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Comcast Messing Around With MSNBC Again; Major Program Shifts Help Comcast’s Politics

Phillip Dampier July 30, 2015 Astroturf, Editorial & Site News 2 Comments
Phillip "A Shakeup in Comcastland" Dampier

Phillip “A Shakeup in Comcastland” Dampier

Morale at MSNBC is reported to be very low this week as Comcast/NBC imposes some major programming changes that don’t seem to make much sense.

The cancellation of The Ed Show, hosted by Ed Schultz, has proved to be the most controversial, sparking a protest from a presidential candidate and new questions about how much influence Comcast brings to bear on how the news is reported.

Although never a ratings king, Schultz’s pro-labor, very anti-TPP (Trans-Pacific Partnership — the latest controversial trade agreement) views, along with his harangues against executive pay and wealth inequality run contrary to the business agenda of parent company Comcast. While many other MSNBC meh-rated shows survived the culling, Schultz is out, along with The Cycle and Now with Alex Wagner.

Democratic presidential contender Bernie Sanders is not happy:

We live in a time when much of the corporate media regards politics as a baseball game or a soap opera. Ed Schultz has treated the American people with respect by focusing on the most important issues impacting their lives. He has talked about income and wealth inequality, high unemployment, low wages, our disastrous trade politics and racism in America.

I am very disappointed that Comcast chose to remove Ed Schultz from its lineup. We need more people who talk about the real issues facing our country, not fewer.

At a time when a handful of large, multi-national corporations own our major media outlets, I hope they will allow voices to be heard from those who dissent from the corporate agenda.

Not very likely.

Morning Joe: Mika Brzezinski (L), Joe Scarborough (C), Willie Geist (L)

Morning Joe: Mika Brzezinski (L), Joe Scarborough (C), Willie Geist (L)

The latest MSNBC remake will leave bottom-rated shows unscathed —  like Morning Joe, an always frustrating viewing experience featuring mercurial, long-winded and very thin-skinned Joe Scarborough and Mika Brzezinski, alternating in whiplash fashion between the deferential “don’t set Joe off”-verbally filibustered co-host and the staunch defender of women’s rights and Barack Obama (most notably when Joe is not there.)

Comcast’s best friends make regular appearances as paid “analysts” and “talent.” Consider the irritatingly frequent appearances of irrelevant Harold Ford, Jr., friend of big business and co-chair of the corporate sock puppet group Broadband for America, part funded by Comcast, or the Rev. Al Sharpton, who writes letters in favor of whatever Comcast business deal is before regulators.

If MSNBC did a sober ratings review, allowing Sharpton’s teleprompter-dependent show PoliticsNation, which couldn’t draw flies, to stay on the schedule is inexplicable. Then there is yesterday’s news regular Ed Rendell, former mayor of Philadelphia, former governor of Pennsylvania, former almost everything… but today Comcast’s BFF. While picking up a check serving as a guest political hack on various MSNBC shows, in his spare time he penned letters supporting Comcast’s merger with Time Warner Cable.

opinionMSNBC Fossil Chris Matthews is still there as well, like a permanent scar. He got his start in 1997 on CNBC and MSNBC obsessing about Bill Clinton’s affair with Monica Lewinsky, remained tolerant if not friendly to the Bush Administration during the “war years,” until he got a “thrill up his leg” for Barack Obama during the 2008 election. He loves politics but knows who butters his bread.

MSNBC’s biggest ratings came from Keith Olbermann, who left the network in a huffy dispute with his boss Phil Griffin. Rumors are circulating wildly this week he’ll be asked back to MSNBC now that his sports gig with ESPN has ended. But Olbermann was also willing to take shots at the corporation that paid him, something not likely to change if he returned to Comcastland. The dealbreaker may turn out to be his nemesis Griffin is still there.

msnbcMSNBC brass suggest the changes are to enhance the network’s “straight reporting” during the day and leave outspoken opinion hosts unscathed in the evening. To show that, MSNBC will present viewers the disgraced former host of the NBC Nightly News, Brian Williams (now exiled to doing special reports for cable news) and Chuck Todd, who depends on good relations with politicians to guarantee their accessibility and appearance on the always predictable Sunday morning talking point time-waster Meet the Press.

