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Justice Department Nearing Decision to Block Comcast-Time Warner Cable Merger

Phillip Dampier April 17, 2015 Competition, Consumer News, Public Policy & Gov't 5 Comments

comcast twcStaff attorneys that have reviewed details of the Time Warner Cable/Comcast merger proposal are prepared to make a recommendation as early as next week that the Department of Justice should block the deal because it is anti-competitive and anti-consumer.

The staff in the Justice Department’s antitrust division have spent more than a year reviewing documents submitted by both cable companies to determine what impact the merger would have on the cable television and broadband landscape.

Bloomberg News today reported the attorneys did not like what they saw and believe the merger would harm consumers. For the first time, a cable company merger deal was reviewed not so much for its impact on cable television programming, but on broadband.

When the Federal Communications Commission redefined broadband as an Internet connection of at least 25Mbps, Comcast suddenly found itself the largest broadband provider in the country. If the merger with Time Warner Cable is approved, Comcast will have a 56.8 percent market share of U.S. broadband customers, far exceeding any other provider.

In upstate New York, Comcast would have more than a 75% market share — nearly 9o% if you just consider non-Verizon FiOS areas. In California, Comcast would control more than 80% of the market, not only picking up Time Warner Cable customers, but Charter customers in Southern California as well. 

Comcast and Time Warner Cable have argued competition is not affected because the two companies never compete with each other. But a de facto broadband monopoly could allow Comcast to raise rates at will and bring a return to usage-related billing. It would also discourage new competitors from entering the market – particularly those relying on broadband to deliver video services, and hand Comcast more leverage to force compensation from online content companies like Netflix.

justiceUnder consideration by the Justice Department:

  • Whether the combined entity would have too much control over nationwide broadband Internet delivery;
  • whether Comcast could use its financial influence to strike exclusive cable deals that could keep programming off other platforms;
  • whether Comcast could limit how programming is delivered through video streaming services (usage caps, etc.);
  • if Comcast complied with terms under a previous merger deal with NBCUniversal.

Renata Hesse, a deputy assistant attorney general for antitrust, will take the analysis and ultimately decide, along with the division’s top officials, whether to file a federal lawsuit to block the deal. Bloomberg reports lawyers at the Justice Department have contacted outside parties to collect evidence to strengthen their potential case against the merger.

Another clear sign the merger is not being received well inside the Justice Department and the Federal Communications Commission is a complete lack of negotiations with Comcast over possible concessions to make the deal less anti-competitive. That also happened with the AT&T/T-Mobile merger where negotiations to ease anticompetitive concerns never seriously got off the ground before the Justice Department sued to block the deal. The FCC quickly announced its own opposition later that same day.

A lawsuit does not necessarily kill the merger deal. Comcast could take its case to federal court to win approval over the objections of the Justice Department. The company might also counter-propose new concessions to address concerns raised by the lawsuit. 

After learning of today’s Bloomberg News story, spokespeople at both Comcast and Time Warner Cable are either confident or in denial:

“There is no basis for a lawsuit to block the transaction,” said Sena Fitzmaurice, a Comcast spokeswoman. The merger “will result in significant consumer benefits — faster broadband speeds, access to a superior video experience, and more competition in business services resulting in billions of dollars of cost savings.”

Time Warner Cable spokesman Bobby Amirshahi said “we have been working productively with both DOJ and FCC and believe that there is no basis for DOJ to block the deal.”

Zimbabwe: Fast Broadband is a “Basic Human Right”; Victoria Falls Going Fiber-to-the-Home: 100Mbps Service

zol-logo-newThe two largest telecom companies in Zimbabwe believe broadband access isn’t just an essential utility — it’s a basic human right and they are responding with major upgrade projects that will deliver speedier broadband, sometimes even faster than what most customers in North America can access.

Anything less than fiber-to-the-home service won’t do, according to Tom Tudor, chief marketing officer at Liquid Telecom. The company is expanding its fiber project in Zimbabwe with popular tourist destination Victoria Falls getting a major upgrade. Liquid Telecom believes data caps are incompatible with the concept of bringing the Internet to more people to “participate in, and benefit from, the digital revolution.” Liquid Telecom’s fiber service – Fibroniks, doesn’t have usage limits or hidden gotcha fees.

