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Comcast Giveth and Taketh Away: Raising Download Speed, Cutting Upload Speed in Midwest

Phillip Dampier June 26, 2018 Broadband Speed, Comcast/Xfinity, Consumer News 5 Comments

Customers in several midwestern states around Chicago have today reported to Stop the Cap! Comcast has provisioned a speed change on their internet accounts with no advance warning or notice, raising download speeds from 100 Mbps to 150 Mbps but cutting upload speeds in half — from 10 Mbps before to 5 Mbps.

The changes seem to impact customers on the midwestern region Blast plan, which was sold in many areas around Chicago with speeds of 100/10 Mbps. Some customers logging into their accounts today see a unilateral plan change there as well — one they never asked for, reflecting the changed speeds:

Comcast has yet to respond to our inquiry about the confusion. Some customers are being told the plan change is in error, at least with respect to upload speeds. It would be unprecedented for Comcast to reduce customer speeds when making speed adjustments. If you are in the midwest and subscribe to this tier, what speeds are you getting today and what does your account profile show with respect to your current internet plan?

Updated 9:01pm EDT — Comcast has responded: “We plan to increase speeds in our central division next month and will share more details soon. It’s important to note that upload speeds will not change as part of that announcement.”

We remain uncertain why current speeds seem to have declined in some areas, which was not addressed.

Updated 9:15pm EDT — Some of the speed changes appear to be related to soft-launched speed upgrades in the Central U.S. division (Alabama, Arkansas, Florida, Georgia, Indiana, Illinois, Kentucky, Louisiana, Michigan, Mississippi, South Carolina, and Tennessee). The Performance tier that used to be 100/10 Mbps is increasing to 150/10 Mbps and the Extreme tier which was 150/20 Mbps previously is upgraded to 250/20 Mbps. You may need to briefly unplug your modem/gateway to receive the new speeds.

Updated June 27 11:10am EDT — Comcast has officially confirmed the upload speed reductions were in error. Customers that still find their upload speeds reduced should reset their modem, and upload speeds of at least 10 Mbps should be restored. The company’s forthcoming speed increases will maintain current upload speeds.

21st Century Fox Accepts Disney’s Sweetened $71.3 Billion Offer, Outbidding Comcast

21st Century Fox has accepted an improved $71.3 billion bid from Walt Disney Co. to acquire its entertainment division, outbidding Comcast’s all-cash $65 billion bid for Fox’s content companies.

Rupert Murdoch and shareholders will walk away from the majority of Fox’s media empire well compensated from a short-term bidding war between Disney and Comcast, which has raised the acquisition price substantially above Disney’s original offer in December.

Disney CEO Bob Iger’s current offer is being seen as “very aggressive” by Wall Street and designed to deter Comcast from responding with a better bid of its own. Comcast was already planning to load up on debt to finance the deal, and was unwilling to include shares of its stock as part of the transaction. Disney itself is putting a huge amount of money on the line to acquire Fox. After including Fox’s current debt load, Disney’s latest offer means the total transaction is expected to exceed $85 billion.

Disney’s decision to postpone an important meeting to discuss Comcast’s bid could be a signal Comcast is preparing a counteroffer.

Whatever company ultimately wins control of Fox will own and control the majority, but not all of Fox’s media assets.

21st Century Fox Assets to be Acquired by Disney (or Comcast if it returns with an even higher bid):

Fox Entertainment Group:

20th Century Fox
Fox Searchlight Pictures
Blue Sky Studios
Fox Star Studios
Fox Networks Group
Fox Sports Networks

FX Cable Networks
National Geographic Partners (Nat Geo suite of cable networks and National Geographic Films) (73%)
Star TV (Asian satellite TV service)
Hulu (United States) (Fox’s 30% stake, giving either buyer 60% ownership and control of the service)
Sky (39.14%) (United Kingdom satellite TV service and content producer)
Endemol Shine Group (50%) (Producer of reality TV shows including Big BrotherMasterChefThe Biggest Loser and Hunted.)

21st Century Fox Assets to Be Spun Off to “New Fox” — an independent company owned by current 21st Century Fox shareholders

Fox Broadcasting Company – The Fox Television Network
Fox Television Stations Group (28 local TV stations)
Fox Television Station Productions
Movies! (a digital subchannel network run as a joint venture with Weigel Broadcasting and seen on around 75 local stations around the country)
MyNetworkTV
Fox News Channel and Fox Business Network
Fox Sports:

Big Ten Network (51% owned in joint venture with Big Ten Conference)
Fox Deportes
Fox Sports 1
Fox Sports 2
Fox Soccer Plus
Fox College Sports
Fox Sports International

The 20th Century Fox studio lot (to be leased by Disney)

A battle is still raging for control of Sky, the United Kingdom’s biggest satellite TV provider. Fox originally sought to acquire the portion of Sky it did not already own, but was derailed by a sweeping 2011 phone hacking scandal after news emerged Murdoch-employed reporters illegally hacked into the private voicemail boxes of celebrities to help fuel new story ideas and substantiate personal scandals. When it was revealed reporters listened to the messages of a murdered schoolgirl, allowing her parents to mistakenly believe she was still alive, the scandal went viral and prompted both criminal and regulatory probes of Murdoch’s operations in the United Kingdom. It also led to the closure of the country’s largest tabloid newspaper, the Murdoch-owned News of the World. The scandal has been widely blamed for Murdoch’s inability to convince regulators to approve his bid for full ownership of Sky Television. Murdoch is now cutting his losses and selling the entire operation to either Disney or Comcast.

