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Cable Companies Expand Broadband Lead in U.S.; Subscriber Adds Up 35%

Phillip Dampier November 15, 2018 Broadband Speed, Competition, Consumer News 1 Comment

Cable companies continue to dominate the U.S. broadband marketplace, and the gap between cable broadband and telephone company DSL continues to widen.

Leichtman Research Group reports the top seven cable companies together added 728,423 internet customers in the last three months, an increase of 35% over 2017. One of the biggest gainers was Comcast, which grew 363,000 subscribers during the third quarter. At the same time last year Comcast added 213,000 customers. Charter Spectrum grew by 308,000 customers in the third quarter, bolstered by speed upgrades in select areas and more aggressive promotions. At the same time in 2017, Spectrum added 285,000 customers.

Cable’s gains are phone company losses. AT&T, Frontier, CenturyLink, and Consolidated (formerly FairPoint) saw 159,974 customers disconnect service in the last three months. Phone company losses were buffered in part by government-funded rural broadband expansion campaigns, which typically introduce broadband service in rural areas for the first time. Where customers have a choice, they are increasingly choosing cable companies to supply internet service because speed and reliability are often better, especially compared to DSL service still prevalent in a lot of areas.

Broadband Providers Subscribers at end of 3Q 2018 Net Adds in 3Q 2018
Cable Companies
Comcast 26,872,000 363,000
Charter 24,930,000 308,000
Cox* 5,040,000 20,000
Altice 4,096,300 14,200
Mediacom 1,260,000 9,000
WOW (WideOpenWest) 755,100 7,300
Cable ONE 660,799 6,923
Total Top Cable 63,614,199 728,423
Phone Companies
AT&T 15,746,000 (26,000)
Verizon 6,958,000 2,000
CenturyLink^ 5,435,000 (71,000)
Frontier 3,802,000 (61,000)
Windstream 1,015,000 8,300
Consolidated^^ 781,912 (1,974)
Cincinnati Bell^^^ 310,700 200
Total Top Telco 34,048,612 (149,474)
Total Top Broadband 97,662,811 578,949

Sources: The Companies and Leichtman Research Group, Inc.

*LRG estimate
^CenturyLink only reported residential subscribers in 3Q 2018.  LRG estimate including non-residential subscribers
^^Consolidated includes a minor sale of a local exchange carrier
^^^Cincinnati Bell does not include the acquisition of Hawaiian Telecom
Company subscriber counts may not solely represent residential households. Top cable and telephone companies represent approximately 95% of all subscribers.

FCC Proposes Another Grand Giveaway of Public Rights-of-Way to Cable Operators

The Federal Communications Commission (FCC) has proposed a new policy allowing cable companies to deduct the fair market value of their obligations to serve the public interest from franchise fee payments to towns and cities.

The proposal, MB Docket No. 05-311 — Cable Franchise Fee Deduction, will turn cable franchise laws upside down in virtually every state, reducing local government revenue and threatening public, educational, and government (PEG) access channels, access to cable in schools and other educational institutions, and undermining local control over the placement of wireless cell equipment and other infrastructure that some cable operators propose to install.

Critics of the proposal claim it would continue a concerted effort to shift oversight and regulatory controls away from local communities and states to a federal government that currently has a policy of favoring the interests of telecommunications companies over the interests of community leaders and the public.

Concord, Calif. Mayor Edi Birsan warned the FCC that if it adopts its proposal, it would strip his city, along with others, of its ability to manage where cable companies place cellular equipment and at what price.

Birsan

“Local governments may lose their authority to manage a cable company’s deployment of non-cable facilities, such as ‘small cells,’ Birsan wrote in a letter to the FCC. “This preemption would threaten to extend to fees for use of the rights of way, meaning:

  • Cable companies can use local rights of way for any purpose, regardless of the terms of the franchise, and avoid having to pay fair compensation to the local government for the use of publicly funded assets in the rights of way.
  • Cable companies could potentially install “small wireless facilities” with little to no public input, without having to meet any aesthetic or equipment size requirements aimed to mitigate blight and preserve community character.
  • Cable companies would gain a significant advantage against their competitors, including telecommunications providers even though the FCC has just adopted an order lowering their deployment standards, resulting in a race-to-the-bottom deployment strategy for both cable and telecommunications companies.”

