Home » cable television » Recent Articles:

FCC Chairman Tells Crowd He’s “Not Done Enough” to Bring More Cable Competition

Phillip Dampier February 3, 2016 Competition, Consumer News, Public Policy & Gov't No Comments
Wheeler

Wheeler

FCC Chairman Thomas Wheeler confessed he “has not done enough” to bring consumers more competition to Comcast, Time Warner Cable, Charter, and other cable operators.

Appearing at the Wharton School at the University of Pennsylvania on Tuesday, Wheeler said Comcast’s effort to buy Time Warner Cable in 2015 would not bring additional competition to the marketplace. The FCC remained pessimistic about the deal, stalling for months until a request for approval was eventually withdrawn by Comcast.

Wheeler has been especially sensitive about deals that could impact broadband services — wireless or wired — since becoming chairman of the FCC during President Obama’s second term in office. The FCC has proven itself less concerned with cable television matters, having approved a merger of AT&T and DirecTV while it still contemplates the merger of Charter Communications with Time Warner Cable and Bright House Networks.

Wheeler also spent time speaking about his latest initiative, breaking up the virtual monopoly on set-top boxes. Wheeler has proposed ending that monopoly by creating a new open standard platform for set-top equipment, allowing various manufacturers to develop boxes for retail sale to consumers.

More Than Half of America Would Wave Goodbye to ESPN for $8/Mo Off TV Bill

Phillip Dampier January 13, 2016 Consumer News, Online Video, Video 3 Comments

The buffet is open.

ESPN’s ability to bid for expensive sports rights may be threatened if pay television customers finally get a chance to subscribe to only the networks they want to watch.

A recent consumer survey conducted by Civic Science found 56% overall would remove ESPN/ESPN2, with 60% of female respondents and 49% of male respondents thrilled to drop ESPN to save $8 a month on their cable bill.

Richard Greenfield at BTIG Research has tried in vain to warn ESPN parent company Disney it may be on borrowed time.

“We continue to believe ESPN is in serious trouble as they spent far too heavily on long-term sports rights contracts, given the deteriorating state of the multichannel video bundle and accelerating shift of TV ad dollars to mobile,” Greenfield wrote in a note to investors. “Simply put, ESPN has been the largest beneficiary of the ‘BIG’ cable bundle for decades and is now dramatically overearning, with consumers the biggest losers.”

No basic cable network costs consumers more than ESPN, with $5-9 dollars of every cable TV bill paying for ESPN and its sister sports networks, whether customers watch or not. Each year, ESPN rakes in almost $9 billion from American households and advertisers, much of it used to bid for high-profile sporting events which used to appear exclusively on major broadcast networks. With billions on hand from pay television customers, many who also pay surcharges for sports programming and broadcast/over the air stations, sports teams and their owners are flush with cash. Some cable companies have even resorted to launching expensive cable networks in association with team owners just to secure viewing rights as competitors continue to bid up the price.

ESPN’s business model depends on making every cable customer pay for ESPN, so its contracts prohibit cable operators and satellite providers from placing the network on an added-cost tier.But as new online video providers launch, many are trying to omit expensive sports programming to give customers cheaper options. If consumers choose those providers, expensive cable networks are in big trouble.


ESPN president John Skipper admits ESPN’s secret: It rakes it at least $6 billion annually from cable customers, many who never watched ESPN. (Playing time varies)

Greenfield has tangled with Bob Iger, Disney’s chairman and CEO about the risks to ESPN’s future business model in the recent past. Iger has taken the cord cutting threat in stride, claiming ESPN is even prepared to start selling its networks individually, direct to consumers. Greenfield believes Iger is bluffing.

“As soon as ESPN launches a direct-to-consumer offering, it will remove the ‘protection’ they receive from cable/satellite distributors who guarantee ESPN a certain level of penetration,” Greenfield writes. “So no matter what price point ESPN/ESPN2 launch to consumers, it enables their legacy distributors such as Comcast to offer far more robust channel packages without ESPN.”

In an open market where customers get to decide on the channels they pay to receive, more than half of the country would not pay for ESPN, creating an enormous revenue hit for the network. Without adequate funds to compete in sports programming rights auctions, ESPN would likely lose access to many sporting events, further reducing revenue received from advertisers as ratings dropped. To make up for those subscriber losses, ESPN might have to charge consumers up to $30 a month for a Netflix-like ESPN offering. Civic Science asked how many would pay $20 a month for ESPN and found only 6% of survey respondents willing. In contrast, about 80 percent of Comcast customers now take ESPN, but not because they have a choice.

Cord-cutting may already be taking a toll on ESPN’s bank account. Those dispensing with a cable television package in favor of Hulu, Amazon, or Netflix may be partly to blame for ESPN’s decision to layoff 300 employees last fall.

“The math for a direct-to-consumer offering for a basic cable network does not work, especially for channel(s) with very high monthly fees embedded within the current MVPD bundle,” said Greenfield. “Disney cannot take ESPN direct-to-consumer and they know it, whether they admit that publicly or not. Furthermore, if the multichannel video bundle frays faster than expected and the TV ad market continues to weaken, ESPN’s future growth prospects are dim, at best.”

N.Y. Approves Charter-Time Warner Merger; Stop the Cap!’s Impact on Deal Conditions

charter twc bhConditions recommended by Stop the Cap! to protect New York consumers after a merger of Charter Communications and Time Warner Cable are expected to cost the two cable companies almost one billion dollars and will guarantee statewide adoption of Time Warner Cable’s Maxx upgrade, guaranteeing all customers receive speed upgrades ranging from 60-300Mbps.

On Friday, the N.Y. Public Service Commission announced its conditional approval of the merger transaction, but only if Charter agrees to a series of wide-ranging conditions to guarantee that New York customers receive tangible benefits as a result of the merger:

The Commission agrees that in order for the proposed merger to be in the public interest, the Petitioners must agree to make concrete and enforceable commitments to modernize their cable system and services, expand access, address the digital divide and improve customer service. To this end, we find that with the acceptance by the Petitioners of the enforceable conditions, as discussed in the body of this Order and Appendix A, the proposed merger is in the public interest. These conditions are designed to help ensure a near ubiquitous world-class communications network that meets the needs of all New Yorkers. Absent acceptance of these conditions, the public interest standard cannot be met, and the petition for transaction approval is denied.

Stop the Cap! was quoted and footnoted extensively in the PSC order. We provided the PSC with insight beyond the public relations machine of Charter and Time Warner Cable. We exposed the fact Charter’s promised service improvements were actually more modest than what Time Warner Cable has undertaken on its own through its Maxx upgrade program. We educated regulators about the inadequacy of Charter’s initial commitment to offer low-cost Internet access for low-income families. We questioned the consumer benefits of certain upgrades that could actually increase costs for consumers because of additional equipment fees. We alerted the PSC that Charter would discontinue Time Warner’s affordable $14.99 Internet offer. We strongly recommended the PSC consider making rural broadband expansion a part of this transaction. We also sought additional protections from any future compulsory usage caps or usage-based billing.

special reportAlthough Stop the Cap! was opposed to the transaction from the outset, doubting it was in the public interest, we recognized the chances for approval were greater than the Comcast-TWC merger that was eventually withdrawn. Therefore, we made it a priority to outline multiple conditions we felt should be imposed on Charter if the deal was to be approved.

Our constituency is ordinary consumers and ratepayers. Too often these kinds of mergers are approved with token conditions that only benefit minority or special interests, favored non-profit or government entities, or those with vested business interests (programmers, equipment manufacturers, etc.) It was important to us that any approval bring something beyond free Internet service for schools or community centers, agreements to continue carrying certain cable networks, or a temporary discount or low value coupon that ends up in the mailboxes of customers a year or two from now.

We know what Time Warner Cable customers in New York want: better service, faster speeds, no data caps, no gotcha fees, affordable Internet options, and job protection.

It appears New York regulators understand that as well and intend to force Charter to offer customers a better deal.

Despite publicly saying little about the merger, just a few hours after the PSC’s decision, Gov. Andrew Cuomo’s office issued a press release taking credit for the merger conditions and unveiling the “tenth signature proposal of his 2016 agenda: dramatically expanding and improving access to high-speed Internet in communities statewide.” Once again, the governor will try to entice providers like Time Warner Cable, Frontier Communications, and Verizon to expand rural broadband in New York using public dollars.

Although lacking a catchy title, the “New New York Broadband Program” includes a $500 million solicitation for private sector partners to subsidize rural broadband expansion with state dollars. The key goals of the 2016 program include:

  • stcAccess to broadband at speeds of at least 100Mbps; 25Mbps in the most remote areas of the State.
  • Public-private partnerships with a required 50 percent match in private sector investment targeted across the program.
  • Priority for projects that improve broadband Internet access in unserved areas, libraries and educational opportunity centers.
  • Applications will be chosen through a “reverse-auction” process, which will award funding to bidders seeking the lowest State investment.
  • Auctions to be held within each Regional Economic Development Council region to ensure statewide allocations of funding.

Much of the funding from earlier years ended up going to Time Warner Cable for modest expansion of its cable service, especially in eastern upstate New York. Likely applicants in 2016 include Time Warner Cable, Frontier Communications, community-owned/co-op broadband providers and rural wireless ISPs. Verizon and Cablevision are unlikely to apply.

Despite the governor’s efforts, most New York homes and businesses will be more affected by the Charter-Time Warner Cable merger, if it wins federal approval.

Gov. Cuomo

Gov. Cuomo

The Public Service Commission took its role very seriously, issuing a 93-page decision that took recommendations from consumer groups including Stop the Cap! very seriously. It did not share the industry’s belief that telecommunications providers in New York are heavily competitive.

“Time Warner serves close to 50% of New York State and we have a legitimate interest in ensuring that, when a company of this size provides customers with a service so affected by the public interest, as is communications, that real benefits accrue to consumers as a result of a given transaction,” the PSC wrote.

The PSC had an easier time sorting through comments about this merger, which generated considerably less interest than Comcast’s failed attempt to buy Time Warner.

“Generally, comments supporting the proposed transaction assert that, among other things, the merger will create jobs and provide better products at more affordable rates,” the PSC concluded in its ruling. “Those opposing the transaction state that the merger will inevitably lead to higher rates and potential data caps on broadband services in the future.”