In short, MSNBC really means it when they call themselves “The Place for Politics.” Except most Americans are now tired of politics, which does not bode well for improved ratings. But then Comcast doesn’t mind a television food fight between Donald Trump vs. Everyone or disputes over Planned Parenthood or police violence, because that is unlikely to cross into the risky territory of discussing corporate influence on the media or inconvenient stories about media consolidation. You’ll find those stories on PBS from Bill Moyers.

CNBC cheerleads big corporate deals all day long, but when is the last time you heard a skeptical news story about cable mergers and network acquisitions? When is big too big?

Consumers Storm FCC With 2,000+ Net Neutrality Complaints About Data Caps, Poor Service

angry guyIt didn’t take long for consumers to start flooding the Federal Communications Commission with thousands of complaints about poor Internet service, usage caps, and speed throttles.

The complaints arrived as the FCC began formally enforcing Net Neutrality by reclassifying broadband as a telecommunications service, subject to oversight by the federal agency.

Consumers used the occasion to deluge the commission about the sorry state of Internet access in the United States, whether it constituted a Net Neutrality violation or not.

National Journal obtained a sample of 50 complaints through a Freedom of Information Act request and it was clear data caps were at or near the top of the complaints list and consumers wasted no time slamming cable and phone companies over the practice.

“Our data should not be capped at 350[GB]!!!!” one consumer pleaded, likely a Suddenlink or Mediacom customer, which both have 350GB caps on certain speed tiers. “Please, please make data caps illegal!!”

fccNo more Netflix and Hulu watching for this family: “I have to tell my kids to stop using YouTube and other services and stuff they need for school so we don’t go over the cap,” another consumer wrote, explaining that their Internet-enabled home security camera uses up a significant amount of their monthly data. “By Comcast having this data cap, I don’t have a open Internet … I also think this data cap is very inaccurate, it goes up without anybody being home, and sometimes by a lot.”

Comcast also received heat for poor performing broadband service, with one customer forced to use Wi-Fi at a local McDonalds to take an online exam because Internet service at home was so poor.

“The Comcast modem is such crap that we can’t even access the Internet,” the consumer wrote. “I’m livid.”

AT&T was roasted for speed throttling its “unlimited data” wireless plan — a practice that already resulted in a $100 million fine from the FCC for misleading consumers. AT&T is appealing.

In all, the FCC reports it received about 2,000 complaints from consumers in June, the first month Net Neutrality rules took effect. The agency has just 30 days to respond to the complaints, most lodged using this online form. The FCC may be able to answer many with a form letter because poor service and usage caps are not strict violations of Net Neutrality, unless the FCC determines the practices “unreasonably interfere” with Internet access. AT&T’s speed throttling comes a lot closer to meeting that test, because many throttled customers report their wireless data service is rendered effectively unusable once throttled.

But the broad-ranging complaints may still prove useful, suggesting to the FCC stronger rules and oversight are required for a broadband market many consider barely competitive and often customer abusive.

Seeking comment, National Journal reported the National Cable and Telecommunications Association and the U.S. Telecom Association, which both represent major Internet providers and have sued to overturn the regulations, declined to comment on the complaints.

Comcast Finds Excuses to Avoid Installing Gigabit Pro Fiber; Construction Costs Seem to Matter

qualifiedComcast is rejecting some requests for its new 2Gbps fiber to the home service, claiming construction costs to provide the service to some homes are too high, even for customers living 0.15 of a mile from Comcast’s nearest fiber optic connection point.

Stop the Cap! reader Thomas, who wishes to withhold his last name, was excited at the prospect of signing up for Comcast’s 2Gbps broadband service for his home-based Internet business, despite the steep $1,000 installation fee and $159/mo promotional price he saw in the media.