Officials in King County, Wash., which includes the city of Seattle, were critical and suspicious of the FCC’s argument that the burdens of providing benefits to communities as defined in franchise agreements are slowing down the deployment of broadband services, a claim Tanya Hannah, chief information officer of the Department of Information Technology and Christina R. Jaramillo, manager of the Office of Cable Communications found had little merit and no evidence to back it.

Hannah

“It is not obvious that if a cable operator’s profit increases by one dollar that the operator will invest an additional dollar in broadband infrastructure deployment,” they wrote in a joint letter to the FCC. “Many cable companies are functional monopolies. Because the data transfer speed of fiber-line cable systems significantly exceeds the speed of wireless systems, cable broadband is the preferred broadband service if the prices for other broadband services are comparable.”

The two officials made it clear that since the FCC was proposing to impose these changes retroactively on town and cities around the country, the result would be detrimental to local government finances.

“If the FCC were to allow the value of the proposed franchise fee offset activities that were done in the past to be deducted from current or future franchise fee payments, the results to local  governments would be debilitating,” the officials wrote. “It could essentially end all monetary fee payments to King County by Comcast and WAVE Broadband for a number of years. This is not a feasible option. It is not realistic and it is not fair.”

The Alabama League of Municipalities told the FCC the issue was about basic state sovereignty, and Alabama does not want the federal government to run its affairs.

“Section 220 of the Alabama Constitution of 1901 provides that no person, firm, association, or corporation shall be authorized or permitted to use the streets, avenues, alleys, or public places of any city, town, or village for the construction or operation of any public utility or private enterprise without first obtaining the consent of the proper authorities of such city, town, or village,” the League wrote. “The Supreme Court of Alabama has labeled this grant of authority as ‘an essential and sovereign power in local authorities […] in the nature of a bill of rights [that] recognize certain fixed constitutional rights which shall not be invaded.'”

Under the FCC’s proposal, Alabama’s Constitution would be violated by allowing cable operators near carte-blanche access to public rights-of-way without fair compensation or permission, the League argued.

For a lot of communities, any reduction in franchise fee payments will lead to a corresponding decrease in funding for PEG television services.

“Our town’s ability to invest and support its public access television unit and the telecommunications curriculum in our schools is directly linked to the funding received from Charter Communications as part of the franchise fee (“cable tax”) agreement,” noted Robert J. Oliveira, chairperson of the Westport, Mass. Cable Advisory Board. “Any reduction in these funds would mandate a corresponding reduction in programming levels and information access to the community and curriculum support to our students.”

Public comments are due to the FCC by the end of today — Wednesday, Nov. 14. Consumers can share their opinions by visiting the docket on the FCC’s website, and then selecting + Express on the left hand side of the page, which will open an online comment form. Municipalities can file formal submissions using the + New Filing link.

Cisco Introduces Full-Duplex Ready Technology for Cable Broadband; Same Upload/Download Speeds

Cisco is helping cable operators get ready to finally end the wide speed disparity between upload and download speeds offered by most cable operators.

As cable operators continue to upgrade their cable systems to support DOCSIS 3.1 technology that makes it much easier to offer gigabit broadband speeds, Cisco is introducing the industry’s first “Full Duplex-Ready” GS7000 FDXi neighborhood node. It is an intelligent, remotely programmable piece of equipment that divides up broadband service to a number of households in a neighborhood. But unlike previous models, this one can offer customers the same upload and download speeds. Since the earliest days of cable modem technology, most bandwidth has been reserved for downloading, giving customers only a fraction of available speed for uploading content.

Cisco promises cable operators can provision its newest offering to deliver Full Duplex service in as little as two minutes. The equipment is expected to undergo field trials as early as this fall with sales widely expected to begin in early 2019.

Comcast reports it is already testing its own new network configuration combining Distributed Access Architecture with Full Duplex.

With remote surveillance cameras, video teleconferencing and virtual reality applications beginning to use significant amounts of upload bandwidth, cable operators expect an upswing in upstream traffic on their networks.