The PSC took a very skeptical approach to Charter’s promised benefits, often finding them vague, questionable, or likely to have occurred with or without Charter’s involvement.

new-yorkFor example, the PSC questioned Charter’s promised network investments and upgrades:

Petitioners, however, decline to specify where in the national footprint of Charter, TWC and BHN these investments will be made or to identify the decisional factors to be used to channel these capital resources to specific areas or customers. There is no analysis to indicate that a reasonable proportion of these investments will be to systems in New York or for the benefit of New York customers. Similarly, there is no proposal by the Petitioners to describe the specific commitments that are being made or the specific enforcement mechanisms that would be used in the event the Petitioners’ implementation fell short of their commitments. Further, in order for these investments to be characterized as part of a net public benefit, Staff concludes, and we agree, that Petitioners would have to establish that these investments would not have been made in the absence of the proposed merger.

In the absence of a demonstration that there is “a tangible commitment to make new investments or invest beyond Time Warner’s current capital investment budgets,” it is difficult to characterize these capital expenditures as a certain benefit to New York customers or a satisfaction of the public interest under the New York statutes.

One of Stop the Cap!’s core arguments in our comments to the PSC was that Charter’s upgrade commitments were not particularly meaningful because Time Warner Cable was gradually upgrading its own systems to a level of service superior to what Charter plans to offer. The PSC clearly understood this and our warning that Charter’s commitments lacked specificity:

Public Benefit Assessment Staff and several commenters suggest that the proposed merger, as described in the Joint Petition and Petitioners’ Reply Comments, does not have sufficient net benefits to warrant a finding that the transaction is in the public interest. We concur. Many of the asserted benefits from the proposed transaction are events triggered by actions taken independently from the merger, and others are likely to be undertaken by TWC in any event, should the merger not be approved. Further, many asserted benefits are only described on a national scale and there is no way to determine if the investments or expenditures will occur in New York. Similarly, many of the projected benefits are described in terms that are too indefinite to permit us to assume that the benefits will occur as described to make a meaningful contribution to the transaction’s net benefits.

Time Warner Cable Maxx speed improvements.

Time Warner Cable Maxx speed improvements.

As a result, the PSC has looked more closely at Time Warner Cable’s Maxx program to be the benchmark for New York, not Charter’s proposed upgrades. They have adopted our recommendation that every Time Warner Cable customer in New York get the same kind of service upgrade residents in New York City enjoy today.

Another argument made by Stop the Cap! dealt with affordable Internet access. Time Warner Cable’s Everyday Low Price Internet ($14.99/mo for 2Mbps) is not fast, but it is affordable and free of the kind of revenue-protecting pre-conditions usually placed on Internet access for the poor. Time Warner’s plan is available to every customer at any time with no restrictions or contracts. In contrast, Charter’s originally proposed affordable Internet program required participants have school-age children, enroll only in the late summer, not have current cable broadband service (or be willing to forego it for 60 days), and not have any prior balance. As with Comcast, pre-conditions like this limit participation. The PSC agreed and now customers will be able to keep their more affordable Internet plans without jumping through artificial hoops launched by Charter.

The days of rural New Yorkers being quoted $20,000 to install Time Warner Cable service are also going to be a thing of the past. In addition to a commitment to pay for line extensions reaching 145,000 unserved or underserved customers, Charter is now required to work with New York’s Broadband 4 All program to receive supplementary funding, as available, to complete service extensions to eventually reach every customer that lives within a franchise area and wants cable service.

There are several other benefits outlined below that make this a better (although not great) deal, at least for New Yorkers. If any other state regulator manages to get an even better deal for that state’s residents, New Yorkers will automatically benefit because of a “most favored state clause” in the PSC’s order, which requires Charter to share those benefits with New York residents.

ny pscAll in all, the New York State Public Service Commission has lived up to its reputation as a consumer-protective body that is responsive to the needs of the public. This is in great contrast to many other states where regulators seem themselves as a business facilitator (and occasionally come directly from the businesses being regulated). In these states, the merger won approval with few, in any, preconditions.

We were delighted to have been extensively quoted and footnoted in the PSC’s order, having proven our case the Charter-Time Warner deal didn’t offer very much for New York. But we’re not happy the PSC punted on data caps. While recognizing they are a concern, the PSC seemed satisfied a three-year guarantee of no data caps was adequate. We disagree. As an increasing number of Comcast customers can attest, data caps are anti-competitive, anti-consumer, and unnecessary. Whatever benefits faster speeds can deliver can be easily curtailed by a data cap. So can online video competition. With much of upstate New York totally dependent on a single provider – Time Warner or Charter – for broadband speeds above 10Mbps, there is plenty of room for mischief that would otherwise be controlled by competitive forces. The PSC saw fit to avoid using its power of approval to get creative on keeping flat rate Internet affordable and available. That is a mistake we predict will be back to haunt us in the future.

Here are the specific conditions, most advocated by Stop the Cap!, that Charter Communications must agree to as a condition of the deal’s approval in New York:

Rural Broadband Access [$355 Million Value]

In addition to the goals accomplished by Gov. Cuomo’s New New York Broadband Program, Charter must agree to unilaterally build-out its network to reach an additional 145,000 “unserved” and “underserved” homes and businesses within four years. This will be an easy target for Charter to reach because the PSC defines “underserved” as any home with less than 100Mbps service. That represents much of upstate New York bypassed by TWC Maxx, so a speed upgrade in just one upstate city will achieve this requirement.

However, the PSC also included a second condition. Subject to the final terms and conditions of the Broadband 4 All Program being comparable to the Connect New York Program, Charter will be required to bid for Broadband 4 All Program funding to offer line extensions to any remaining unserved and underserved home across its entire New York service territory, which means every New Yorker within a cable franchise service area that wants service will be able to get it without being quoted tens of thousands of dollars for construction costs.

This will finally help would-be customers like Stop the Cap! reader Jesse Walser in Jamesville who has tried to get wired broadband in his home for over a decade. Verizon won’t upgrade its network and Time Warner Cable quoted him between $5,900 and $26,000 for installation of a line extension to reach his home.

All Digital Cable System Upgrade

Charter must convert their existing New York systems to an all-digital network (including upgrading the Columbia County Charter cable system to enable broadband communications) capable of delivering faster broadband speeds.

In Columbia County, residents are currently better served by smaller local providers. Both Germantown Telephone and Mid-Hudson Cable offer high-speed access throughout their territories. Berkshire Telephone has almost 100% DSL coverage, and Taconic Telephone has expanded DSL service to much of their huge service territory. Frontier Communications offers some DSL in southern Columbia County. The biggest problem providers are Verizon, which has no plans for DSL service in the area, and Charter Cable, which still runs a basic cable television-only system in the county.

In New York, Charter now provides cable television and other communication services to a relatively small number of customers, from two cable system clusters in and around Plattsburgh (14,000 customers) and Columbia County (2,500 customers). Plattsburgh gets television, phone and broadband service from Charter, but Columbia County is still served by a now-ancient, cable television only system.

Network Modernization and Speed Increases [$305 Million Value]

Charter must convert all of its systems in New York to all-digital within 30 months of the closing of the merger transaction. Charter is also required to offer broadband speeds up to 100Mbps to all customers by the end 2018 and match TWC Maxx speeds of 300Mbps by the end of 2019.

Charter’s all digital upgrade in upstate New York will facilitate faster broadband service, but it will also mean a set-top box or other similar device for every cable connected television in the home.

Broadband Affordability [$250 Million Value]

Despite Charter’s simplified menu of options (two broadband speed tiers and one video package), the PSC has required Charter to allow customers to keep their current plans, at least for the next several years:

  • Charter is required to maintain and advance its commitment to an affordable standalone Internet offering through the continuation of the Time Warner Everyday Low Price $14.99
    service throughout the Time Warner New York territory for up to two years and allow existing customers to keep the service for three years.
  • Charter is required to offer its 60Mbps standalone broadband product throughout New York at uniform national pricing. [$125 million value]
  • Charter is required to allow existing Time Warner customers to retain, without material changes that have the intent to discourage, the standalone and bundled broadband services they subscribe to at the close of the transaction for three years from the date of the closing.
  • Charter is required to provide a low-income broadband offering to eligible customers throughout its New York footprint. The PSC-ordered plan will offer 30Mbps for $14.99 a month to any household eligible for the National School Lunch Program and senior citizens 65 years and older eligible for the federal Supplemental Security Income program. No credit check shall be required and conditions requiring current broadband customers to wait 60 days to qualify and cover any past due bills have been deleted.

Customer Service [$55 Million Value]

Within two years after the close of the proposed transaction, Charter shall invest a minimum of $50 million in service improvement programs.

Charter is required to show a 35% reduction in Time Warner Cable’s 2014 cable PSC Complaint Rate by the end of 2020, with a 17.5% reduction due by the end of 2018. If they don’t achieve that, Charter must invest an additional $2.5 million in its service for each failure.

Job Protection

For the next four years, Charter cannot cut the number of customer facing jobs in New York.

Canada Talks TV: Preparing for A-La-Carte Cable TV; Providers Threaten Rate Hikes

alacarte

Does Canada’s Food TV need special protection when it made 53% gross profits on the backs of cable subscribers that pay for the network whether they watch it or not?

“If you cut your cable, then your Internet is going to go up,” predicts Gary Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing.

That is just one of several predictions many Canadian cable and phone companies are claiming will come from the “disastrous decision” to allow consumers the freedom to pick and pay for only the cable channels they want to watch. Amidst claims that over 10,000 jobs will be lost, chaos and bankruptcy will stalk minority and niche cable networks, consumers will pay much higher bills, and American programming will boycott Canada fearing a-la-carte could make its way into the United States, Canada is at least having an adult discussion about the future of television and where it fits in the country’s identity.

Big changes are coming as a result of the latest great soul-searching made by our good neighbors to the north, always concerned about the potential of the Canadian Experience being overrun, if not decimated by the United States’ entertainment hegemony. In a moment of clarity, regulators have just realized what the rest of English-speaking Canada already knew: protectionist content regulations don’t work on the Internet. Canadians routinely bypass geographical restrictions and Canadian content laws with virtual private networks that relocate them, online at least, to a home address in the U.S. so they can binge-watch the unrestricted American versions of Netflix, Hulu and other online video services.

Regulators have now adopted the attitude – “if you can’t beat ’em, join ’em,” encouraging Canadian entertainment producers to create fewer, but better shows that will not only attract Canadian audiences, but those abroad.

Only the exchange is supposed to be mutual. High quality Canadian television productions like Orphan Black, Schitt’s Creek, X Company, The Book of Negroes, This Life, 19-2, Vikings, Killjoys, Rookie Blue, and Murdoch Mysteries are all among Canadian critics’ top favorites. But relatively few Americans know these shows exist or assume they are co-productions owned by some American entertainment conglomerate. Only a brief glimpse of a Canadian flag during the warp speed end credits might clue viewers this isn’t the case.

