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It’s Official: Charter Communications Buys Bright House Networks in $10.4 Billion Deal

Charter_logoCharter Communications today officially announced it will acquire control of Bright House Networks in a $10.4 billion deal the two companies are calling a “partnership.”

Widely anticipated, the deal will help Charter in its quest to become the second largest cable operator in the country, up from fourth place.

Bright House is the sixth largest cable operator, serving almost two million video customers in central Florida including Orlando and Tampa Bay, as well as Alabama, Indiana, Michigan, and California.

The deal will establish a partnership between Charter and Bright House’s current owner, Advance/Newhouse. But nobody will doubt who is in charge. Charter will own 73.7% of the venture, leaving the Newhouse family with a minority share of 26.3%. Bright House shareholders will receive shares of New Charter stock.

brighthouse1The deal is partly contingent on Time Warner Cable, which has a right to acquire Bright House for itself as part of a long-standing partnership between the two cable companies on programming and technology matters. But such an acquisition now seems remote, considering Time Warner Cable remains tied up in its year-long effort to be acquired by Comcast. An even larger Time Warner Cable would further complicate that transaction in Washington, where regulators are clearly concerned about supersizing Comcast. Since some regulators count Bright House customers as de facto Time Warner Cable customers, having Bright House acquired by Charter would seem to reduce Comcast’s influence over American broadband and cable television by cutting its combined market share from 29 to 27 million subscribers.

The Charter Sucks website could soon be getting more traffic.

The Charter Sucks website could soon be getting more traffic.

But Charter is also dependent on the Comcast deal closing, because that transaction delivers Charter another 2.5 million Time Warner and Comcast castoffs that will be sold service under the brand GreatLand Connections. The combination of those subscribers and Bright House will make Charter the second largest cable operator in the country.

Unfortunately for customers, Charter isn’t even close to second place in customer satisfaction or service. Beyond the very active Charter Sucks website, every consumer satisfaction measurement firm places Charter substantially below average in service, satisfaction, and pricing. Bright House scored on the high side.

“From the frying pan into the fire,” lamented Sam Pama, a former Bright House customer turned FiOS fan in Tampa. “First Frontier bought Verizon FiOS in Florida and now Charter is buying Bright House. Both treat their customers like crap.”

One piece of good news: Charter quietly shelved their usage caps months ago and Frontier has only toyed with them in the past, taking significant heat from Stop the Cap! before backing off. Neither are expected to slap usage limits or usage billing on customers in the foreseeable future.

Man Who Says Comcast Got Him Fired From Job Now Seeking $5 Million In Damages for Invasion of Privacy

Comcast-LogoAfter Comcast customer Conal O’Rourke spent more than a year trying to get the cable company to stop overbilling him, Comcast allegedly got their revenge by having O’Rourke fired from his job at PriceWaterhouseCoopers, which just so happened to count Comcast as an important client.

O’Rourke sued Comcast after the company allegedly complained about O’Rourke’s persistence to his boss at the accounting firm. After months of discovery motions surrounding the lawsuit, O’Rourke’s legal team has amended their complaint to add a seventh cause of action — invasion of privacy — after Comcast’s damage control efforts exposed private conversations between O’Rourke and Comcast customer service representatives.

The Consumerist was the first to tell O’Rourke’s story, and it has now learned Comcast allegedly recorded and used O’Rourke’s private conversations with the cable company to further disparage O’Rourke to protect its own image. His attorneys are now asking for additional damages, up from the original $1 million to more than $5 million:

After Conal filed suit, Comcast released a statement to Consumerist and others, explaining that, “As part of this investigation, we have listened to recorded calls between Mr. O’Rourke and our customer service representatives and his treatment of them and his language is totally unspeakable.”

This statement and description of the customer service calls goes too far, says Conal in the revised lawsuit.

“The recorded customer service telephone calls between Mr. O’Rourke and Comcast are private, and are not the subjects of legitimate public concern,” reads the amended complaint. “Comcast’s public disclosure of the existence and nature of Mr. O’Rourke’s private calls to Comcast customer service – which disclosure falsely portrays Mr. O’Rourke as an individual lacking in decency, ethics and integrity – is offensive and objectionable to a reasonable person of ordinary sensibilities.”

The lawsuit claims that “Comcast’s conduct towards Mr. O’Rourke was wanton, willful and intentional, and committed with malicious intent.”

Comcast apparently intends to drag the case out in court, potentially for years.

“That’s how long hard-fought federal lawsuits are taking in this district these days, and Comcast will be opposing it hard,” Conal’s lawyer Harmeet K. Dhillon told Ars Technica. “I can’t say on the record why it didn’t settle, but you can see from Comcast’s public statements that they want to be ‘vindicated.’”

Incumbent Cable, Phone Companies Will Tighten Bundle Pricing to Battle Cord-Cutting

triple play

A typical promotional offer from Comcast for a bundle of broadband, TV and phone service.