“For the average person just looking for a faster connection at home, 2Gbps is absolute overkill, but if you run a home-based business that depends on a fast Internet connection, Comcast’s prices are a lot more reasonable than a Metro Ethernet or fiber solution from AT&T,” Thomas said.

Thomas is a Comcast customer in the Chicago area and knew he’d qualify for the service because he watched Comcast crews install/upgrade fiber cables close to his home. Comcast requires customers to live within one-third of a mile of the nearest company-owned fiber connection point to get 2Gbps service. Thomas lives far closer than that and Comcast’s online qualification tool also seemed to show the service would be available to him.

“I assumed it would be easy to order service, but it has not turned out that way at all,” Thomas complained.

Comcast’s regular customer service agents were hit or miss for Thomas. Some are acquainted with Comcast’s Gigabit Pro offering, many others are not. It took three calls for him to find a representative aware of the product, but even then the representative informed him someone would have to call him back to take his order. Two days later, he did receive a call from a Comcast regional office that explained the lengthy ordering and installation procedure. If everything worked as it should, it would take up to three months for Comcast to complete the fiber installation. But Thomas warned there were potential deal-breakers along the way.

Equipment Costs

Comcast will supply some, but not all, of the necessary equipment. A router provided by Comcast adds $19.99/mo to the price, and could be worthwhile to customers wanting to limit their out-of-pocket up front costs. But there are other equipment requirements to consider as well:

  • Desktop PC with available PCIe expansion slot
  • 1 10G PCIe network interface controller with SFP+ cage ($200-400)
  • 1 10G enhanced small form factor pluggable SFP+ transceiver (850nm MMF) ($200-350)
  • 1 MMF LC patch cable ($25-30)

To connect multiple devices to the fiber handoff, a compatible and very expensive 10Gbps Layer 3 switch or router is also required, which can run well into the thousands of dollars.

Pricing Gotchas

Installation is $500 and activation costs another $500. There is an early termination fee of $1,100 if you disconnect service before the end of your term contract. On a three-year contract, the amount of the fee is reduced by $100 every three months you keep the service. That $159 promotional price quoted in the press turned out to be another issue. Comcast informed him that offer is only good in the cities of Nashville (a future Google Fiber city also designated for GigaPower U-verse from AT&T) and Chattanooga, Tenn. (which already has gigabit service from EPB). It would cost him $299.95 a month, not $159.

Service Qualification Procedure

slow noComcast implies any customer within 1/3rd of a mile of their nearest fiber cable is qualified to get Gigabit Pro service, but Thomas tells us that just isn’t true.

“Comcast treats these installations the same way they would running cable into virgin territories like an unserved neighborhood or office park,” Thomas said. “Once you commit to an order, I am convinced they do a Return On Investment (ROI) and cost analysis to decide if it makes financial sense to actually bring fiber to you.”

It begins with an in-office map survey that reviews Comcast’s existing network and verifies a path from Comcast’s existing fiber network to the customer’s home. This process takes up to 14 days, according to Thomas, and makes certain the customer is within the qualified distance for service.

“But I can say it goes beyond this, because Comcast was also looking at proposed routes to get fiber to me, and the representative was concerned about whether Comcast’s cables in my area were on telephone poles or underground in conduit,” reported Thomas. “There was also an issue with a pedestal and I was informed a site survey was required to check whether existing infrastructure in my neighborhood could support the service.”

Comcast said a visit from a technician would be required — another two-week process, and about then he was told “there was indeed a problem with their existing pedestal and they also ran into a conduit issue,” Thomas said. “At that point, I was informed my order could not go ahead because Comcast would have to spend about $17,000 to correct these issues and cover my installation and that evidently failed their ROI and cost analysis.”

Had Thomas passed all the qualification tests, he would have waited up to 13 weeks (more than three months) from the time he ordered service before he could actually use it. Now, he will wait at least a year for Comcast’s suggested alternative — the arrival of DOCSIS 3.1, which is expected to support gigabit speeds over Comcast’s existing coax cable network.

