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AT&T’s Latest Sneaky Wireless Rate Hike

Always looking for a new angle.

Always looking for a new angle.

While T-Mobile and Sprint are preparing to battle it out offering dueling unlimited data plans, Verizon Wireless and AT&T are continuing to raise prices for many customers while pushing upgrades on customers some do not need.

This week, AT&T officially introduced its Mobile Share Advantage plan, with most of the advantages going to AT&T.

Per device fees have shot up by as much as 33% if you have more than two smartphones on your account. AT&T used to charge $15 per smartphone as a device fee. Now it is $20, offset in many cases by some reductions in data plan costs. But once you add a third device, you are paying a $5 rate increase per device.

The company is also trying to clean up its reputation by eliminating the scourge of data-related overlimit fee bill shock. Before the change, AT&T customers faced an overlimit fee of $5 for each 300MB used on its 300MB data plan and $15 per gigabyte on other plans. Instead of billing overlimit fees, AT&T is adopting punishing speed throttles for customers over their allowance. Once customers exceed their plan limit, speeds are reduced to 2G levels, up to 128kbps. While that is just painful for web pages, it makes watching video and uploading photos next to impossible without experiencing frustrating network timeout error messages.

Gone are the 2, 5, and 15GB plans. Customers can now choose from 12 different usage plans ranging from 1-100GB.

data plans att

But AT&T’s most conservative users of data are going to pay more under the new plan. Customers enrolled in the old 2GB $30 data plan, suitable for those who use their phones to check e-mail and view web pages, will find that same $30 will only buy them 1GB if they switch to the new plan. To avoid the likelihood of hitting the speed throttle, these customers will have to upgrade to a 3GB plan for $40 — a $10 increase.

For everyone else who happens to slightly exceed their data allowance, many may end up preferring the old $15 overlimit fee system. Under the new plan, customers have to live with speed throttles that make their devices almost unusable until the billing cycle refreshes. We predict many customers won’t wait and will upgrade their data plan to restore functionality. But upgrades from the 3GB and 6GB plans come in $20 increments — $5 more than the overlimit fee charged for slightly going over. Even worse, if the overage was a one-time issue, many customers will spend $20 more on a data allowance many probably won’t use.

Customers are free to keep their existing plan, for now. But if they change plans, they won’t be able to switch back.

Christmas in August: Calif. Allows AT&T to Fine Itself and Keep the Money

att400California’s Public Utilities Commission (CPUC) couldn’t get cozier with AT&T if they moved regulators into the phone company’s plush executive suites.

In a 3-2 decision, the CPUC has given California phone companies that cannot manage to keep their wireline networks in good order an early Christmas, allowing the companies to effectively fine themselves for bad performance and keep the money.

Although the CPUC adopted a series of “automatic fines” for companies with chronic service problems (AT&T is by far the largest offender), it completely negated any sting by allowing companies to skip the fine by demonstrating they’ve invested at least twice the amount of the penalty in their networks. That is an expense AT&T’s bookkeepers can manage to document in minutes just by highlighting AT&T’s investments in other parts of the state. AT&T can argue investments in gigabit fiber in southern California or wiring fiber to business parks and cell sites improves service reliability for at least some customers.

CPUC president Michael Picker isn’t in any hurry either, helpfully offering AT&T and other phone companies two years to complete the investments that will cancel their fines:

In support of a request to suspend the fine, carriers may propose, in their annual fine filing, to invest no less than twice the amount of their annual fine in a project (s) which improves service quality in a measurable way within 2 years. The proposal must demonstrate that 1) twice the amount of the fine is being spent, 2) the project (s) is an incremental expenditure with supporting financials (e.g. expenditure is in excess of the existing construction budget and/or staffing base), 3) the project (s) is designed to address a service quality deficiency and, 4) upon the project (s) completion, the carrier shall demonstrate the results for the purpose proposed. Carriers are encouraged to review their service quality results to find appropriate target projects to invest funds.

Consumer advocates have accused AT&T of underinvesting in their wireline facilities for years. Because the CPUC does not require the investment be specifically targeted to correcting problems that prompted the fine, phone companies can continue to allow high cost/low profit rural infrastructure to deteriorate while targeting service-improving investments in more profitable or competitive service areas.

Steve Blum from Tellus Venture Associates, who has closely tracked telecom public policy matters in California for years, called it the most cynical decision he’s ever seen from the CPUC:

Fines, it seems, are just another cost of doing business for telecoms companies and don’t matter anyway. So why not let them keep the money?

Boiled down, that’s CPUC president Michael Picker’s rationale for establishing new telephone voice service level requirements backed up by a swinging schedule of penalties and then saying but we’ll let you keep the money if you invest it in infrastructure or pay staff. Or something. Anything.

Picker

Picker

Commissioner Mike Florio called the Picker’s proposal “unenforceable.”

The CPUC’s own staff has documented the troubling condition of landline service in the state. A staff report published in September 2014 showed the largest phone companies in the state — AT&T and Verizon (later sold to Frontier Communications) — that control 88% of landlines in California never met the CPUC’s minimum standard of repairing 90% of “out of service” trouble tickets within 24 hours during 2010-2013.

In 2010 and 2011, AT&T and Verizon needed an average of 110 hours to repair 90% of outages. That is 4.5 days. In 2012 and 2013, repair time marginally improved to an average of 72 hours (3 days). That is three days without any phone service or the ability to call 911, something the CPUC staff said compromised public safety.

AT&T and Verizon have papered the CPUC’s walls with “corrective action reports” over the years explaining why they failed to meet CPUC standards and what actions they planned to take to improve compliance. The staff report found those reports never resulted in improved compliance.

Commissioner Catherine Sandoval submitted an alternative plan of simple fines and a reporting system that gives equal weight to outages occurring in areas served by independent phone companies like Citizens Telecommunications Company of California (d/b/a Frontier) and SureWest Telephone (d/b/a Consolidated Telephone). Picker didn’t bother to hold a vote on Sandoval’s proposal, instead bringing his own proposal to the commission that approved it on a 3-2 voice vote. Florio and Sandoval voted no.

