Comcast is back with another rate increase effective April 1st, amounting to 3.5 percent for many cable, broadband, and telephone customers.

Although prices vary depending on your specific service area, the range of the price increase is more consistent.

In southern New Jersey, for example, here is the breakdown — all prices are by the month:

• Expanded/Standard service cable-TV tiers are increasing $2.  Expanded service customers could pay up to $50.10, Standard customers $60.55;
• Triple Play customers will see a $5 increase in the second year of their two-year contract from $114.99 to $119.99.  First year pricing remains $99 for new customers;
• Digital Premium Packages are increasing $2;
• Economy Broadband (1Mbps) increases $2, Performance (12Mbps) increases $2, Blast! (16Mbps) increases $2, Ultra sees no price increases (but goes away for new customers effective 4/1);
• Comcast phone line prices are also increasing in certain cases;
• Each additional DVR drops by $5 — Verizon FiOS was hammering Comcast about DVR pricing.

There are no rate changes for business service customers or subscribers with “limited basic service.”  There is also no change in the company’s broadband usage allowance — 250 GB, the only part of Comcast’s service that seems to stubbornly remain at the same level year after year.

Comcast, the nation’s largest cable operator, blamed the mid-year price increases on increased programming and other business costs.

But the company is not exactly hurting.  Comcast’s 4th quarter earnings last year jumped 132 percent to $955 million dollars.  Rate increases that are designed to drive consumers into profitable service bundles, combining television, Internet, and telephone service, guarantee even better financial results in 2010.

Verizon is already capitalizing on Comcast’s rates by offering residents in southern New Jersey an even better price for Verizon FiOS — dropping from $109.99 for two years to $89.99, not including taxes and fees.  But like Comcast, Verizon wants you take a bundle of services, or else face higher prices.  The company recently increased the price for FiOS TV to $64.99 for standalone service.

Time Warner Cable is offering mobile phone providers a solution to their clogged wireless networks — clog ours instead!

Business Week notes the cable company has been aggressively pitching its broadband network to cell phone companies in New York City, which can be used to transport cell phone calls and mobile data between cell towers and the providers’ operations centers.  The “backhaul” network cell phone companies rely on to move calls and data between the cell tower nearest you and your provider’s distribution network is often the source of the worst bottlenecks, especially when those networks are connected by standard copper telephone wiring, as many still are.

The more customers sharing a low capacity copper line, the slower your data speeds and greater the chance for dropped calls.  Although some providers have expanded their fiber capacity to reach busy cell towers, many more are still stuck with copper… until now.

Time Warner Cable’s offer to offload clogged cell phone networks onto the cable company’s broadband backbone has become extraordinarily profitable to the nation’s second largest cable operator.

In fact, it has become Time Warner Cable’s fastest-growing business after revenue tripled last year, Craig Collins, senior vice president of business services told Business Week.

We are talking $3.6 billion dollars in revenue in 2012 from wireless carriers alone, according to researcher GeoResults, Inc.

“Backhaul is a growth play that we are pursuing aggressively,” Collins said. “These mobile players want to get the bandwidth they need at a cost-effective price and our structure allows them to get that pretty seamlessly.”

U.S. smartphone use has grown almost 700 percent in four years, according to the U.S. Federal Communications Commission. Mobile-data volume is more than doubling annually as people use devices like the iPhone, BlackBerry and Google Inc.’s new Nexus One to send photos, watch videos and surf the Web. When networks jam, consumers face dropped calls and may find they can’t access Web pages or TV, analysts said.

The coming "exaflood" doesn't seem to worry Time Warner Cable, except when profits from consumers are at stake

Apparently the “exaflood” scare theory that suggests broadband networks are becoming hopelessly clogged does not apply to Time Warner Cable, because the company easily found plenty of free bandwidth in metropolitan New York City to profit from wireless phone traffic.

Not to be outdone, Comcast expects $1 billion from the wireless backhaul gravy train over time, according to its February 3rd conference call with investors.  Comcast is in a unique position to help ease congestion in San Francisco, where the cable operator provides service to some of the same customers who wander the city with Apple iPhones on AT&T’s overclogged Bay Area network.