Despite protectionist media policies that have endured since 1970, the Canadians are now boldly going where Americans have so far feared to tread. They are having the conversation about the future of television and online entertainment in all forms while American media barons remain in denial.

For average consumers, the biggest change will begin next spring when the era of Canadian a-la-carte cable television arrives, allowing consumers to take an ax to the expensive 120-300 channel television package once and for all. Starting March 1, all Canadian providers will be required to offer consumers a basic cable package priced at no more than $25 a month, containing Canadian and U.S. over the air stations and networks, educational, and public channels. If you want more, you can have it by buying channels or mini-packages of networks individually to create a personalized cable TV lineup of networks you actually care to watch.

Programmers across Canada, particularly those catering to sports fans, foreign audiences, religious viewers, and minorities are horrified by the idea. So are media critics that fear the change could help bring an end to Canada’s unique multilingual and multicultural identity.

special reportCustomers like James Rehor of Hamilton explains why.

“Why would I pay for it? Why do I get it? Why does it come on my TV?” asks the 60-year-old construction worker. He’s ready on day one to purge the large number of French and other non-English channels from his Cogeco Cable lineup. Rehor offers comfort to sports programmers, however. He’s a big fan of the Toronto Maple Leafs, so Leafs TV, Sportnet, and TSN will stay.

Non-sports fans are another matter. They can’t wait to ditch the sports networks that are always the most expensive channels in a Canadian cable package.

“Clearly the most expensive (channels) will always be sports,” Pelletier tells the Canadian Press. “At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe … In the case of someone who doesn’t watch any sports at all, their bill will probably decrease.”

http://www.phillipdampier.com/video/CRTC Supporting the creation of content made by Canadians for Canadians and global audiences 3-2015.mp4

An Age of Abundance: Canadian telecom regulators are transforming media regulations in Canada, recognizing the way Canadians watch television has changed. Quality, not quantity, is now most important. CRTC chairman Jean-Pierre Blais discusses the new reality. (6:08)

Pelletier and his industry friends are on a mission to convince Canadians to leave well enough alone and not drop the current all-for-one price cable television package for a-la-carte — not realizing the potential consequences.

catnipSome in the cable industry have tried other scare tactics to no avail.

One industry-backed study predicted pick-and-pay could cost the economy 10,000 jobs. Consumers could care less. Unifor, a union that represents many in the television sector, seemed to agree Canada’s cultural heritage will be at risk with lowest common denominator programming dominating from St. John’s to Vancouver, much of it shoveled from the United States. But Canadians still want their House of Cards and Homeland.

Howard Law, a media spokesman for Unifor, predicts less profitable Canadian channels will fold under a pick-and-pay pricing model.

“The introduction of pick and pay will, in itself, lead to a major loss of revenues to Canadian broadcasting system, which ultimately plays out in less Canadian content and less Canadian jobs and less Canadian broadcasting,” he said in an interview on CBC’s The Exchange with Amanda Lang.

Minority interest and religious channels are also worried about their future. Most of those networks are classified as “specialty channels” by the Canadian Radio-television and Telecommunications Commission (CRTC). Legacy networks that have been around since at least the 1990s have been sitting pretty, protected by their designation as a “Category A” specialty station. Unlike in the United States, Canadian cable networks are licensed to operate by the CRTC, and at least 60 of those Category A networks also enjoy “genre protection,” a CRTC policy that guarantees their channel carriage on Canadian cable, satellite, and telco TV systems and protection from other cable networks that want to run the same kind of programming.

http://www.phillipdampier.com/video/CBC How New CRTC Rules Will Change Canadian TV 3-2015.mp4

For decades, protectionist Canadian content regulations made certain Canadian television reflected its audience. But online video and the Internet has allowed Canadians to bypass traditional cable television to watch they want, not what the government hopes they will. New CRTC rules reflect that reality as Canadian TV rethinks how to get the viewer’s attention. From CBC-TV’s The National (4:16)

CRTC policies have allowed Canadian specialty channels to flourish despite operating in a smaller marketplace with fewer viewers than their American counterparts. That means networks like FoodTV and HGTV in Canada have profit margins ranging from 53-58 percent. Fashion Television and BookTV made an improbable $2.7 million in pre-tax profit, not so much from viewers but from the licensing fees every Canadian cable customer pays for the four networks whether they watch them or not.

From its inception, Canadian TV has always faced a looming shadow from the south. Protecting Canada's identity has been a priority for decades.

From its start, Canadian TV has always faced a looming shadow from the south. Protecting Canada’s identity has been a priority for decades.

“If you’re a specialty channel that’s lived within the protective cocoon of bundling for years, you’ve gotten used to having a full-time job with benefits,” independent technology analyst Carmi Levy told CBC News. “Contrast that with living outside the protective cocoon, you’re essentially a freelancer, you fight for every contract, you have no benefits, there are no guarantees that money will be coming tomorrow or next week.”

It probably won’t be coming from subscribers like Mr. Rehor, who won’t hesitate to drop channels if they go unwatched.

The CRTC is also doing some dropping of its own, starting with genre protection, which could lead many specialty networks to follow American cable networks that today depend on chasing ratings to justify their licensing fees. The unintended result in the United States has been questionable lineup changes like the appearance of Law & Order rerun marathons on WEtv, a network supposedly dedicated to women’s entertainment. Ovation, a fine arts independent cable network that is about a niche as a network can be, depended on weekend binges of PBS’ Antiques Roadshow reruns in 2012 just to attract enough viewers to show up in the ratings.

Lesser known networks like OutTV, Canada’s only network dedicated to lesbian, gay, bisexual, and transgender viewers, may face an uncertain future if it can’t charge a premium price to make up for expected subscriber losses from pick and pay. Other niche channels may have to merge with other networks or more likely relaunch with an online platform and deliver a reduced menu of content to audiences.

crtcLarge Canadian mainstream networks and programmers don’t expect too much change from pick and pay, as most Canadians will likely still demand a package with their programming included. But distributors – cable, satellite, and telco TV platforms, do expect some major changes. The average Canadian now pays around $50 a month for basic cable, a price that will be cut in half next spring.

Rogers Cable already knows what is coming. It ran a trial in 2011 in London, Ont., with 1,000 customers who were given the choice of picking and paying for the channels they wanted. It didn’t take long for the cable company to discover customers loved it and TV stations and cable programmers hated it.

“We found that customers like bundles, but want to build their own. They want a basic package and an extra package they create,” Rogers spokesman Kevin Spafford told the Toronto Sun. “We did get push back from TV stations. There was concern about offering this service. They did not want us to proceed with that model.”

After the trial ended, Rogers allowed the pilot project participants to keep their pick and pay packages, something they’ve held tightly for over four years.

Rogers’ pilot offered something like what the CRTC is demanding be available to all Canadians:

rogers logoROGERS PICK AND PLAY PILOT

  • $20 a month for “skinny basic” TV package of Canadian stations. (The CRTC plan mandates no more than $25.)
  • 15-channel package for $27 a month. Other packages of 20 and 25 stations also offered, for more money. (The CRTC wants networks to offer channels individually or in mini-bundles.)
  • U.S. major networks offered for $3 a month. (Under the CRTC policy, these stations may appear under the basic or a-la-carte tiers.)

REGULAR ROGERS

  • Basic: $40 a month, 190 channels
  • Digital Plus: $63, 220 channels
  • Sports packages: $77, 230 channels
  • VIP TV: $77, 270 channels
  • VIP Ultimate: $119, 320 channels

The upcoming changes are probably the biggest in Canadian cable television history, but they still may not be enough to attract cord-nevers — those who have never subscribed to cable TV. Most are under 30 and already watch all their favorite shows online. Some budget-minded Canadians who want to cut their cable bill may consider joining them by cutting the cord altogether or slimming down their cable packages, but Pelletier warns that cable operators will not leave their money on the table.

cablecordSupplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier warns. Plus, you may have to surrender any discounts you get from bundling cable with home phone, Internet and/or wireless service.

Usage capped Internet is also still an effective deterrent for cord-cutting and whether your television entertainment comes over the cable or online, providers will still make a run for your wallet. Some observers predict providers will dramatically increase the retail prices of a-la-carte networks to limit potential savings while also continuing to raise broadband prices.

A 2014 national PIAC poll found 90 per cent of 1,000 consumers polled were willing to pay an additional $1 a month per channel, while 54 per cent would be willing to go $3 a month, and 21 per cent would be willing to pay $5 a month for an extra channel of their choosing. Many don’t realize under the current system the wholesale rate for many channels is under 50 cents a month. Considering what Canadians are willing to pay, it is likely cable companies will price channels according to what the marketplace will tolerate, which could be around $3 for each channel a month.

Suspicion about any cable company offering a New Deal is something Americans and Canadians have in common. Mr. Rehor is already keeping a wary eye.

“I think it’s a good idea, I just don’t know how they’re going to really work it,” he says, fearing it could ultimately end up costing the same amount he pays now.

http://www.phillipdampier.com/video/CBC Pick and Pay TV 3-2015.flv

CBC News offers this extended discussion about the implications of “pick and pay” cable television. (10:11)

Charter & Time Warner Cable Try Internet-Only TV Service to Combat Cord-Cutting, Cord-Nevers

Phillip Dampier October 26, 2015 Charter, Consumer News, Online Video, Time Warner Cable 2 Comments

charter spectrum logoCharter Communications and Time Warner Cable believe they can win the war against cord-cutting by offering broadband-only customers a less expensive video package with a free Roku 3.

Charter Communications has been quietly testing a subscription service called Spectrum TV Stream that’s aimed at broadband-only customers, starting at $12.99* per month and includes a free Roku 3 streaming player.  Customers can start with a package of around 15-20 local/over the air, home shopping, religion, and weather channels, along with the option of adding Showtime or HBO for an extra $12.99 a month. Several extra cable channels, including: ABC Family, ESPN, Food Network, Hallmark, HGTV, LMN, Nat GEO, AMC, Discovery, History, FX, History 2, TBS and TLC are also available as an option for an extra $7 a month.

Because it’s Charter, there are some gotchas, as indicated by our *asterisk. The most disappointing is Charter’s insistence on applying its usual $5-8/month Broadcast TV Surcharge fee (it varies by market) to the streaming service. Other taxes, fees and surcharges also apply, which means most will pay at least $20 a month for a service Charter is advertising for $12.99. The Charter-supplied Roku 3 ($99 value, which includes a remote and headphones) is required to use the service and comes pre-activated. Customers can also access the service through Charter’s phone/device app, but out of home viewing does not function for some networks for contractual reasons.