Despite the easy out, the state’s phone companies are still complaining the fine system was unnecessary because the free market was best equipped to manage service outages. If customers don’t like their provider, they can switch, assuming there is another provider available in the large rural and mountainous parts of the state.

Charter’s Plans for Time Warner Cable, Bright House Customers Apparently Leaked

charter twc bhCharter’s plans for Time Warner Cable and Bright House Networks customers are now potentially clearer thanks to the apparent leak of several informational slides from a presentation given to employees to familiarize them with Charter’s forthcoming service plans.

A reader of DSL Reports in California shared what purports to be informational slides from a company training course. Los Angeles is among the first markets to be offered the new Charter/Spectrum service plans, likely to arrive as early as mid-September.

We’ve condensed the information down into a more readable format to give you an idea (subject to change, of course) about Charter’s pricing and plans. Existing customers may not need to give up their current plans right away, and some customers may not want to. Charter has recognized Time Warner Cable Maxx’s network upgrades in its plans and pricing, which means customers already upgraded for Maxx service will get better value from Charter’s plans than those customers who never made the upgrade list before Time Warner Cable was sold.

Keep in mind Charter will start by offering all “New Charter” customers a “new customer” promotion, priced low the first year and then increasing incrementally in price during the second and third years. Year three pricing will be equivalent to Charter’s regular price, which will be substantially higher than customers on Time Warner Cable customer retention plans have paid. Charter’s service plans offer improved broadband speeds, but at a significantly higher price. Standalone broadband customers in particular will feel an immediate sting. Charter’s entry-level price for most customers is $59.99 for 60Mbps, about $25 more than Time Warner Cable’s promotional rate for Standard 15/1Mbps service, which has been selling for about $35/mo for the first year. Charter will point out that it includes a cable modem for free while Time Warner Cable charged $10 a month, but that offers no solace to customers who have purchased their own equipment.

Please note these plans and prices have not been officially confirmed by Charter. In fact, we would not be surprised to see some pricing changes before the plans are officially available.

TELEVISION

spectrum selectThere are big changes in store from Charter. First, the company will end distribution and support for Digital Transport Adapters (DTAs) — the small boxes designed for older analog-only TV sets. Charter expects you to have a traditional set-top box on every cable-equipped TV in the house. Second, it seems Whole House DVR service is being discontinued. Charter prefers the alternative of placing DVR boxes on each set where you want to record and watch TV shows. There is a significant cost for Time Warner Cable to install Whole House DVR service and it involves a technician coming to your home. Charter seems to want to cut truck roll expenses, and traditional DVR boxes are easy for customers to install themselves.

DVR pricing is still confusing for customers. A single DVR box is priced at $4.99 for the equipment + an $11.99 DVR service fee. DVR’s 2-4 cost $4.99 per box + a $19.99 DVR service fee. We are not sure if the $19.99 inclusively covers all DVR boxes in the home or if that is charged for each additional DVR. (Update: STC reader Ricardo reports the $19.99 fee is inclusive, so it is only charged once regardless of how many extra DVRs you have.)

For the first year, traditional set-top boxes for New Charter customers are a bargain at $4.99/mo. Legacy Charter customers pay $2 more, and we predict you will pay more as well after the first year, but the equipment fees are less than what Time Warner Cable charged.

Customers will choose from three plans: Select, Silver, or Gold:

  • Select: 125+ channels (HD included), Spectrum App (comparable to TWC TV app), 10,000+ On Demand Library ($64.99)
  • Silver: 175+ channels (HD included), Spectrum App, On Demand, HBO, Cinemax, Showtime, NFL Network ($84.99)
  • Gold: 200+ channels (HD included), Spectrum App, On Demand, premiums shown above + TMC, Starz, Encore, Epix, NFL Redzone ($104.99)

Charter’s pricing is built to encourage customers to bundle multiple services together, because substantial discounts are provided, especially when combining TV and internet service.

INTERNET

(Image courtesy of Tech_Guy 88/DSL Reports)

(All presentation slide images courtesy of Tech_Guy 88/DSL Reports)

Charter moves to just two tiers of service available to the public (except in New York where TWC’s $14.99 Everyday Low Price Internet continues to be an option for the next two years — although it has been removed from TWC’s website) and standalone broadband pricing is considerably more expensive with Charter than with Time Warner Cable.

Perhaps special promotional offers will bring standalone internet prices closer to the $34.95-39.95 most new customers have gotten for Time Warner’s Standard Service (15/1Mbps) for years. We expect most customers will be more sensitive to price vs. speed and standalone internet at these prices will be a shock. We are not certain if Earthlink will continue to be an alternative option.

Upload speeds in non-Maxx areas are conservative, if these slides are accurate, topping out at just 5Mbps. This still leaves Charter as one of the slower U.S. providers.

In TWC Non-Maxx Areas (maximum TWC speed now 50/5Mbps):

  • Spectrum Internet 60/5Mbps: Standalone $59.99/mo or $29.99 as part of a triple play package (first year promo price), $59.99 standalone or $53.99 as part of a bundle (regular price);
  • Spectrum Ultra 100/5Mbps: Standalone $119.99/mo or $99.99 as part of bundled package (first year promo price), $119.99 standalone or $113.99 as part of a bundle (regular price).

In TWC Maxx Territories (maximum speed now 300Mbps):

  • Spectrum Internet 100/10Mbps: Standalone $59.99/mo or $29.99 as part of a triple play package (first year promo price), $59.99 standalone or $53.99 as part of a bundle (regular price);
  • Spectrum Ultra 300/20Mbps: Standalone $119.99/mo or $99.99 as part of bundled package (first year promo price), $119.99 standalone or $113.99 as part of a bundle (regular price)

Spectrum Wi-Fi, for those without their own routers, can be added to any internet plan for a $9.99 setup charge and $5 a month.

spectrum assistCharter’s discount plan for the income-challenged carries the usual restrictions. The most unconscionable effectively forces current Charter customers to go with internet access for 60 days before they can enroll in Spectrum Internet Assist. They also must not owe any past due balance to Charter.