Time Warner Cable CEO Glenn Britt doesn’t want to limit the potential revenue to just the wireless big boys — he wants to offer service to carriers large and small:

While Time Warner Cable declined to specify if AT&T, the lone U.S. carrier for the iPhone, is a customer, the New York- based cable company says it wants to sign carriers large and small. Chief Executive Officer Glenn Britt alluded to AT&T’s extra iPhone traffic in a December conference call.

“They want to get that into a cable as fast as they can,” Britt said, referring to overloads. His company began leasing backhaul in 2008 and posted $26 million in sales last year, less than 1 percent of the company’s total sales. Collins declined to give a forecast for 2010.

All this, of course, comes ironically to those Time Warner Cable customers who were subjected to Internet Overcharging experiments from Time Warner Cable just about one year ago.  Apparently, the exaflood only applies to consumers who face enormous broadband pricing increases and/or usage limits because of “overburdened” broadband networks.

Not so overburdened that the company can’t make room for billions in new earnings from cell phone companies, of course.

[Video Fixed!] Craig Moffett discusses wireless smartphone data usage trends and Time Warner Cable’s involvement in transporting mobile phone and data across its cable broadband network (5 minutes)

Stop the Cap! has received several requests for Sen. Al Franken’s (D-Minnesota) comments during the Senate hearing in early February reviewing the proposed merger.  So here, for your viewing pleasure, is the portion of the hearing where Franken comes out swinging in opposition to the ongoing consolidation of media companies in America. (February 4th – 14 minutes)

Broadband providers love to tout their Internet services as “unlimited, always on access at blazing fast speeds.”  Increasingly, their service isn’t unlimited, it’s not always working, and those blazing fast speeds are doused in a shower of asterisks leading to fine print indicating “speeds are not guaranteed.”

Take Comcast, for example.

The Consumerist’s reader Matt received a brochure from America’s largest cable operator filled with inaccuracies, falsehoods, and fine print.  In order of appearance, let’s fact check:

Source: The Consumerist

Fiber Fiction: “Comcast High Speed Internet is delivered to your computer through the same fiber-optic network that delivers all those great channels to your television.”

Fiber Fact: Comcast does not operate an all-fiber network.  Their distribution system uses a mix of fiber and standard copper coaxial cable.  The fiber network is only a backbone, which connects to the same coaxial cable companies like Comcast have used since the 1970s.  If you want a true fiber-optic network, you’ll need to sign up with Verizon FiOS or a municipally-run fiber provider.  No national cable operator runs one.  It’s part of their marketing rhetoric to try and capitalize on the benefits of fiber without actually spending the money to actually build a fiber system.

Speed Trap: “Download speeds up to 100 times faster than a 56K phone modem.”

Autobahn: This one has one of those asterisks attached — “actual speeds may vary.”  Comcast doesn’t guarantee speed, and relies on the familiar “up to” disclaimer that phone companies love to use with their DSL service.  If your neighborhood is clogged with users, the websites you visit run slowly, or Comcast has a problem somewhere, your speed will suffer.

Unlimited That Isn’t: “Unlimited usage for a flat, monthly fee.”

Unlimited Reality: Comcast has a usage limit of 250 GB per month.  Exceed it and you potentially will get a call from Comcast lecturing you about your usage.  Ignore them and you may be without your broadband service for a year.

Consumerist reader Matt was a victim of Comcast’s marketing doublespeak when he exceeded the limit and got a phone call from the company.  Instead of being browbeaten by Comcast customer service, he was ready and armed with the brochure the company sent him:

I was told I used more data than they allow (250GB). I do not argue that I used over 250GB, in fact I went quite a bit over. Though I did want to ask for proof that affected their network, I figured it wasn’t the nicest way to start the interaction. I informed them that I used this because it was sold as “Unlimited usage for a flat, monthly rate.” He then told me it said “access.”

I had the brochure right next to me and quoted, “Unlimited usage for a flat, monthly rate.” He told me their website says something different, and my local franchise overstepped its bounds, and their website overrules the “Important Information about our services, Charleston SC” sales brochure sent to me. If I went over again (It goes by calender month, not billing cycle) I would be disconnected for 1 year without giving me a call.

I asked if Comcast had a tool to help me monitor bandwidth. “Not in your market” he told me. “Download something from Google that will do it for you.”