Because the service is so new, Charter’s sales representatives have offered inconsistent information about the service. One current Charter customer was charged a $29.99 service change fee to transition to Spectrum TV Stream while several others were told they could not drop existing cable TV service and sign up for streaming without first canceling and disconnecting all Charter services for at least 30 days. To be fair, some representatives offered to open a new account in the name of another household member to avoid the 30 day waiting period and another used the opportunity to offer the customer a retention discount to encourage him not to change his service.

Gotcha with that $30 change fee.

Gotcha with that $30 change of service fee, which may turn out to be a billing mistake. Also notice the out-the-door price of Spectrum TV Stream is higher than advertised.

Based on these experiences, it seems likely Charter is using revenue protection measures to discourage current cable television customers from switching to a less-costly plan.

You need Charter's Internet service to subscribe.

You need Charter’s Internet service to subscribe.

Charter’s flyer about the service has been sent to cord-cutters, cord-nevers, and broadband-only customers with satellite TV subscriptions. But since a copy landed in our hands, we’re sharing the details with everyone.

To ask if the service is available in your area or to subscribe, customers need to call a special toll-free number: 1-844-560-5730. You will need Charter broadband service to qualify for the streaming TV service. The Roku 3 device is shipped to arrive within one week, and requires a customer signature or waiver on file for FedEx delivery. Although Charter claims the offer of the free Roku 3 expires Nov. 15, 2015, it is likely to be extended. Customers signing up will be considered qualified cable TV subscribers, allowing authenticated access to on-demand content from cable programmer websites, including premium services like HBO Go (if you subscribe). Up to 15 devices can be registered for viewing, five in simultaneous use. There is a 30-day money back guarantee and customers can cancel and keep the Roku 3 with no further obligations to Charter.

Quality and performance was rated fair by beta testers already signed up. The service works over Charter’s broadband network, which may be another reason the company dropped usage caps several months ago. Regular viewing will run up your usage numbers, but not as much as high-definition streams from Netflix or Amazon.

Charter’s Spectrum TV Stream apparently uses MPEG-2 compression and video quality is reportedly not comparable to traditional satellite TV or cable. Some claim it performs about equal to Netflix’s lowest resolution stream setting. Others complain it can take 3-4 seconds to change channels and streaming quality can dynamically change based on Charter’s broadband performance. Cable customers will also likely miss functionality they get with a DVR to pause, rewind, and start-over television programs — features all absent from Charter’s streaming service.

But even those disappointed with the service are welcoming the consolation prize of an effectively free Roku 3, which Charter allows you to keep with cancellation just for trialing the service.

TWC-TV-New-LogoTime Warner Cable is reportedly planning to launch its own streaming television package today for its broadband-only customers, starting with those in New York City. Usually reliable sources tell Engadget Time Warner Cable will launch a beta test of a new version of its TWC TV service. As with Charter, Time Warner Cable will supply a free Roku 3 tied to the customer’s Time Warner Cable broadband account.

Time Warner will offer its “Starter TV” package as a broadband add-on for $10 a month. That package offers viewers (in NYC): WABC, WCBS, C-SPAN, C-SPAN 2, C-SPAN 3, WWOR, WPXN, WLNY, WMBC, UniMas, WRNN, RISE, WYNJ, Educational Access, EVINE Live, WNYW, Galavision, Government Access, HSN, Music Choice, WNBC, WNET/WLIW, Public Access, QVC, SHOP NBC, TBN, TBS, Telemundo, TWC News, Univision, WGN America, WPIX, and several international/special interest channels.

Showtime and Starz will also be available in an optional package priced at $20 a month. If you want all of Time Warner’s channels and those premiums, they are bundled together for an extra $50 a month. We are not certain if the $50 bundle covered Time Warner’s “Standard” or “Preferred” TV lineup as of press time.

In essence, the package will look a lot like what current Time Warner Cable customers can access over the company’s TWC TV app. The difference is this is the first time Time Warner will sell IPTV service to consumers who now avoid cable television. These streaming-only customers will also never have to lease a cable set top box.

in homeAs with Charter’s service, Time Warner Cable customers will have to give up DVR services like pause, fast-forwarding, rewind, and start-over. The service offers no recording capability either, and maintains the same contractual restrictions that limit the number of channels you can watch on devices outside of the home.

Customers can stream video on up to four registered devices, including the Xbox One/Xbox 360, Android, iOS, Fan TV, Kindle Fire and Samsung’s Smart TVs.

It’s our contention these IPTV services are the likely future of cable television. It’s inevitable cable operators will eventually use their fiber/coax networks to deliver one platform — broadband, on which it will sell Internet access, television, and phone service. This could mean the eventual end of the set top box, replaced with inexpensive devices like a Roku. DVR’s can be replaced with cloud-based DVR-like services to manage time shifting and similar conveniences. That would be welcomed by many cable subscribers who detest the current generation of power hungry devices and their monthly rental costs, especially as cable systems continue to move to all-digital service, necessitating a box on every connected television in the home.

The current TWC TV app offers both good and bad to users. The alphabetic channel lineup is a welcome change from trying to find a channel by its number. The app is also ready-made for out of the home viewing, at least when programmers allow Time Warner the ability to offer that option. But TWC TV has also suffered from regular buffering glitches, service or channel outages, video quality degradation at peak usage times, and in our experience runs up to a minute behind live television.

Stop the Cap Files Opposition to Charter-TWC-Bright House Merger With FCC

charter twc bhFEDERAL COMMUNICATIONS COMMISSION

_______________________________________

Applications of Charter Communications, Inc., Time
Warner Cable Inc., and Advance/Newhouse
Partnership for Consent to the Transfer of                        MB Docket No. 15-149

Control of Cable Television Relay Service
Applications         

_______________________________________

Statement of Opposition

(Click here to download a copy in PDF format.)

October 10, 2015

Stop the Cap! is a Rochester, N.Y.-based consumer group founded in 2008 to fight against the introduction of artificial limits on broadband usage (usage caps, consumption billing, speed throttling) and to promote better broadband speeds and service for consumers. Our group does not solicit or accept funding from lobbyists, companies, or others affiliated with the telecommunications industry. We are entirely supported by individual donors who share our views.

Introduction

It is our view that the application of Charter Communications to effectively acquire Time Warner Cable and Bright House Networks offers no compelling public interest benefit and is therefore not in the public interest.

Our organization represents the interests of consumers and customers who face ever-growing broadband and television bills. Since its founding in 2008, we have witnessed a gap between the promised benefits of telecom mergers and what actually materializes for customers. Our conclusion is that consumers rarely benefit from these transactions. Prices continue to rise, customer service does not significantly improve, competition suffers, and conditions imposed by regulators to protect consumers or improve service are either not meaningfully met, expire too soon, or are too limited to be useful.

Charter’s claimed public interest benefits from its acquisitions are woefully inadequate and will, in fact, harm consumers if this merger is permitted.

The proposal asks the Commission to approve Charter’s acquisition of not one, but two established cable providers, one considerably larger than Charter itself:

  • Time Warner Cable, the second largest U.S. cable operator with more than 11 million residential and business customers[1];
  • Bright House Networks, the sixth largest U.S. cable operator with approximately 2.5 million customers.[2]

Charter Communications is about half the size of Time Warner Cable.[3]

Charter's broadband customer satisfaction scores are nothing to write home about.

Charter’s broadband customer satisfaction scores are nothing to write home about. Time Warner is no prize either, especially in areas where Maxx upgrades are not yet available.

In the 2015 J.D. Power U.S. Residential Television Service Provider Satisfaction Study, Charter rated poor — second to last place behind five other providers in the North West region, fourth from last behind six others in the South region, and third from last behind five other providers in the West. In fact, at no time did Charter rank anything higher than “about average” for television, broadband, and telephone service and often scored worse.[4]

This is a critical measurement of how Charter is likely to perform in areas currently served by Time Warner Cable and Bright House, should the merger be approved.

“The ability to provide a high-quality experience with all wireline services is paramount, as performance and reliability is the most critical driver of overall satisfaction,” said Kirk Parsons, senior director and technology, media & telecom practice leader at J.D. Power. “The fact that households continue to choose to upgrade their wireline connection to digital service is a testament to its improved performance and benefits, such as higher quality video and faster Internet speeds.”

FCC Chairman Thomas Wheeler has publicly stated his four preferences for telecommunications policies that promote competition and foster enhanced service.[5]

  1. “First, where competition exists, the Commission will protect it,” Wheeler said. “Our effort opposing shrinking the number of nationwide wireless providers from four to three is an example. As applied to fixed networks, the Commission’s Order on tech transition experiments similarly starts with the belief that changes in network technology should not be a license to limit competition.”
  2. “Communications policy has always agreed on one important concept: the exercise of uncontrolled last-mile power is not in the public interest,” Wheeler said. “This has not changed as a result of new technology. When network operators have unrestrained last-mile power, public policy can step in to protect consumers and innovators. When cable companies, for instance, were accused of using their control over the last-mile distribution of video programing to harm competition by keeping content from others, Congress stopped that practice in the 1992 Cable Act. There are two important lessons from this: First, last-mile power cannot be a lever for gaining an unfair advantage. Second, rules of the road can provide guidance to all players and, by restraining future actions that would harm the public interest, incent more investment and more innovation.”
  3. “Where meaningful competition is not available, the Commission will work to create it. For instance, our efforts to expand the amount of unlicensed spectrum create alternative competitive pathways. And we understand the petitions from two communities asking us to pre-empt state laws against citizen-driven broadband expansion to be in the same category, which is why we are looking at that question so closely.”
  4. “Where competition cannot be expected to exist, we must shoulder the responsibility of promoting the deployment of broadband. One thing we already know is the fact that something works in New York City doesn’t mean it works in rural South Dakota. We cannot allow rural America to be behind the broadband curve. Our universal service efforts are focused on bringing better broadband to rural America by whomever steps up to the challenge—not the highest speeds all at once, but steadily to prevent the creation of a new digital divide.”

We will return to these four themes in our statement to see if Charter’s application helps or hinders these priorities. It is our contention Charter’s application does not meaningfully advance the stated goals of the Chairman or the Commission. In fact, Charter’s proposal impedes achievement of some of these goals significantly.

In our presentation, we will regularly refer to Charter’s existing product suite, usually referred to as “Charter Spectrum.” We will also refer to two different types of service from Time Warner Cable.

Wheeler

Wheeler

On January 30, 2014, Time Warner Cable announced its new TWC Maxx initiative that substantially improved broadband speeds for customers without a corresponding rate increase. The upgrade also introduced a new class of cable equipment for video customers offering an enhanced viewing experience, increased plant/service reliability, improved customer support – including more options for in-home service calls, and retained and improved existing budget-priced broadband tiers for fixed and low-income customers.[6]

We will therefore refer to both Time Warner Cable Maxx-upgraded service areas defined above and “legacy service areas” that are currently awaiting Maxx upgrades and now offer slower top Internet speeds ranging from 50-100Mbps.