“Every day we lay new fiber which enables us to deliver what we refer to as ‘The Real Internet’, a superfast service which transforms how people access and share information,” Tudor said.

superfast-fibreAt the outset in Victoria Falls, Fibroniks will offer unlimited use packages up to 100Mbps, with a commitment customers can access whatever they want, whenever they want, at a guaranteed fixed monthly price. Liquid Telecom already supplies fiber service in the capital city of Harare, but Tudor believes getting into smaller communities in the country is essential.

“We believe that internet connectivity is a basic human right and so it is our mission to provide quality broadband to every person and business in Africa,” said Tudor.

It will bring a broadband revolution to Victoria Falls, a community of over 35,000 that has languished with ADSL and last generation wireless services like WiMAX and 3G, which offer speeds typically no higher than 512kbps.

Fibroniks also includes telephone service, which will cost a fraction of what Tel•One, Zimbabwe’s sole fixed landline provider, charges for service. Tel•One has focused most of its investment improving and expanding ADSL service over its existing landline network. Although Tel•One may end up reaching more Zimbabwe citizens faster that Liquid Telecom, the speeds Tel•One provides will be much slower than Liquid Telecom’s Fibroniks.

Liquid Telecom’s other fiber to the home projects are in Zambia, with plans to expand to Kenya, Rwanda, and two other African countries yet to be announced.

Cox Boosting Its Economy Class Broadband Speeds in Arizona: 5Mbps is Now the Minimum

COX_RES_RGBCox Communications has raised Internet speeds for its economy class customers in Arizona as it continues network enhancements across the state.

One-third of Cox customers in Arizona subscribe to the company’s two cheapest tiers — Internet Starter and Internet Essential. Both packages are getting free speed upgrades that began in late March. Now all Cox customers in the state should have the higher speeds:

  • Cox High Speed Internet Starter was 1Mbps and is now 5Mbps;
  • Cox High Speed Internet Essential was 5Mbps and is now 15Mbps.

Speed increases in one state often eventually turn up in other states where Cox provides service.

Last July, Cox doubled speeds for its Preferred tier (increased from 25 to 50Mbps) and Premiere tier (increased from 50 to 100Mbps).

Usage caps are still in place on Cox broadband packages, but they are widely ignored by most customers because Cox rarely cracks down on offenders, and usually backs off if a customer threatens to cancel service over the issue.

AT&T Barely Launches GigaPower U-verse in Houston… Another Fiber to the Press Release Irritates Locals

gigapower-600x315Houston residents excited by this week’s launch of AT&T U-verse with GigaPower have been quickly disappointed after learning the service is available practically nowhere in Houston and likely won’t be for some time.

The upgrade, offering up to 1,000/1,000Mbps broadband, was launched Monday with an announcement “select residents” in Bellaire, Pasadena, and northwest Harris County, Tex. will be the first to get the service.

Bellaire, known as the “City of Homes,” is a primarily residential community of 6,000 houses surrounded by the city of Houston. AT&T’s Houston headquarters are located in Bellaire, and the company maintains good relations with the local government. Larry Evans, AT&T’s vice president and general manager for South Texas told the Houston Chronicle that is a key factor for getting GigaPower upgrades. Evans said Bellaire, Pasadena and northwest Harris County have been very cooperative in clearing red tape and letting AT&T install fiber infrastructure for GigaPower with a minimum of fuss from permitting and zoning authorities.

Bellaire is a mostly residential community surrounded by Houston.

Bellaire is a mostly residential community surrounded by Houston.

The larger city of Pasadena, with a population approaching 150,000 is another case where close cooperation with the city government made the difference. The city council contracts with AT&T to supply telecom services to the local government as well.

