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D.C. Court of Appeals Announces Expedited Schedule for Net Neutrality Legal Challenges

DC Circuit Court

DC Circuit Court

The U.S. Court of Appeals for the D.C. Circuit has agreed to begin contemplating the legality of the Federal Communications Commission’s Net Neutrality rules on an expedited schedule, with written briefs from the cable and wireless industry challenging the rules due by July 30.

The schedule could allow the court to begin hearing oral arguments about whether Net Neutrality and Title II reclassification of broadband as a telecommunications service are legal as early as late fall, with a decision coming in 2016.

Both sides advocated for the court to make its decision as soon as possible.

To help the judges, the court has ordered all parties to limit the length of their written briefs and avoid using telecom jargon at all costs. The judges expect to read a series of at least 13 written briefs from all parties in the case before oral arguments are heard and has imposed limits ranging from 2,000-33,000 words on each submission to cut the workload.

Those objecting to Net Neutrality are not challenging the FCC’s rules prohibiting blocking of websites, paid prioritization or speed throttling. They are more worried about Title II reclassification, which gives the FCC wide latitude to oversee the broadband business. They are also challenging the vaguely defined “catch-all” general Internet conduct standard which allows the FCC to regulate if providers attempt end runs around specific rules to achieve comparable results. The FCC argues it needs the latitude to respond to a rapidly changing Internet. Internet providers also have a track record of finding and exploiting loopholes, something the FCC wants to limit.

Charter Asks FCC to Approve Time Warner Cable/Bright House Merger; Stop the Cap! Urges Changes

charter twc bhCharter Communications last week filed its 362 page redacted Public Interest Statement laying out its case to win approval of its acquisition of Time Warner Cable and Bright House Networks, to be run under the Charter banner.

“Charter may not be a household name for all Americans, but it has developed into an industry leader by implementing customer and Internet-friendly business practices,” its statement reads.

The sprawling document is effectively a sales pitch to federal regulators to accept Charter’s contention the merger is in the public interest, and the company promises a range of voluntary and committed service upgrades it says will improve the customer experience for those becoming a part of what will be America’s second largest cable operator.

Charter’s proposed upgrades fall under several categories of direct interest to consumers:

Broadband: Charter will commit to upgrade customers to 60Mbps broadband within 30 months (about 2.5 years) after the deal is approved. That could mean some Time Warner Cable customers will still be serviced with standard speeds of 15Mbps as late as 2018. Time Warner Cable’s Maxx upgrade program will be effectively frozen in place and will continue in only those areas “consistent with Time Warner Cable’s existing deployment plans.” That will leave out a large sections of the country not on the upgrade list. Charter has committed to impose no data caps, usage-based pricing or modem fees, but only for three years, after which it will be free to change those policies at will.

Wi-Fi: Charter promises to build on Time Warner’s 100,000 Wi-Fi hotspots, most in just a few cities, and Bright House’s denser network of 45,000 hotspots with a commitment to build at least 300,000 new hotspots across Charter’s expanded service area within four years. Charter will also evaluate deploying cable modems that also act as public Wi-Fi hotspots. Comcast already offers over 500,000 hotspots with plans for many more, making Charter’s wireless commitment less ambitious than what Comcast today offers customers.

Cable-TV: Charter has committed to moving all Time Warner and Bright House systems to all-digital service within 30 months. Customers will need to lease set-top boxes designed to handle Charter’s encryption system for all cable connected televisions. Among those boxes includes Charter’s new, IP-capable Worldbox CPE and cloud-based Spectrum Guide user interface system.

Video on the Go: Charter will adopt Time Warner Cable’s streaming platform and apps to provide 300 streaming television channels to customers watching from inside their homes (a small fraction of those channels are available while outside of the home). Customers will not be able to watch on-demand recorded DVR shows from portable devices, but can program their DVRs from apps or the website.