As consumers continue to expand their broadband usage to take advantage of services like online video and file backup, services Comcast itself offers, more and more will run up against Comcast’s monthly usage limit.  Although your Comcast bill increases year after year, their usage limit has not.  It was 250 GB in 2008 and remains the same in 2010. Thanks to Stop the Cap! readers Dave and Michael who sent word our way.

Mark Cuban

Mark Cuban has once again entered the debate over online video, Internet Overcharging schemes, and giant corporate mergers… and mangled it.

Cuban, who owns HD Net as well as the Dallas Mavericks basketball team, occasionally presents cable industry talking points on his blog, but quickly gets into trouble when he strays from them.

This time, Cuban is annoyed with Sen. Al Franken (D-Minnesota) over remarks the senator made about the proposed Comcast-NBC merger.  Cuban seized on comments by Franken that Comcast should put all of its television programming online.  Doing that, Cuban insists, would lead to higher prices for broadband and usage caps on it.

Where has Cuban been?  I realize the man is too wealthy to worry about the relentless rate increases Comcast and other companies force on consumers every year, but he also forgot Comcast already has a usage cap on its service, even before the feared video tidal wave arrives.

I get that no one really cares if Comcast has to spend money on capital improvements to add bandwidth to the home.  They should. Its pretty damn stupid to push consumption in a direction that will raise internet rates  to receive the same content for which there is already a phenomenal digital network in place to deliver that content.

Think about it for a minute Senator Franken. Comcast, and every large TV Provider has a digital network in place that can and does deliver gigabits of tv content perfectly,  every second of every day, to any TV set in any  home that is connected to their network. It works. Well.  What you are asking Sen Franken, is that Comcast duplicate the delivery of theirs and NBCUniversals shows on a network, the internet,  that is not, and has never been designed to handle the delivery of huge volumes of video and tv shows.

Cuban should be arguing that point with the cable industry.  TV Everywhere, the online video platform that will offer consumers access to “hundreds of TV shows and cable programming,” is their invention.  If Cuban’s fears are correct, why would the nation’s largest cable operators launch such an ambitious online video platform?

Cuban has bought into industry propaganda justifying usage caps.  There is always an excuse for rationing broadband service to boost profits.  First it was file sharing, now it’s online video causing the “serious problem” of customers using broadband service for more than just e-mail and web browsing.  Their solution – monetize it.  Usage caps and usage based billing are about preserving high profits, not protecting or increasing network capacity.  TV Everywhere proves that.

Franken does not advocate usage caps, as Cuban suggests.  The senator simply wants to be certain Comcast cannot act as a gatekeeper, determining who gets access to Comcast-NBC programming, and who does not.

Cuban should be welcome to such measures as a victim of Gatekeeper Abuse himself.  Mark, how many subscribers did you lose nationwide when Time Warner Cable unilaterally pulled the plug on your channels?

Broadband Reports this morning heard from a trusted source who says America’s largest cable operator is considering offering 250Mbps service to customers, perhaps as early as 2011.

While some cable operators (Time Warner Cable) have dragged their feet on DOCSIS 3 upgrades, Comcast has not — it is expected to have 100 percent of its cable systems upgraded this year.

DOCSIS 3 provides vastly increased speeds across a more robust network.  Older standards provided neighborhoods with a single 6 Mhz channel, with a 36Mbps downstream pipeline.  While that may be fine for a neighborhood browsing web pages and checking e-mail, it doesn’t take much too much high bandwidth activity to start slowing speeds down.  DOCSIS 3 “bonds” multiple channels together to create one fat pipeline.  Newer chipsets support eight combined 6Mhz channels, capable of providing that same neighborhood with 320Mbps of capacity.  Using schemes like PowerBoost, or with few others online, Comcast can deliver occasional bursts of speed at 250Mbps to customers without further upgrades, notes Dave Burstein of DSL Prime.

The bigger question is will customers pay the premium price for 250Mbps if Comcast maintains its 250GB usage limit on it?  Super speed tiers like this are useful to customers using high bandwidth applications.  It doesn’t make sense to upgrade to premium speeds if they’re accompanied by a usage governor.

America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.

Comcast alone, the nation’s largest cable company, has filed thousands of objections to proposed broadband projects in communities large and small, claiming those projects have the potential of introducing competition in their service areas, whether or not actual broadband service is being provided to residents in those communities.