“I honestly felt mislead by Comcast’s press releases that suggested service was just a matter of where you lived without telling customers they will deny service if it costs Comcast over a certain dollar amount, no matter how close you live to their existing fiber,” Thomas added. “Promoting a service and actually providing it are two very different things and it seems Comcast just isn’t providing it, at least to me.”

Have you explored Comcast Gigabit Pro? If so, share your experiences in the comment section. We’d love to hear from you if you actually have the service installed.

Fiber to the Press Release: Comcast’s 2Gbps Service Arrives – In One 993-Acre Houston Development

the grovesAfter months of issuing nationwide press releases promoting Comcast’s new, blazing fast 2Gbps fiber to the home broadband, the cable company has finally announced it will be available (so far) … in one single 993-acre unfinished planned community in a northeastern suburb outside of Houston: Humble, Tex.

The Groves, designed to eventually contain 2,200 single-family homes on 993 acres west of West Lake Houston Parkway and south of Kingwood, currently resembles a crop circle because much of the community has yet to be built.

Crescent Communities, the North Carolina-based developer, calls The Groves a “refuge” from the rest of Houston, with amenities close at hand. Residents may not instinctively balk at Comcast’s expensive super-fast service requiring a $1,000 installation fee and a multi-year commitment to get the special promotional price of $159/mo. Housing at The Groves starts in the upper $200,000s and extends into the $500,000 range.

The Houston Business Journal reports Comcast will directly connect homes in the development to fiber optics, not the usual coaxial cable used elsewhere. Every home in the development will have access to the all-fiber network, which will offer 250Mbps and higher speeds, according to Comcast spokesman Michael Bybee.

Comcast will officially launch the 2Gbps service next week.

The Groves crop

The Groves (center) is a master-planned upscale residential community that will eventually contain over 2,000 homes. But in this photograph, provided by the developer, it looks more like a crop circle.

Unfinished Business: Comcast will not face much of a challenge wiring an incomplete planned community for fiber optics. Much of The Groves has yet to be built.

Unfinished Business: Comcast will not face much of a challenge wiring an incomplete planned community for fiber optics. Much of The Groves has yet to be built. (Dark Green: Unfinished/Tan: Complete)

Comcast’s Poor Service Doesn’t Discriminate: Former Comcast VP Complains About Slow Speeds

chong

Rachelle Chong, a former commissioner of the Federal Communications Commission during the Clinton Administration, member of the California Broadband Task Force (2006-2008), commissioner of the California Public Utilities Commission (2006-2009), and Comcast’s vice president for government affairs for the California region (2011-2013) also happens to be a Comcast broadband customer.

She took to Twitter this morning to complain the company she used to work for was giving her a fraction of the speed she was paying for.

At least Comcast’s poor service doesn’t discriminate. Less prominent customers are experiencing the same issues:

One customer isn’t too sure fast speeds matter much. He lives in one of Comcast’s usage cap test markets, where Comcast enforces a usage allowance on their Internet service, with a bill-shocking overlimit fee if you dare exceed it.

Public-Private Partnership: Did Miss. AG Staff Conspire With Hollywood to Launch Attack on Google?

quid pro quoGoogle is seeking documents from three network television conglomerates that could prove the Mississippi Attorney General’s office conspired with executives of 21st Century Fox, Comcast/NBC, and Viacom to launch a coordinated lobbying campaign against the search engine giant over its business practices.

A court filing reported by Variety alleges that staffers of Mississippi Attorney General Jim Hood (D) conspired to launch an anti-Google media and lobbying blitz to pressure the company over its search practices, notably the “autocomplete feature” that some believe promotes illegal activities.

Copies of email from Meredith Aldridge, one of Hood’s staff members, addressed to Brian Cohen at the Motion Picture Assn. of America (MPAA) allegedly lays out a proposed media/public relations campaign to plant negative Google stories in newspapers and on television shows with the assistance of executives inside the media companies. The examples included:

Hood

Hood

  • A custom-written editorial for placement in the Wall Street Journal, owned by News Corp., former owner of 21st Century Fox, suggesting Google stock would lose value if it faced a sustained probe by Attorney General offices across the country;
  • An appearance arranged by a Comcast/NBCU government relations executive on the Comcast/NBC-owned Today show that would perpetuate “an attack on Google;”
  • A suggestion that a PR firm engineer a regulatory filing with the Securities and Exchange Commission on behalf of a stockholder to complain about Google.