Cable and phone companies will continue to raise the price of broadband-only service while also increasing the value proposition of bundled packages of broadband, television, and phone service to keep customers from cutting the cable television cord.

For at least four years, cable companies have refocused rate increases and fees on Internet access, especially for broadband-only customers. At the same time, cable-TV rate hikes are easing, especially for customers subscribed to two or more services. Today, customers face prices as high as $67 a month for standalone Internet service. But that price can drop in half if customers bundle broadband with television and phone service. Most triple play promotions in markets where AT&T U-verse and Verizon FiOS compete can be as low as $90 a month. In less competitive markets, a similar promotion often costs $99-119 a month.

Recent research by Sanford Bernstein reveals these pricing strategies are not happening by accident.

Media analyst Todd Juenger recently held his second cord-cutting focus group in Comcast-dominant San Francisco and found some of those most likely to cancel cable television decided to keep their Comcast bundle after they discovered the cable company charges $66.95 a month for Internet-only service, excluding the modem rental fee. For $10 more per month during the first year, customers can get that same 25Mbps broadband service bundled with 140 TV channels. Assuming the customer doesn’t protest the subsequent rate increase beginning a year later, that rate will eventually reset to $136.90 a month. But price-sensitive customers who complain often avoid any rate increase at all.

Juenger’s focus group surveyed 18 men and women in the age group most likely to drop cable television – 21-38 year-olds. Despite their love for Netflix, Hulu, Amazon, and other online video services, the participants broadly recognized the cable/telco bundle now delivers a better value proposition and as long as cable and phone companies continue to price up standalone Internet service, many will choose to stay with the company they hate and not try to cobble together a comparable package of broadband and television service from other providers.

cablecord“Hence, we remain cautiously optimistic that cord-cutting, in large numbers, isn’t likely to happen,” Juenger wrote his clients. “It’s one of those ideas that sounds great in the abstract but crumbles when faced with the reality.”

As cable television pricing continues to exceed many household budgets, providers are seeking new customers that can afford cable TV but choose not to subscribe. One of their primary targets: broadband-only customers and cord-nevers who might be persuaded to add cable television at a starting price of $10-20 above what they pay for broadband service. That price is less than what Sling TV or PlayStation Vue charges for far fewer channels.

The challenge competing online video providers face is finding a compelling limited channel lineup that will appeal to all-comers. Although the average cable subscriber generally watches fewer than a dozen cable channels regularly, not having access to one or more of those favored channels is a deal-breaker for many.

Juenger’s focus group was most open to a hypothetical a-la-carte package of any 10 customer-chosen channels for $20 a month. But Juenger reminded his investor clients no such package currently exists and probably never will.

“Simply put, for existing pay-tv subs, the content [available to Sling or View customers] is too limited (relative to the cost savings); and for cord-nevers, the price is too high (relative to the appeal of the content),” Juenger wrote.

But Juenger did warn that customers are enthusiastic about sticking it to their current provider, if they can get the programming they want. That could make some programmers, especially broadcast stations and networks, more vulnerable to revenue loss. If a company can reliably offer a variety of theme-based slimmed down cable packages coupled with an effective and seamless over-the-air antenna, no retransmission fees would be paid to over-the-air stations and networks.

If the bundled package pricing argument doesn’t work with cord-cutters, the broadband usage cap probably will. Customers will quickly learn they can eat through their monthly Internet usage allowance watching live television online, or avoid that prospect by subscribing to cable TV, which offers unlimited viewing.

Comcast Screw Up Forces Washington Man to Sell His New Home; Quoted Him $60,000 Installation Fee

MasterMap_Oct2012A Washington state man who just moved into his new home is now being forced to consider selling it to somebody else because Comcast repeatedly misled him about its ability to provide service.

Seth told his extensive story to The Consumerist, which detailed his repeated attempts to get Comcast broadband service after multiple missed or unfinished service appointments. More importantly, Seth is representative of many Americans who have been told broadband is a fiercely competitive industry, yet they cannot sign up for service at a reasonable price from any provider.

For Seth, having reliable broadband service is not just a convenience — it is essential if he wants to stay employed. Before even considering making an offer on his new home in Kitsap County, Seth did his homework verifying Comcast provided service in the neighborhood. Comcast repeatedly assured him it did, and one sales rep confirmed a former resident at the same address had Comcast service. Seth was satisfied, bought the home and called to get Comcast service installed. But when a Comcast crew arrived Jan. 31, they quickly discovered there was no cable line strung to Seth’s property. That isn’t typically a deal-breaker and the techs completed a “drop bury request” that would normally result in the arrival of a Comcast cable burial crew to bring service from a nearby utility pole. Not this time.

Comcast determined the same home that its own sales rep promised used to have Comcast service was now suddenly too far away from Comcast’s infrastructure. If it decided to offer Seth service, the company quoted an installation fee approaching $60,000.