Most large providers like Time Warner Cable, Comcast, and many national phone companies have steered clear of applying for broadband stimulus money.  They don’t like requirements that could force them to adhere to Net Neutrality provisions, sharing equal access to their networks.  But they don’t want anyone else on their turf getting funding either, and they’re spending enormous amounts of time and money objecting to anything and everything that seeks funding in their respective service areas.

It’s nothing short of a Broadband Blockade, and it is dramatically slowing the government’s ability to pour over thousands of applications.

Settles

Dan Hays, from consulting firm PRTM, told USA Today as a result of the delays, there’s significant doubt as to whether the monies can be awarded before the end of September when the funding authorization expires.

Could that be part of the plan all along?

“They aren’t leading, they aren’t following, and they won’t get out of the way,” said Craig Settles, a municipal broadband expert. “They’re not going to put proposals on the table because they don’t like the rules. Yet they’re not going to cooperate with the entities that are going after the money.”

“There are 11,000 public comments (about the funding applications), and I’m willing to bet that 9,000, at least, were a challenge or protest of one sort or another,” says Settles.

“We’re at a point where it’s the general public’s interest vs. the entrenched incumbents,” Settles added.

When giant telecommunications providers are threatened, they run to lawmakers for special protection, and they’re getting it.

National Public Radio ran this report about the problems awarding broadband stimulus grants. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Coming next…

FairPoint – Bankrupt And Soaking in Failure – But Still Has Enough for Lobbyists, Attorneys to Fight Broadband Projects On Its Turf

Providing computers in income-challenged neighborhoods and free access to wireless Internet for Philadelphia’s poorest neighborhoods simply won’t do in Comcast’s home city. The cable giant has filed objections to a proposal to bring access to those who would never be able to afford Comcast’s asking price for broadband.

Comcast Center in Philadelphia

Comcast executive vice president David Cohen made it all too clear in a story from Bloomberg News:

“Those applications don’t qualify for funding primarily because they are applications to provide service in areas where there is already broadband service,” Cohen said. He didn’t provide an estimate of how many applications would be implicated, and said Comcast would point out only applications that would serve areas where it provides Internet service.

“We would mostly care if it goes to an area where we’re the broadband provider,” Cohen said.

Comcast has concerns about tax dollars and other benefits going to projects that could compete with Comcast’s offerings. But Comcast’s rank hypocrisy is on full display when one considers public funding is a-okay when it is directed towards Comcast:

Comcast executives lobbied the state government for financial assistance to build their new Center City headquarters. The firm unsuccessfully sought a Keystone Opportunity Zone (KOZ) designation for its building, which would have provided local and state tax relief. Despite the fact that KOZs are intended to spur development in areas of blight, not prosperous Center City locations, the $30 billion company almost succeeded with the help of Gov. Rendell. Had the Comcast effort prevailed, the company would have been exempt from state and local business taxes until 2015.

The Pennsylvania Legislature defeated Comcast’s and the governor’s efforts. The governor then made an end-run around the legislature, funneling nearly $43 million in taxpayer money to aid Comcast and pay for infrastructure near the Comcast building, prompting outrage from many. Comcast’s direct incentives were nearly $13 million. The economic development funds equated to roughly 10 percent of the building’s cost.

Rival office landlords complained bitterly about the public subsidies, fearing that Comcast Center will lead to a glut of downtown office space and lure away their corporate tenants.

Isn’t that a familiar argument. The state of Pennsylvania didn’t help matters when it didn’t include the project on a list of “recommended projects” it sent to federal officials.

Coming up…

American Cable Association Complains Their Lobbying Wasn’t As Effective as the Telephone Companies

Frontier's broadband stimulus requests were also shot down when West Virginian cable operators objected

Even companies whose raison d’être these days is to provide better phone and broadband service to rural Americans are being turned down. Frontier Communications, who wants to take control of 617,000 phone lines in West Virginia from Verizon was, in part, promoting rural broadband stimulus funding as a benefit of the deal. After all, a phone company specializing in serving the underserved would stand a better chance of securing broadband stimulus money than a telephone behemoth like Verizon.

Apparently not. The feds turned down their $55 million dollar broadband stimulus application, too.

Frontier applied for two stimulus grants, one to provide fiber optic connections to schools, libraries and health care facilities, the other to fund broadband expansion in West Virginia.

West Virginia’s incumbent cable companies teamed up and just said no.

Opposition piled on from Armstrong Cable Services, Comcast, JetBroadband and Suddenlink urging federal officials to deny Frontier’s applications. They claimed the phone company was trying to secure taxpayer money to provide broadband service in their territories, making the application redundant.

“They had said this was a reason to grant approval, that this would really boost broadband deployment,” Patrick Pearlman, deputy director of the state PSC’s Consumer Advocate Division, which is opposing the Frontier-Verizon sale told the Charleston Gazette. “They went on about how they’re going to get all this money and bring all this, but apparently they couldn’t count on the feds.”

Frontier didn’t blame themselves for the failure, of course. They blamed state officials for holding up their deal with Verizon.

“This is one of the reasons why we have asked this and other commissions to act expeditiously in their review of the proposed transaction,” Daniel McCarthy, Frontier’s chief operating officer told the Gazette.

State regulators should take the rejection as a lesson learned if they believed Frontier’s claims that approving the deal would result in an improved position for broadband stimulus funding. It was not to be. Even small cable companies will pounce on applications that suggest competition might be on the way.

More and more, it appears likely the grand plan for vastly improved broadband will be reduced to funding a handful of showcase rural broadband projects that solve some of the nation’s broadband deficiency woes, but after telecommunications industry and their lobbyist friends are done chewing up the project, plans of expanded broadband providing Americans with better choices at reasonable prices will remain a broadband pipe dream.

TDS Telecom’s grant for broadband expansion is an example of showcasing hit or miss rural broadband projects.  The company secured $8.6 million to expand broadband Internet services to TDS customers in one Chatham Telephone Company exchange in northern Michigan.  Considering TDS serves largely rural customers in 30 states, winning expansive broadband improvement for all Americans is about as likely as winning the Powerball jackpot. TDS CEO Dave Wittwer explains the stimulus funding to customers in this video. (1 minute)

Burlington Telecom (BT), the city owned-and-operated fiber-based cable, broadband, and telephone provider is mired in debt and is not financially viable in its current form.

Those are the findings of a “blue ribbon” committee tasked with answering questions about the future of the financially-troubled municipally-owned provider serving 4,600 Burlington customers in Vermont.

In an 11-page public report, the committee recommended the city partner with a commercial entity that would assume a majority interest in BT.  As a minority stakeholder, the city could eventually recoup the 17 million dollar investment it has made in the company.

Although some residents have lobbied the city to abandon the 100 percent fiber network to stem ongoing losses, the committee advised against it.

“The city has a considerable asset in BT, and should not give this asset away at a fire sale price,” notes one independent consultant working with the committee. “BT is too important to be jettisoned, in part because it keeps the competition honest.”

Burlington Telecom building and staff

But carrying forward as-is is not a good idea either, the report concludes.

“BT is not viable in relationship to its current debt load of $51 million and its ability to generate earnings to repay this debt. BT cannot meet its principal and interest obligations at this time,” the committee concluded, noting that the company’s current business plan can’t meet future financial challenges either.

As if to underscore that notion, BT this month asked the city of Burlington for a $386,000 loan from to make an interest payment to CitiLeasing by Wednesday, to prevent the company from technically defaulting on its $32 million municipal lease purchase.  On Friday, a judge issued a restraining order forbidding such a loan unless the Vermont Public Service Board agrees.

The committee noted that the reasons for BT’s financial problems weren’t rooted in its “first-class” fiber optic network, or its usefulness to the city.

In summary, the committee and its consultants blamed the problems on these factors:

- HBC found BT overpaid for its fiber network, spending $1,000 per home passed, when fiber build-out prices have dropped in the past few years.

- BT is spending too much money on customer installations.  HBC reports BT could save more than $600 off the $1,600 the company pays to hook up each customer.

- The company uses the same door-to-door marketing company Comcast uses to get new customers.  Additionally, BT contracts with a third party service company to handle installations and service calls.  This work should be done in-house, HBC recommends, as paying a company based on how many installations are performed provides a built-in incentive to cut corners and quality.

- BT’s broadband products are too slow for a compete, handing incumbent cable provider Comcast an unnecessary competitive advantage.  Fiber can blow cable modem service out of the water when competing on speeds, but BT foolishly charges too much money for too slow service topping out at just 8Mbps/8Mbps, for a whopping $71.80 a month.  BT calls that “the ultimate Internet experience.”  It’s not.  HBC predicts broadband will become BT’s most important service, so it is critical for the company to make the product more attractive to customers.

- BT is mired in politics that has nothing to do with its service to the community, and it creates unnecessary distractions that commercial providers do not have.  Some who oppose the municipal fiber project or the current city council use BT as a political football.

- Because it is a public entity, too much financial and strategic business information is open to public review, which includes BT’s competitors.  That gives Comcast and FairPoint advance notice of BT plans, pricing, and growth strategies.  Restructuring as a semi-private entity under local government oversight would help guarantee competitive business information stays out of the hands of the competition.

- BT lacks an effective marketing strategy to convince residents and businesses to change providers.  Without a compelling lineup of services, and a marketing effort to sell them, customers will be reluctant to go through a disruptive switch to BT service.  The provider’s bundled service packages are often compelling (a triple play with basic television and phone service only costs $89 a month, less than $20 more than standalone broadband service), but they often lack the services, speed, and channels consumers want.

- The company does not pay enough attention to customer service strategies.  Customers complain BT does not accept cash payments from walk-up customers, who are told to return with a money order.  From a confusing automated attendant that answers customer calls to inconvenient hours and appointment scheduling, BT needs to hire marketing experts to help restructure how it serves potential and subscribing customers.

Burlington Telecom's fiber broadband speeds are the same uploading and downloading, but there is plenty of room for improvement in speeds at a lower price

- BT utilizes a 200-megabit backbone at a cost of $6,000 a month and a 350-megabit backbone at a monthly cost of $16,331. It is HBCs belief that backbone costs can be reduced considerably, as much as $6,000 per month should be saved through re-negotiation. Costs should be in the neighborhood of $25 to $30 per megabit, as compared to the $40 per megabit of speed now being paid by BT. HBC buys twice as much bandwidth per month than BT and pays only $7,000 more for the additional capacity.

- Finally, the company leaves a lot of potential earnings on the table.  It doesn’t provide local-ad insertions on cable channels and doesn’t leverage its excess broadband capacity with businesses by selling them web hosting, co-location, and speed critical services.  It doesn’t provide value-added services that cable companies now offer, such as caller ID on TV.

The Burlington mayor, Bob Kiss, expressed skepticism at some of the conclusions in the committee’s findings.

Kiss believes refinancing BT’s debt would give the telecom company more time to implement better marketing and service improvements, which could attract new customers and revenue.

For Burlington business leaders, the entire affair is an embarrassment.  Many believe significant harm will come from a city gaining a reputation for defaulting on its obligations.

The conclusion many have reached is that Burlington Telecom was naively planned, without sufficient regard to realistic projections of expenses and revenues, and lacks expertise to effectively compete with other local providers.  Building an advanced fiber network for your community is only as good as the services offered at a price that makes sense.  Alienate customers with ineffective marketing or out of touch product packaging, and your future will be in doubt.

WCAX-TV in Burlington has followed the BT saga for months.  This video includes five reports covering the company’s future viability (13 minutes)

1. Burlington Telecom Saga Continues (12-15-2009)
2. Burlington Telecom Forces Changes In Burlington City Government (02-01-2010)
3. Burlington Telecom Not Financially Viable (02-05-2010)
4. Burlington Council Gets Blue Ribbon Committee Report (02-11-2010)
5. Burlington Telecom’s Fate Under Discussion (02-11-2010)

http://www.phillipdampier.com/video/WFFF Burlington Burlington Telecom's Future Unclear 02-11-2010.flv

WFFF-TV in Burlington reports the telecom company’s future is unclear. (1 minute)

http://www.phillipdampier.com/video/WPTZ Plattsburgh Burlington Telecom Not Viable.flv

WPTZ in Plattsburgh covered the contention over an upcoming interest payment BT needs to pay by Wednesday.  (3 minutes)

Read our complete coverage on Burlington Telecom.