Discount Internet for the Poor: Charter references the fact its minimum entry-level broadband speed is 60Mbps so that does not bode well for Time Warner Cable’s Everyday Low Priced Internet $14.99 slow-speed Internet plan. Instead Charter will build upon Bright House Networks’ mysterious broadband program for low-income consumers.

Based on Charter’s initial proposal, Stop the Cap! will urge state and federal regulators to require changes of these terms before approving any merger. Among them:

  1. All existing Time Warner Cable and Bright House service areas should be upgraded to meet or exceed the levels of service offered by Time Warner Cable’s Maxx program within 30 months. It is not acceptable to upgrade some customers while others are left with a much more modest upgrade program proposed by Charter;
  2. Charter must commit to Net Neutrality principles without an expiration date;
  3. Regardless of any usage-cap or usage-based pricing plans Charter may introduce after its three-year “no caps” commitment expires, Charter must permanently continue to offer unlimited, flat rate Internet service at a reasonable price as an alternative to usage-priced plans;
  4. Customers must be given the option of opting out of any leased/provided-modem Wi-Fi hotspot plan that offers a wireless connection to outside users without the customer’s consent;
  5. Charter must commit to a more specific Wi-Fi hotspot program that details towns and cities to be serviced and proposed pricing for non-customers;
  6. Charter must allow customers to use their own set-top equipment (eg. Roku, Apple TV, etc.) to receive cable television service without compulsory equipment/rental fees. The company must also commit to offering discount alternatives such as DTAs for secondary televisions and provide an option for income-challenged customers compelled to accept new equipment to continue receiving cable television service;
  7. Charter must retain Time Warner Cable’s Everyday Low Priced $14.99 Internet plan regardless of any other low-income discount program it offers. If it chooses to adopt Bright House’s program, it must broaden it to accept applications year-round, simplify the application process and eliminate any waiting periods;
  8. Charter must commit to independent verification of customer quality and service standards and adhere to any regulatory guidelines imposed by state or federal regulators as a condition of approval.
  9. Charter must commit to expansion of its cable network into a reasonable number of adjacent, unserved areas by committing a significant percentage (to be determined) of measurable financial benefits of the merger to the company or its executives towards this effort.

Stop the Cap! will closely monitor the proceedings and intends to participate on both the state (New York) and federal level to guarantee any merger provides consumers with an equitable share of the benefits. We will also be examining the impact of the merger on existing Time Warner Cable and Bright House employees and will promote merger conditions that protect jobs and limit outsourcing, especially overseas.

Some Time Warner Cable Customers Get a Small Speed Boost Thanks to Overprovisioning

Phillip Dampier June 29, 2015 Broadband Speed, Consumer News, Time Warner Cable 2 Comments

timewarner twcTime Warner Cable customers in parts of the northeast have noticed their broadband speeds increased slightly over the last several days.

Stop the Cap! reader Howard Goldberg was among those who noticed Time Warner’s broadband performance in upstate New York has improved, at least for upper tiers.

“Over the past 24 hours, Speedtest.net (against the TWC site in Syracuse, and many others) is reporting 60-62Mbps down and 6.0-6.2Mbps up, an increase from 55/5.5Mbps we have had over the past few years,” Goldberg notes. He is subscribed to Time Warner Cable Ultimate, marketed in upstate New York as 50/5Mbps service.

We noticed the same thing late last week here in Rochester as speed test results now consistently top 60Mbps when using a Time Warner Cable-based server. The upstream speed increase was less visible, but still measurable.

Goldberg also reports ping times have dropped from the 18-22ms range to 13-15ms when using the Syracuse, N.Y. test site, which could also point to a more responsive Internet connection overall.

Cable companies occasionally deliver speeds that are actually faster than what they sell, known as overprovisioning, to improve customer satisfaction and boost their performance in the Federal Communications Commission’s ongoing national speed test program, designed to verify if providers are actually providing the speeds they are marketing to customers.

Are Time Warner customers in other areas seeing similar results? Report your findings in the comment section.

