subcommittee, but it will undoubtedly be back again in future legislative sessions. The legislation is troubling because it will harm taxpayers and stifle private-sector competition and innovation.

Or more accurately, it will make sure Comcast and AT&T can ram usage caps and higher prices for worse service down the throats of Tennessee customers.

epb broadband prices

EPB’s broadband pricing. Higher discounts possible with bundling.

Lopez also plays fast and loose with the truth suggesting the Obama Administration handed EPB a $111.7 million federal grant to compete with Comcast and AT&T. In reality, that grant was for EPB to build a smart grid for its electricity network. That fiber-based grid is estimated to have avoided 124.7 million customer minutes of interruptions by better detection of power faults and better methods of rerouting power to restore service more quickly than in the past.

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

Public utilities can run smart grids and not sell television, broadband, and phone service, leaving that fiber network underutilized. EPB decided it could put that network to good use, and a recent study by University of Tennessee economist Bento Lobo found EPB’s fiber services helped generate between 2,800 and 5,200 new jobs and added $865.3 million to $1.3 billion to the local economy. That translates into $2,832-$3,762 per Hamilton County resident. That’s quite a return on a $111.7 million investment that was originally intended just to help keep the lights on.

So EPB’s presence in Chattanooga has not harmed taxpayers and has not driven either of its two largest competitors out of the city.

Lopez then wanders into an equally ridiculous premise – that minority communities want mobile Internet access, not the fiber to the home service EPB offers:

Not all consumers access the Internet the same way. According to the Pew Research Center, Hispanics and African-Americans are more likely to rely on mobile broadband than traditional wire-line service. Indeed, minority communities are even more likely than the population as a whole to use their smartphones to apply for jobs online.

[…] Additionally, just like people are getting rid of basic at-home telephone service, Americans, especially minorities, are getting rid of at-home broadband. In 2013, 70 percent of Americans had broadband at home. Just two years later, only 67 percent did. The decline was true across almost the entire demographic board, regardless of race, income category, education level or location. Indeed, in 2013, 16 percent of Hispanics said they relied only on their smartphones for Internet access, and by 2015 that figure was up to 23 percent.

That drop in at-home broadband isn’t because fewer Americans have access to wireless broadband, it’s because more are moving to a wireless-only model. The bureaucracy of government has trouble adapting to changes like these, which is why government-owned broadband systems are often technologically out of date before they’re finished.

But Lopez ignores a key finding of Pew’s research:

In some form, cost is the chief reason that non-adopters cite when permitted to identify more than one reason they do not have a home high-speed subscription. Overall, 66% of non-adopters point toward either the monthly service fee or the cost of the computer as a barrier to adoption.

What community broadband provides communities the big phone and cable companies don't.

So it isn’t that customers want to exclusively access Internet services over a smartphone, they don’t have much of a choice at the prices providers like Comcast and AT&T charge. Wireless-only broadband is also typically usage capped and so expensive that average families with both wired broadband and a smartphone still do most of their data-intensive usage from home or over Wi-Fi to protect their usage allowance.

EPB runs a true fiber to the home network, Comcast runs a hybrid fiber-coax network, and AT&T mostly relies on a hybrid fiber-copper phone wire network. Comcast and AT&T are technically out of date, not EPB.

Not one of Lopez’s arguments has withstood the scrutiny of checking his claims against the facts, and here is another fact-finding failure on his part:

Top EPB officials argue that residents in Bradley County are clambering for EPB-offered Internet service, but the truth is Bradley County is already served by multiple private Internet service providers. Indeed, statewide only 215,000 Tennesseans, or approximately 4 percent, don’t have broadband access. We must find ways to address the needs of those residents, but that’s not what this bill would do. This bill would promote government providers over private providers, harming taxpayers and consumers along the way.

Outlined section shows Bradley County, Tenn., east of Chattanooga.

Outlined section shows Bradley County, Tenn., east of Chattanooga.

The Chattanoogan reported it far differently, talking with residents and local elected officials on the ground in the broadband-challenged county:

The legislation would remove territorial restrictions and provide the clearest path possible for EPB to serve customers and for customers to receive high-speed internet.

State Rep. Dan Howell, the former executive assistant to the county mayor of Bradley County, was in attendance and called broadband a “necessity” as he offered his full support to helping EPB, as did Tennessee State Senator Todd Gardenhire.