Comcast’s Robert Howald told attendees at a pre-SCTE Cable-Tec Expo event that the cable operator “wants to go symmetrical,” which means offering customers the same upload and download speeds. To manage this, Comcast needs to eliminate a large percentage of copper coaxial cable from its network and replace it with fiber, something the company has gradually been doing over the past few years. Comcast may be positioned to bring Full Duplex online earlier than many other cable operators because of its ongoing effort to push fiber optics closer to its customers.

Other cable operators, particularly smaller ones, may have a long way to go to be Full Duplex ready at high internet speeds. Some, like Altice’s Cablevision, have chosen to scrap traditional hybrid fiber-coax technology entirely, going all-fiber straight to the home. Other operators are hoping customers are not quite ready to demand identical upload and download speeds, and believe faster download speeds will satisfy customers for at least the next 5-10 years. If they are wrong, competitors offering fiber service could steal a lot of their business sooner than they think.

Charter Settlement Talks With New York Officials Proving Fruitful; Spectrum Likely Staying

Charter Communications’ ongoing settlement talks with the New York Public Service Commission are “productive” and will likely result in a final settlement agreement allowing Spectrum to continue operating in New York.

Today, the Public Service Commission formally approved a third extension for Charter, allowing the cable company to hold off filing an orderly exit plan and an appeal of the order revoking approval of Charter’s acquisition of Time Warner Cable in New York State. Department of Public Service (DPS) staff recommended one last 45-day extension to allow settlement discussions to continue and conclude.

“These discussions have been productive and should continue. However, DPS Staff believes that the Commission should direct that any request granted in response to Charter’s most recent filing be final in form and that any additional time allowed must either result in a settlement agreement being presented to the Commission or the cessation of settlement talks and a resumption of the processes outlined in the Revocation and Compliance Orders, unless good cause is shown by both parties,” wrote John J. Sipos, acting general counsel for the Public Service Commission. “This will ensure that progress is made or that in the event a settlement is not reached, that there is certainty as to the expectations on the parties going forward.”

DPS staff identified nine principles guiding discussions towards a final settlement:

  1. All addresses that are counted toward Charter’s obligations must further the Commission’s statements that service be provided to those in less densely populated areas (i.e., Upstate N.Y.).
  2. Addresses counted toward Charter’s obligations must not have had network previously passing the address or high speed broadband service available from a competitor. As the Commission has previously noted, New York City is one of the most wired cities in America, with much of the City served by multiple providers. Thus, the focus of the buildout should be in Upstate N.Y.
  3. Overlap between Charter’s proposed buildout Upstate and those areas awarded by the Broadband Program Office should be minimized or eliminated to the maximum extent practicable.
  4. The goal of DPS Staff and New York State is to ensure that the maximum number of New York State residents have wireline cable and broadband networks available to them.
  5. Charter’s violations of the January 8, 2016 order and September 2017 Settlement Agreement must be addressed.
  6. Going forward, the scope of changes allowed to be made to the buildout plan should be limited in order to provide certainty to New Yorkers as to when Charter’s network will pass their homes and businesses.
  7. Safety is of paramount importance to New York State and that, regardless of any targets agreed to, all work must be done safely.
  8. Company representations regarding the buildout and compliance with PSC orders must be truthful.
  9. The buildout schedule must establish concrete and enforceable consequences should Charter fail to meet its obligations.

Because the ongoing discussions have been conducted in private, without input from interested third parties (including Stop the Cap!) and the public, the revelation of the “nine principles” are the first indication the public has that the Commission’s staff has limited the scope of its negotiations to the rural broadband buildout obligation contained in the original merger approval order. This also coincides with Gov. Andrew Cuomo’s high-profile commitment to expand broadband availability to every New York resident, one of the achievements the governor cites in his re-election campaign. Charter’s participation is essential to the program achieving its objectives, because rural broadband funding has been diverted to addresses not identified as targets for Charter’s rural broadband buildout.

Gov. Andrew Cuomo announcing rural broadband initiatives in New York.

Charter ran into trouble with the Commission because it failed to initially meet its buildout targets for 2017 and progress further faltered in 2018. The Commission argues Charter attempted to mask the problem by counting new passings in urban areas towards its broadband expansion commitment, including many addresses in the New York City area. When Charter balked at the Commission’s broad disqualification of Charter’s progress reports, many that included locations outside the intended goal of the rural expansion effort, the PSC hastily met in July and revoked approval of the original merger agreement, directly threatening Charter’s ability to provide Spectrum service in the state.