It is our contention that Charter’s proposal to bring improved broadband speeds, better set-top boxes, faster upgrades, and a three-year commitment to voluntarily adhere to Net Neutrality/Open Internet policies and not impose usage caps on residential broadband service offers little because Time Warner Cable Maxx already offers consumers a more compelling offer on an upgrade timeline nearly equivalent to that proposed by Charter Communications.

Time Warner Cable has also never been credibly accused of violating Net Neutrality principles, is unlikely to do so in the future, and has repeatedly insisted it will not impose compulsory usage caps on its customers. We also argue Charter Communications’ heavy indebtedness as a result of this transaction will likely pose a challenge to complete the company’s promised upgrade plan and its ongoing operations.

In short, consumers are much better off remaining Time Warner Cable and Bright House Networks customers as opposed to Charter Communications customers.

Should the FCC ultimately disagree with our contention, we urge you to impose our ideas for strong and meaningful conditions to protect consumers. Without this, we fear the executives of both companies and their shareholders will be the only ones to actually benefit from this transaction. Consumers will be left with little more than a higher bill.

Discussion

charter spectrum logoCharter Communications’ proposition to the Commission and customers is to deliver a more compelling product suite offering faster Internet speeds, better set-top equipment, and a three-year commitment to adhere to the Commission’s Open Internet principles and not impose usage caps or modem rental fees on customers.

While on the surface these commitments may seem laudable, when they are closely examined it quickly becomes apparent they offer little to Time Warner Cable customers, particularly the approximately 45% of which will have been upgraded to “Maxx” service by the end of 2015.[7]

Charter customers can generally choose from two tiers of Internet service, according to Charter’s website[8]:

We offer two different Charter Internet connection packages:

Plus – up to 30Mbps Download and 4Mbps upload

Ultra – up to 100Mbps Download and 5Mbps Upload

With Charter Internet Ultra, network speeds can reach up to 100 Megabits per second (Mbps). Your exact speed will depend on the service level to which you subscribe.

Charter charges new customers an introductory monthly price ranging from $29.99 (when Internet service is bundled with video/phone service) to $39.99 (Internet-only service) for its 60Mbps Standard broadband tier.[9] It is this promotional rate Charter is proposing to extend to Time Warner Cable and Bright House Networks customers. But Charter does not commit to a specific time frame under which this promotional rate will apply to these customers. According to Charter’s disclaimer, the promotional rate expires after one year, after which the rate resets to a “standard rate,” currently $59.99 a month.[10]

speed-plan-chart-2014In contrast, Time Warner Cable offers a much larger variety of Internet tiers, starting at $14.99 a month and generally increasing in $10 increments, based on offered speed.[11] In legacy service areas, Time Warner Cable’s pricing can be more compelling, even with the slower Internet speeds, because income-challenged consumers may feel a need to buy service based on price, not performance. Charter all but eliminates these lower-cost options, except in limited circumstances where a customer manages to meet onerous requirements to qualify for a low-income broadband discount plan.

Achieving faster Internet speeds is another priority for Chairman Wheeler. At a speech last fall at 1776, the Chairman said, “a 25Mbps connection is fast becoming ‘table stakes’ in 21st century communications.”[12]

Both Time Warner Cable and Charter Communications will deliver twice or more that minimum speed as their Standard tier offering. Time Warner already achieves this goal in their Maxx service areas, where 50Mbps is the new Standard speed tier. Charter proposes to take more than two years to upgrade Time Warner Cable customers to an incrementally faster 60Mbps speed tier. Additionally, Time Warner Cable Maxx customers are assured they can further upgrade that speed in increments up to 300Mbps. Charter, in contrast, offers most customers a maximum of 100Mbps.[13]

The most important question before the Commission is which cable operator is better positioned to deliver the services customers want and/or need. We argue Time Warner Cable and Bright House, not Charter Communications, are both in a stronger position to deliver.

Since the termination of the Comcast-Time Warner Cable merger, Time Warner Cable has responsibly invested in their infrastructure without assuming an irresponsible amount of debt. Bright House Networks’ owners have taken the company private, but their ongoing investments in a robust Wi-Fi platform, their high consumer satisfaction scores, and their investments in ongoing upgrades to meet challenges of competitors like Verizon FiOS suggest the company is in healthy financial shape.

Time Warner Cable CEO Robert Marcus reported significant progress in their first quarter 2015 report to shareholders and customers, despite the distraction of the Comcast merger[14]:

Over the past 16 months, we’ve made significant investments to improve our customers’ experience:

  • Investing more than $5.2 billion to, among other things, improve the reliability of our network and upgrade customer premise equipment – including set-top boxes and cable modems – with the latest technologies and expand its network to additional residences, commercial buildings and cell towers;
  • Launching TWC Maxx, which features greater reliability, all-digital video, advanced TV services, standard tier of Internet speeds at 50 Mbps, and higher tiers of service up to 300 Mbps. New York, Los Angeles and Austin are complete; Dallas, San Antonio and Kansas City are underway; Charlotte, Raleigh and Hawaii are slated for later this year; and San Diego is expected to be done in early 2016;
  • Introducing Enhanced DVR, a six-tuner set-top box that allows customers to record up to six shows simultaneously and store up to 150 hours of HD content;
  • Increasing the number of Cable Wi-Fi hotspots available to our customers to 400,000;
  • Rolling out our cloud-based video guide to 8 million set-top boxes to date. The guide also makes it easier to browse our On Demand library, which now sits at 30,000 free and paid titles and continues to grow;
  • Expanding our industry-leading TWC TV app – which allows customers to watch live TV and On Demand content and control and program their DVR from inside and outside the home. TWC TV is now available on Xbox One, Xbox 360, Amazon Kindle Fire HD and HDX tablets, Android and IOS phones and tablets, Fan TV, PCs, Samsung TV and Roku;

Serving customers on their schedules rather than ours. We expanded one-hour appointment windows across the company and in Q1 met that window 97 percent of the time. We continue to add nighttime and weekend appointments.

Marcus

Marcus

Since that report, Time Warner Cable has announced new Maxx service upgrade areas – Greensboro and Wilmington, N.C. Marcus has indicated additional cities will receive upgrades in 2016.[15]

On the January 29, 2015 quarterly results conference call with investors, Marcus indicated Maxx upgrades delivered tangible benefits to the company, including increased customer satisfaction, higher network reliability, and a stronger product line.[16] Based on those factors, it would be logical to assume Time Warner Cable would continue its upgrade project, and indeed Marcus confirmed this in his remarks:

“Our aim is to have 75% of our footprint enabled with Maxx […] by the end of [2016], and my guess is we’re continuing to roll it out beyond that,” said Marcus. “So the only question is prioritization, and obviously as we think about where to go first, competitive dynamics are a factor. So that includes Google, although it’s not explosively dictated by where Google decides to go. In fact I think we announced the Carolinas before Google did their announcement this week. So competitors are certainly relevant obviously.

At the rate Time Warner Cable has been rolling out Maxx upgrades, which were first announced on January 30, 2014[17], with 45% of its service area upgraded within 23 months, it is likely the company would complete its Maxx upgrade to all of its service areas within the next 24-30 months. Notably, the staff of the New York Department of Public Service found, while investigating this deal, “there is no indication that Petitioner’s plan for converting to all-digital in New York is any different from Time Warner’s existing plan.”[18]

Charter’s upgrade proposal is, in fact, generally inferior to what Time Warner Cable is accomplishing on its own. We strongly recommend the Commission carefully consider whether Charter’s proposal is as truly compelling as they claim.

twc maxxWe are also very concerned about Charter’s plans to deliver affordable Internet access. Chairman Wheeler expressed his concerns about the digital divide in broadband. The cost of access is perhaps the most important factor for getting broadband service in income-challenged households. If Charter’s price is too high, many will go without service.

Charter has no plans to continue Time Warner Cable’s $14.99 Everyday Low Price Internet service – a very important offer for low income residents and senior citizens who are unable to afford the nearly $60 regular price both companies charge for their 50 or 60Mbps tiers. Time Warner Cable offers this $14.99 tier without preconditions, restricted qualifiers, contracts, or limits on what types of services can be bundled with it. Any consumer can buy the service and bundle it with Time Warner Cable telephone service for an additional $10 a month, which offers a nationwide local calling area, as well as free calls to the European Union, Mexico, Puerto Rico, and several Asian nations.

The loss of a $25 plan that includes basic Internet access and a bundled, 911-capable telephone line would be devastating to low-income households and senior citizens. During the Comcast-Time Warner Cable merger hearings in New York, no topic elicited as much interest as Internet affordability and the onerous restrictions cable operators place on their income-qualified budget Internet plans.[19] The same concerns exist today with Charter’s application. Time Warner Cable clearly offers a superior product line for these customers, including two other Internet service tiers offering stepped up Internet speeds in $10 increments. These options would be unavailable from Charter.

Charter’s proposed solution to serve low-income customers is adoption of Bright House Networks’ Connect2Compete program, which offers restricted access to $9.95/month Internet service for those who qualify.

connect2competeStop the Cap! investigated Bright House Networks’ existing offer in a report to our readers in June 2015, and we urge the Commission to look much more closely at the specific conditions Bright House customers have had to endure to qualify to subscribe[20]:

1) You must have at least one child qualified for the National School Lunch Program. They need not be enrolled now.

2) You cannot have been a Bright House broadband customer during the last three months. If you are a current customer, you must first cancel and go without Internet service for 90 days (or call the phone company and hope to get a month-to-month DSL plan in the interim.)

3) If you have an overdue bill older than 12 months, you are not eligible until you pay that bill in full.

4) Bright House does not enroll customers in discounted Internet programs year-round. From a Bright House representative:

“We do participate in this particular program, however, it is only around September that we participate in it. This is a seasonal offer that we have which can only be requested from the middle of August to the middle of September, which is when most start up with school again for the year.”

5) Bright House does not take orders for the Low-Income Internet plan over the Internet. You have to enroll by phone: (205) 591-6880.

Families fall into poverty every day of the year, and poverty-stricken families move from one school district to another every day of the year. So it’s horribly unfair to tell them they’d qualify for this program if only they had fallen into poverty sometime between the middle of August and the middle of September.

It has been our experience covering service providers across all 50 states that most design these low-cost Internet access programs with revenue protection first in mind. Charter Communications is no different. As with Comcast, Connect2Compete is only available to families with school age children. Applicants face an intrusive, complicated, and time-restricted enrollment process that threatens to dampen and discourage participation.