Comcast’s Acquisition of Fox Will Make It Among World’s Most Maxed Out Companies

Phillip Dampier June 19, 2018 AT&T, Comcast/Xfinity, Consumer News 1 Comment

If Comcast’s $65 billion all-cash offer for 21st Century Fox is accepted, America’s largest cable operator will also be among the world’s largest corporate debtors, owing $170 billion in all.

Comcast will borrow as much as $85 billion to cover the acquisition of Fox, plus an additional $27.5 billion to cover the buyout of the United Kingdom’s satellite operator Sky.

Excluding banks, Comcast will be the world’s second most-buried-in-debt corporation, outdone only by AT&T, according to Moody’s.

Comcast’s all-cash offer to snatch Fox away from its corporate arch-enemy Disney, also bidding for Fox, is remarkable for a company with only $6 billion of cash on hand. Comcast will have to borrow most of the money for the buyout, in addition to covering Fox’s existing $20 billion in debt. The result will be a 1980s style leveraged buyout that is likely to result in a significant downgrade of Comcast’s credit rating. Moody’s has already warned the company of exactly that.

Some Wall Street analysts see the transaction as particularly unusual for Comcast, a company that has avoided massive debt. Some suspect the generous cash offer for Fox is being driven by personal animosity between Comcast CEO Brian Roberts and Disney CEO Robert Iger, originating more than a decade earlier when Comcast attempted a hostile takeover of Disney, and failed.

Many investors are clearly worried about the growing debt levels of several large telecommunications companies, which remind some of two spectacular corporate failures at the end of the dot.com boom, when MCI-Worldcom and Global Crossing were both brought down by accounting scandals and bankruptcy in an effort to hide their debts.

There are fears that a decade of unprecedented low-interest rates, business-friendly regulatory policies, and a stabilized economy have allowed companies to grow complacent about the risks of debts from blockbuster mergers that are now bigger and more expensive than ever. Companies may be overconfident that their huge, debt-financed deals can be managed with low interest loans and frequent refinancing and bond sales to until debts can be paid down. But some analysts warn that if there is a downturn in the economy, easy credit will be hard to get, and interest rates will be significantly higher. Because highly leveraged companies are bigger credit risks, bondholders will likely demand a better deal for themselves.

The Wall Street Journal reports global corporate debt (excluding financial institutions) now stands at $11 trillion, and those companies are now 30% more leveraged than they were just before the start of the financial crisis of 2007. Wall Street expects several additional merger deals in the telecommunications and media sectors this year, which will likely raise debt levels even higher.

The unprecedented level of debt has not escaped the notice of the Federal Reserve. Asked whether the United States is in a “credit bubble,” Fed chief Jerome Powell said last week that officials are “watching” elevated levels of corporate leverage.

AT&T and Comcast officials told the Journal any fears are unwarranted; they are different from most companies because their respective debts are expected to be repaid quickly with higher levels of cash generated by their businesses. AT&T claims it could apply the $8-10 billion of its anticipated free cash flow from the merger with Time Warner to reduce debts, although that could threaten shareholder perks like dividend payouts and share buybacks, as well as customer-focused network upgrades.

Investors that used to treat AT&T and Comcast stock as a safe haven are not anymore.

“We are getting a lot of calls,” Allyn Arden, a telecom and cable analyst at S&P Global Ratings, told the Journal after both S&P and Moody’s cut their respective ratings on AT&T bonds last week to a level just two notches above the junk-debt category.

AT&T CEO Randall Stephenson downplayed the concerns of Wall Street over the additional debt.

“This thing delivers quickly,” he told CNBC. “Within four years, we’ll be back to our normal levels of debt.”

Where will AT&T and Comcast get the money to pay down their debts? Captive customers could be one source. Both AT&T and Comcast are planning to continue raising rates, particularly on internet customers, providing a lucrative shot of extra revenue. By gaining control of deep content libraries, both Comcast and AT&T will be able to hike licensing fees on that content as well.

Comcast Bids $65 Billion in Cash to Acquire Fox Media Assets

(Reuters) – Comcast Corp offered $65 billion on Wednesday for 21st Century Fox’s media assets, emboldened by AT&T prevailing over the Trump administration’s attempt to block a merger with Time Warner, Inc..