Hood’s office appeared to be ready for a lengthy, all-out assault on Google, at least based on an outline ready for the summer meeting of the National Association of Attorneys General in Boston in 2013. The document suggests Hood was prepared to discuss how Google may have perpetuated the illegal online purchases of counterfeit goods, weapons, and prescription painkillers through its search engine.

Google argues the pattern of behavior from Hood’s office suggests the three media companies are withholding documents connecting “contributions to AG Hood’s cause and the quid quo pro they expected to receive.”

Hood’s case did not go over well in the courtroom of U.S. District Judge Henry Wingate, who ruled there was a “substantial likelihood” Google will prevail on its claim that Hood violated its First Amendment rights.

“On a Razor’s Edge:” Charter’s Deal With Time Warner Financed With Junk Bond Debt

Charter will be among America's top junk bond issuers. (Image: Bloomberg News)

Charter will be among America’s top junk bond issuers. (Image: Bloomberg News)

The attempted $55 billion acquisition of Time Warner Cable will saddle buyer Charter Communications with so much debt, it will make the cable operator one of the nation’s largest junk bond borrowers.

Bloomberg News reports investors are concerned about the size and scope of the financing packages Charter is working on to acquire the much-larger Time Warner Cable. Total debt financing this year has already reached $18.2 billion and one of Charter’s holding companies is signaling plans to add another $10.5 billion in unsecured debt. Bloomberg reports the total value of Charter’s combined debt from existing operations and its acquisition of Time Warner Cable and Bright House Networks may reach as high as $66 billion.

Ironically, Time Warner Cable CEO Robert Marcus used Charter’s penchant for heavily debt-financed acquisitions as one of the reasons he opposed Charter’s first attempted takeover of Time Warner in January 2014.

The New York Times suggested Marcus seemed to be looking out for shareholders when he called the offer “grossly inadequate” and demanded more cash and special protections, known as “collars,” to protect stockholders against any swings in the value of Charter stock used to cover part of the deal.

charter twc bhThe Marcus-led opposition campaign against Charter gave Comcast just the time it needed to mount a competing bid — all in Comcast stock, then worth around $159 a share. Comcast also offered Marcus an $80 million golden parachute if the deal succeeded.

Marcus’ concerns for shareholders suddenly seemed less robust. Gone was any demand for cash to go with an all-stock deal — Comcast stock was good enough for him. Most blockbuster mergers of this size and complexity also contain provisions for a breakup fee payable by the buyer if a deal falls apart. Marcus never asked for one, a decision the newspaper called “foolish,” considering regulators eventually killed the deal, leaving Time Warner Cable with nothing except bills from their lobbyists and lawyers.

After the Comcast deal failed to impress regulators, Charter returned to bid for Time Warner Cable once again. This time, Charter offered nearly $196 a share — nine times earnings before interest, taxes, depreciation, and amortization. (They offered about seven times earnings in 2014.) Marcus will now get the $100 a share in cash he wanted from Charter the first time, but shareholders are realizing that cash will be a lower proportion of the overall higher amount of the second offer.

Marcus has also said little about the enormous amount of borrowing Charter will undertake to seal its deal with Time Warner Cable. Nor has he said much about a revisited and newly revised golden parachute package offered to him by Charter, expected to be worth north of $100 million.

Marcus

Marcus

But others did notice Charter raised $15.5 billion selling bonds on July 9, many winning the lowest possible investment grade rating from independent ratings services. Standard & Poor’s and Fitch Ratings bottom-rated part of Charter’s debt offering and Moody’s classified that portion as Ba1 — junk grade.