“We can finally get something done,” Senator Gardenhire said. “The major carriers, Charter, Comcast and AT&T, have an exclusive right to the area and they haven’t done anything about it.”

So while EPB’s proposed expansion threatened Comcast and AT&T sufficiently to bring out their lobbyists demanding a ban on such expansions in the state legislature, neither company has specific plans to offer service to unserved locations in the area. Only EPB has shown interest in expansion, and without taxpayer funds.

The facts just don’t tell the same story Lopez, AT&T, and Comcast tell and would like you to believe. EPB has demonstrated it is the best provider in Chattanooga, provides service customers want at a fair price, and represents the interests of the community, not Wall Street and investors Comcast and AT&T listen to almost exclusively. Lopez would do a better job for his group’s membership by telling the truth and not redistributing stale, disproven Big Telecom talking points.

Frontier Launches ‘Vantage’ Brand Bundles of TV, Broadband, and Phone

Phillip Dampier March 24, 2016 Broadband Speed, Competition, Consumer News, Frontier, Video 6 Comments

vantage tvFrontier Communications customers lucky enough to live in an upgraded or recently acquired service area may soon be getting Frontier Vantage, a new suite of enhanced products including a multichannel TV package, faster broadband, and phone service.

Frontier Vantage started life in Frontier’s fiber to the home market trial in Durham, N.C., and is set to accompany, not replace, the Frontier FiOS and U-verse brands, starting in a wide rollout in Connecticut. Much like the XFINITY brand today co-exists with Comcast, Frontier intends its new Vantage brand to signify a premium experience. It is part of Frontier’s larger plan to introduce IPTV service in more than 40 of its larger markets across the country over the next four years, with an even larger presence in former Verizon service areas in Texas, Florida, and California.

In all, Frontier expects to offer the enhanced service to more than eight million of its customers after upgrades are finished.

Frontier’s biggest challenge will be getting Vantage service to customers in its legacy service areas, where its reliance on ADSL and its slow broadband speeds are often inadequate for a shared broadband and IPTV platform. In upgraded service areas, other challenges are appearing, including firm rejections of Vantage in multi-dwelling units where complex owners have signed multi-year exclusivity contracts with cable operators.

frontier new logo“As far as Durham goes, some of the initial learnings are that we were locked out in many cases of securing long-term contracts with some of the apartments and condominium owners in the market because we didn’t have a video product other than a mini head-end that was using satellite, which was not the preferred solution,” said Frontier CEO Dan McCarthy in February. “In the first several weeks of introducing the product, we’ve already secured new contracts that would be substantial units right out of the gate. Our door-to-door sales process has been very successful so far, but we’re in the early days — it’s only been really about a month or so.”

McKenney

McKenney

Much of the door knocking is taking place in Connecticut, where Vantage started replacing the older Frontier TV/U-verse platform on set-top boxes starting last Monday. Former AT&T customers have transitioned through three brand changes. Originally served by AT&T U-verse, Frontier’s acquisition of AT&T’s wireline facilities in the state introduced customers to Frontier U-verse/FrontierTV. As of this week, it is now VantageTV.

The new firmware introduces a Netflix “on-demand channel” (Ch. 800 in Connecticut) where subscribers can access Netflix content without having to use separate hardware like Chromecast or Roku. This is the first of several “apps” that Frontier will offer, allowing customers to reach Facebook, Twitter, home shopping, weather, and games over their set-top box.

Frontier also plans a ‘start-over’ feature that allows viewers to start at the beginning of a show already in progress, an enhanced on-screen program guide and easier access to a list of upcoming shows. A video-on-demand library will also be on offer, and Frontier claims it will include over 100,000 movies and TV shows.

Customers will also get a whole-home DVR that can record four shows at once on a 1TB hard drive. A limited number of markets will also be offered 4k video service.

Accompanying the TV package will be phone service and Internet access at speeds starting as 12Mbps up to 1,000Mbps, depending on the market and available infrastructure.

“This is the perfect time for Frontier to launch our premier products,” said Cecilia K. McKenney, executive vice president and chief customer officer and head of corporate marketing at Frontier. “‘Vantage’ conveys the ultimate customer experience and represents products and services that deliver value, solutions, and choice.”

http://www.phillipdampier.com/video/Frontier What is Vantage TV 3-24-16.mp4

Frontier introduces Vantage TV to customers in Connecticut formerly served by AT&T U-verse. This introductory video shows Frontier’s new set-top box firmware includes direct support for Netflix. (2:16)

Frontier: Your Lousy Wi-Fi is Responsible for Your Slow Internet, Not Us

wi-fi blameFrontier Communications CEO Dan McCarthy blames slow Internet connections on your lousy home Wi-Fi network, not on his company’s broadband service.