Charter’s claimed interest to meet the needs of low-income customers might be more honorable if not for their insistence otherwise-qualified existing customers cannot downgrade their regular price broadband plan to Connect2Compete unless they voluntarily go without Internet access for three months.

Time Warner Cable goes out of its way to advertise "No Data Caps."

Time Warner Cable goes out of its way to advertise “No Data Caps.”

We strongly recommend Charter Communications be compelled to continue Time Warner’s $14.99 Internet plan, but at speeds no less than 25Mbps, the minimum definition of entry-level broadband by the FCC. We also recommend Charter be required to further discount this plan to $9.95 a month for qualified customers who meet a simple income test the Commission can define and establish. These discount programs should not just be available to families with school-age children. Everyone needs affordable Internet access, whether you are single and looking for your first job or a fixed income senior citizen.

All restrictions for existing customers or those with an outstanding balance must be prohibited and sign-ups must be accepted 365 days a year with re-qualification occurring not more than once annually.

Charter’s broadband offer for lower-income Americans is inadequate, and so is their plan for customers who need enhanced service.

Time Warner Cable Maxx delivers a more compelling offer for consumers and small businesses that need much faster Internet access. Charter’s upgrade will offer customers two choices: 60 or 100Mbps service. Time Warner Cable Maxx offers considerably more[21]:

chartersucksCharter Communications’ commitment to not impose “usage caps” for three years is inadequate. As we have learned from Comcast, the industry definition of a “usage cap” differs widely from the definition understood by most consumers.

Charter’s commitment must be expanded to prohibit all forms of usage pricing, such as those similar to what Comcast is market testing in several of its service areas.[22] In these markets, Comcast has established an arbitrary usage allowance and charges punitive overlimit fees to customers that exceed it. Comcast has repeatedly denied it has “usage caps” because its so-called ‘data plans’ allow customers to voluntarily exceed their usage allowance, at a cost. Without a commitment Charter will also not impose usage-based pricing, its commitment to regulators not to impose “usage caps” is largely meaningless.

More concerning, Charter Communications has a history of capping their customers’ usage. Less than three months before announcing it would acquire Time Warner Cable, Charter Communications quietly dropped usage caps in place on its broadband plans since 2009, without explanation.[23] The FCC itself is investigating this and other related issues as part of this proceeding.[24]

internet limitConsumers have shown no interest in usage-based pricing or usage-capped wired Internet and strongly prefer unlimited access. One only need look at Time Warner Cable’s own results when offering an optional discounted Internet plan for customers volunteering to limit their usage.

Time Warner Cable CEO Rob Marcus noted customers strongly want to keep their unlimited use plans, even if they cost more. Speaking at the Deutsche Bank Media, Internet, and Telecom Conference, Marcus noted:

“If you take the 30GB a month and compare it to what median usage is, let’s say high 20s — 27GB a month, that would suggest a whole lot of customers would do well by taking the 30GB service,” Marcus said. “Notwithstanding that, very few customers — in the thousands — have taken the usage based tiers and I think that speaks to the value they place on unlimited — not bad because we plan to continue to offer unlimited for as far out as we can possibly see.”[25]

Marcus has repeatedly made it clear compulsory usage caps are off the table at Time Warner Cable – a lesson they learned after customers pushed back and forced them to shelve a usage cap experiment planned for Rochester, N.Y., Greensboro, N.C., and Austin, San Antonio, and Beaumont, Tex. in April 2009[26]. The company has never raised the possibility of compulsory usage limits or usage-based billing again.

“We have no intention of abandoning an unlimited product we think that something that customers value and are willing to pay for,” said Time Warner Cable CEO Robert Marcus. “The way we’ve approached usage-based pricing is to offer it as an option for customers who prefer to pay less because they tend to use less. And we’ve made those available at 5 gigabytes per month and 30 gigabytes per month levels.[27]

A deal with Charter would mean Time Warner Cable's bonds would be downgraded to junk status.

A deal with Charter would mean Time Warner Cable’s bonds would be downgraded to junk status.

Time Warner Cable again offers a superior choice for Americans, and it is an important one. Chairman Wheeler said “last-mile power cannot be a lever for gaining an unfair advantage.” With many consumers having no practical choice for an alternative broadband provider, allowing Charter to impose usage limits or forcing customers into even higher-priced usage billing plans would deliver a major unfair advantage into the hands of the cable operator, always concerned with protecting its cable television package from emerging online video competition.

In fact, almost all of Charter’s so-called customer-friendly commitments and policies have a very unfriendly expiration date of just three years, which should be unacceptable to the Commission. There is no reason Charter cannot extend its commitments to not charge modem fees, adhere to the basic principles of Net Neutrality, and not impose usage caps or other forms of usage billing permanently. Without such a commitment, consumers could soon pay much higher prices for broadband service, and without robust competition unlikely to develop over the next three years, there will be every incentive for Charter to further boost earnings by imposing modem fees and usage pricing on its customers.

One of the strongest incentives for rate increases is the level of debt Charter Communications will assume in this transaction. The Department of Public Service staff in New York concluded New Charter’s debt and lowered credit rating “represents the single most substantial risk of the proposed transaction.”[28]

Debt servicing costs and more expensive credit are both deterrents to investment and are likely to limit the scope of Charter’s ongoing system upgrades and maintenance. Charter is a much smaller cable operator than Time Warner Cable, and is itself still in the process of repairing and upgrading its own cable systems and those it acquired in earlier acquisition deals. Time Warner Cable, in contrast, is in a much stronger financial position to carry out its commitments associated with the Maxx upgrade program.

Charter’s general offer to consider expanding service into unserved areas is vague, or has been redacted. We remind the Commission the past history of winning expansion commitments from cable operators who rely on Return On Investment (ROI) formulas to determine which homes and businesses they will serve have met with limited success.

The pervasive problem of rural broadband availability is unlikely to be resolved substantially by this transaction without the strongest buildout requirements. But even that is unlikely to be of much help for large areas outside of existing video franchise areas.

Compelling Charter Communications to adopt universal service obligations within all existing Time Warner Cable and Bright House franchise areas may be a good start. Under such a requirement, any consumer or business that wants cable service and lives within the geographic boundaries of an existing franchise area would receive it upon request without construction fees, surcharges, or other passed-along fees to reach that customer, regardless of their distance from the existing cable plant or ROI formula. The largest impact of this would be to extend cable service into business parks and commercial buildings, which often lack cable service, but many suburban and exurban residential customers would also benefit. This also would achieve the Chairman’s goal to facilitate rural broadband where incumbents have generally failed to provide the service.

consumer reportsThe Commission must carefully consider Charter’s financial capacity to meet these obligations as well. No commitment is worth much if a company ultimately fails to deliver on it.

An overburdened cable operator is also unlikely to make substantial investments in improving customer service, and that makes the risk of depending on Charter Communications to improve Time Warner Cable’s already poor customer service rating doubtful. It also risks the much higher scores Bright House customers have given to that company for its superior customer service.

Competition is the biggest incentive to improve customer service and responsiveness, and that is unlikely to deliver much pressure on cable companies like Charter over the next few years. In fact, we argue customer service is likely to deteriorate in the short term because of the disruptiveness of any ownership change and eventual billing system integration.

Consumer Reports already rates Time Warner and Charter’s Internet Service poorly[29]:

  • Charter: 63 (Reader Score), Poor Value, Fair Reliability, Good Speed, Mediocre Phone/Online Support, Fair In-Home Support
  • Time Warner Cable: 57 (Reader Score), Poor Value, Fair Reliability, Fair Speed, Mediocre Phone/Online Support, Fair In-Home Support

Charter Communications’ proposed benefits to Time Warner Cable and Bright House cable television customers are also weak and not compelling. Both Time Warner Cable and Charter proposed to move to all-digital cable television to free up bandwidth to offer improved broadband before the merger deal was announced. Bright House was also headed in the same direction.

badbillWhile consumers clamor for smaller, less-costly cable television packages, Charter Communications’ CEO Thomas Rutledge is credited for inventing the “triple play” concept of convincing customers to package more services – broadband, television and telephone — together in return for a discount. Reuters cited his preference for “simplified pricing,”[30] which is why Charter offers most customers only two options for broadband service and one giant television package dubbed Spectrum TV containing more than 200 channels.[31]

Unfortunately, any benefits from an all-digital television package are likely to be diluted when customers get the bill. Currently, many Time Warner Cable customers watch analog channels on television sets around the home without the need to rent a costly set top box. Any transition to digital television will require the rental of a set top box or purchase of a third-party device to view cable television programming. These can represent costly add-ons for an already high cable bill.

With approximately 99 percent of customers renting their set-top box directly from their pay-tv provider, the set-top box rental market may be worth more than $19.5 billion per year, with the average American household spending more than $231 per year on set-top box rental fees, according to findings from Senators Edward J. Markey (D-Mass.) and Richard Blumenthal’s (D-Conn.) query of the top-ten pay-tv multichannel video programming distributors (MVPDs).[32]

Passed by Congress in December, the STELA Reauthorization Act of 2014 repealed the set-top box integration ban, which enabled consumers to access technology that allowed use of a set-top box other than one leased from their cable company. Without the integration ban, by the end of this year, cable companies will no longer be required to make their services compatible with outside set-top boxes, like TiVo for example, bought directly by consumers in the retail marketplace.

American cable subscribers spend, on average, $89.16 a year renting a single set-top box. The average set-top box rental fee for each company was used to calculate an overall set-top box rental cost average across companies: $7.43 a month, or $89.16 per year. Considering many homes rent a DVR box to make and view recordings and maintain less-capable boxes on other televisions, the total cost adds up quickly. The average household spends $231.82 a year on set-top box rental fees, according to Sens. Markey and Blumenthal.