Assuming you qualify (eligible for the National School Lunch Program and senior citizens 65 years and older eligible for the federal Supplemental Security Income program), $14.99 will get you up to 30/4Mbps, plus an extra $5 a month if you want Charter to supply a Wi-Fi enabled router. The usual $9.99 activation fee is waived. Self-installation is free. If they have to send a truck to your home, the prevailing standard installation rate will apply. This is the only level of service Charter sells that will not require a credit check.

PHONE

Time Warner’s phone service had been promoted for years at $10 a month as part of a double-play or triple-play bundle. Charter’s triple play bundle pricing seems to show the price for phone service will now be effectively $20 a month.

Charter’s digital phone service has never seemed to be a marketing priority for Charter in its legacy service areas, and will likely be treated as an afterthought going forward. No further information about any service or calling area changes from what Time Warner Cable offered is available yet.

Unlimited Data is Back (With Fine Print): T-Mobile/Sprint Push Unlimited Data Plans for All

Tmo1LogoSeveral years after wireless unlimited data plans became grandfathered or riddled by speed throttling, America’s third and fourth largest carriers have decided the marketplace wants “unlimited everything” after all and is prepared to give customers what they want, at least until they read the fine print.

T-Mobile Announces “The Era of the Data Plan is Over”: T-Mobile ONE

T-Mobile CEO John Legere used a video blog to announce a major shakeup of T-Mobile’s wireless plans this morning, centered on the concept of “unlimited everything.”

“The era of the data plan is over,” said Legere. T-Mobile’s new plan — T-Mobile ONE — does away with usage caps and usage-based billing and offers unlimited calls, texting, and data on the company’s 4G LTE network. The plan becomes available Sept. 6 at T-Mobile stores nationwide and t-mobile.com for postpaid customers. Prepaid plans will be available later.

tmoone

“Only T-Mobile’s network can handle something as huge as destroying data limits,” said Legere. “Dumb and Dumber can’t do this. They’ve been running away from unlimited data for years now, because they built their networks for phone calls, not for how people use smartphones today. I hope AT&T and Verizon try to follow us. In fact, I challenge them to try.”

Legere

Legere

T-Mobile claims the savings with its unlimited plan are enormous compared to its bigger competitors AT&T and Verizon Wireless.

Verizon’s largest LTE usage-capped data plan would cost a family of four $530/month. That’s $4,440 more than T-Mobile ONE will charge.

T-Mobile ONE costs $70 a month for the first line, $50 a month for the second, and additional lines are $20 a month, up to 8 lines with auto pay (add $5 per line if you don’t want autopay). Customers can add tablets for an extra $20 a month.

T-Mobile does offer some caveats in the fine print which are relevant to customers:

  • All video streaming on this plan is throttled to support a maximum of 480p picture quality. Higher video quality is available with an HD add-on plan for $25/mo per line;
  • Tethering is included with T-Mobile ONE, but it is painfully speed-limited to 2G speeds — around 70kbps, just a tad faster than dial-up. At that speed, a web page that will take less than five seconds to load on a 4G network will take 17-25 seconds. A 60 second YouTube video will take nearly five minutes to watch, and downloading apps or sharing images is often impossible because of timeouts. If you want 4G tethering, that will be $15 a month for 5GB, please;
  • Customers identified as among the top 3% of data users, typically those who use more than 26GB of 4G LTE data a month will find themselves in the same data doghouse T-Mobile’s Simple Choice customers are in. That means during peak usage periods on busy cell towers, heavier users are deprioritized on T-Mobile’s network, but we’re not sure if that results in slight speed reductions or the kind of drastic 2G-like experience these kinds of “fair usage” policies often deliver.

Our analysis:

bingeonWhile we’re happy to see unlimited data plans return to prominence, T-Mobile is continuing to punish high bandwidth applications, tethering, and usage outliers with frustrating speed throttles.

T-Mobile’s biggest source of increasing traffic is coming from online video. About a year ago, Legere introduced T-Mobile’s Binge On program, which offers streaming video from T-Mobile’s partners without it counting against your usage allowance. This program had the potential of causing problems with the Federal Communications Commission’s Net Neutrality rules.

Legere seemed to avoid trouble by revealing enough information about Binge On to make it clear why the program exists — to reduce video traffic’s impact on T-Mobile’s network. That might seem counterintuitive until one looks at what it takes to be a Binge On partner — allowing T-Mobile’s Binge On-related traffic to be “optimized” to Standard Definition video (around 480p). No money changes hands between T-Mobile and its Binge On partners.

T-Mobile makes it easy to be a BingeOn participant.

T-Mobile makes it easy to be a Binge On participant.

Binge On was an important factor in freeing up bandwidth on T-Mobile’s network. Some analysts suggest two-thirds of T-Mobile’s video traffic load disappeared after Binge On was introduced. Video is likely the single biggest bandwidth consuming application on wireless networks today. If a customer is watching on a smartphone or even a small tablet, 480p video is generally adequate and has a lower chance of stopping to buffer.

slowAnother clue about the impact of online video on T-Mobile’s network is the same video throttling strategy is built into T-Mobile ONE and applies to all online video, whether the provider partners with T-Mobile or not. Also consider the extraordinary cost of the optional HD Video add-on, which defeats video throttling: a whopping $25 per month per device. That kind of pricing clearly suggests 1080p or even 4K video is a major resource hog for T-Mobile, and customers looking for this level of video quality are going to pay substantially to get it.

T-Mobile is also clearly concerned about tethering, relegating hotspot and tethered device traffic to 2G speeds, which will quickly deter anyone from depending on it except in emergencies. Again, traffic is the issue. Some semi-rural customers unserved by cable but able to get a 4G signal from a T-Mobile tower may think of using T-Mobile as their exclusive source of internet access. At speeds just above dial-up, they won’t consider this an option.

We’re also disappointed to see 26GB of usage a month as the threshold for potential speed throttling. T-Mobile ONE is not cheap, and without more detailed information about how often those exceeding 26GB face speed slowdowns, how much of a slowdown, and how quickly those speed reductions disappear when the tower gets less congested would be very useful. Until then, customers are likely to interpret 26GB as a type of soft usage allowance they will not want to exceed.