Bright House’s Mysterious Internet Discount Program Charter Wants to Adopt Nationwide

If you can find it.

If you can find it.

A major concern about the merger between Charter and Time Warner Cable and Bright House Networks is the availability of affordable Internet access. That was a major issue for New York regulators contemplating the earlier failed merger attempt between Comcast and Time Warner Cable.

Time Warner Cable offers all subscribers a low-speed budget Internet option called Everyday Low Price Internet for $14.99 a month with no pre-qualifications, no paperwork, and no contract commitment. Although originally designed to appeal to price sensitive DSL customers, it has become Time Warner’s de-facto low-income Internet offering for those who cannot afford Standard Internet service.

According to Charter Communications’ Public Interest Statement filed today with the Federal Communications Commission — its case to win approval of its acquisition of Time Warner Cable and Bright House — the future is not looking too good for Time Warner’s $15 Internet program if the merger is approved. Charter makes a point of stating its entry-level Internet option is 60Mbps service at almost three times that price.

So what will “New Charter” offer more than 10 million cable customers going forward:

New Charter will build upon Bright House Networks’ broadband program for low-income consumers by making a broadband offering available with higher speeds and expanded eligibility while continuing to offer the service at a significant discount, and will begin making the offer available within six months after the transaction closes and offer it across the New Charter footprint within three years of closing.

If you were even aware Bright House offered a discount broadband program, congratulations!

An advocate of affordable Internet service claims Bright House has done an excellent job keeping any mention of the program off its website. In fact, it appears arranging for a visa to visit North Korea is probably slightly easier than getting cheap service from Bright House.

It turns out Bright House does have a modified version of its barely advertised “Lite Internet” plan offering 2Mbps downloads and 512kbps uploads. Anyone can buy that plan for about $20 (with a separate modem fee). Bright House’s Low-Income Internet plan offers the same service for $9.95 a month for up to 24 months.

To qualify, there is an Olympic-style playing field of hoops to jump through, according to Cheap Internet:

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

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

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

But it gets crazier.

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

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

That restriction gets heavy criticism from Cheap Internet.

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

Time Warner Cable offers $14.99 to anyone without paperwork.

Time Warner Cable offers $14.99 to anyone without paperwork.

But wait, there is more.

Bright House does not take orders for the Low-Income Internet plan over the Internet. That’s right. No Internet sign ups over the Internet. You have to enroll by phone: (205) 591-6880. We dialed it and experienced 30 seconds of… silence. No ringing, no busy signals, nothing. Then an automated attendant picked up looking for a pre-qualification phone number to decide if we are in a Bright House service area. That is as far as we could get. It hung up.

It turns out Bright House sometimes refers to its discount Internet program under another name: Connect2Compete. As both Cheap Internet and Stop the Cap! found, if you visit Bright House’s website and search for either term, you will find absolutely nothing.

Does it seem Bright House lacks enthusiasm selling this option to income-challenged consumers?

The most information available about the discount Internet program Charter wants to bring to Time Warner Cable customers is available on a pretty skimpy third-party website that has no connection to Charter, Time Warner or Bright House. Nothing to be concerned about there!

New Charter promises to improve the program, but Stop the Cap! believes there is a much simpler solution. For $5 more, Time Warner Cable already offers a fine discount option available to anyone, anywhere, for as long as they want it. No paperwork, no complications, no drama. The fact New Charter seems to prefer a different option — one that requires an archaeological dig to unearth needed information — makes us wonder whether they are interested in serving the needy at all.

Cable Companies Demand Satellite Providers Pay Up; Customer Bills Expected to Rise

directvTwo cable industry trade associations have asked the Federal Communications Commission to start collecting more fees from satellite television operators to cover the FCC’s regulatory expenses — a move satellite providers argue will cause consumers to suffer bill shock from increased prices.

