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Big Red Verizon Really Wants to Own a Cable Company – Charter or Comcast Will Do Nicely

Shhh… Don’t tell anyone except the newspapers, trade journals, everyone else….

Well-placed sources inside Verizon are leaking like a sieve to the media about the phone giant’s ambition to own and operate a large cable company.

In what may be a trial balloon to test the waters with the incoming Trump Administration, at least two “well-placed sources” have told the New York Post Verizon CEO Lowell McAdam is seriously contemplating countering AT&T’s buy of DirecTV and its attempted acquisition of content company Time Warner, Inc., with the buyout of a major national cable operator.

Verizon’s primary interest, according to multiple sources, is expanding available content to fill its current and future wireless platforms, especially 5G. Acquiring a cable operator would make content deals easier and more affordable because of volume discounting. It would also allow Verizon to directly sell cable products and services without investing in further FiOS expansion.

The CEO told friends at the Consumer Electronic Show in Las Vegas that he “wants to buy into cable.”

The most likely targets would have to be large cable operators with a national footprint, and a source told the tabloid two companies qualified: Charter or Comcast.

“Altice is too small,” the source speculated. That would also count out other medium-sized companies like Cox and Mediacom, because they have too limited a service area to be of much use to Verizon.

No final decision has been made, the newspaper notes, adding no talks are underway between Verizon and any cable company at present. Should Mr. Trump repeat the earlier objections to the AT&T-Time Warner, Inc., merger he made last October, any marriage of Verizon with a cable operator would be unlikely. Trump cited unchecked media consolidation as his primary reason for opposing AT&T’s latest acquisition deal, but he has not repeated those objections recently. Last week Trump met with AT&T CEO Randall Stephenson in New York.

McAdam originally planned to use Verizon’s acquisition of Yahoo! as a way to broaden the phone company’s content library, but that yet-to-be-finished deal has been in turbulence since media reports exposed major security breaches of Yahoo’s e-mail and portal sites.

A deal with Charter is more likely than a buyout of Comcast because Charter’s most significant shareholder – John Malone, has no allegiance to keeping Charter Communications independent. Charter also lacks the kind of complications that an acquisition of Comcast could bring – notably Comcast’s ownership of NBC and its dozen owned-and-operated TV stations.

Malone has a long history of dispassionately buying and selling large telecom assets, including the cable company Tele-Communications, Inc. (TCI) he helped build from a handful of cable systems into what used to be the nation’s largest cable operator. In 1999, TCI was sold and rebranded as AT&T Broadband and Internet Services. Three years later, most of those cable systems were again sold to their present owner Comcast.

Verizon may argue it has already divested significant amounts of its FiOS service to Frontier Communications in the Pacific Northwest, Indiana, Texas, California, and Florida, limiting antitrust concerns. But state regulators, particularly in New York, are likely to raise serious objections if Verizon, already the dominant telephone company in New York (except Rochester) attempts to acquire Charter, the only significant cable operator in upstate New York and Manhattan. That would leave the vast majority of New York with a classic telecom monopoly, with only one provider for landline and broadband service.

Arris’ First DOCSIS 3.1 Modem is Coming Soon… for $199.99

Phillip Dampier January 17, 2017 Broadband Speed, Comcast/Xfinity, Consumer News, Cox No Comments

The Arris Surfboard SB8200, in white. Arris usually releases identical versions in black and white colors. (Photo courtesy of: Arris)

Arris, the nation’s number one manufacturer of cable modems, will introduce its first DOCSIS 3.1-compatible cable modem as early as this week.

The Arris SB8200 will reportedly cost consumers a steep $199.99 when it goes on sale at the end of this month.

Multichannel News reports the modem box will include the logos of Comcast and Cox, advertising compatibility with Comcast’s ongoing DOCSIS 3.1 trials and the forthcoming introduction of DOCSIS 3.1 to a significant number of Cox Cable customers.

It is capable of download speeds up to 5Gbps, uses up to 32 downstream and 8 upstream channels, and includes two gigabit Ethernet ports.

Customers can begin using the new DOCSIS 3.1 modem as soon as it is available for sale, because it will be backwards-compatible with existing DOCSIS 3 broadband networks. Prospective buyers should check with their cable operator before purchase, to make sure it is officially supported.