T-Mobile ONE also delivers a powerful signal to Wall Street because it raises the lowest price a T-Mobile postpaid customer can pay to become a customer from $50 to $70 a month for a single line. That’s quite a burden for some customers who will have to look to prepaid plans or resellers to get cheaper service. Other carriers rushed to meet T-Mobile’s $50 2GB plan when it was introduced, which has served as an entry-level price range for occasional data dabblers. If those carriers don’t immediately raise prices as well, they will undercut T-Mobile. That could provoke an increase in cancellations among customers buying on price, not plan features. T-Mobile is banking consumers will appreciate unlimited data enough to pay extra for peace of mind.

Jackdaw Research found customers enrolled in 2GB and 6GB T-Mobile plans, T-Mobile ONE represents a price increase. Those signed up for 10GB or unlimited service will pay the same or slightly less with T-Mobile ONE.

Jackdaw Research found customers enrolled in 2GB and 6GB T-Mobile plans will see a price increase with T-Mobile ONE. Those signed up for 10GB or unlimited service will pay the same or slightly less.

sprintlogoSprint: Unlimited Freedom: Two Lines of Unlimited Talk, Text, and Data for $100/month

Not to be outdone by T-Mobile, Sprint CEO Marcelo Claure today announced his own company’s overhaul of wireless plans, featuring the all-new Sprint Unlimited Freedom plan, which offers two lines of unlimited talk, text and data for $100 a month, with no access charges or hidden fees.

Starting Friday, Aug. 19, Sprint customers can sign up for the new plan, which costs $60 for the first line, $100 for two lines, and $30 for each additional line, up to 10. Sprint pounced on the fact its Unlimited Freedom plan for two is $20 less than T-Mobile charges.

Otherwise the two plans are remarkably similar — too similar for the CEOs of both companies that spent part of today engaged in a Twitter war.

T-Mobile CEO John Legere and Sprint CEO Marcelo Claure traded tweet barbs this morning.

T-Mobile CEO John Legere and Sprint CEO Marcelo Claure traded tweet barbs this morning.

“Sprint’s new Unlimited Freedom beats T-Mobile and AT&T’s unlimited offer – only available to its DirecTV subscribers – while Verizon doesn’t even offer its customers an unlimited plan,” read Sprint’s press release.

unlimited freedom“Wireless customers want simple, worry-free and affordable wireless plans on a reliable network,” said Marcelo Claure, Sprint president and CEO. “There can be a lot of frustration and confusion around wireless offers, with too much focus on gigabytes and extra charges. Our answer is the simplicity of Unlimited Freedom. Now customers can watch their favorite movies and videos and stream an unlimited playlist at an amazing price.”

Sprint has also essentially joined the T-Mobile optimization bandwagon, limiting streaming video to 480p, but it goes further with optimization of games — limited to 2Mbps, and music — limited to 500kbps. There does not seem to be any option to pay more to avoid the “optimization” and Sprint is not offering a tethering option with this plan.

“While we initially questioned using mobile optimization for video, gaming and music, the decision was simpler when consumers said it ‘practically indistinguishable’ in our tests with actual consumers,” said Claure. “In fact, most individuals we showed could not see any difference between optimized and premium-resolution streaming videos when viewing on mobile phone screens. Both provide the mobile customer clear, vibrant videos and high-quality audio. Mobile optimization allows us to provide a great customer experience in a highly affordable unlimited package while increasing network efficiency.”

sprint

boostAlso, beginning Friday, Aug. 19, Sprint’s leading prepaid brand, Boost Mobile introduces its own unlimited offer, Unlimited Unhook’d:

  • Unlimited talk, text and optimized streaming videos, gaming and music
  • Unlimited nationwide 4G LTE data for most everything else
  • $50 a month for one line
  • $30 a month for a second line up to five total lines

In addition to the Unlimited Unhook’d plan, Boost Mobile will also unveil the $30 Unlimited Starter plan, which includes unlimited talk, text and slower network data (2G or 3G) with 1GB of 4G LTE data. Customers looking for more high-speed data can add 1 GB of 4G LTE data for $5 per month or 2 GB of 4G LTE data for $10 per month. Multi-line plans are also available for families looking to save some money for an additional $30 a month per line.

“There’s a lot of confusion and clutter in prepaid, but is doesn’t have to be that way. Boost Mobile is offering the simplest solution with plans that are easy to understand,” said Claure. “Boost has something for everyone, whether you need a truly unlimited plan with 4G LTE data or want to save extra money with a low-cost plan.”

Meet North Carolina’s Sen. Thom Tillis (R-ALEC/Time Warner Cable)

Tillis was honored in 2011 as ALEC's "Legislator of the Year" and received an undisclosed cash reward.

Tillis was honored in 2011 as ALEC’s “Legislator of the Year” and received an undisclosed cash reward.

Back when we first became aware of Republican member of the North Carolina legislature Thom Tillis around 2010, he was hard at work building his political future just as Republicans were poised to take control of the state legislature for the first time since the days of Reconstruction. Despite running unopposed in 2010, Tillis raised more money from cable and phone companies than any other lawmaker in the state, depositing $37,000 before knowing he would be the next Speaker of the North Carolina House of Representatives in January 2011. To celebrate, AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 just a few weeks before the swearing-in ceremony. It was money well spent, if you were a cable or phone company doing business in North Carolina.

Tillis left the legislature in 2015 to become the junior U.S. Senator from North Carolina. The telecom industry made sure to keep the campaign contributions flowing, if only to give their thanks for Tillis’ unwavering support for their agenda. Tillis doesn’t care much for his rural constituents still waiting for something better than dial-up internet access and as long as his campaign coffers remain bulging with corporate contributions, he doesn’t think he has much to fear from the state’s voters either. After all, he survived accusations from a resigning House Finance chairman that he had a secret business relationship with Time Warner Cable.

Raleigh’s The News & Observer felt it was their duty to mention Tillis in their editorial pages anyway, taking him to task for “cheering a loss for North Carolina consumers last week after a federal appeals court upheld a cable company protection law that he supported as state House speaker in 2011.”

The newspaper is talking about North Carolina’s infamous anti-public broadband bill that was literally constructed by lobbyists working for Time Warner Cable. The law effectively made it impossible for community broadband providers to bring their much-needed service to adjacent communities that have waited more than a decade for companies like Time Warner Cable, AT&T, CenturyLink and others to offer internet access in rural and underserved parts of the state.

Tillis personally helped shepherd the corporate protection bill, designed to shield incumbent cable and phone companies from community competition, through the state legislature, supporting it every step of the way. It would become law in 2011 and rural broadband in North Carolina hasn’t gotten any better since. In fact, it’s almost stagnant. But Tillis cannot say the same thing about his campaign bank accounts, which continue to bulge with corporate donations now in excess of $11 million.

An effort by the Federal Communications Commission to pre-empt the state law failed in a federal appeals court, much to the delight of Thom Tillis, something the newspaper calls an “insult” to North Carolinians looking for a better deal.

“Today’s ruling affirms the fact that unelected bureaucrats at the FCC completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hard-working taxpayers and maintain the fairness of the free market,” Tillis said in a statement. Cough, cough.

The newspaper’s response:

Translation: Time Warner and other companies, thank goodness, will retain control of the market without having to worry about towns competing with them and thus will be able to charge people whatever the market will bear.

For Tillis to say the court ruling, which should be appealed, is a triumph for taxpayers is preposterous. It’s a setback. The “free market” he backs is one free of competition from municipal broadband services that offer a better product at a lower price.

French Unions, Media Warn America: Beware of Altice!

Look what's in the box. MergeMaster Patrick Drahi. (Illustration: Michel Kichka)

Look what’s in the box. MergeMaster Patrick Drahi. (Illustration: Michel Kichka)

Cable conglomerate baron Patrick Drahi promised American, French and Portuguese consumers he would bring them value for money by taking control of large established telecom companies in both countries and revamp their products and services to bring improved service. Consumer advocates in all three countries continue to argue customers are still waiting for Drahi’s debt-laden Altice empire to deliver on its promises.

A flurry of mid-summer articles in the French media continue to acknowledge Drahi’s formula has brought results — for him and his top executive minions, but has caused headaches for employees, customers, and even the government.

The biggest firestorm involves Altice-owned SFR’s newly-announced plan to slash at least 5,000 more jobs at France’s fourth-largest mobile operator, which also provides wired cable-TV and broadband services in parts of the country. That represents at least one-third of SFR’s total workforce. The planned cuts run so deep, some in the French press call them “violent.” These new cuts are on top of the 1,200 jobs Drahi cut when he took control of SFR two years ago. An Altice executive warned that if they still perceive to be “fat on the bone,” there will be further cuts after that, presumably starting in 2019.

The job cuts have raised the ire of some in the French press because one of the conditions of Altice’s takeover of SFR was a commitment not to cut jobs. But some reporters may have missed the fine print negotiated with regulators  — the job protection agreement expires in July 2017, after which Drahi can slash at will. And he will.

Investment banks love it. American and European banks have loaned €50 billion ($55 billion) — a record amount — to Drahi to buy up telecom companies on a virtual credit card and deliver short-term results by slashing expenses, which at least temporarily boosts profits. When customers find out the implications of the draconian cuts, they complain and tend to leave. But savvy investors learn how to cash out before that happens, often walking away with huge returns. Such methods have been business-as-usual in the United States for a long time. But Drahi has improved on the old formula of relying on OPM – Other People’s Money – to build his empire.

Altice1Some of the money flowing through Altice’s coffers comes from the French taxpayer, currently footing the bill for unpopular French President François Hollande’s key measure to boost the competitiveness of French companies — the Tax Credit for Competitiveness and Employment (CICE), which significantly cuts employer’s labor expenses. Altice has been a grateful recipient of this gift from French taxpayers, who pay for it through new ecological taxes and an increase in Value Added Tax (VAT) rates, which like our sales tax, applies to goods and services one buys. The standard VAT rate in France is now 20%, with 10% charged on restaurant meals, transport, renovation/improvement works and certain medical drugs, and 5.5% on food, water and non alcoholic beverages, books, special equipment for the disabled and school meals. The other half of the money spent implementing the CICE came from decreased public spending on infrastructure and social service programs. Take from the poor and middle class and give to the corporations, Hollande’s critics claim. The program was supposed to protect employment, but critics say it has had little or no effect beyond enriching large corporate conglomerates who hire and fire for their own reasons, and are not particularly concerned about what that could do to future government payouts.

French newspaper l’Humanité is calling on the government and Mr. Drahi to account for his use of taxpayer-funded CICE aid. The paper demands the Hollande government to disclose exactly how much Altice’s SFR has received from the program.

Unemployment office in Connecticut

Unemployment office in Connecticut

Altice continues to claim the job cuts will be voluntary — a suggestion scoffed at by employee unions in both France and Portugal, where Altice operates telecommunications companies. In addition to asking Altice-owned Suddenlink and Cablevision employees whether the recent sudden separation from their paychecks was voluntary, unions claim they have the benefit of past experience.

“When they say ‘no job cuts’ and 1,200 have already been cut over the past 18 months, how can we trust them?” asked Frederic Retourney, a spokesman for the CGT-FAPT employee union. “We know that voluntary redundancies are made under duress in most cases. When SFR announces 5,000 job cuts when there are 14,400 employees at the company now, we do not see how one can speak of voluntary departures.”

The job cuts at Altice’s U.S. operations — Suddenlink and Cablevision — have just begun. In a filing with the Connecticut Department of Labor, Altice disclosed it is issuing a total of 587 termination notices in that state — 482 call center workers in Shelton who will lose their jobs Nov. 1 and another 105 in Stratford leaving in two waves Oct. 14 and Dec. 15. Cablevision’s chief Connecticut competitor Frontier Communications is turning Altice’s lemons into Frontier’s lemonade by capitalizing on the job cuts with a quickly organized media push for a job fair on Aug. 31 in New Haven targeting the soon-to-be-former Cablevision workers.

Frontier will hold interviews for the former Altice call-center workers and field technicians. The alternative, if those former Cablevision workers still want to work for Altice, is to move to New York or New Jersey and hope their jobs don’t get cut again. With Frontier, they can stay in Connecticut.

madagascarAltice-owned SFR Francophone call center workers face even bigger challenges from relentless demands for cost cuts. In 2015, Altice announced it was open to relocating its Moroccan-based customer care call center to Madagascar, a large and severely economically depressed island nation off the eastern coast of southern Africa. Drahi, who told Wall Street he likes to pay as little as he can in salaries, is evidently upset labor costs in Morocco now force Altice to pay salaries up to €500 a month ($560). The company said it was open to seeking solace hiring French-fluent replacement workers in Antananarivo, Madagascar’s capital city, where the average annual salary is $260. In contrast, Connecticut call center workers make an average of $14.80/hour, according to Indeed.

Connecticut State Rep. Laura Hoydick (R-Stratford) acknowledges employee life with Altice in charge of Cablevision may be a tough ride.

“Having gone through unemployment with family members — and now me — emphasizes how the Cablevision employees are nervous for their livelihood and existence,” Hoydick told The Hour. “I thought it was great that the Frontier folks saw that there was an already-trained workforce here in Connecticut.”

Other state Republicans are attempting to blame Democratic Gov. Dannel P. Malloy for Cablevision’s job cuts, characterizing them as evidence employers are fleeing the high taxes and expenses associated with running a business in Connecticut.

“People are making a choice: ‘Do I stay in Connecticut and weather the storm, or do I move out of the state?’” said state Rep. Jason Perillo (R-Shelton).

lexpressFor now, those decisions are mostly made by Altice’s cable company call center workers and some members of middle management. But Patrick Drahi’s long-term plan to conquer the media business depends on implementing his “convergence” strategy, which means owning and controlling not only the means of distribution, but also the product being distributed. l’Humanité compared Drahi’s business to a multibillion cephalopod, with octopus-like tentacles extending his control and influence well beyond the cable business.

In France, he is accomplishing his mission by buying up cable networks, newspapers, and other media outlets which he packages together. Now a customer doesn’t just buy cable TV — he buys TV, internet, phone, the daily newspaper, and magazines for one flat price. For about $22 a month, SFR customers get unlimited digital access to 17 newspapers and magazines including Libération, l’Express, and l’Expansion. Then you can watch Drahi’s new sports channels and local news channel — all owned by Altice. Drahi told the French Senate his new bundled media model could “save the press.” But dig a little deeper and you discover Drahi’s altruism is considerably more limited.

By bundling everything together, the Altice-owned businesses each enjoy the enormous benefit of having their products taxed at the special press VAT rate of 2.1%, down from the usual 20% that would be otherwise owed. Altice pockets the savings for itself — a considerable boost in gross revenue.

More conservative investors worry about how Altice is managing to pay for all of its acquisitions and still manage to cover its existing massive debt, especially as Drahi plots to bring his model to the United States. His goal in America: to create the largest or second-largest telecom company in the country. Worried shareholders have been placated by the news massive layoffs are in SFR’s future, with the cost-savings they bring. Those still not satisfied were quieted after Numericable, another Altice concern, borrowed almost two billion dollars and raided Altice’s treasury for another billion to finance a dividend payout to shareholders worth more than $2.5 billion. Of course, Mr. Drahi himself is among the top recipients.

Consumer Groups to Tom Wheeler: Keep Pushing Forward on Real Reforms

Wheeler

Wheeler

One of the biggest surprises of the Obama Administration has been FCC chairman Thomas Wheeler, whose industry background made his appointment immediately suspect among consumer advocates, including Stop the Cap!

But over the last few years of his tenure, he has built one of the strongest pro-consumer records of accomplishments the commission has seen in decades. Not only has Wheeler outclassed Kevin Martin and Michael Powell — the two chairmen under the prior Bush Administration, he has also demonstrated strong conviction and consistency lacking from his immediate predecessor, Julius Genachowski. Wheeler has won praise from consumer groups after pushing through Net Neutrality, adding stronger terms and conditions to the Charter-Time Warner Cable-Bright House merger to extend a ban on usage caps for seven years, discouraging more wireless provider mergers, and several other pro-consumer measures dealing with persistent problems like phone bill cramming.

Many top telecom executives and lobbyists and many Republican members of Congress have been highly critical of Mr. Wheeler and have bristled at media reports suggesting he might not exit with the outgoing Obama Administration. More than a few have hinted they would like to see Wheeler depart sooner than later.

The Wall Street Journal is now questioning whether Wheeler can complete at least three more of his important agenda items before President Obama’s term ends early next year.

His “open standards” for set-top boxes reform is mired in a full-scale cable industry push-back, efforts to impose strong privacy rules on what cable and phone companies do with your private information apparently violates Comcast’s right to offer you a discount if you agree to let them monitor your online activity, and even an effort to clean up business telecommunications service rules has met opposition, mostly from the companies that are quite happy making enormous profits with the rules as written today.

“Chairman Wheeler has accomplished a lot during his tenure, but with the election fast approaching, he probably has time to get one more big thing done,” Rep. Frank Pallone of New Jersey, the top Democrat on the House Energy and Commerce Committee, told the newspaper.

Some Republicans in the Senate are holding up a vote on a second 5-year term for Democratic Commissioner Jessica Rosenworcel after hearing media reports Wheeler may be thinking of remaining as FCC chairman after the end of the Obama Administration. Wheeler’s term doesn’t expire just because the president that appointed him leaves office, but it would be unusual for Wheeler to stay. But then a lot of traditions in Washington are not necessarily good ideas and we see no reason to hurry Wheeler out of his chairmanship. The chances we will get someone as tenacious as Mr. Wheeler has proven to be from the next president is unlikely. Those blocking the vote on Ms. Rosenworcel are playing the usual Washington power games, simply looking for a commitment Wheeler will leave with President Obama.

Wheeler has few allies among Republicans, who don’t like his Net Neutrality policies, don’t want Wheeler’s open-standard set-top box plan, and believe he is a regulator more than a preferred deregulator. Rosenworcel has recently been wavering on support for Wheeler’s set-top box plan and his internet privacy plan, which worries us because her vote is critical to assure passage. Rosenworcel could be trying to be seen as an independent to improve her chances at winning reappointment, but she risks alienating consumer groups if she sides with the two Republican FCC commissioners, who have shown themselves to be engaged in almost open warfare against consumers. Rosenworcel would do better to vote with consumers and avoid any appearance she is more interested in protecting her position in Washington.

“Sure, there are headwinds, but that’s often a sign that they’re doing something right,” Todd O’Boyle, program director for the media and democracy reform initiative at Common Cause told the newspaper. “There’s reason to think that the FCC will advance all three reforms.”

As far as Mr. Wheeler, as long as he represents the interests of the American people over those of AT&T and Comcast, he should feel free to stay as long as his term allows.

Technical Matters

Phillip Dampier August 4, 2016 Editorial & Site News 3 Comments

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Editorial: N.Y. Governor’s Broadband Initiative Saddles Us With a Slower Internet

Thanks, Gov. Cuomo

Thanks, Gov. Cuomo

In Gov. Andrew Cuomo’s zeal to take credit for broadband enhancements across New York State, he also took partial-credit for convincing Charter Communications to speed its plan to deliver internet speeds of 100Mbps across upstate New York by early 2017, calling it “sweeping progress toward achieving its nation-leading goal of broadband for all.”

Unfortunately for New Yorkers, the governor forgot to mention his plan, coupled with the state government’s approval of Charter’s merger with Time Warner Cable, will actually result in slower and more expensive broadband for all of upstate New York.

“Access to high-speed internet is critical to keeping pace with the rising demands of the modern economy,” said Gov. Andrew Cuomo. “The New NY Broadband Program is advancing our vision for inclusive, interconnected communities that empower individuals, support small businesses, and advance innovation. These actions are a major step forward in creating the most robust broadband infrastructure network in the nation, and ensuring that reliable, high-speed internet is available to all New Yorkers.”

While the governor’s goals for rural broadband expansion in New York are laudable and have actually produced significant results, his belief in Charter’s broadband enhancement plan is misplaced and will actually leave cities in upstate New York at a serious broadband speed disadvantage that could remain an indefinite problem.

It is difficult to admit that New York was better off leaving Time Warner Cable as the dominant cable operator in New York State. As we warned last fall in our testimony to the N.Y. Public Service Commission, Charter’s merger proposal included promises of broadband enhancements considerably less robust than what Time Warner Cable had already undertaken on its own initiative. Time Warner Cable Maxx would have brought upstate New York free speed upgrades ranging from 50/5Mbps for Standard internet customers (up from 15/1Mbps) to 300/20Mbps (up from 50/5Mbps) for customers subscribed to Time Warner’s Ultimate tier.

Charter only advertises its 60Mbps tier. You have to dig to discover they also sell 100Mbps, for $100 a month and a $200 installation fee.

Charter only advertises its 60Mbps tier. You have to dig through their website to discover they also sell 100Mbps, for $100 a month and usually a $200 installation fee.

Charter this week made it clear those Maxx upgrades are dead, except in areas where they have already been introduced. Instead, upstate New York (and likely other Maxx-less areas around the country) will get two internet speed tiers instead: 60 and 100Mbps.

Getting 100Mbps is better than 50Mbps, at least until you check the price. Customers should be sitting down for this. Charter’s 100Mbps tier costs $100 a month after a one-year promotional rate and often includes a one-time $200 installation fee. In contrast, Time Warner Cable charges about $65 a month for 300/20Mbps internet-only service, which incrementally rises after one year if you don’t threaten to cancel service. There is usually no installation or upgrade fee.

This is the “benefit” Gov. Cuomo is touting?

In fact, with Charter Communications to be the overwhelmingly dominant cable operator throughout upstate New York, this leaves cities like Buffalo, Rochester, Syracuse, Albany, and Binghamton in a relative broadband swamp. While cities of similar sizes in other states are qualifying for Google Fiber, AT&T’s gigabit fiber upgrade, or fiber to the home service from community-owned broadband providers, Charter’s competition includes a barely trying Frontier Communications which still offers little more than slow speed DSL, Verizon Communications which stopped expanding FiOS in New York (except Fire Island) in 2010, and a handful of small independent phone companies and fiber overbuilders serving very limited service areas.

Charter is still required to offer 300Mbps service… by 2019 in New York as part of a commitment to regulators we fought for and won. That represents a speed equal to Time Warner Cable Maxx, but Charter has three years to offer what many New Yorkers either already had or were slated to get by next year from Time Warner Cable for much less money.

It takes chutzpah to proclaim broadband victory from this kind of avoidable defeat. Gov. Cuomo’s plan for better broadband allows Charter to cheat millions of New Yorkers out of Time Warner’s much better upgrade that was scheduled to be finished this summer in Central New York and ready to commence in Rochester this fall and Buffalo early next year. The governor should be on the phone with Charter management today insisting that all of New York get the 300Mbps internet service Time Warner Cable was planning for this state. Anything less leaves New York worse off, not better.

Consider again this cold, hard reality: Time Warner Cable was the better option — that is how bad things are in New York.

Upstate cities considering their economic future must not rely on the state or federal government to solve their broadband problems. Considering what Charter and Gov. Cuomo are proposing, waiting for the cable company to make life better isn’t a solution either. The only alternative is for local community leaders to start taking control of their own broadband destiny and launch community-owned, gigabit-capable, fiber to the home service. Charter won’t do it, Frontier can’t, and Verizon is too busy making piles of money from its wireless network to worry if your city will ever have 21st century internet access it needs to compete in the digital economy.

Verizon 5G: Finally a “Fiber” Broadband Service Verizon Executives Like

verizon 5gIt wasn’t difficult to understand Verizon’s sudden reticence about continuing its fiber to the home expansion program begun under the leadership of its former chairman and CEO Ivan Seidenberg. Starting his career with Verizon predecessor New York Telephone as a cable splicer, he worked his way to the top. Seidenberg understood Verizon’s wireline future as a landline phone provider was limited at best. With his approval, Verizon began retiring decades-old copper wiring and replaced it with fiber optics, primarily in the company’s biggest service areas and most affluent suburbs along the east coast. The service was dubbed FiOS, and it has consistently won high marks from customers and consumer groups.

Seidenberg

Seidenberg

Seidenberg hoped by offering customers television, phone, and internet access, they would have a reason to stay with the phone company. Verizon’s choice of installing fiber right up the side of customer homes proved highly controversial on Wall Street. Seidenberg argued that reduced maintenance expenses and the ability to outperform their cable competitors made fiber the right choice, but many Wall Street analysts complained Verizon was spending too much on upgrades with no evidence it would cause a rush of returning customers. By early 2010, Verizon’s overall weak financial performance coupled with Wall Street’s chorus of criticism that Verizon was overspending to acquire new customers, forced Seidenberg to put further FiOS expansion on hold. Verizon committed to complete its existing commitments to expand FiOS, but with the exception of a handful of special cases, stopped further expansion into new areas until this past spring, when the company suddenly announced it would expand FiOS into the city of Boston.

Seidenberg stepped down as CEO in July 2011 and was replaced by Lowell McAdam. McAdam spent five years as CEO and chief operating officer of Verizon Wireless and had been involved in the wireless industry for many years prior to that. It has not surprised anyone that McAdam’s focus has remained on Verizon’s wireless business.

McAdam has never been a booster of FiOS as a copper wireline replacement. Verizon’s investments under McAdam have primarily benefited its wireless operations, which enjoy high average revenue per customer and a healthy profit margin. Over the last six years of FiOS expansion stagnation, Verizon’s legacy copper wireline business has continued to experience massive customer losses. Revenue from FiOS has been much stronger, yet Verizon’s management remained reticent about spending billions to restart fiber expansion. In fact, Verizon’s wireline network (including FiOS) continues to shrink as Verizon sells off parts of its service area to independent phone companies, predominately Frontier Communications. Many analysts expect this trend to continue, and some suspect Verizon could eventually abandon the wireline business altogether and become a wireless-only company.

With little interest in maintaining or upgrading its wired networks, customers stuck in FiOS-less communities complain Verizon’s service has been deteriorating. As long as McAdam remains at the head of Verizon, it seemed likely customers stuck with one option – Verizon DSL – would be trapped with slow speed internet access indefinitely.

Verizon's FiOS expansion is still dead.

Verizon’s FiOS expansion rises from the dead?

But McAdam has finally shown some excitement for a high-speed internet service he does seem willing to back. Verizon’s ongoing trials of 5G wireless service, if successful, could spark a major expansion of Verizon Wireless into the fixed wireless broadband business. Unlike earlier wireless data technologies, 5G is likely to be an extremely short-range wireless standard that will depend on a massive deployment of “small cells” that can deliver gigabit plus broadband speeds across a range of around 1,500 feet in the most ideal conditions. That’s better than Wi-Fi but a lot less than the range of traditional cell towers offering 4G service.

What particularly interests McAdam is the fact the cost of deploying 5G networks could be dramatically less than digging up neighborhoods to install fiber. Verizon’s marketing mavens have already taken to calling 5G “wireless fiber.”

“I think of 5G initially as wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer,” said McAdam during Verizon’s second-quarter earnings call. “With wireless fiber the so-called last mile can be a virtual connection, dramatically changing our cost structure.”

McAdam

McAdam

Verizon’s engineers claim they can build 5G networking into existing 4G “small cells” that are already being deployed today as part of Verizon’s efforts to increase the density of its cellular network and share the increasing data demands being placed on its network. In fact, McAdam admitted Verizon’s near-future would not depend on acquiring a lot of new wireless spectrum. Instead, it will expand its network of cell towers and small cells to cut the number of customers trying to share the same wireless bandwidth.

McAdam’s 5G plan depends on using extremely high frequency millimeter wave spectrum, which can only travel line-of-sight. Buildings block the signal and thick foliage on trees can dramatically cut its effective range. That means a new housing development of 200 homes with few trees to get in the way could probably be served with small cells, if mounted high enough above the ground to avoid obstructions. But an older neighborhood with decades-old trees with a significant canopy could make reception much more difficult and require more small cells. Another potential downside: just like Wi-Fi in a busy mall or restaurant, 5G service will be shared among all subscribers within range of the signal. That could involve an entire neighborhood, potentially reducing speed and performance during peak usage times.

Verizon won’t know how well the service will perform in the real world until it can launch service trials, likely to come in 2017. But Verizon has also made it clear it wants to be a major, if not dominant player in the 5G marketplace, so plenty of money to construct 5G networks will likely be available if tests go well.

Ironically, to make 5G service possible, Verizon will need to replace a lot of its existing copper network it has consistently refused to upgrade with the same fiber optic cables that make FiOS possible. It needs the fiber infrastructure to connect the large number of small cells that would have to be installed throughout cities and suburbs. That may be the driving force behind Verizon’s sudden resumed interest in restarting FiOS expansion this year, beginning in Boston.

“We will create a single fiber optic network platform capable of supporting wireless and wireline technologies and multiple products,” McAdam told investors. “In particular, we believe the fiber deployment will create economic growth for Boston. And we are talking to other cities about similar partnerships. No longer are discussions solely about local franchise rights, but how to make forward-looking cities more productive and effective.”

If McAdam can convince investors fiber expansion is right for them, the company can also bring traditional FiOS to neighborhoods where demand warrants or wait until 5G becomes a commercially available product and offer that instead. Or both.

There are a lot of unanswered questions about how Verizon will ultimately market 5G. The company could adopt its wireless philosophy of not offering customers unlimited use service, and charge premium prices for fast speeds tied to a 5G data plan. Or it could market the service exactly the same as it sells essentially unlimited FiOS. Customer reaction will likely depend on usage caps, pricing, and performance. As a shared technology, if speeds lag on Verizon’s 5G network as a result of customer demand, it will prove a poor substitute to FiOS.

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  • James R Curry: It's also worth noting that in Maxx areas, 50/5 is the same price as 15/1 in non-Maxx areas. So without the Charter buy out, you would have eventuall...
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  • Phillip Dampier: You missed my point. Many customers prefer a lower price over faster speed. You started with 50/5Mbps. Most TWC customers choose to pay for 15/1Mbps b...
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