The American Cable Association and the National Cable & Telecommunications Association have filed comments with the FCC asking the commission to impose the same regulatory fees on satellite subscribers that cable companies are likely to pay in 2015 — 95 cents a year per subscriber.

The FCC has proposed initially charging satellite operators $0.12 this year per customer, or about one cent a month. The two cable lobbying groups want that 12 cent fee doubled to 24 cents and then raised an additional 24 cents each year until it reaches parity with what cable companies pay.

dish logo“The FCC is off to a good start by declaring that Dish and DirecTV should pay regulatory fees to support the work of the agency’s Media Bureau for the first time and proposing setting the initial per subscriber fee at one cent per month in 2015,” said Matthew Polka, president and CEO of the ACA. “But given the FCC proposes that cable operators pay nearly 8 cents per month, per customer, it must do more, including requiring these two multibillion dollar companies with national reach to shoulder more of the fee burden next year that is now disproportionately borne by smaller, locally based cable operators.”

The satellite industry has filed their own comments with the FCC objecting to any significant fee increases, claiming it will cause consumers to experience bill shock and that satellite companies pose less of a regulatory burden on the FCC in comparison to cable operators.

The ACA counters that even if the satellite companies were required to pay the full 95 cents this year — the same rate small independent cable operators pay — it would add a trivial $0.08 a month to customer bills — less than a 0.4% increase on the lowest priced introductory offer sold by satellite providers.

fccThe ACA reminded the FCC it did not seem too concerned about rate shock when it imposed a 99 cent fee on IPTV providers like AT&T U-verse in 2014 without a phase-in.

DirecTV and Dish argue the FCC has jurisdiction over cable’s television, phone and Internet packages — a more complex assortment of services. Satellite providers currently only sell television service, so charging the same fee cable companies pay would be disproportionate and unfair, both claim.

Despite the sudden introduction of the IPTV fee last year, AT&T managed to use the opportunity to turn lemons into lemonade.

AT&T added a “Regulatory Video Cost Recovery Charge” on customers’ bills after the FCC assessed a 99 cent fee on IPTV services like U-verse in 2014. But AT&T charged nearly three times more than what it actually owed. U-verse customers were billed $0.24 a month/$2.88 in 2014 for “regulatory fee cost recovery.” But AT&T only paid the FCC $0.99 for each of its 5.7 million customers. It kept the remaining $1.89 for itself, amounting to $10,773,000 in excess profit.

This year the FCC expects to collect $0.95 from each U-verse subscriber, a four cent decline.

FCC Likely to Toss First Formal Net Neutrality Complaint Against Time Warner Cable

The nation’s first Net Neutrality complaint filed with the Federal Communications Commission accuses Time Warner Cable of refusing to provide the best possible path for its broadband customers to watch a series of high-definition webcams covering San Diego Bay.

sundiego_banner

Commercial Network Services’ CEO Barry Bahrami wrote the FCC that Time Warner Cable is degrading its ability to exercise free expression by choosing which Internet traffic providers it directly peers with and which it does not:

I am writing to initiate an informal complaint against Time Warner Cable (TWC) for violating the “No Paid Prioritization” and “No Throttling” sections of the new Net Neutrality rules for failure to fulfill their obligations to their BIAS consumers by opting to exchange Internet traffic over higher latency (and often more congested) transit routes instead of directly to the edge provider over lower latency peering routes freely available to them through their presence on public Internet exchanges, unless a payment is made to TWC by the edge provider. These violations are occurring on industry recognized public Internet peering exchanges where both autonomous systems maintain a presence to exchange Internet traffic, but are unable to due to the management policy of TWC. As you know, there is no management policy exception to the No Paid Prioritization rule.

By refusing to accept the freely available direct route to the edge-provider of the consumers’ choosing, TWC is unnecessarily increasing latency and congestion between the consumer and the edge provider by instead sending traffic through higher latency and routinely congested transit routes. This is a default on their promise to the BIAS consumer to deliver to the edge and make arrangements as necessary to do that.

The website responsible for initiating the complaint shows live webcam footage of the San Diego Bay.

The website responsible for initiating the complaint shows live webcam footage of the San Diego Bay.

Bahrami’s complaint deals with interconnection issues, which are not explicitly covered by the FCC’s Net Neutrality rules that prohibit intentional degradation or paid prioritization of network traffic. For years, ISPs have agreed to “settlement-free peering” arrangements with bandwidth providers that exchange traffic in roughly equal amounts with one another. To qualify for this kind of free interconnection arrangement, CNS’ webcams must be hosted by a company that receives about as much traffic from Time Warner Cable customers as it sends back to them — an unlikely prospect.

As bandwidth intensive content knocks traffic figures out of balance, ISPs have started demanding financial compensation from content producers if they want performance guarantees. This is what led Comcast, Verizon and AT&T to insist on paid interconnection agreements with the traffic monster Netflix.

Time Warner Cable is calling on the FCC to dismiss Bahrami’s letter on the grounds it is not a valid Net Neutrality complaint.

“[The FCC should] reject any complaint that is premised on the notion that every edge provider around the globe is entitled to enter into a settlement-free peering arrangement,” Time Warner Cable responds. That is a nice way of telling CNS it doesn’t get a premium pathway to Time Warner Cable customers for free just because of Net Neutrality rules.

CNS250X87Bahrami responds Time Warner’s attitude is based on a distinction without much difference because he is effectively being told CNS must pay extra for a suitable connection with Time Warner to guarantee his web visitors will have a good experience.

“This is not a valid complaint, and there is no way the FCC is going to side with them,” Dan Rayburn, a telecom analyst at Frost & Sullivan and the founding member of the Streaming Video Alliance told Motherboard. “The rules say you can’t block or throttle, but there’s no rule that says Time Warner Cable has to give CNS settlement-free peering. I don’t see how the FCC could possibly say there’s a violation here.”

The FCC made it clear in its Net Neutrality policy it intends “to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules” with respect to interconnection matters.

That makes it likely Bahrami’s complaint will either be tossed out on grounds it is not a Net Neutrality violation or more likely dismissed but kept in what will likely be a growing file of future cases of interconnection disputes between ISPs and content producers. If that file grows too large too quickly, the FCC may be compelled to act.

AT&T Slapped With $100 Million FCC Fine for Deceiving Customers About “Unlimited Data”

fccAT&T violated the transparency rules of the Federal Communications Commission not less than a million times by allegedly deceiving customers about an unlimited data plan that was speed throttled to unusability after as little as 3GB of usage a month. As a result, the FCC today fined AT&T $100,000,000.

“Consumers deserve to get what they pay for,” said FCC chairman Tom Wheeler. “Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure.”

From the Notice of Apparent Liability:

Based on the facts and circumstances before us, we find that AT&T apparently willfully and repeatedly violated Section 8.3 of the Commission’s Rules by:

  1. using the term “unlimited” in a misleading and inaccurate way to label a data plan that was in fact subject to prolonged speed reductions after a customer used a set amount of data; and
  2. failing to disclose the data throughput speed caps it imposed on customers under the MBR policy.

In short:

“Unlimited means unlimited,” said FCC Enforcement Bureau chief Travis LeBlanc. “As today’s action demonstrates, the Commission is committed to holding accountable those broadband providers who fail to be fully transparent about data limits.”

This is the largest proposed fine in FCC history, according to a senior FCC official. The official told the Wall Street Journal AT&T made billions of dollars off the practice.

Wheeler

Wheeler

Thousands of AT&T customers have complained about the practice and feel misled about the company limiting an unlimited use plan.

“A provider cannot announce something in large type that it contradicts in fine print; such practices would be inherently misleading to consumers, and, therefore contrary to both the spirit and letter of the Open Internet Transparency Rule,” the FCC notice states.

The FCC’s two minority Republican commissioners strongly disagreed with the action against AT&T. Ajit Pai used his dissent to cut and paste large sections of AT&T’s website in defense of the company.

“Because the Commission simply ignores many of the disclosures AT&T made; because it refuses to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency rule ex post by imposing specific requirements found nowhere in the 2010 Net Neutrality Order; because it disregards specific language in that order and related precedents that condone AT&T’s conduct; because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here condemns a private actor not only in innocence but also in ignorance, I dissent,” Pai wrote.

att-logo-221x300Commissioner Michael O’Rielly dissented because he felt the FCC was overreacting to AT&T’s throttling program and assumed harm was done to every customer affected by it.

“I firmly believe that the Commission must take the necessary steps to enforce its regulations,” O’Rielly wrote. “But, it is equally important that the Commission’s enforcement procedures be fair and equitable. Licensees must have faith in the process and trust that the government is working in a sound and just manner, instead of vilifying them, or demanding that they incriminate themselves.”

“We will vigorously dispute the FCC’s assertions,” said Michael Balmoris, an AT&T spokesman. “The FCC has specifically identified this practice as a legitimate and reasonable way to manage network resources for the benefit of all customers. We have been fully transparent with our customers” and exceeded FCC disclosure requirements, Balmoris said.

AT&T only imposes its speed throttle on unlimited data plan customers who exceed 3GB of usage. Customers on usage-based billing plans do not face a speed throttle after exceeding 3GB of usage.

Net Neutrality Now in Full Effect; The Internet Is Still Working, Providers Are Still Getting Rich

netneutralityThe Federal Communications Commission’s Net Neutrality rules took full effect Friday, after a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit denied petitions for a temporary stay of the rules made in separate lawsuits by AT&T and other telecom industry opponents.

“This is a huge victory for Internet consumers and innovators!,” FCC Chairman Thomas Wheeler exclaimed in a written statement. “There will be a referee on the field to keep the Internet fast, fair and open. Blocking, throttling, pay-for-priority fast lanes and other efforts to come between consumers and the Internet are now things of the past. The rules also give broadband providers the certainty and economic incentive to build fast and competitive broadband networks.”

The Net Neutrality rules govern both wired and wireless Internet services, and most observers predict the biggest impact will be felt by wireless customers. Wireless providers have experimented with speed throttling, priority access, data caps, and so-called “sponsored data” exempt from usage caps or usage billing. Some of these practices are now illegal under Net Neutrality rules and others are subject to increased scrutiny by the FCC.

Providers generally have not opposed rules blocking online censorship, paid prioritization, and selective speed throttling, but they are vehemently against the FCC’s catch-all “Internet general conduct rule,” that effectively allows the agency to oversee issues like interconnection agreements that connect content producers with each ISP, data caps/usage billing, and issues like zero-rating — providing an exemption from an ISP’s usage allowance for preferred content partners.

Providers argue the FCC could block innovative pricing and usage-based billing they argue customers would like to have.

Other industry groups claim Net Neutrality will lead to a significant decline in investments towards broadband upgrades and expansion. But Charter Communications CEO Thomas Rutledge, now in the middle of a multi-billion dollar merger deal with Time Warner Cable and Bright House Networks, disagreed, noting it will have no effect on Charter’s investment plans for its own cable systems or those it may acquire.

“The big news today is that there is no news,” said Timothy Karr, senior director of strategy for Free Press. “With Net Neutrality protections in place, there are no dramatic changes to the way the Internet works. Internet users are logging onto a network that’s open, as they’ve long expected it to be.”

Hometown Newspaper of Charter Communications Warns Time Warner Deal Not in the Public Interest

Editor’s Note: This editorial in the St. Louis Post-Dispatch is reprinted in its entirety. It comes from a newspaper that has covered Charter Communications since its inception. The Post-Dispatch reporters are also some of Charter’s subscribers — the cable company serves all of metropolitan St. Louis. Charter has never been received particularly well in St. Louis and in other cities where it provides generally mediocre service. Communities across Missouri that have endured poor cable and broadband service have recently taken a serious look at doing something about this by building their own public broadband networks as an alternative. But big money telecom interests, especially AT&T, have found it considerably less expensive to lobby to ban these networks from ever getting off the ground than spending the money to upgrade networks to compete.

charter twc bhOn May 15, the last day of this year’s session of the Missouri Legislature, House Bill 437 finally was assigned to a committee, where it promptly died. Given the power of the American Legislative Exchange Council, it may well be back next year.

HB 437, sponsored by Rep. Rocky Miller, R-Lake Ozark, was full of gobbledygook about “municipal competitive services,” but its effect would have been to condemn Missourians to ever-higher prices for broadband Internet service. Cities would have been forbidden from establishing their own broadband services to compete with private operators, thus holding down prices.

ALEC, which wines and dines state lawmakers and then gets them to pass pro-business “model legislation” in their states, had succeeded in getting restrictions on public Internet providers in 20 states. But in February, the Federal Communications Commission struck down North Carolina’s ALEC-inspired law, so the future of other such laws is uncertain.

About 22 percent of Missourians are still regarded as “underserved,” having no reliable access to broadband service of at least 25 megabits per second — what’s needed to stream video without lags. About 1 in 6 Missourians have only one wired access provider to choose from. More than 400,000 Missourians have no wired broadband at all.

Missouri is ranked 38th “most connected” in the nation by the federal-state Broadband Now initiative. In the 21st century, this is like being underserved by railroads in the 19th century or power lines in the early 20th. In parts of rural Missouri, it’s hard to do business, which helps explain why HB 437 died in committee.

Rep. Rocky Miller (R-Lake Ozark)

Rep. Rocky Miller (R-Lake Ozark)

The basic question is whether companies that invest in high-speed Internet infrastructure should be able to charge whatever they can get away with, or whether broadband service should be treated as a public utility. If it’s the latter, as the FCC determined in February, then government must make sure it’s affordable.

Which brings us to Charter Communications proposed $56 billion takeover of Time Warner Cable and its $10.4 billion acquisition of Bright House Networks. Both deals were announced May 26; both will need approval from the FCC and the Justice Department’s antitrust regulators.

In St. Louis, we have a love-hate relationship with Charter, a homegrown company built atop what was once Cencom Cable. It has dominated the cable TV market here almost as long as there’s been a cable market.

Charter customers endured years of poor service, its bankruptcy, its legal challenges, its ownership and management changes. Just when it got itself together, in 2012, the headquarters was moved from Des Peres to Stamford, Conn., though it retains a significant presence here.

Today our little Charter is a big fish; the Time Warner and Bright House deals would make it the nation’s second-largest cable company, with 24 million customers, behind only Philadelphia-based Comcast, with 27 million.

But cable TV no longer drives cable TV. Internet-based video services, like YouTube and Netflix, have revolutionized the way people, particularly younger people, watch TV. When cable companies first started connecting customers to the Internet through the same cables that delivered TV programming, it was regarded as a nice add-on business. Now broadband delivery is seen as a far bigger part of the future than providing TV programs.

missouriIndeed, when Comcast tried to acquire Time Warner last year, the dominance (nearly 60 percent of the market) that the combined company would have had over broadband service caused federal regulators to look askance. Comcast abandoned its bid in April.

By contrast, a Charter-Time Warner-Bright House combination (it will do business as Spectrum) will control 30 percent of the broadband market. Charter Spectrum will have 20 million broadband subscribers, compared with 22 million for Comcast.

So what can customers expect? Charter’s CEO Tom Rutledge has promised “faster Internet speeds, state-of-the-art video experiences and fully featured voice products, at highly competitive prices.”

This begs the question, competitive with whom? Comcast? Mom-and-pop operations that can’t afford the infrastructure? Municipal service providers who are being ALEC’d out of business?