McCarthy hoped to convince investors attending the J.P. Morgan Global High Yield & Leveraged Finance Conference earlier this month that Frontier’s last-mile network performance isn’t the real problem, it’s his customers’ Wi-Fi, and delivering faster broadband service isn’t going to solve many speed woes.

“I think the biggest issue that we face in having those kind of increments of capacity is the experience in the home can be substandard not only for us and they perceive a speed issue, but it’s really a Wi-Fi issue,” McCarthy said. “If you look at that many of the perceived speed issues in a home are purely due to a neighbor on the same Wi-Fi channel, which can cut your throughput by 50 percent.”

McCarthy claimed at least 40 percent of the complaints Frontier customers lodge about the company’s broadband service relate to the home Wi-Fi experience. Oddly, customers of other broadband providers don’t seem to complain as much about the performance of their Internet access provider. Frontier scores #12 on Netflix’s speed performance ranking, delivering an average of 2.51Mbps video streaming performance. It isn’t great, but it beat Windstream, Verizon DSL and last place CenturyLink.

frontier new logoFrontier Communications has promised to commit additional investment to expand and improve broadband after it completes its purchase of Verizon landlines in Florida, California, and Texas. Copper DSL customers may eventually get 25Mbps service, fiber customers up to 1Gbps. But the speed improvements have not been as forthcoming in Frontier’s original service areas, dubbed “legacy territories.”

McCarthy claimed more customers within its copper service areas will get speeds of 25-30Mbps, with some getting speeds of 100Mbps and above. But legacy customers often report they consider themselves lucky to see 6Mbps from Frontier DSL.

McCarthy

McCarthy

Despite that, McCarthy seemed to signal Frontier will direct much of its investment into its newest acquisition service areas, not the communities which have had Frontier DSL service for a decade or more.

“We’re investing in the copper facilities as we go into these three states,” McCarthy said. “We’ll be putting in the latest generation of bonded VDSL with vectoring capabilities at the DSLAM and that gives us the ability to have those 80-100 Mbps speeds.”

McCarthy does get the benefit of bragging the company has a larger amount of fiber broadband than ever before.

“Before we do the three-state acquisition, about 10 percent of our markets are passed with fiber-to-the-home and with these three markets about 55 percent of those markets are fiber-to-the-home,” McCarthy said. “We’ll have a substantial slug of markets passed with fiber.”

This excludes the fact Frontier did not build this additional fiber infrastructure itself. It acquired it from another company, in this case Verizon.

Stop the Cap! Joins 21 Other Consumer Groups Asking FCC to Block Charter-Time Warner Cable Merger

charter twc bhOn Monday, Stop the Cap! joined 21 other public interest organizations in sending a joint letter urging the Federal Communications Commission to deny Charter’s bid to take over Time Warner Cable and Bright House Networks. Late last week, the Wall Street Journal reported that FCC Chairman Tom Wheeler may be planning to circulate a draft order approving the $90 billion merger.

The Center for Media Justice, CREDO Action, Daily Kos, Demand Progress, Free Press and Presente.org were among the media justice, Internet rights and public interest groups calling on the FCC to reject this deal, which would create a national broadband duopoly.

Together, Charter and Comcast would control nearly two-thirds of the nation’s high-speed broadband subscribers and would offer service to nearly 80 percent of U.S. households. The letter notes that this substantial increase in market power, coupled with Charter’s $66 billion in debt, would give the company both the incentive and the heightened ability to raise prices at will. This would broaden the digital divide, hitting low-income communities the hardest.

Stop the Cap! earlier filed objections to the merger with the FCC and in two states seen as critical to the deal – New York and California. In our view, no cable merger has ever resulted in better service or lower prices for consumers. Such deals deliver handsome sums to executives and shareholders while saddling customers with relentless rate hikes and no improvement in service. Charter’s history is troubling and its ability to meet its financial obligations while saddled in debt is dubious. Charter declared bankruptcy in 2009, after accumulating $21.7 billion in debt accumulated from years of mergers and consolidation efforts. As credit markets tightened up, Charter’s ability to manage its debt fell apart. Now the company is back to its old modus operandi, piling up debt buying Time Warner Cable — a much larger operation, and trying to combine it with Bright House Networks, another cable operator prominent in Florida.