As in other AT&T service areas, actual availability of GigaPower is extremely limited. A search of prospective addresses in Pasadena found service available in only a few neighborhoods. In Bellaire, only a few streets now qualify for service. We were unable to find a single address in “northwest Harris County” that qualified for U-verse with GigaPower, but AT&T claims that “surrounding communities” would also have access, without disclosing the names of any of them. That makes it extremely difficult to accurately use AT&T’s service qualification tool to verify coverage.

Jim Cale found he pre-qualified on the website for U-verse with GigaPower service, but his hopes were dashed when a representative informed him his order was canceled because, in fact, GigaPower was not actually available on his street.

“My neighborhood was wired with fiber to the home when it [was built] a few years ago,” shared “Ed From Texas.” “AT&T is the provider and that was one of its advertised features. Who do I need to harass at AT&T to get Gigapower turned on for us?”

Gene R. is in a similar predicament:

“I can’t even get U-Verse and I am two blocks from loop 610,” he said. “AT&T says they don’t know when it will be available. I suspect…never.”

Richard dumped AT&T in the past for not meeting the speeds U-verse advertises, but is hopeful an all-fiber network might finally bring better speeds.

pasadena“I dropped AT&T’s MaxPlus because I never got anything approaching the 18Mbps speed I was being billed for,” he wrote.

AT&T will sell several U-verse with GigaPower plans in Houston. The packages below include waivers of equipment, installation and activation fees, if you agree to allow AT&T to monitor your browsing activity:

  • U-verse High Speed Internet Premier: Internet speeds up to 1Gbps starting as low as $110 a month, or speeds at 300Mbps as low as $80 a month, with a one year price guarantee;
  • U-verse High Speed Internet Premier + TV: Internet speeds up to 1Gbps and qualifying TV service starting as low as $150 a month, or speeds at 300Mbps and qualifying TV service as low as $120 a month, with a one year price guarantee;
  • U-verse High Speed Internet Premier + TV + Voice: Internet speeds up to 1Gbps with qualifying TV service and Unlimited U-verse Voice starting as low as $180 a month, or speeds at 300Mbps with qualifying TV service and Unlimited U-verse Voice as low as $150 a month, with a two-year price guarantee.

These offers all include a provision in the service agreement allowing AT&T to spy on your browsing habits ostensibly to supply “targeted advertising.” But the terms and conditions do not limit AT&T from broadening its monitoring of your usage for other purposes. If you opt out, the price goes up to $109 monthly for 300Mbps service and $139 monthly for 1Gbps broadband and you will pay installation and activation fees.

AT&T says the monitoring is done purely to power its targeted ads. Some examples:

  • If you search for concert tickets, you may receive offers and ads related to restaurants near the concert venue;
  • After you browse hotels in Miami, you may be offered discounts for rental cars there;
  • If you search for a car online, you may receive an email notifying you of a local dealership’s sale;
  • If you are exploring a new home appliance at one retailer, you may be presented with similar appliance options from other retailers.

“You might receive these offers or ads online, via email or through direct mail,” says AT&T on their Internet Preferences page.

The “price guarantee” provision is actually a contract obligating you to stay with U-verse for 1-2 years or face an early termination fee of $180. AT&T also warns your Internet speeds will deteriorate “if two or more HD shows [are] viewed at same time.” Usage caps apply, as usual. GigaPower customers signed up for the fastest speeds receive 1 terabyte, or 1,000 gigabytes, of data per month. Customers will get warnings if they exceed the cap twice. The third time, and going forward after that, they’ll pay a $10 fee for each 50GB over the cap.

Stop the Cap! Calls on Comcast to End Its Usage Caps/Usage Billing Trials, Restore Unlimited Service

Phillip "Comcast lost its case for usage caps" Dampier

Phillip “Comcast lost its case for usage caps” Dampier

With today’s announcement Comcast intends to bring unlimited 2Gbps broadband to as many as 18 million homes across its service area, one thing is clear — if Comcast is not worried about the impact of that many potential customers consuming 2Gbps of bandwidth, there is absolutely no justification to impose usage caps and allowances on any Comcast customer.

A frequent justification for usage caps and usage billing is to guarantee fair access for all customers on a shared, congested network. Another is to help defray the cost of broadband expansion. But Comcast’s new super-speed tier will have no usage cap and customers are invited to use it as much as they like for a fixed price. Clearly, a customer maxing out a 2Gbps connection to upload and download enormous amounts of content, say on a peer-to-peer network, will have a far greater impact on Comcast’s infrastructure than a user with a basic 25Mbps Internet connection. Yet today in Atlanta, Comcast is asking its 25Mbps customers to stay within a 300GB usage allowance, if they want to avoid an overlimit penalty of $10 for each 50GB block of additional usage.

Comcast does not like Stop the Cap! calling Comcast’s “data usage trials” what we believe them to be: “usage caps.”

In response to our testimony before the New York Public Service Commission last year regarding its application to acquire Time Warner Cable, Comcast objected to our claim it was placing usage allowances or limits on its broadband customers.

“Comcast does not have ‘data caps’ today,” Comcast told the PSC in its filing. “Comcast announced almost two years ago that it was suspending enforcement of its prior 250GB excessive usage cap and that it would instead be trialing different pricing and packaging options to evaluate options for subscribers—options that reflect evolving Internet usage and that are based on the desire to provide flexible consumption plans, including a plan that enables customers who want to use more data the option to pay more to do so as well as a plan for those who use less data the option to save some money.”

Yet Comcast’s desire to offer “flexible” usage plans becomes very inflexible when customers ask for unlimited service. Comcast has refused to offer such an option in several trial markets where usage caps are once again being tested.

courtesy-notice-640x259Last May, Comcast vice president David Cohen emphatically stated usage caps and usage-based billing were all about “fairness,” telling investors: “People who use more should pay more, and people who use less should pay less.”

Those signing up for 2Gbps service will be in a position to use far more bandwidth and data than any other Comcast customer subscribing to a lower speed broadband tier, yet will not be asked to pay more for using more or pay less for using less. They will be signing up for a simple to understand unlimited usage plan most Comcast customers want that will carry no billing surprises. At the moment, that is the only unlimited tier residential plan a Comcast customer in Atlanta will be able to buy.

Also turned on its head is the idea that customers who use the most bandwidth or cost Comcast the most should be contributing more to help Comcast pay for network upgrades, but once again this will not be the case for 2Gbps customers in Atlanta. They will cost Comcast a fortune as the company rips out its existing HFC (coaxial cable) infrastructure and replaces it with fiber to the home service. Yet the 25Mbps customer still using decades-old coaxial cable is effectively being asked to limit their Internet usage to avoid additional charges while the 2Gbps modern fiber customer is not.

It clearly makes no sense, but will rake in dollars for Comcast as usage continues to grow.

If Comcast’s network can sustain up to 18 million 2Gbps users with no usage cap, it has more than enough capacity to take the limits off every Comcast broadband customer. Comcast must shelve its usage billing trials immediately and remove all usage allowances from residential broadband customers in various test markets where they have been in place for more than a year. Google, Verizon, Time Warner Cable, Cablevision, Charter, and many other broadband providers have found no defensible reason to slap usage limits on their broadband customers. If they can provide comparable speeds and service without a cap, so can Comcast.

Comcast should clearly state it is in the business of providing the best possible customer experience using 21st century infrastructure more than robust enough to sustain usage demands, and compulsory usage caps and consumption billing are incompatible with the company’s goal to provide top-quality, worry-free Internet access.

If Comcast wants to test voluntary discount programs for light users, we have no objection. But customers should always have access to an affordable unlimited option without having to watch usage meters or worry about bill shock.

Comcast needs to do the right thing today and end all compulsory data usage trials across the country and commit to providing unlimited, allowance-free broadband service.

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  • Mashfique Khan: Hi Phillip, Do you have the names of the street in Pasadena and Bellaire where the GigaPower is actually available. I've searching street by street b...
  • Kwame: You are obviously not a student of history, of the current state of African geopolitics. Stick to what you know - which seems to be telecommunications...
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