Charter traveled down a similar road six years ago, overwhelmed with more than $21 billion in debt to cover its aggressive acquisitions. Charter declared bankruptcy in 2009. The cable company has survived this time, so far, because of the Federal Reserve’s low-interest rates and very low corporate borrowing costs.

“Charter is walking on a razor’s edge,” warned Chris Ucko, a New York-based analyst at CreditSights.

Not so fast, responds Charter.

“The combined company will” reduce debt quickly, Francois Claude, a spokesman for Stamford, Conn.-based Charter said in a statement to Bloomberg News.

One likely source of funds to help pay down that debt will come from customers as the company seeks to drive higher-cost products and services into subscriber homes. Some of that revenue may come from selling higher speed broadband, a service customers are unlikely to cancel and may find difficult to get from telephone companies that have not kept up with the speed race. If cord cutting continues, and online video competition increases, that could result in customers dropping cable television packages at a growing rate, negatively impacting Charter’s revenue.

Time Warner Cable’s bondholders are already counting their losses. Their “investment grade” securities have already lost 9.3 percent of their value this year, compared with 0.58% losses in the broader high-grade debt market, according to Bank of America/Merrill Lynch. If increased competition does arrive or the FCC continues its pro-consumer advocacy policies, there is a big risk Charter’s revenue expectations may never materialize.

Comcast Loses 69,000 Subscribers; Internet Customer Additions Down 12%, But Revenue Higher

Phillip Dampier July 23, 2015 Comcast/Xfinity, Consumer News No Comments

Comcast-LogoNEW YORK (Reuters) – Comcast Corp, the largest U.S. cable operator, posted in-line second-quarter results, as its high-speed Internet and NBC Universal businesses grew amid a drop in pay-TV subscriber departures.

Comcast, also the No.1 U.S. high-speed Internet provider, said on Thursday total revenue rose 11.3 percent to $18.74 billion in the second quarter ended June 30. Analysts on average had forecast revenue of $18.14 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to Comcast rose 7.3 percent to $2.14 billion, or 84 cents per share, from a year earlier.

Profit was up 10 percent from a year ago to 84 cents per share after excluding items such as investments and acquisition-related items, matching Wall Street estimates.

The company, which lost 8,000 video customers last quarter, reigned in subscriber losses in the second quarter compared to a year ago. It said 69,000 subscribers departed from April through June, but it was less than the 144,000 users who left a year earlier.

cablecordWall Street keeps a close watch on the number of new video subscribers as pay TV operators fight to keep customers amidst intense competition from streaming video services such as Dish Corp’s Sling TV.

Earlier this month, Comcast said it is beta testing a new cable streaming service called Stream, which will broadcast live TV from HBO and about a dozen other networks for $15 per month. The new service lets Comcast’s Xfinity Internet customers stream live TV over phones, tablets and laptops.

Comcast’s high-speed Internet customer additions dropped 12 percent to 180,000, but revenue from the business rose about 10 percent to $3.1 billion.

Business services revenue increased 20.4 percent to $1.16 billion.

At NBC Universal, revenue rose 20.2 percent to $7.23 billion from a year earlier.

Revenue at the film studio rose 93 percent from a year earlier to $2.3 billion, bolstered by its summer blockbusters “Furious 7” and “Jurassic World.”

The Universal theme park business, with its popular “Harry Potter” attraction in Florida, saw revenue rise 26 percent to $773 million.

Advertising revenue at cable networks fell 3 percent in the quarter to $917 million amid a decline in ratings that has hit networks across the TV industry. The NBC broadcast network’s ad revenue rose a modest 0.3 percent to $1.25 billion.

Shares of Comcast, which abandoned its proposed $45 billion merger with Time Warner Cable Inc in late April, closed at $64.50 on Wednesday on the Nasdaq.

(By Malathi Nayak; Editing by Bernard Orr)

Cable’s Fiber Fears: Broadband Market Share Drops to 40% or Less When Fiber Competition Arrives

The magic of fiber

The magic of fiber

Ever wonder why Comcast, one of the strongest defenders of classic coaxial-based cable technology, is suddenly getting on board the fiber-to-the-home bandwagon? New research suggests if they don’t, their market share could fall to 40% or less if a serious fiber competitor arrives.

“There’s some sort of magic associated with fiber,” John Caezza, president of Arris’s Access Technologies division, told Multichannel News. “Everyone thinks it’s better than [cable technology].”

The risks to the cable industry are clear: be prepared to upgrade or face customer losses.

Craig Moffett of Moffett Nathanson has never been a cheerleader for fiber to the home service. In 2008, Moffett vilified Verizon for its investment in a major fiber upgrade we know today as FiOS to replace its aging copper infrastructure, complaining it was too expensive and was overkill for most residential customers. He was more tolerant of AT&T’s less-costly fiber to the neighborhood approach, dubbed U-verse, that still used traditional telephone lines to deliver service into the home. Because U-verse did not need AT&T to replace wiring at each customer location, the cost savings were considerable. But the cost-capability compromise left AT&T with a less robust platform, with broadband speeds initially limited to a maximum of around 24Mbps.

While phone companies like AT&T and Verizon were saddled with the enormous cost of tearing out decades-old obsolete phone wiring to varying degrees, the cable industry seemed well positioned with a mature, yet still recent hybrid fiber-coaxial (HFC) platform that was upgraded in the 1990s in many cities. While still partly reliant on the same RG-6 and RG-11 coaxial cable used since the first days of cable television, cable companies also invested in fiber optics to bring services from distant headends to each town, removing some of the copper from their networks without the huge expense of bringing fiber all the way to customer homes.

For Moffett, it was the cable industry that had the network with room to grow without spending huge amounts of capital on upgrades. He has touted cable stocks ever since.

Moffett

Moffett

What worries Moffett now isn’t Google, Frontier, CenturyLink, or even Verizon. He’s concerned about AT&T.

As part of its commitment to win approval of its merger with DirecTV, AT&T promised regulators in June it would expand AT&T U-verse with GigaPower — AT&T’s gigabit fiber to the home upgrade — to at least 11.7 million homes, nine million more than it has ever promised before. Comcast has a 32% overlap with AT&T U-verse, compared to Time Warner Cable (26%), Charter Communications (32%), Bright House Networks (25%) and Cox Communications (25%). Comcast had promised faster broadband with the advent of DOCSIS 3.1 beginning as early as next year. But the company isn’t willing to wait around to watch AT&T and others steal its speed-craving customers. This spring, it promised 2Gbps Gigabit Pro fiber to the home service to customers living within 1/3rd of a mile of the nearest Comcast fiber line.

Some in the cable industry complain Google’s huge marketing operation has saddled cable broadband with a bad rap — ‘it’s yesterday’s news, with Google Fiber representing the future.’ The marketing war has been largely won by Google, they say, leaving consumers convinced fiber is the better and more reliable technology, and they need it more than the cable company.

Cable’s defense is to consider some marketing changes of its own — including the idea of dropping the name “cable” from the business altogether, because it implies older technology. But despite any name change, most cable companies will continue to rely on HFC infrastructure for at least several more years, despite claims they are bringing their own middle mile fiber networks closer to customers than ever. Cable operators now serve an average of 400 homes from each cable node. Some cable companies like Comcast plan to cut the number of customers sharing a node to around 100-125 homes, which means fewer customers will share the same broadband connection. But in the end, that will make cable comparable at best to a fiber to the neighborhood network, still hampered to some degree by the presence of legacy coaxial copper cable. The industry believes most consumers will never see the limitations, and for those that do, a limited fiber buildout with a steep installation fee may keep costs (and demand) down to those who need the fastest possible speeds and are willing to pay to get them.

CableLabs_TaglineThat philosophy may still cost cable companies customers if a fiber competitor doesn’t have to compromise speed and performance and can afford to charge less.

The top 10 U.S. cable companies currently account for 60% of the residential broadband market and 86% of all broadband net additions in the first quarter of 2015, says Leichtman Research Group.