Earlier this year, several of the signers delivered petitions to the FCC from more than 300,000 Americans opposing the merger, and thousands have called the agency in recent days to weigh in against the deal. Political leaders including Senate Democratic Leader Harry Reid have spoken out about the merger’s many harms.

“Too many Washington insiders have given up on challenging this deal despite its serious harms,” said Free Press policy director Matt Wood. “Instead of forecasting its chances for approval, the groups signing this letter will keep fighting to block this merger, along with the guaranteed price increases it would foist on people and communities who can least afford it.

“If Charter gets this merger approved, nothing will stop it from raising its rates for high-speed broadband and video customers who have nowhere else to turn. Temporary promises and weak conditions aren’t going to preserve competition and choice in the long run, and they’re not going to do anything to stop these price hikes. The FCC is charged with promoting the public interest, and there’s no way in which this merger benefits the public. Higher prices and fewer choices won’t help anyone but the companies pitching this bad bargain.”

“If its takeover of Time Warner Cable goes through, Charter will have a broadband footprint as big as Comcast’s,” said Demand Progress executive director David Segal. “This would turn an industry that’s already too concentrated into a duopoly, paving the way for higher rates today and the eventual formation of a new cross-sector behemoth that controls content production and delivery.

“Americans increasingly understand that corporate concentration is jacking up prices and lowering quality for all sorts of basic goods and services. At a hearing of a Senate antitrust subcommittee this month, lawmakers made it clear that they see companies that are allegedly too big to fix in many industries, not just the banking sector. This FCC must now decide whether it wants to stem the swelling tide of concentration, or enable these monopolies.”

Free Press and Stop the Cap! contributed elements of this story.

Mediacom Promises $1 Billion Investment in Broadband Upgrades

logo_mediacom_mainMediacom, perennially rated America’s dead-last cable company by Consumer Reports’ annual subscriber surveys, will invest $1 billion over the next three years to combat increasing competition from AT&T and other telephone companies by improving its broadband service.

The chief goal of the upgrades is to introduce gigabit broadband speeds for nearly all of Mediacom’s three million customers across 22 states. The initiative, dubbed Project Gigabit, will require Mediacom to push fiber closer to customers and businesses and will depend largely on DOCSIS 3.1 technology.

Mediacom is already providing gigabit service in several communities in Missouri, including Jefferson City, where it sells 1,000/50Mbps service for $149.99 per month, with discounts available to customers bundling it with other services. Mediacom has placed a data cap on its gigabit tier of 6TB a month, with an overlimit fee of $10 per 50GB. The Missouri systems bond 32 downstream channels using DOCSIS 3.0 technology, and customers report speed test results averaging 980/60Mbps. In other areas, many Mediacom systems will be upgraded to DOCSIS 3.1 service as part of the gigabit rollout.

Mediacom gigabit

“From the time we acquired our first cable system in March 1996, Mediacom’s focus has always been to offer the smaller communities we serve the same communications and video services that are available in America’s largest cities,” said Mediacom’s founder and CEO, Rocco B. Commisso. “Project Gigabit will allow us to go even further by giving our customers access to one of the fastest broadband networks in the world.”

In addition to speed upgrades, Mediacom also plans:

  • Expansion of Mediacom Business’s high-capacity network inside downtown areas and commercial districts to create more “lit buildings” within the company’s footprint and bring tens of thousands of new business customers on-net with immediate access to fiber-based communications services;
  • Extension of Mediacom’s deep-fiber residential video, Internet and phone network to pass at least an additional 50,000 homes;
  • Deployment of community Wi-Fi access points throughout high-traffic commercial and public areas across Mediacom’s national footprint.
mediacom rating

Consumer Reports subscriber survey results for Mediacom

Customers hope the service improvements might finally lift Mediacom out of last place in consumer satisfaction scores, a rating it has maintained for several years.

Mediacom caps its Internet service and penalizes customers with a $10 per 50GB overlimit fee.

Mediacom caps its Internet service and penalizes customers with a $10 per 50GB overlimit fee.

Altice to New York Public Service Commission: Butt Out of Our Cablevision Buyout!

nosyBillionaire cable magnate and Swiss luxury property connoisseur Patrick Drahi excels at “take it or leave it” offers on behalf of Altice, the cable conglomerate he founded.

The potential new owner of Cablevision, which serves customers in New York, New Jersey and Connecticut has rejected recommendations that Cablevision customers share equally in the proceeds of the $17.7 billion deal. Altice’s lawyers have countered that 15% is more than enough.

Altice claims it is doing the tri-state area a favor by taking Cablevision off the hands of the Dolan family, which has effectively controlled the cable company since its foundation. Altice claims customers will get tangible benefits from the deal:

  • Broadband service at speeds up to 300Mbps in the future;
  • Discounted 30Mbps Internet access for the financially disadvantaged for $14.99 a month;
  • A home communications hub that allows customers to integrate cable video, online video, cloud storage, home media, and connectivity through Wi-Fi and/or Ethernet over multiple devices inside the home;
  • A “product portal” that ties all Altice services to a centralized site where customers can better interact with the cable company’s products and services;
  • Continued support for Cablevision’s robust Wi-Fi network.

Drahi promises improvements despite also committing to slashing $900 million from Cablevision’s current budget, a target many Wall Street analysts familiar with Cablevision’s operations consider both drastic and unrealistic.

Altice1Critics of the deal include consumer groups concerned about the poor performance of other Drahi-run cable systems and Cablevision’s organized labor force, unhappy about Drahi’s statements to Wall Street that he prefers to pay only minimum wage wherever possible. Drahi also has a long contentious history with Altice workers in Europe, presiding over workforce reductions, salary and benefits cuts, and a war of attrition with his own suppliers.

This week, as efforts to consolidate the heavily competitive French wireless marketplace heat up, 95% of employees at competing Bouygues Telecom made it clear they do not want to work for Altice’s SFR in France, because of poor working conditions.

Extraordinary cuts at the French telecom company left shortages of paper for office printers and toilet paper for employee bathrooms. Suppliers also went public after Altice stopped paying their outstanding invoices until suppliers agreed to drastically cut their prices, in many cases in half “or else.”

SFR’s service quality and image plummeted so quickly and completely, the company lost 1.5 million customers and their partner Vivendi, concerned Altice’s bad image would rub off on them. They sold their remaining 20 percent stake in SFR to Mr. Drahi.

Drahi

Drahi

“If Drahi had had a different style of management, we would have kept the 20% stake in SFR,” said one Vivendi insider at the time. “But he had very bad press as a result of his management style. We didn’t want to be associated with any of that.”

Suddenlink and Cablevision customers may not have much of a choice. Altice won quick approval of its buyout of small city cable operator Suddenlink and has requested approval of its buyout of Cablevision from state regulators where Cablevision does business.

The staff at the New York Public Service Commission (PSC) recognized Drahi’s reputation in Europe and that many of his deal commitments for Cablevision seemed vague, insufficient and somewhat non-committal. Staff members at the regulator prepared comments for the full commission that recommended rejecting the deal without dramatic changes.

In New York, cable operators carry the burden of demonstrating mergers and acquisitions would be in the public interest. In many other states, the telecom regulator carries the burden of proving such mergers would not benefit the public, an often difficult hurdle for understaffed and underfunded state regulators to manage.

optimumNew York regulators usually insist that state residents share in the proceeds of any sale that comes before the commission for review. In most cases, this is in the form of an agreement to invest in infrastructure or service improvements, improve customer service standards, and protect jobs. As with Time Warner Cable and Charter, the staff recommended the commission first consider a roughly 50/50 share of any deal savings or synergies, evenly split between customers and shareholders.

Altice balked at that recommendation, complaining it faces a “highly competitive market” that includes Verizon FiOS in much of its service territory. As a result, Cablevision customers deserved less… much less.

“[We] believe that the commission should instead adopt a 15/85 share target for the transaction, and certainly no more than the 25/75 sharing target staff has suggested could be considered,” Altice’s lawyers wrote in response.

Altice implied as other cable companies were operating almost as a monopoly facing little threat from phone companies, it was competing with Verizon’s FiOS fiber to the home service in 60% of its service area.

ny psc“The contrast between the competitive landscape faced by Cablevision as compared to other large cable operators in New York State is stark,” the lawyers wrote. “Verizon FiOS is available in just two Comcast communities, 3% of Time Warner Cable communities, and zero Charter communities in the state.”

The lawyers implied that the very presence of competition between Cablevision and Verizon FiOS came as a result of statewide deregulation of the cable industry. Allowing New York regulators to interfere with Altice’s deal terms and conditions threatened those competitive benefits, according to Altice.