Charter proposes to introduce a new generation of set top boxes but as far as we know, has not disclosed the monthly cost of these IP-capable boxes to subscribers. We do note the current generation of digital set-top boxes leased by Charter cost customers $6.99 a month each, slightly less than the national average.[33] We anticipate this fee may rise after the introduction of more advanced equipment. We note Charter also charges its television customers in a city like St. Louis an extra $6.05 a month for the “Broadcast TV Service Charge” and $4.99 a month for “Whole House Wire Maintenance.”[34]

Other points the Commission should consider in reviewing this transaction:

  1. While it is true Charter and Time Warner don’t compete for the same customers, it is inaccurate to suggest the transaction will not alter competition. Cable industry consolidation is underway, in part, to help larger combined operators secure better volume discounts for increasingly expensive video programming.AT&T’s primary motivation to acquire satellite provider DirecTV was to secure better prices for video programming, both for DirecTV customers but more importantly for its own, much smaller, U-verse TV operation.[35]The cost barrier for new, directly competing entrants into the cable television business is well-recognized, especially by smaller independent cable television providers that lack the ability to secure similar volume discounts for themselves. The American Cable Association, representing small operators, warned the FCC “existing providers of both broadband and MVPD services and new entrants will be deterred from expanding their broadband networks or otherwise undertaking new builds” as a result of increasing programming costs.[36]As a result, it is unlikely a new provider will be able to develop a sustainable business model that includes cable television while paying wholesale programming costs that are dramatically higher than what combined companies like New Charter will pay.
  2. The Commission must insist that Time Warner Cable customers in legacy service areas be treated the same as those already upgraded to Maxx service. If the deal is approved, Charter must be compelled to commit to continue Time Warner Cable’s Maxx upgrade initiative across the entire footprint of Time Warner Cable’s former service areas, to be completed within 30 months. We also agree with the staff recommendation of the N.Y. Department of Public Service that Charter also be compelled to upgrade its facilities to support gigabit broadband, but this should be extended to include all of its service areas, not just the largest cities.This does not pose a significant challenge to cable operators. With the upcoming introduction of DOCSIS 3.1 technology, operators even smaller than Charter will support 1Gbps broadband speeds as they drop analog television signals. Suddenlink[37], MidContinent[38], Cox[39], and Mediacom[40] already have gigabit deployment plans underway.
  3. The Commission must establish and enforce meaningful enforcement mechanisms should Charter fail to achieve its commitments as part of this transaction. Cable consolidation has never significantly benefited consumers. Charter is not guaranteeing Time Warner Cable or Bright House customers will receive a lower bill as a result of this merger. Nor is it committing to pass along the lower prices it will achieve through negotiations for wholesale video programming volume discounts. Cable rates, especially for broadband, will continue to increase. Without meaningful competition, there is no incentive to give consumers a better deal or better service.That is why if the Commission feels it must approve this transaction, the conditions that accompany it to achieve a true public interest benefit must be meaningful, directly relevant to the majority of customers, and ongoing.

Cable operators know once they secure a franchise or become the incumbent provider, no other cable company will negotiate with city officials to take over that franchise if the current provider’s application is denied during renewal. Once Charter (or any other cable company) establishes a presence, there is little or no chance a community will be able to get rid of that provider if it fails to perform. That is why any franchise transfer that comes from an acquisition or merger must be treated with the upmost seriousness. Customers will likely live with the decision the Commission makes for the next 10-20 years or more.

just_say_noAs the Commission must realize, this transaction does not just involve entertainment. Recently, the Obama Administration declared broadband Internet access a “core utility.”[41]

“Broadband has steadily shifted from an optional amenity to a core utility for households, businesses and community institutions,” according to a report from the administration’s Broadband Opportunity Council. “Today, broadband is taking its place alongside water, sewer and electricity as essential infrastructure for communities.”

Our group strongly believes regulators should not take a risk on Charter’s less-then-compelling offer when Time Warner Cable and Bright House have both demonstrated a better financial position. Time Warner has a proven track record of delivering on its commitments to improve service with its Maxx upgrade project. Time Warner Cable has superior options for low-income consumers, offers more broadband options and faster speeds for entrepreneurs in the digital/information economy, and has committed to providing unlimited Internet access – a critical prerequisite for consumers choosing to drop cable television’s one-size-fits-all bloated video package and watch only the shows they want to see and pay for online.

At the start of our presentation, we referred to the Chairman’s four stated goals for improving broadband and competition. At this point, it should be obvious that shrinking the number of companies providing service has not delivered significant service improvements. In fact, for many customers, Charter’s offer is worse.

Allowing further marketplace consolidation widens the gap for cable television programming costs, which could deter new competitors from entering the market. Small providers pay dramatically higher programming costs while the largest receive substantial volume discounts. That is contrary to the Chairman’s goal of protecting last-mile competition.

Online video has created the “cord-cutting” effect, allowing consumers to shop for better video values beyond the local cable company. Without a permanent ban on usage caps and usage pricing, providers like Charter (that maintained usage caps until a few months before this application was filed) have a strong incentive to resume them after the deal’s token three-year commitment expires. Without also closing the obvious loophole of “usage pricing,” nothing precludes Charter from imposing usage-based pricing on consumers immediately after the deal is approved.

Promoting expanded rural broadband, another priority of the Commission, does little if the incumbent providers refuse to offer it. We see nothing in Charter’s public application that commits them to extending service to specific areas Time Warner Cable or Bright House do not service today. In fact, before this application was filed, Charter’s willingness to provide service to unserved areas in their own existing franchise areas was not always evident.[42] It is hard to believe Charter will voluntarily disregard their own Return On Investment formula to provide the service many rural customers eagerly hope might be forthcoming if the provider was somebody other than Time Warner Cable or Bright House.

We urge the FCC to deny Charter’s application. If it sees fit to make a different choice, we strongly recommend you demand Charter meet, at the minimum, the same level of service Time Warner Cable Maxx provides across the entire existing Time Warner franchise area, achieve the same customer service standard well-regarded Bright House manages for its customers, and a better deal for consumers that continue to face spiraling cable bills, few competitive choices, and no new alternatives on the horizon.

  • [1] http://dealbook.nytimes.com/2014/02/13/the-comcast-time-warner-deal-by-the-numbers/?_r=0
  • [2] https://brighthouse.com/about/about-us/about-us.html
  • [3] https://www.charter.com/browse/content/about-charter
  • [4] http://www.jdpower.com/press-releases/2015-us-residential-television-internet-telephone-service-provider-satisfaction
  • [5] http://arstechnica.com/business/2014/09/most-of-the-us-has-no-broadband-competition-at-25mbps-fcc-chair-says/
  • [6] http://www.theverge.com/2014/1/31/5365816/time-warner-cable-maxx-plans-broadband-cable-improvements-in-nyc-la
  • [7] http://www.fiercecable.com/story/twc-promises-maxx-reach-45-customers-end-year-tivo-support-apples-airplay/2015-07-14
  • [8] https://www.myaccount.charter.com/customers/support.aspx?supportarticleid=59
  • [9] https://www.charter.com/browse/content/packages
  • [10] http://stopthecap.com/wp-content/uploads/2015/09/psc-staff-recommend-charter-twc-15-m-0388.pdf
  • [11] http://www.timewarnercable.com/en/plans-packages/internet/internet-service-plans.html?iid=internet-lob:1:1:compareplans
  • [12] http://arstechnica.com/business/2014/09/most-of-the-us-has-no-broadband-competition-at-25mbps-fcc-chair-says/
  • [13] https://www.myaccount.charter.com/customers/support.aspx?supportarticleid=59#speedoptions
  • [14] http://www.twcableuntangled.com/2015/04/twc-gains-momentum-with-best-ever-subscriber-growth-customer-enhancements/
  • [15] http://www.twcableuntangled.com/2015/07/twc-maxx-expands-rollout-in-2015/
  • [16] http://seekingalpha.com/article/2864536-time-warner-cables-twc-ceo-rob-marcus-on-q4-2014-results-earnings-call-transcript?
  • [17] http://www.twcableuntangled.com/2014/01/get-the-details-on-twcs-plan-to-transform-ctv-internet-experience/
  • [18] http://stopthecap.com/wp-content/uploads/2015/09/psc-staff-recommend-charter-twc-15-m-0388.pdf
  • [19] See e.g., Case 14-M-0183, Joint Petition of Comcast Corporation and Time Warner Cable, Inc. for Approval of a Transfer of Control of Subsidiaries and Franchises, Information Forum/Public Statement Hearing (dated June 19, 2014) Tr. 29-33.
  • [20] http://stopthecap.com/2015/06/25/bright-houses-mysterious-internet-discount-program-charter-wants-to-adopt-nationwide
  • [21] http://www.timewarnercable.com/en/enjoy/better-twc/internet.html
  • [22] http://customer.xfinity.com/help-and-support/internet/data-usage-trials/
  • [23] http://stopthecap.com/2015/09/23/fcc-demands-details-about-charters-suddenly-retired-usage-caps/
  • [24] https://www.fcc.gov/document/request-information-sent-charter-communications-inc-0
  • [25] http://stopthecap.com/2014/03/13/time-warner-cable-admits-usage-based-pricing-is-a-big-failure-only-thousands-enrolled/
  • [26] http://abcnews.go.com/Technology/story?id=7368388
  • [27] http://stopthecap.com/2014/10/30/time-warner-cable-recommits-mandatory-usage-caps-long-company-remains-independent/
  • [28] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={C60985CC-BEE8-43A7-84E8-5A4B4D8E0F54} (p.39)
  • [29] http://www.consumerreports.org/cro/electronics-computers/computers-internet/telecom-services/internet-service-ratings/ratings-overview.htm
  • [30] http://www.reuters.com/article/2014/01/30/us-charter-timewarnercable-rutledge-anal-idUSBREA0T01D20140130
  • [31] https://www.charter.com/browse/content/tv#/channel-lineup
  • [32] http://www.markey.senate.gov/news/press-releases/markey-blumenthal-decry-lack-of-choice-competition-in-pay-tv-video-box-marketplace
  • [33] https://www.charter.com/browse/content/rate-card-info (city of St. Louis, Mo.)
  • [34] https://www.charter.com/browse/content/rate-card-info (city of St. Louis, Mo.)
  • [35] http://www.usatoday.com/story/money/2015/07/24/fcc-approves-ts-acquisition-directv/30626421/
  • [36] http://www.americancable.org/node/5229
  • [37] http://www.multichannel.com/news/technology/suddenlink-boots-1-gig-broadband/392087
  • [38] https://www.midco.com/PressRoom/2014/midcontinent-bringing-gigabit-internet-access-to-the-northern-plains/
  • [39] http://www.multichannel.com/news/distribution/cox-plots-docsis-31-plans/393996
  • [40] http://www.multichannel.com/news/cable-operators/mediacom-sets-residential-1-gig-rollout/393585
  • [41] http://thehill.com/policy/technology/254431-obama-administration-declares-broadband-core-utility-in-report
  • [42] http://www.dslreports.com/forum/r28864058-Why-won-t-Charter-come-another-1-2-mile-for-more-customers

Online Video Streaming Threatening the Cable TV Business

Phillip Dampier September 21, 2015 Competition, Consumer News, Online Video, Video No Comments
http://phillipdampier.com/video/Bloomberg Are Streaming Companies a Threat to Cable 9-21-15.flv

Jeffrey Tambor and Jill Soloway delivered Amazon.com Inc. its first major Emmy awards for the show “Transparent,” as the online retailer went toe-to-toe with Time Warner Inc.’s HBO, highlighting the growing competition between video streaming services vs. traditional cable television. Berenberg Senior Media Analyst Sarah Simon discusses with Bloomberg’s Francine Lacqua on “The Pulse.” (4:26)

Charter Relies on Netflix Testimonial to Sell Time Warner Cable/Bright House Merger to Consumers

netflix charter

Image from Meet New Charter television ad (Image courtesy: Charter Communications)

Charter Communications has begun advocating for its merger with Time Warner Cable and Bright House Networks in advertisements that note Netflix is a merger supporter.