As cable operators upgrade to DOCSIS 3.1, the SB8200 should allow customers to immediately take advantage of speed upgrades, which are expected to be dramatic. Many cable operators are targeting gigabit download speeds for their top-tier, although upload speeds are expected to be considerably lower than 1000Mbps.

At least one cable operator has been wavering about whether to move towards DOCSIS 3.1 or switch to fiber broadband technology.

Altice USA, which currently owns Suddenlink and Cablevision/Optimum, has announced plans to scrap its existing hybrid fiber/coax infrastructure and upgrade Cablevision customers to fiber-to-the-home service, which will not use DOCSIS cable modems. Altice has not ruled out fiber upgrades for its Suddenlink systems, but has upgraded speeds in many markets using the older DOCSIS 3 standard. Altice USA is expected to continue acquiring smaller cable operators this year – most likely bidding for Cable ONE and a handful of other smaller, regional cable operators.

Among cable operators that have made substantial investments in DOCSIS 3.1 upgrades and are least likely to abandon the technology include: RCN, Mediacom, and WideOpenWest (branded: WOW!). Charter Communications is also expected to be a DOCSIS 3.1 provider… eventually. The company is likely to be preoccupied over the next few years upgrading Time Warner Cable and Bright House Networks systems it acquired to all-digital platforms before it considers moving to DOCSIS 3.1.

Arris will face competing models including Netgear’s CM1000 ($179.99) and the Linksys CM3132 ($199.99) which should be available by late spring.

Comcast: Still America’s Most Despised Company

Phillip Dampier January 16, 2017 Comcast/Xfinity, Consumer News No Comments

Despite ten years of promises to do better, Comcast Corporation remains America’s most hated company, according to a new survey from 24/7 Wall St:

The internet service provider and subscription television service industries are not known for superior customer service. In fact, the two industries have the worst average scores in the American Customer Satisfaction Index. Still, Comcast has a significantly worse customer satisfaction score than either industry average.

The company’s internet services received the fourth worst score out of some 350 companies. In J.D. Power’s rating of major wireline services, only Time Warner Cable — recently subsumed by Charter — received as poor of an overall satisfaction score. In the same survey, Comcast received the worst scores in cost to consumer, performance, billing, and reliability. In 24/7 Wall St.’s annual customer satisfaction poll conducted in partnership with Zogby, nearly 55% of of respondents reported a negative experience with the company, the second worst of any corporation.

Customer complaint intensity remains very high for companies that have a history of increasing fees and charges, those that enjoy the benefits that come from a lack of competition, and at companies where there is a high likelihood of customer contact with customer service. The cable industry fits the bill on all three, and customers do not like what they see in Comcast.

For at least a decade, company executives have claimed to be dramatically improving customer service, most recently relying on Charlie Herrin, executive vice president of customer experience at Comcast. Comcast calls Herrin an in-house “consumer advocate.”

Herrin

“We know we still have work to do, but we’re excited about the progress we’re making,” Herrin tells customers on Comcast’s XFINITY Customer Experience website. “We’ve reached all-time highs across many of our key customer service areas. The number of customers who have had to call us is down 14 percent – which means your products are more reliable, your bill is easier to understand and our self-service platforms are making a difference. Our on-time arrival rate for technicians coming to your home has improved to over 97 percent.  Our success rate for solving your issue on the FIRST call is up by 7 percent, getting us closer to our goal of fixing it right the first time, every time. Our Digital Care team is also getting back to you faster, as our response time on social channels improved by 95 percent.”

Although Herrin seems convinced, customers are not. The Better Business Bureau’s Comcast file warns visitors the BBB receives so many complaints about the cable operator, it can only publish approximately one out of every twenty on its website. But that amounts to at 34,902 complaints published online in just the last three years. The majority relate to issues like Comcast’s usage caps, billing errors, mysterious fees, and poor service.

Customers may not appreciate Herrin’s metrics for improvement if they reported a service problem over an app, received an inaccurate (but easier to read) bill, or got a speed increase and a bill with penalty overlimit fees for using too much of their internet service.

Time Warner Cable customers hoping for improved service from new owner Charter Communications also appear to be out of luck. As Charter has grown in size, its already-mediocre customer satisfaction rating is apparently slipping again, now making it to 24/7 Wall Street’s Worst list at #12.

“Charter has one of the poorest reputations for customer service of any company in the subscription television service industry,” 24/7 Wall Street wrote. “It also scores below average in customer service compared to its competitors in the fixed line telephone industry and internet service industry.”

Two other telecom companies also scored very poorly – DISH Networks, also called out by its employees as an awful place to work, and Sprint, perpetually in the middle of a “service improvement” project that never seems to end, leaving many customers running out of patience.

Community Broadband Battle in Savannah Media Pits Local GOP Against Broadband Choice

Savannah, Ga.

The very idea that a city would get involved in selling better broadband service to its residents has sparked a coordinated campaign to sully municipally owned providers and color the results of an ongoing study to determine if Savannah, Ga. is getting the kind of internet access it needs.

While the city and county continue their Broadband Fiber-Optic Feasibility Study and survey residents about incumbent providers including AT&T, Comcast, and Hargray Communications, an organized pressure campaign coordinated by the Chatham County GOP is well underway to undermine any idea the city should compete against the three dominant local internet providers.

“The purpose of this study is to examine how we are currently served with broadband infrastructure, particularly focused on the services available to our community residents, anchor institutions, businesses, and key services like public safety, health and education,” a Savannah city spokesperson told Stop the Cap!

The city’s goal is to: “confirm that residents, anchor institutions and businesses have access to the services they need and that those services are competitively priced.” Incumbent providers are betting the answer to that question will likely be no and have started early opposition to discourage the city from attempting to build its own broadband network. Comcast and AT&T have apparently teamed up with the local Chatham County GOP to defend current providers in suspiciously similar-sounding letters to the editor.

Consider two examples.

About a month ago, Stephen Plunk, executive secretary of the Chatham County Republican Party, liberally sprinkled talking points provided by outside think tanks in an editorial published by the Savannah Morning News:

The Savannah Morning News published this ominous illustration adjacent to a guest editorial from a Chatham County GOP official opposing public broadband.

Only 6,000 residents in Chatham County, out of about 280,000, do not have access to wired internet of any sort. About 90 percent of Savannah residents can choose from two or more wired internet service providers . The city’s current residential providers offer speeds up to 105 mbps, and its 12 business providers offer speeds that are generally between 100 mbps and one gigabit.

Private providers also are making big new investments here. Last year, Hargray Communications announced a plan to offer one gigabit speeds to Lowcountry customers. In March, Comcast announced its intention to offer 10-gigabit speeds to city businesses. Last month, AT&T said it also will begin offering superfast capacity.

Next, let’s look at whether a city should provide service directly to customers. Or, is it wise? To determine that, the city council must ask itself whether it wants to go down the path of Marietta, which ran its own internet company several years ago but was forced to sell that network at a loss when it failed to turn a profit year after year. Marietta’s mayor eventually admitted the city never should have become an ISP. There are government ISPs that do make a profit every year, but they are rare. Chattanooga’s government-run system is often touted as a model, but the city received more than $100 million from the federal government to get its system started.

This morning, Mary Flanders, chairwoman of the Chatham County GOP wrote essentially the same things in an “opposing views” piece published by the Connect Savannah weekly newspaper (and at least cited some of her sources):

They should proceed carefully. Cautionary tales about municipal broadband networks abound.

Consider the situation in Marietta, the sprawling suburb northwest of Atlanta. Marietta started its own municipal network that stretched along a 210-mile long route. After spending $35 million to build out the network, Marietta earned a grand total of 180 customers.

The then-Mayor said the city couldn’t keep pace with the expenses associated with the constant flood of technology upgrades required to manage a broadband network. The city ultimately sold the network in 2004 for a $20 million loss.

Pacific Research Institute, in a report on municipal broadband, found that “Mariettans had decided that they would rather take a $20.33 million loss than continue to subsidize a municipal telecom venture that was sucking their city dry.”

Marietta may be relatively close to home, but it’s not the only example. Provo, Utah spent $40 million to build its network, only to sell it to Google Fiber for the princely sum of $1. In Groton, Connecticut, taxpayers lost $38 million.

City leaders need to consider the downside risk to municipal services if and when the broadband network fails to attract customers and generate case. The shortfall has to be made up somewhere. Where will the money come from? Tax hikes?

Budget cuts to basic services or to the police or fire department? Try explaining that to voters come election time, especially if the crime rate is on the rise.

According to Kelly McCutcheon, President of the Georgia Public Policy Foundation, typically the consultants are the only ones who come out good on these deals. It would be a bitter pill to swallow by Savannah citizens and city leaders alike.

Let’s dig into some of the specifics on Internet needs in Savannah. Of the 280,000 residents in Chatham County, only 6,000 residents do not have access to wired Internet of any kind. About 90% of Savannah residents can choose from two or more wired Internet service providers (ISPs).

The city’s current residential providers offer speeds up to 105 mbps, and its twelve business providers offer speeds that are generally between 100 mbps and one gigabit, which is considered to be very speedy in the Internet world.

Private providers also are making big new investments in the area. Last year, Hargray Communications announced a plan to offer one gigabit speeds to Lowcountry customers. In March, Comcast announced its intention to offer 10-gigabit speeds to city businesses. Last month, AT&T said it also would begin offering incredibly fast capacity to Savannah entrepreneurs.

On track to be profitable by 2006, local politics forced an early sale of the community fiber network that was succeeding.

Most of these talking points have been debunked by Stop the Cap! over our nine-year history. The examples of municipal broadband failures are so few and far between, we’ve come to recognize them, and many of the shop worn examples provided by the Chatham County Republicans are more than five years old.

In Groton, Conn., the emergence of a municipal provider inspired network upgrades and more competition from Comcast while the phone company Southern New England Telephone (later AT&T and today Frontier Communications) did everything possible to keep the publicly owned provider from offering phone services to customers. In the end, Comcast undercut the municipal provider and AT&T’s deployment of U-verse created problems for the then-rosy revenue projections the municipal provider was depending on to recoup its original construction costs. The network was sold five years ago to a private provider and customers still appreciate the quality of the original network today run by Thames Valley Communications, which rates four out of five stars while its competitors Frontier and Comcast rate two. It would be wrong to assume today’s municipal broadband providers have not learned important lessons and now account for incumbents responding to competition with heavily discounted rate retention plans for customers threatening to leave, as well as network upgrades. Revenue projections have become more conservative, both to deal with unexpected construction costs and the revenue likely to be earned in light of cut-rate plans from the competition. But many customers make the switch anyway, persuaded by the quality and reliability of superior fiber networks, rate stability, and a more responsive level of customer service.

The networks in Provo, Utah and Marietta, Ga., are examples of what happens when politicians opposed to the concept of municipal broadband intentionally meddle with them in an effort to prove an ideological argument or to help move along a pre-conceived sale of publicly owned infrastructure to private companies.

In Provo, the fiber to the home network was built and quickly hamstrung by a Utah state law that forbade the city from selling broadband service to the public. Instead, it had to sell wholesale access to private companies it had to attract, who in turn would provide service to the public. Imagine a marketing campaign for a new provider that required customers to deal with two unfamiliar providers just to sign up.

Christopher Mitchell, who studies municipal networks and advocates for community involvement in broadband, wrote a year ago iProvo was facing serious challenges primarily because politicians and industry lobbyists got in the way:

“Industry lobbyists convinced Utah legislators to restrict local authority over municipal networks to ‘protect’ taxpayers and that argument is still frequently used today by groups opposing local internet choice. The law does not actually revoke local authority to invest in networks, it monkeys around with how local governments can finance the networks and requires that municipalities use the wholesale-only model rather than offering services directly.

“However, the debt-financed citywide wholesale-only model has proven to be the riskiest approach of municipal networks. Building a municipal fiber network where the city can ensure a high level of service is hard and can be a challenge to make work financially. Trying to do that while having less control over quality of service and splitting revenues with 3rd parties is much harder.”

Marietta’s experience with municipal broadband failed only because a new mayor unilaterally declared it an ideological failure and sold the network at a loss for political reasons. We covered that debacle ourselves back in 2012:

In Marietta, the public broadband “collapse” was one-part political intrigue and two-parts media myth.

Marietta FiberNet was never built as a fiber-to-the-home service for residential customers.  Instead, it was created as an institutional and business-only fiber network, primarily for the benefit of large companies in northern Cobb County and parts of Atlanta.  The Atlanta-Journal Constitution reported on July 29, 2004 that Marietta FiberNet “lost” $24 million and then sold out at a loss to avoid any further losses.  But in fact, the sloppy journalist simply calculated the “loss” by subtracting the construction costs from the sale price, completely ignoring the revenue the network was generating for several years to pay off the costs to build the network.

In reality, Marietta FiberNet had been generating positive earnings every year since 2001 and was fully on track to be in the black by the first quarter of 2006.

So why did Marietta sell the network?  Politics.

Marietta’s then-candidate for mayor, Bill Dunway, did not want the city competing with private telecommunications companies.  If elected, he promised he would sell the fiber network to the highest bidder.

He won and he did, with telecommunications companies underbidding for a network worth considerably more, knowing full well the mayor treated the asset as “must go at any price.”  The ultimate winner, American Fiber Systems, got the whole network for a song.  Contrary to claims from that the network was a “failure,” AFS retained the entire management of the municipal system and continued following the city’s marketing plan.  So much for the meme government doesn’t know how to operate a broadband business.

While members of the Chatham County GOP took potshots at outside consultants hired to consider whether Savannah should explore offering community broadband, Ms. Flanders was far more sanguine about her sources: the Pacific Research Institute (PRI) and the Georgia Public Policy Foundation.

In fact, the Pacific “Research Institute” doesn’t do independent research and it’s not an institute. It’s a right-wing, dark money-funded think tank with ties to the American Legislative Exchange Council (ALEC) and the Koch Brothers. The Georgia Public Policy Foundation, like PRI, prides itself on not revealing the sources of its funding, but SourceWatch uncovered their financial ties to the Donors Capital Fund, a corporate-“murky money maze” specifically designed to hide corporate contributions and the motives those companies have to send the money. So it isn’t a stretch to assume that when a think tank suddenly takes an interest in municipal broadband, checks from AT&T, Comcast, and others have proven to be helpful motivators.

Merry Christmas from Comcast: We’re Raising Your Rates (Again)

Phillip Dampier December 14, 2016 Comcast/Xfinity, Competition, Consumer News 2 Comments

Tis the season for rate increases. Fa-la-la-la-la, La-La-La-La.

Comcast is bringing itself some Christmas cheer this holiday season with more of your money going into its pocket as the cable giant announces nationwide rate hikes that will cost customers an average of 3.8 percent more in 2017. Comcast blames much of the increase on others.

“We continue to make investments in our network and technology to give customers more for their money—like faster internet service and more Wi-Fi hotspots, more video across viewing screens, better technology like X1 and a better customer experience,” Comcast said in a statement. “Unfortunately, the costs we are charged to carry popular networks continue to increase significantly, especially broadcast television and sports programming, which are the largest drivers of increases in price adjustments.”

Customers may not feel like they are getting more for their money with Comcast’s data caps and overlimit fees, which increasingly affect customers except in the northeast (for now). Cable TV customers will generally see a published rate increase of around $1 a month, which sounds like a pittance until you scrutinize the rate hike more closely.

Bill padding is where the real money will be made in 2017:

  • Broadcast TV Fee: Was around $5 in most markets, but Comcast intends to charge $2 more, bringing the fee to $7 a month;
  • Regional Sports Surcharge: Whether you watch sports channels or not, you will be expected to pay $2 more next year for those channels, with fees rising to $5 a month.

The absence of viable broadband competition in states like Maryland, bypassed by Verizon FiOS, means Comcast can raise broadband prices almost at will.

TV Predictions notes officials in Montgomery County, which includes the suburban Washington, D.C. cities of Bethesda and Rockville, have been notified of $5 a month rate hikes on broadband, taking some internet access pricing above $80 a month:

  • Internet Plus will increase from $77.95 a month to $82.95 a month;
  • Internet Pro Plus with Showtime will rise from $81.95 a month to $86.95 a month;
  • Internet Pro Plus With HBO will increase from $84.95 a month to $89.95 a month;
  • Premier XF Double Play package will increase from $182.95 a month to $187.99 a month, taking Comcast closer to the $200 cable bill.

Standalone internet pricing is now just as expensive as a deluxe cable television package, despite the fact it costs Comcast only a fraction of the amount it charges to provide the service:

  • Performance plan will rise from $69.95 to $74.95 a month;
  • Performance Pro plan will go from $79.95 a month to $84.95 a month;
  • Blast plan will rise from $82.95 a month to $87.95 a month.

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