Neither Charter nor Time Warner has particularly good customer service ratings (though to be fair, Charter is miles ahead of where it used to be, at least in St. Louis). Still, Charter will take on lots of debt to finance the deal, much of it in high-yield junk bonds. The broadband business provides leverage. As analyst Craig Moffett of MoffettNathanson told the Wall Street Journal: “Broadband pricing is almost an insurance policy for cable operators, in that if all else fails, you’ve always got the option to raise broadband rates.”

America wouldn’t let a private operator own 30 percent of its roads and highways. It wouldn’t allow two of them to control half the electricity. If broadband Internet service is a public utility, it must be regulated strictly.

The lesson is old as the hills: The free-marketeers who talk most passionately about competition are generally in the business of trying to eliminate it. Charter and Time Warner are both members of ALEC.

The Charter-Time Warner deal clearly is not in the public interest. The upside for shareholders is huge. The upside for Charter executives is even bigger. But it’s hard to see how Charter’s customers would see much benefit at all.

FCC Chairman Gives Green Light for More Cable Mergers; Calls and Reassures Cable Execs Some Deals Are Okay

Wheeler

Wheeler

Federal Communications Commission chairman Tom Wheeler personally called the chief executives of some of America’s largest cable operators, including Charter Communications and Time Warner Cable, to reassure them that the agency does not object to future cable industry consolidation.

Wheeler said any new merger deal would be assessed on its own merits, and cable executives should not assume the agency is against future cable mergers just because it objected to the Comcast/Time Warner Cable deal.

The Wall Street Journal reports Wheeler sought to “clear the air” in response to industry hand-wringing over whether future buyouts and acquisitions could get passed the FCC. Wheeler reassured executives they were over-reading the commission’s intent.

Wheeler did suggest he would like to see more competition among cable companies, an idea that has been dead on arrival since the cable industry began colluding to agree to stay out of each other’s territories two decades ago. Although Wheeler would like to see competition increased by cable operators competing head to head for customers, it is much more likely the industry will seek further consolidation to reduce the prospect of competition, not increase it.

The larger the cable operator, the greater the economy of scale — especially for cable programming costs. A potential new entrant would likely be discouraged from entering the business, discovering it had no prospect of getting cable programming at prices comparable to what the largest cable operators pay.

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  • Limboaz: It's like if I order something online and get it delivered. It would be like UPS charging both the shipper AND the receiver for shipping costs. It's t...
  • Angel: I called TWC and they reduced my bill by $20 a month and they added DVR, STARZ, bonus channels, and upgraded my internet speed! Thanks for the help!! ...
  • James R Curry: For what it's worth, I've had Time Warner's 300mbps service for about a year, and it has consistently given me speeds of around 322mbps, which I can't...
  • Limboaz: A billion dollars seems like a steal when you consider how big Toronto is. Meanwhile the cable ISP's down here in the States plot how they can jack up...
  • sandiegohdtv: In another part of my town, Cox offers this program as well. However, they offer it all year round and I believe you can register for it online....
  • sandiegohdtv: Made a huge error. It was 15 mbps to 60 mbps. Sorry, for that as I thought the filing meant that, but I did check it over again. I found out when it w...
  • Phillip Dampier: It's a bit complicated depending on where you live and who serves you: Regardless of what we want, it is almost a certainty TWC's and Bright House'...
  • JayS: Could you clarify #1 & #7. It appears that the acquirer, Charter, only offers one (1) level of internet speed. I would expect they would unify al...
  • Phillip Dampier: You will end up keeping your existing modem for phone service only (at no charge) and your own purchased modem will supply Internet access only. It's ...
  • Phillip Dampier: This is likely because Time Warner management has curtailed some of their most aggressive promos this year, so the ones you can get now cost a little ...
  • Phillip Dampier: I think most if not all premium channels are available on promo for $9.99. I do not know if they can handle swapping one for the other however....

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