“Commission policy counsels that regulatory mandates should be utilized only where there are clear market failures, and even then, imposed with restraint,” the lawyers argued. “Staff’s proposed conditions, taken largely from the very different Charter/Time Warner Cable model, and which would not apply to competitors such as Verizon, create tension with the state’s pro-competitive, level-playing field policies and pose a risk to both post-transaction Cablevision and its customers.”

Altice is maxing out its credit cards. (Image: FT)

Altice is maxing out its credit cards. (Image: FT)

Altice argues that because competition exists, “it is reasonable to assume that a substantial portion of synergy savings will be re-invested in network infrastructure and new technologies—including research and development associated with such investment—rather than simply returned to customers or shareholders.”

Except that has not proven true with other telecom operators. Last year, Comcast bought back more than $2 billion of its stock, or 35.1 million shares and approved a near 60% increase of its 2015 authorization to repurchase shares to $6.75 billion. In February, Comcast boosted its dividend payout to shareholders by 10% and planned to repurchase another $5 billion of its own stock during 2016. Last year, Verizon announced it was returning capital to its shareholders through a $5 billion accelerated share-repurchase program and raised its dividend payout to the highest level (56.5¢ per share) since at least 2000. From 2012-2014, AT&T paid out nearly $27 billion to investors through its own share repurchase program. This quarter, it announced a 48¢ share dividend payout, also the highest amount since at least 2000.

Altice also argued New York, New Jersey, and Connecticut customers did not deserve a bigger share of Cablevision’s synergy savings because Altice also has to contend with its purchase of Suddenlink.

“The Commission should instead take into consideration Suddenlink’s operations, which Altice acquired at the end of 2015, just as it took into account all of the U.S. entities comprising New Charter post-closing,” Altice’s lawyers argued. The hole in that argument, deal critics claim, is that Altice doesn’t extend the synergy savings from its deal with Suddenlink to anyone except itself.

Altice also pushed back on other PSC staff recommendations:

  • Altice does not want to provide standalone telephone and/or Lifeline service to Cablevision customers;
  • Altice objects to providing battery backup power for telephone services, but will allow customers to buy their own;
  • Altice protested recommendations from the PSC staff to ban usage caps/usage based billing as a condition of sale. Altice claims usage caps may benefit customers and objects to a rulemaking that prohibits Cablevision from imposing them while leaving their competitors free to cap at will. “Cablevision’s competitors are launching aggressive service offers that Cablevision will have to match or beat—and if the company is subject to regulatory restrictions its competitors do not face, it will be handicapped in keeping up with market demands,” Altice argued.
  • New York City should have no say whether this sale is approved or not, claiming the sale does not trigger the city’s right of review.

If the PSC is unimpressed with Altice’s arguments, the cable operator has one other: federal and state law prohibits the commission from imposing most of the terms and conditions its staff recommended. The presentation is unlikely to win much favor at the PSC, particularly because Altice concedes almost nothing and objects to nearly everything on the staff’s menu of deal conditions.

The Communications Workers of America has also attacked the deal, arguing much of Altice’s presentation to the PSC is less than meets the eye. The CWA notes Altice intends to erect a money silo around Cablevision, purporting to protect its finances and operations from the rest of Altice’s telecom empire. But that also means Altice will invest none of its own money in Cablevision upgrades and service improvements, relying on Cablevision’s existing resources, credit lines, and debt obligations to cover the costs. Considering Drahi’s management style, that is likely to drive up debt.

The Financial Times reports Altice has already run up debt, ballooning over the past two years from €1.7 billion in 2012 to just over €50 billion by the end of this year, assuming its acquisition of Cablevision goes through. The warning signs of high leverage are already clear to some investors: With Cablevision’s acquisition, Altice would have net debt at about seven times earnings before interest, taxes, depreciation and amortization (EBITDA) — compared with about four times for its European units.

With jitters over European banks, interest rates, oil and gas, and the general state of the stock market, investors are expressing concern.

“From a general valuation perspective, companies with high leverage start becoming a source of fear,” one Altice investor told the Financial Times.

The PSC will likely adopt many of the staff recommendations regardless of Altice’s objections if it approves the sale. Some of those conditions are likely to include broadband service improvements, a low-income discounted Internet access program, and coverage area expansion into currently unserved areas.

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