The all-cash offer for Fox’s movie and TV studios and other assets including the X-Men franchise, opens a war with Walt Disney, which has bid $52 billion in stock. Comcast described the bid as 19 percent higher than Disney’s bid today. The transaction does not include the FOX television network, network owned-and-operated local television stations, or its cable news channels Fox News and Fox Business.

Comcast is expected to lead a wave of traditional media companies trying to combine distribution and production to compete with Netflix Inc and Alphabet Inc’s Google. The younger firms produce content, sell it online directly to consumers and often offer lucrative targeted advertising.

AT&T won a court victory over skeptical U.S. antitrust regulators on Tuesday when a federal judge allowed it to buy Time Warner for $85 billion, which was widely taken as a green light for Comcast to submit its expected bid.

Comcast may face more difficulty than AT&T and other would-be acquirers, though, since Comcast already has its own TV and movie studios in the NBC Universal division, a content overlap AT&T-Time Warner lacked.

Shares of Comcast, Fox and Disney were barely changed in after-hours trade.

Comcast in a statement outlined an offer that was similar to Disney’s, including a commitment to the same divestitures. It said that it would agree to litigate any action taken by the Justice Department to block the deal.

In a letter to the Fox board, Comcast chairman and CEO Brian Roberts said, “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

Justice Department lawyers who tried to stop AT&T’s $85 billion deal expect consumers will lose out as bigger companies raise prices, and some lawyers saw that as a concern in a Comcast-Fox deal which would put two movie studios and two major television brands under one roof.

“One cannot ignore the fact that there’s less independent content to go around,” after the AT&T deal, said Henry Su, an antitrust expert with Constantine Cannon LLP.

Still, the AT&T court fight gave Comcast valuable information about how to structure a Fox deal, said David Scharf, a litigation expert with Morrison Cohen.

“Any deal that’s coming down the pike that’s not baked yet knows the government’s playbook. They know what the government is concerned about,” he said. “They can learn how to structure a deal to make it more palatable.”

Disney itself has “surgically” structured a transaction that “might be doable,” avoiding Fox Broadcasting and big Fox sports channels, U.S. antitrust chief Makan Delrahim said last week.

Comcast may have a tough time winning over Fox’s largest shareholder, Rupert Murdoch’s family. They own a 17-percent stake and would face a multi-billion dollar capital gains tax bill if he accepted an all-cash offer from Comcast, tax experts have told Reuters.

Craig Moffett, an analyst with MoffettNathanson, said in a research note that Disney could prevail for other reasons.

“Disney has the superior balance sheet, cost of debt, equity and rationale to emerge victorious over Comcast in a bidding war,” Moffett said.

Reporting by Sheila Dang in New York and Diane Bartz in Washington; Additional reporting by Arjun Panchadar in Bengaluru; Writing by Peter Henderson; Editing by Maju Samuel and Lisa Shumaker.

CNBC reports Comcast has officially submitted its $65 billion all-cash offer to acquire assets of 21st Century Fox. Disney is also a contender and may respond by sweetening its own offer. (2:29)

Comcast Dumps Congestion Management System It Says Was Unused for a Year

Image courtesy: cobalt123Comcast has quietly dropped its internet congestion management system, designed to slow down its heaviest users, claiming it has gone unused for more than a year and was no longer needed.

Originally spotted by readers of DSL Reports, the announcement referenced the system that replaced Comcast’s speed throttle that intentionally degraded peer-to-peer network traffic after Comcast claimed it was unfairly impacting its other customers:

As reflected in a June 11, 2018 update to our XFINITY Internet Broadband Disclosures, the congestion management system that was initially deployed in 2008 has been deactivated. As our network technologies and usage of the network continue to evolve, we reserve the right to implement a new congestion management system if necessary in the performance of reasonable network management and in order to maintain a good broadband Internet access service experience for our customers, and will provide updates here as well as other locations if a new system is implemented.

Comcast’s “protocol-agnostic” network management technology, designed by Sandvine and introduced in 2008, measured customer traffic and singled out heavy users for speed reductions when Comcast’s network was saturated with traffic. Customers were unaware if they were deemed heavy users or if their traffic was targeted for temporary speed reductions. Comcast relied on the technology, along with the introduction of a 250 GB nationwide data cap, to control network traffic and stall the need for expensive node-split upgrades.

Comcast claims the introduction of DOCSIS 3.0 (starting in late 2008) and DOCSIS 3.1 (2017) gradually eliminated the need to maintain the congestion management system, because channel bonding vastly expanded available internet bandwidth. What remains in place in most Comcast service areas is Comcast’s controversial 1 TB usage cap. The company initially claimed its data caps were part of a network traffic management strategy, but more recently the company claims it collects more from heavy users to compensate for its broadband investments.

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