Seth consulted the FCC’s Broadband Map which depicted Kitsap County a veritable paradise of competition, with at least 10 providers fighting for his business. But Seth quickly realized the FCC’s map was misleading and inaccurate.

comcast whoppersFour of his options were wireless carriers that don’t provide a strong signal to his home or charge obscenely high prices for usage capped Internet access. ViaSat was on the list promising up to 25Mbps, but ViaSat satellite customers can testify the actual speeds received are much slower, and do not reliably support the VPN access Seth required.

Neither Comcast or CenturyLink offer broadband service to Seth, despite the fact both told the FCC they did for the purpose of its map. StarTouch uses microwave signals to reach its customers, but not in Seth’s part of Kitsap County. It seems someone put up a large building in between StarTouch’s transmission facilities and Seth’s home, blocking the service for a significant part of the county.

XO Communications does provide reliable T1 service to businesses at speeds from 1.544Mbps – 6Mbps. The biggest downside is its cost — $600 a month. Finally, Seth’s only other alternative is a gigabit fiber network run by the Kitsap Public Utility District. But cable companies like Comcast effectively lobbied to guarantee those types of networks would never be a competitor by pushing for laws that forbid retail service to individual homes or businesses. In Washington, the law only allows the utility district to sell wholesale access to its network to companies like… Comcast.

In the end, Comcast decided it wasn’t interested in serving Seth even if he found the $60,000 to cover the installation fee. CenturyLink shrugged its shoulders over why it isn’t offering DSL in Seth’s neighborhood. Seth is preparing to put his home back on the market. It’s a perfect choice for Luddites everywhere.

The moral of the story?

  • Comcast is not always forthcoming and honest when signing up customers and led Seth through two months of missed appointments and misinformation;
  • The accuracy of the FCC’s broadband availability map is questionable.

California Delays Consideration of Comcast-Time Warner Cable Merger, Charter Realignment Until May

comcastbuy_400_241Californians get a reprieve from the menacing Comcast-Time Warner Cable merger with an announcement from the California Public Utilities Commission it is putting further consideration of the merger deal on hold until later this spring.

Consumer groups loudly protested the PUC for holding its single public hearing on the merger in San Francisco, which has been served almost exclusively by Comcast for years. Most of the impact of the merger will be felt in Los Angeles, where Time Warner Cable provides service to around 1.8 million customers. The deal also involves Charter Communications customers in the region, who will also end up as Comcast customers if the deal is approved.

The PUC eventually agreed to hold a meeting in Los Angeles, but then scheduled it for Good Friday. Now it has changed the date for the four-hour public input session to April 14, one day before tax returns are due. No specific information about the time of the meeting could be located on the CPUC website, but we do know it will be held in the auditorium of the Public Utilities Commission’s building at 320 West 4th St. in downtown Los Angeles.

That the CPUC seems to be heading towards approving the deal does not come as much of a surprise. The CPUC has been surprisingly friendly to the communications companies it regulates, in the past approving questionable statewide video franchise reforms on behalf of AT&T and generally permitting most of the merger and consolidation transactions that arrive at the commission for review.

An advising administrative law judge attached a long list of recommended temporary conditions that should be included in any approval, covering everything from lobbying about municipal broadband to discount Internet service for the poor. Although Comcast claims it is willing to accept many of the short-term conditions, it also signaled objections to some of the most significant requirements, a potential sign Comcast might exercise its legal options in the future to be rid of the deal’s most onerous conditions.

Independent consumer groups not financially aligned with the cable industry are almost universally opposed to the merger as are many Californians.

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  • GBlljhgfvbffg5365: Enjoy less competition and very High Uncompetitive Pricing along with 20GB data Caps with speed throttling after 10GBs....
  • Comcastic: Why not swap the california and florida Bright House systems with Comcast for other systems near Charter? Charter is already giving up their systems o...
  • Paul Houle: I've rarely seen people happy with a WISP. A WISP promised to serve my area by putting up 13 towers, but then the cost went out of control when t...
  • Will Williams: Noooooooooooooooooooooooooooooooooooooooo...
  • Rob: Yes, they are referring to giga power....
  • Steve: Albany, NY area. Triple play, 15/1 Mbps internet, no premium channels, one DVR box and two regular boxes. Used the Twitter method for the 3rd year i...
  • Stacy: I am cancelling my service with Suddenlink due to the data cap. I am willing to accept the sacrifice of lower internet speeds to ensure none of my har...
  • karen: I agree with everyone here: it shouldn't be legal. And I guess when viewership numbers drop significantly, or when advertising dollars drop, cable co...
  • GBlljhgfvbffg5365: This. The Full Price needs to be disclosed before you even sign up. Quite often I've found is that their is a $50+ Difference in the price they advert...
  • Allen P.: Terrible Internet speeds and the worst customer service. Unfortunately they are the only provider for my area. I would get rid of them if I could....
  • Jason: I am curious if the 50Mbps speed as the fastest they ever achieved if that was wired or wireless? What environment are they in? An apartment or a sing...
  • Angel: it should read "I’m NOW paying 4$ less than the original promo I bought last year". and you actually have to get to the cancellation department, the p...

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