Moffett predicts cable broadband will only capture 40% of share in markets where it faces a fiber to the home competitor (Google, EPB, Greenlight, Verizon FiOS), 55% in markets served by a fiber to the neighborhood competitor (U-verse, Prism), and 60% where the competition only sells DSL (most Frontier, Windstream service areas). Nationwide, AT&T’s newest gigabit fiber commitment could cost the cable industry 2.4% of the whole residential broadband market, Moffett said.

Phil McKinney, president and CEO of CableLabs, believes DOCSIS 3.1 — the next standard for cable broadband — can easily stand toe to toe with fiber to the home providers.

McKinney

McKinney

“I think it [HFC] has tremendous life, and we are going to be riding it all day long,” Werner said. DOCSIS 3.1 “is definitely going to be our go-to animal. Due to ubiquity, we can go out and virtually serve all of our [customers] very quickly.”

Cable companies claim their speed increases reach all of their customers in a given area at the same time without playing games with “fiberhoods” or waiting for incremental service upgrades common with Google Fiber or AT&T’s U-verse. Customers, the industry says, also appreciate DOCSIS upgrades bring no service disruption and nobody has to come to the home to install or upgrade service.

“The cable industry has more fiber in the ground than each fiber provider in the world,” McKinney argues. “If you look at total fiber strand miles, there’s more fiber under management and under control of the [cable] operators than anybody else combined.”

That may be true, but Moffett thinks it is only natural shareholders may eventually punish the stocks of cable operators that will face competition from AT&T’s U-verse with GigaPower. There is precedent. Cablevision serves customers in New York, Connecticut, and New Jersey and faces fierce competition from Verizon FiOS in most of its service areas. That competition has been brutal, occasionally made worse in periodic price wars. What may be protecting cable stocks so far is the fact AT&T competition will only affect, at most, 32% of the impacted cable operators’ service areas.

AT&T’s gigabit network has also proved itself to be more press release than performance, with very limited availability in the cities where it claims to be available. Verizon FiOS, in contrast, is widely available in most of Cablevision’s service area.

Still, Comcast is hoping it can hang on to premium customers who demand the very fastest speeds and performance with targeted fiber.

“Gigabit Pro is really for those customers who have got extreme needs,” said Tony Werner, Comcast’s executive vice president and chief technology officer.

Comcast Says Early 2Gbps Gigabit Pro Customers Will Be Served by Metro Ethernet

comcast2gbps-495x316The first 2Gbps Gigabit Pro deployments from Comcast will rely on Metro Ethernet that now serves Comcast’s midsized business customers, later migrating to passive optical network [PON] technology Comcast intends to begin installing in new housing developments and apartment complexes.

Multichannel News reports Comcast is now offering a limited promotional price of $159/mo for the ultra-fast broadband service, but to receive the discount customers must sign a three-year service contract with early cancellation penalties and agree to pay up to $1,000 in installation and activation fees.

Comcast claims it will offer the service to about 18 million homes by the end of the year — those within 1/3rd of a mile of Comcast’s existing fiber network.

Tony Werner, Comcast’s executive vice president and chief technology officer would not say which version of PON — GPON or EPON Comcast will use long-term, but a decision had already been made within the company and would eventually be known to customers.

Comcast-LogoZTE, a Chinese provider of telecommunications equipment and network solutions, says EPON is the dominant fiber to the home solution in Japan, Korea, China and other Asia-Pacific countries. In other countries, especially in America, GPON is the preferred choice, as it can coexist with earlier PON systems.

Werner added Comcast will quietly deploy fiber to the home service in certain new housing developments.

“Once the trench is open, the incremental economics are close enough that we will do fiber-to-the-home, unless it’s a very small stub off of existing plant,” Werner said.

But for everyone else, it will be coaxial cable as usual unless customers pay that $1,000 fiber fee and are willing to wait up to eight weeks for installation. Comcast will run fiber and install the necessary equipment, including the Optical Network Terminal, only to customers who sign up for Gigabit Pro.

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