A vocal group of consumers among the 78,000 rural New Yorkers without access to cable, DSL, fiber, or wireless broadband are also calling out the governor and the Broadband Program Office (BPO) for bait and switch rural broadband. They accuse the governor of promising to get broadband service to every New York home or business that wants it, but quietly capitulating on that commitment by assigning tens of thousands of rural New Yorkers satellite internet service from HughesNet, widely criticized for not consistently meeting broadband speed standards and offering heavily usage capped service at very high prices.

Because the DPS has set a goal to minimize overlap of Charter’s planned expansion areas with addresses designated for BPO-funded HughesNet service, the Commission will indefinitely prevent satellite customers from getting other practical internet options, because many of these locations are high-cost service areas. Stop the Cap! urged the Commission to consider requiring Charter to further expand its rural broadband commitment as a penalty for earlier transgressions, specifically targeting as many satellite-designated addresses as practical, even if HughesNet has already received BPO funding to serve those locations.

Dampier

“The commitment should be to protect the interests of the public, not the assigned provider,” said Phillip Dampier, director and founder of Stop the Cap! “The Commission’s goal to maximize the number of New York addresses where wireline cable and broadband networks are available is laudable. But this goal is immediately abandoned in areas designated for satellite service. Satellite internet access has rarely, if ever, been considered by broadband regulators to be a suitable replacement for wired internet access. Satellite internet access has proven again and again to be a frustrating and inadequate broadband solution.”

“We are talking about a very small percentage of places where overlapped funding may occur, potentially giving these rural New Yorkers two options for internet access instead of one,” Dampier added. “There is no conflict with the public interest if it means these customers have the option of a much faster, unlimited internet access plan — something HughesNet does not and will not offer in the foreseeable future.”

Stop the Cap! argues without a better option for residents stuck with satellite, the governor has broken his promise and commitment to these left-behind New Yorkers.

“In many cases, these addresses are literally just down the road from the nearest Spectrum customer,” Dampier noted. “Niagara County, for example, is hardly in the middle of the Adirondacks and is heavily wired by Spectrum/Time Warner Cable already. Is it too much to ask to push them to do more?”

John B. Rhodes, chairman of the New York Public Service Commission, signed an order granting the extension, but acknowledged the lack of broadband service in counties where Spectrum offers service to some residents but not others is a point of contention.

“Many Upstate New Yorkers living in Charter’s franchise areas are understandably frustrated by the lack of modern communications infrastructure,” Rhodes wrote. “The Compliance and Revocation Orders [revoking the merger] were designed to deal with very serious issues presented by Charter’s conduct related to the company’s network expansion. As such, the processes envisioned therein must continue in the absence of an agreement.”

New Zealand Court Rules Neighbors May Be Forced to Trim Trees Interfering With Wireless Internet

Property owners in New Zealand may have to trim back or remove trees if they are proven to interfere with Wi-Fi or wireless broadband services in the neighborhood, according to an interesting High Court judgment that could establish a wide-ranging precedent.

As short-range 5G wireless internet services become established, high frequency and millimeter wave-based signals depend on line-of-sight communications with end users. Trees and buildings can reduce signal range or block the signal entirely, rendering the service unusable. In this case, an appeals judge was asked to rule whether broadband users or property owners took precedence when a large stand of trees or a building in an adjacent yard made wireless reception more difficult or impossible.

Justice Sally Fitzgerald found that when alternative solutions like relocating a receiver cannot be found to mitigate reception problems, nearby property owners may have to take steps to protect neighbors’ access to Wi-Fi and other wireless services, under a new interpretation of Section 335(1)(vi) of the [Property Law] Act of New Zealand. Similar laws are in place in North America and European countries.

The decision could result in a dramatic increase in legal challenges from frustrated neighbors who cannot get good reception because adjacent property owners prefer a tree-filled landscape.

Justice Fitzgerald

Fitzgerald based her decision on basic property laws that make illegal anything that can unduly interfere with the reasonable use and enjoyment of private property. Such laws are used as a basis for noise ordinances, zoning restrictions, restrictions on commercial use of residential property, and placement of structures on or near property lines. This judge found no special distinction between physical objects or noise and wireless transmissions. But she did find reasonable limitations on what would constitute a valid complaint.

In this case, Ian and Karen Vickery brought the complaint against their neighbor Christine Thoroughgood, for interfering with their access to wireless internet by refusing to trim the trees on her property line. But the judge found a better answer than ordering a robust tree trimming. Fitzgerald found the Vickery’s already receive a suitable signal after placing a receiver on a pole located away from their home. Therefore, the judge ruled against the complaint by the Kiapara Flats couple, even though they preferred placing the receiver on their home.

Legal observers found the case precedent-setting, despite its low-key outcome, because this High Court judge has established a right of access to broadband that takes precedence over property owners’ landscaping and buildings. Under certain circumstances, a neighbor may be forced to trim, remove, or alter trees and structures on their land if a neighbor can prove it directly interferes with their right to access wireless signals like broadband in a way that cannot be mitigated.

From the decision:

I am satisfied, and Mr. Allan properly accepted, that undue interference with a Wi-Fi signal caused by trees could constitute an undue interference with the reasonable use and enjoyment of an applicant’s land for the purposes of s 335(1)(vi) of the Act.

From reviewing the evidence, however, I do not agree that the Judge erred in accepting independent expert evidence (in fact called by Mr. Vickery) which objectively contradicted Mr. Vickery’s personal evidence on the issue as to Wi-Fi signal.

The expert, Mr. Lancaster, explained that Mr. Vickery’s Wi-Fi service is a “fixed wireless solution”. He notes in his technical report that it works by having the internet service provider establishing a “broadcast site” in a prominent location and connecting to customers with clear “line of sight” to that broadcast site.

In this case, the broadcast site (provided by Compass Wireless) is located on Moirs Hill Road. Mr. Lancaster notes that “nominally the solution will service customers up to 30 kilometres away from the broadcast site subject to a clear unobstructed line of sight.” In this way, Mr. Lancaster confirms that trees could obstruct the otherwise clear line of sight.

At present, the Wi-Fi transponder (or receiver) at the Vickerys’ home is mounted on a pole a little distance away from the rear of the house. I viewed its location during my site visit and have reviewed the photographs in Mr. Lancaster’s report. With the transponder located in its present position (referred to by Mr. Lancaster as “Location A”), Mr. Lancaster states:

There is currently a clear signal to the installed dish and other parts of the property, the signal has remained good for the past two years since installation.

This current location, however, is not Mr. Vickery’s preferred location. He notes that the present location is in a particularly windy site and on one occasion the wind was so strong it blew the cable out of the back of the aerial. Mr. Vickery also noted that another much larger stand of pine trees on the Thoroughgoods’ land, some considerable distance away, are also impacting what is referred to as the “Fresnel zone” of the Wi-Fi connection in its present location.

Mr. Vickery’s preferred location is closer to and attached to the back of the house itself, where it would be easier for Mr. Vickery to service the transponder. At this location however, Mr. Vickery says the trees in issue will interfere with the signal.

Mr. Lancaster states in his report that he spent over two hours on site and only identified two other locations (other than the present location, Location A) which he would consider appropriate for an installation.

The first of these alternative locations (Location B) is on the northeast corner wall of the home — Mr. Vickery’s preferred location. Mr. Lancaster states “this is the location the Compass installers would have chosen by default and as a standard installation”. In relation to Location B, Mr. Lancaster states “it is obviously at risk due to close proximity to the existing tree/shrub planted boundary, being approximately three metres above ground level.” He states that to retain adequate signal at this location, a window would be required in the shelter belt hedge — the trees in issue in this case.

In light of the independent expert evidence, I do not accept the Judge erred in concluding there was no undue interference with the Vickerys’ Wi-Fi signal. It is important to reiterate that not only does the expert evidence not indicate an interference, but the standard required by the legislation is an “undue” interference in any event. The expert evidence confirms this threshold has not been met.

Accordingly, while it is true that Mr. Vickery’s preferred location for the Wi-Fi transponder would be on the wall of the home, there is clearly an alternative location which is currently being used and which is considered by Mr. Lancaster to be adequate. There is also a further alternative and adequate location (Location C). And although this location would require cabling, this would not in my view be unreasonable in the circumstances.

I accordingly do not consider the ground of appeal concerning Wi-Fi has been made out.

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