“Netflix says our upcoming merger with Time Warner Cable is a good thing for you,” said the advertisement, which also promoted an Associated Press story that stated Netflix supports Charter’s acquisition of Time Warner Cable.

The 30-second spots, now run by Time Warner in heavy rotation during local ad inserts on cable networks, promotes Charter’s 60Mbps entry-level broadband tier, 200 HD channels, no contracts or hidden fees, and the company’s claim it offers unlimited broadband access. It does not mention Charter executives have included a three-year expiration date on their commitments, after which the company can do almost anything it pleases.

Charter is hoping to enlist Time Warner Cable and Bright House customers to advocate for their merger’s approval with regulators and has launched a new website called Meet New Charter to promote the deal.

As of early September, the sparse website includes four testimonials — one from Reed Hastings, CEO of Netflix who supports the transaction because Charter promises to voluntarily abide by Net Neutrality policies, won’t attempt to extract fees from Netflix to improve the reach of its service for TWC/Bright House customers, and won’t have usage caps — all deterrents to subscribers using online video.

The other three testimonials come from cable and broadcast programming networks depending on carriage deals with Charter to increase their audience reach.

Meet New Charter wrote of these commitments for Time Warner Cable and Bright House Networks customers:

Faster speeds. Charter’s slowest broadband tier is 60Mbps, which enhances the ability of several people in the same house to watch streaming high-definition video at the same time.

Affordable, faster broadband at lower prices. New Charter will price its new 60Mbps entry level speeds based on Charter’s current model, which is less expensive than TWC and BHN’s comparable offerings.   Charter’s pricing model offers nationally uniform pricing with no data caps, no usage-based pricing, no modem fees and no early termination fees.

Committed to Net Neutrality. Charter has long practiced network neutrality and consistently invested in interconnection capacity to avoid network congestion.

Investing in customer care. We are focused on improving New Charter’s customer service and improving our relationships with our customers across our footprint.  Over the last three years, Charter has brought back jobs from overseas call centers and hired thousands of people to improve our customer care services. New Charter will also return TWC call center jobs to the United States and will hire and train thousands of new employees for its customer service call centers and field technician operations.

A quicker rollout of advanced technology. We will complete the full digitization of TWC and BHN—freeing up spectrum that will allow for faster broadband speeds and more high-definition channels and On-Demand offerings.

New Charter customers will transition to Charter’s new cloud-based guide. The new guide will offer intuitive search and discovery and will work on old and new set-top boxes, so consumers will get the benefits of the new guide without needing a technician to visit or to pay more for a new box.

To carry out these ambitions, Charter will have to drop analog video channels from the lineup, which means cable television customers will need to lease set-top boxes or other devices for each connected television in their home.

Consumer Reports has also repeatedly rated Charter as one of the country’s worst cable operators (sub req’d.) for customer service, pricing, customer satisfaction, and reliability. In 2015 it rated among the bottom five cable operators nationwide.

http://www.phillipdampier.com/video/We Are Charter 9-9-15.mp4

Charter Communications has begun running this advertisement in heavy rotation on Time Warner Cable systems promoting its merger deal. (30 seconds)

Cord Cutting Could Hit 2 Million This Year: 6,200 Americans Cancel Cable TV Every Day

Phillip Dampier August 19, 2015 Consumer News 3 Comments
courtesy: abcnews

Time to cut the cable TV bill down to size.

Cord-cutting, the often denied and downplayed practice of canceling cable television service, is becoming trendy in the United States, with up to two million customers likely to turn their backs on pay TV in 2015.

The Financial Times reports about 566,000 customers have canceled cable television between April and June on this year. The subscriber losses are occurring at most cable operators except for Verizon, which picked up a few new customers during the last quarter.

That translates into 6,200 customers a day dropping service, despite aggressive efforts by providers to rescue their business. For at least 10 years, cable television prices have risen at nearly twice the rate of inflation, helping give the industry a public black eye. But with few alternatives until recently, consumers bared their teeth but paid the bill. With the advent of online video services and digital over the air television, that is finally changing.

cord cutToday, customers in or near large cities can watch an average of 12-24 over the air stations and digital “sub-channels” for free. Add a Netflix and Hulu subscription and customers can watch “on-demand” shows as well.

Some cable companies have resisted dramatic rate increases realizing they will continue to bleed customers with every rate hike notice. But many others have resorted to tricks like adding surcharges at the bottom of the bill. Many cable companies today include sports programming and broadband TV surcharges of $1-4 each, hoping customers will blame someone else for their higher bill. Most surcharges are not covered by customer retention or new customer discounts, either, and those fees are rising.

Time Warner Cable added a $2.75 sports surcharge on many customer bills in addition to the Broadcast TV surcharge. Most providers charge between $2-6. Within three years, customers can expect to see surcharges hiked to the $8 range.

As the cord cutting numbers add up, broadcast executives may still be in denial, but Wall Street isn’t. Traders did some cutting of their own, slashing $50 billion off the value of media stocks after major entertainment companies reported declining ad revenues and expected poorer financial results in the future.

Cord Cutting Freakout: Media Stocks Crash Over Fear of Fewer Paying Customers

Phillip Dampier August 6, 2015 Consumer News 7 Comments

ESPN Red Logo large“Must-have” ESPN is not as must-have as the pay television business once believed as the costly basic cable network reported more subscriber losses as consumers cut the cord.

Despite a claim from ESPN owner Walt Disney that the sports network is watched in 83 percent of U.S. cable households, the number of cable customers buying a television package that includes ESPN is in decline. Subscriber disinterest and the growing unaffordability of cable television are the two primary reasons even the “untouchable” cable networks are starting to see the effect of cord cutting.

ESPN is the most expensive basic cable channel, costing every pay television customer at least $6.61 a month in 2015 according to SNL Kagan estimates. That price increases by about 8% a year, needed to keep up with ever-increasing sports rights fees networks pay to televise events. With subscribers covering the bill, ESPN has been able to outbid traditional network television and other cable networks to win the rights to more prestigious events. But since broadcast networks now collect money from cable subscribers as well, bidding wars have erupted that have made sports teams and league organizations very rich, thanks to cable customers that pay for ESPN and other networks whether they watch them or not.

ESPN sports programming costs

ESPN sports programming costs

But those days may soon be over, as customers discover cheaper “skinny bundles” of cable television packages or sign up for online video services that avoid costly sports networks. That was not possible just a few years ago. ESPN’s contract mandates its network be available on the standard basic tier — no optional sports tiers allowed, if a cable system wishes to carry it. To collect even more from cable subscribers, ESPN also effectively forces cable systems to carry one or more of their ancillary networks, which include ESPN2, ESPN3, ESPN+, ESPN Latin America, ESPNews, ESPNU, ESPN Classic, ESPN Deportes, Longhorn Network, and the SEC Network. That puts even more money in ESPN’s pocket.

disneyThe network has been a safe bet for investors for years, at least until this week when the company lowered its expectations for cable operating income growth from 2013-2016. Instead of growth between 7-9 percent, ESPN is now predicting only 4-6 percent. Although some might see that as a modest adjustment, Wall Street didn’t think so and Disney shares tanked 8.4% Wednesday. That was nothing compared to what happened today.

“Media stocks are getting slaughtered,” Aaron Clark, a portfolio manager at GW&K Investment Management, which manages $25 billion in assets, told the Wall Street Journal. “It’s been the long-running fear that we would eventually see cord-cutting. Everyone thought it would be a slow-moving train wreck, but Disney’s comment woke people up.”

Viacom, Inc. dropped 12 percent after it reported declines in second-quarter profits and revenue, which investors blamed on cord-cutting. Disney fell another 2.5% today and 21st Century Fox lost 6% after lowering its expectations for full-year profit for fiscal 2016. Cord-cutting, again.

To say ESPN is important to Disney would be an understatement. At least 75% of Disney’s cable network revenue comes from ESPN and estimates suggest 25% of Disney’s entire operating income in 2015 comes from the sports cable network. As ESPN faces customer defections and pressure on revenue growth, their costs are still rising. Sports rights at ESPN rose by 13% in 2014 and 19% in 2015, according to MoffettNathanson. If ESPN continues to lose customers and is forced to become more conservative about future price increases, parent company Walt Disney will feel the heat.

Search This Site:

Contributions:

Recent Comments:

  • Jonny: My smaller cable company Suddenlink (1.4M customers) started the same thing. 250GB cap with with their medium speed of 50mbps. They are only doing thi...
  • Joe V: Man these guys just don't get it. Not to worry, just as the music industry learned the hard way that to piss off their customers by giving them crap, ...
  • Mike D.: The TV providers have never been willing to fight for the consumer with the other conglomerates who bundled crap with one or two channels of good cont...
  • Sean Colbert: The comcast cap isnt even bad compared to mine. I have Hughesnet Gen4 (All I can get in my area) and I have a 20gb a month limit with an extra 50 in b...
  • zychor: 59Mbps down, 5.9Mbps up ..it doesn't matter internet is so slow...
  • Phillip Dampier: Rats... and I knew I caught this in the proofread and made the change but it stayed a draft while the inaccurate one went live. Thanks for catching th...
  • Dave: Quit whining....bunch of babies...
  • bob: how is this fair to existing customers who reside in areas where upgrade hasnt gone through. im supposed to pay 60 plus dollars each month for extreme...
  • Michael Elling: Paul, part of this stems from the industry's infatuation with vertical models and the govt-granted quasi-monopoly structure stemming from spectrum sal...
  • Paul Houle: One of the funny things about the current debate is that communities everywhere are asking for better wireline broadband, but you don't see many peop...
  • Duffin: I have just dropped my cable, and I do plan on getting Hulu Plus instead, but you know what? If they stop putting current episodes on Hulu I'm just no...
  • David Manthos: The bill is actually HB 2551, not 2511. http://www.legis.state.wv.us/Bill_Status/Bills_history.cfm?input=2551&year=2016&sessiontype=RS&...

Your Account: