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New York City Comptroller Unimpressed With Comcast/Time Warner Cable Merger

one mbps

“Hey look, is that the Verizon FiOS truck?”

New York City comptroller Scott Stringer is lukewarm at best about the idea of Comcast taking over for Time Warner Cable. In a letter to the New York Public Service Commission released today, Stringer says the deal needs major changes before it comes close to serving the public interest.

“As New York City residents know all too well, our city is stuck in an Internet stone age, at least when compared to other municipalities across the country and around the world,” Stringer wrote. “According to a study by the Open Technology Institute at the New America Foundation, New Yorkers not only endure slower Internet service than similar cities in other parts of the world, but they also pay higher prices for that substandard service. Tokyo residents enjoy speeds that are eight times faster than New York City’s, for a lower price. And Hong Kong residents enjoy speeds that are 20 times faster, for the equivalent price.”

Stringer should visit upstate New York some time. While the Big Apple is moving to a Verizon FiOS and Time Warner Cable Maxx or Cablevision/Optimum future, upstate New York is, in comparison, Raquel Welch-prehistoric, especially if your only choice is Verizon “No, We Won’t Expand DSL to Your House,” or Frontier “3.1Mbps is Plenty” Communications. If New York City’s speeds are slow, upstate New York speeds are glacial.

“The latest data from the FCC shows that, as of June 30, 2013, over 40 percent of connections in New York State are below 3Mbps,” Springer added.

Come for the Finger Lakes, but don’t stay for the broadband.

Should the merger be approved, Comcast would be obligated to comply with the existing franchise agreement between Time Warner Cable and the City of New York. However, in order for the proposed merger to truly be in the public interest, Comcast must have a more detailed plan to address these ongoing challenges and to further close the digital divide that leaves so many low-income New Yorkers cut off from the information superhighway. To date, Comcast’s efforts to close the digital divide have focused on its “Internet Essentials” program, which was launched in 2012.iii The program offers a 5 megabit/second connection for $9.95/month (plus tax) to families matching all of the following criteria:

• Located within an area where Comcast offers Internet service
• Have at least one child eligible to participate in the National School Lunch Program
• Have not subscribed to Comcast Internet service within the last 90 days
• Does not have an overdue Comcast bill or unreturned equipment

While the aim of the program is laudatory, its slow speed, limited eligibility, and inadequate outreach have kept high-quality connectivity beyond the reach of millions of low-income Americans. Not only are the eligibility rules for Internet Essentials far too narrow, but the company has done a poor job of signing up those who do meet the criteria. In fact, only 300,000 (12 percent) of eligible households nationwide have actually signed up since the program was launched in 2011.

It is critical that the PSC not only press Comcast to significantly expand the reach of Internet Essentials, but also that it engage in appropriate oversight to ensure that the company is meeting its commitments to low-income residents of the Empire State.

Phillip "Comcast isn't the answer to the problem, it's the problem itself" Dampier

Phillip “Comcast isn’t the answer, it’s the problem” Dampier

In fact, the best way New York can protect its low-income residents is to keep Comcast out of the state. Time Warner Cable offers everyday $14.99 Internet access to anyone who wants it as long as they want it. No complicated pre-qualification conditions, annoying forms, or gotcha terms and conditions.

When a representative from the PSC asked a Comcast representative if the company would keep Time Warner’s discount Internet offer, a non-answer answer was the response. That usually means the answer is no.

“We have seen how telecommunications companies will promise to expand access as a condition of a merger, only to shirk their commitments once the merger has been approved,” Springer complained. “For instance, as part of its 2006 purchase of BellSouth, AT&T told Congress that it would work to provide customers ‘greater access and more choices for broadband, no matter where they live or work.’ However, later reports found that the FCC relied on the companies themselves to report their own merger compliance and did not conduct independent audits to verify their claims.”

Big Telecom promises are like getting commitments from a cheating spouse. Never trust… do verify or throw them out. Comcast still has not met all the conditions it promised to meet after its recent merger with NBCUniversal, according to Sen. Al Franken (D-Minn.).

Stringer also blasted Comcast for its Net Neutrality roughhousing:

While the FCC has not declared internet providers to be “common carriers”, state law has effectively done so within the Empire State. Under 16 NYCRR Part 605, a common carrier is defined as “a corporation that holds itself out to provide service to the public for hire to provide conduit services including voice, data, or video by electrical, electronic, electromagnetic or photonic means.”

Importantly, the law requires these carriers to “provide publicly offered conduit services on demand to any similarly situated user on substantially similar terms, subject to the availability of facilities and capacity.”

In recent months, Comcast has shown that it is willing to sacrifice net neutrality in order to squeeze additional payment out of content providers, such as Netflix. As shown in the chart below, Netflix download speeds on the Comcast network deteriorated rapidly prior to an agreement whereby Netflix now pays Comcast for preferential access.

speed changes

concast careConsumers have a legitimate fear that if access to fiber-optic networks is eventually for sale to the highest bidder, then not only will it stifle the entrepreneurial energy unleashed by the democratizing forces of the Internet, but will also potentially lead to higher prices for consumers in accessing content. Under that scenario, consumers are hit twice—first by paying for Internet access to their home and second by paying for certain content providers’ preferred access.

Internet neutrality has been a core principle of the web since its founding and the PSC must examine whether Comcast’s recent deal with Netflix is a sign that the company is eroding this principle in a manner that conflicts with the public interest.

Stringer may not realize Comcast also has an end run around Net Neutrality in the form of usage caps that will deter customers from accessing competitors’ content if it could put them over their monthly usage allowance and subject to penalty rates. Comcast could voluntarily agree to Net Neutrality and still win by slapping usage limits on all of their broadband customers. Either causes great harm for competitors like Netflix.

“I urge the Commission to hold Comcast to that burden and to ensure that the merger is in the best interest of the approximately 2.6 million Time Warner Cable subscribers in New York State and many more for whom quality, affordable Internet access remains unavailable,” Stringer writes. “And I urge Comcast to view this as an opportunity to do the right thing by introducing itself to the New York market as a company that values equitable access and understands that its product—the fourth utility of the modern age—must be available to all New Yorkers.”

If Comcast’s existing enormous customer base has already voted them the Worst Company in America, it is unlikely Comcast will turn on a dime for the benefit of New York.

The best way to ensure quality, affordable Internet access in New York is to keep Comcast out of New York.

No cable company has ever resolved the rural broadband problem. Their for-profit business model depends on a Return on Investment formula that prohibits expanding service into unprofitable service areas.

These rural service problems remain pervasive in Comcast areas as well, and always have since the company took over for AT&T Cable in the early 2000s. Little has changed over the last dozen years and little will change in the next dozen if we depend entirely on companies like Comcast to handle the rural broadband problem.

A more thoughtful solution is encouraging the development of community co-ops and similar broadband enterprises that need not answer to shareholders and strict ROI formulas.

In the meantime, for the good of all New York, let’s keep Comcast south (and north) of the border, thank you very much.

 

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New York Public Service Commission Announces Delay in Comcast/TWC Merger Consideration

comcast twcAs more than 2,300 New Yorkers express fierce opposition to the merger of Comcast and Time Warner Cable, the New York Public Service Commission has announced a delay in the review of the proposal until October.

The PSC now expects to consider the matter at a meeting to be held October 2. The PSC is also extending the period for the public to comment on the proposed merger.

Your comments are now due no later than Aug. 8, with reply comments from various parties due no later than Aug. 25.

Your input is vital, so please take a few moments to send an e-mail to the PSC with your views.

Here’s an example of one of the letters we are seeing:

Via e-mail: [email protected]
Honorable Kathleen H. Burgess, Secretary
New York State Public Service Commission
Three Empire State Plaza
Albany, NY 12223

Re: 14-M-0183 – Joint Petition of Time Warner Cable and Comcast for Approval of a Holding Company Level Transfer of Control

Dear Secretary Burgess:

As a resident of this state, who is a customer of Time Warner Cable, I am writing to express my staunch opposition to the above-referenced joint petition. This application should be denied outright, simply put, because the merger of Comcast, the nation’s largest cable company, and Time Warner Cable, the nation’s second largest company, would be contrary to the interest of consumers in the State of New York, as well as antitrust laws.

Though executives of both applicants are adamant that this proposed merger would benefit consumers and enhance competition, the ominous, far-reaching implications that will undoubtedly follow render these claims, among others, implausible. That is, if this merger were to take place, a virtual monopoly would be created, giving Comcast unprecedented control over cable and broadband internet networks at the expense of not only consumers, who would receive nothing but fewer choices at higher prices, but also rival businesses, whose viability would certainly be stifled. The proposed merger would likewise pose a threat to net neutrality.

Given the abysmal record of Comcast, which includes being fined for failing to comply with the terms and conditions of its previous and similarly controversial merger with NBC Universal, as well as its political clout, it is clear that the approval of this joint petition would both be inconsistent with the mission of this Commission, as as well as the interest of consumers in this state. It should, accordingly, be denied in its entirety.

Respectfully submitted,
Patrick A. Berry
Volunteer, Common Cause New York

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I Love You Comcast! An Amazing 180 for Former Antitrust Attorney David Balto

Phillip "I got whiplash just watching" Dampier

Phillip “I got whiplash just watching” Dampier

A former policy director at the Federal Trade Commission and antitrust attorney at the U.S. Justice Department has managed an impressive 180 in just a few short months regarding the merger of Time Warner Cable and Comcast.

In February, David Balto told TheDeal the proposed takeover of Time Warner Cable “is a bad deal for consumers.” Today, Mr. Balto’s panoply of guest editorials, media appearances and columns — suddenly in favor of the merger — are turning up in the New York Times, the Orlando Sentinel, Marketplace, WNYC Radio, and elsewhere.

Balto’s arguments are based on “research” which, in toto, appears to have been limited to thumbing through Comcast’s press releases and merger presentation. That was enough:

First, this deal should create benefits for Time Warner customers, who will gain a significantly faster Internet and more advanced television service.

Second, competition is increasing in both the pay-TV and broadband businesses. Ninety-eight percent of viewers have a choice of three or more multichannel services, plus growing options online. Yahoo just announced a new video service, joining Netflix, Amazon and YouTube. In the last five years, cable has lost about seven million customers, satellite has gained nearly two million, and the telecommunications companies have gained six million.

Third, Comcast’s post-merger share of broadband falls closer to 20 percent when including LTE wireless and satellite providers. Over all, 97 percent of households have at least two competing fixed broadband providers — three or more if mobile wireless is included.

We used to wonder why government officials and regulators were so easily fooled by the corporate government relations people sent into their offices armed with press releases, talking points, cupcakes, and empty promises. We understand everyone isn’t a Big Telecom expert, but too often regulators’ reflexive acceptance of whatever companies bring to their table threatens to win them rube-status. We’d like to think Mr. Balto isn’t Comcast’s sucker, and we certainly hope there are no unspoken incentives on the table in return for his recent, very sudden conversion to celebrate all-things Comcast. Maybe he’s simply uninformed.

Balto

Balto

Although our regular readers — nearly all consumers and customers — are well-equipped to debunk Mr. Balto’s arguments, for the benefit of visitors, here is our own research.

First, Comcast’s Internet service is not faster than Time Warner Cable. Mr. Balto needs to spend some time away from Comcast’s merger info-pack and do some real research. He’ll find Time Warner Cable embarked on a massive upgrade program called TWC Maxx that is more than tripling broadband speeds for customers at no extra charge. Those speeds are faster than what Comcast offers the average residential customer, and come much cheaper as well. Oh, and TWC has no compulsory usage limits and overlimit penalties. Comcast’s David Cohen predicts every Comcast customer will face both within five years.

Second, that “advanced TV platform” Balto raves about requires a $99 installation fee… for an X1 set-top box. It also means equipment must be attached to every television in the house, because Comcast encrypts everything. At a time when customers want to pay for fewer channels, Comcast wants to shovel even more unwanted programming and boxes at customers. Older Americans who want their Turner Classic Movies have another nasty surprise. They will need to buy Comcast’s super deluxe cable TV package to get that network, at a cost exceeding $80 a month just for television. Ask Time Warner customers what they want, and they’ll tell you they’d prefer old and decrepit over an even higher cable TV bill Comcast has already committed to deliver.

Has competition truly increased? Not in the eyes of most Americans who at best face a duopoly and annual rate hikes well in excess of inflation. Even worse, for most consumers there is only one choice for 21st century High Speed Internet service – the cable company. Mr. Balto conveniently ignores the fact cable’s primary competitor is still DSL which is simply not available at speeds of 30+Mbps for most consumers. In some areas, like suburban Rochester, N.Y., the best the local phone company can deliver some neighborhoods like ours is 3.1Mbps. That isn’t competition. Verizon and AT&T have both stopped expanding DSL. Verizon has ended FiOS expansion and AT&T’s U-verse still maxes out at around 24Mbps for most customers. AT&T’s promised fiber upgrades have proven to be more illusory than reality, available primarily in a handful of multi-dwelling units and new housing developments. In rural areas, both major phone companies are petitioning to do away with landline service and DSL altogether.

Raise your hands if you want Comcast’s “benefits.” In New York, out of 2,300 comments before the PSC, we can’t find a single one clamoring for Comcast’s takeover. The public has spoken.

Cable "competition" in Minneapolis

Cable “competition” in Minneapolis. Charter and Comcast have also teamed up to trade cable territories as part of the Time Warner Cable merger package deal.

Satellite television’s days of providing the cable industry with robust competition have long since peaked. AT&T is seeking to further reduce that competition by purchasing DirecTV, not because it believes in satellite television, but because it wants the benefits of DirecTV’s lucrative volume discounts.

Any antitrust attorney worth his salt should be well aware of what kind of impact volume discounting can have on restraining and discouraging competition. Comcast’s deal for Time Warner will let it acquire programming at a substantial discount (one they have already said won’t be passed on to customers) so significant that any would-be competitors would be in immediate financial peril trying to compete on price.

Frontier Communications learned that lesson when it acquired a handful of Verizon FiOS franchises in Indiana and the Pacific Northwest. After losing Verizon’s volume discounts, Frontier was so alarmed by the wholesale renewal rates it received, it let loose its telemarketing force to convince customers fiber was no good for television and they should instead switch to a satellite provider they partnered with. It’s telling when a company is willing to forfeit revenue in favor of a third party marketing agreement with an outside company.

So what does this mean for a potential start-up looking to get into the business? Since programming is now a commodity, most customers buy on price. The best triple-play deals will go to the biggest national players with volume discounts – all cable operators that have long agreed never to compete directly with each other.

In the Orlando Sentinel, Mr. Balto seemed almost relieved when he concluded Comcast and Time Warner don’t compete head-to-head, somehow easing any antitrust concerns. It is precisely that fact why this deal must never be approved. Comcast has been free to compete anywhere Time Warner provides service, but has never done so. Letting Comcast, which has even worse approval ratings than Time Warner, become the only choice for cable broadband is hardly in the public interest and does nothing for competition. Instead, it only further consolidates the marketplace into a handful of giant companies that can raise prices and cap usage without restraint.

If Mr. Balto truly believes AT&T and Verizon will ride to the rescue with robust wireless broadband competition, his credibility is in peril. Those two companies, among others, are completely incapable of meeting the growing broadband demands (20-50GB) of the home user. With punishing high prices and staggeringly low usage caps, providers are both controlling demand and profiting handsomely from rationing service at the same time. Why change that?

No 3G/4G network under current ordinary traffic loads can honestly deliver a better online experience than DSL, and customers who attempt to replace their home broadband connection in favor of wireless will likely receive a punishing bill for the attempt at the end of the month. The only players who want to count mobile broadband as a serious competitor in the home broadband market are the cable and phone companies desperately looking for a defense against charges they have a broadband monopoly or are part of a comfortable duopoly.

One last point, while Mr. Balto seems impressed that Comcast would continue to voluntarily abide by the Net Neutrality policies he personally opposes, he conveniently omits the fact Comcast was the country’s biggest violator of Net Neutrality when it speed limited peer-to-peer traffic, successfully sued the government over Net Neutrality after it was fined by the FCC for the aforementioned violation, and only agreed to temporarily observe Net Neutrality as part of its colossal merger deal with NBCUniversal. It’s akin to a mugger promising to never commit another crime after being caught red-handed stealing. A commitment like that might be good enough for Mr. Balto, but it isn’t for us.

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Friday is the Deadline for Net Neutrality Comments With the FCC; Here’s How to Get Yours Submitted

netneutralityFriday is the last day to submit your views on Net Neutrality with the Federal Communications Commission. Although there may be some future opportunities to comment, it’s important to make your voice heard with the FCC today. Almost 650,000 Americans have done so to date, and we need to see this number rise even higher to combat the influence and power of Big Telecom companies looking to turn the Internet into a corporate toll booth.

If you recall, FCC chairman Tom Wheeler is promoting a scheme where big ISPs like Verizon, AT&T and Comcast can divide up the Internet and introduce toll lanes allowing preferred paid traffic to travel on the Internet at faster speeds, usually at the expense of unpaid traffic that will get relegated to an Internet slow lane. It’s pay to play, and customers of these ISPs are already getting a preview of the new corporate road map for the net. Netflix viewers on ISPs that don’t have a paid agreement to handle video traffic suffer from rebuffering and lower quality video. But ISPs collecting tolls from Netflix don’t subject their customers to a degraded online video experience. Of course, before ISPs realized they could make money selling fast lanes, Netflix worked fine on virtually all of these providers.

Wheeler’s proposal would extend the two-tiered Internet to other websites and service providers, allowing big telecom companies to hand-pick winners and losers and discriminate in favor of their own Internet traffic. Comcast does that today with online video on certain game consoles. If that video comes from Comcast, it doesn’t count against any usage caps. If it doesn’t, it could get rough sticking to Comcast’s arbitrary usage allowance.

The FCC is in way over its head, unaware of the creative ways ISPs can find loopholes large enough to drive through any well-intentioned consumer protections. There is only once certain way to keep ISPs honest — reclassify them as what they should have been all along – a telecommunications service subject to common carrier rules. That would guarantee ISPs could not meddle with your Internet service for financial gain, could not artificially slow down “non-preferred” traffic to make room for paid traffic, and would guarantee that Internet applications of the future will succeed or fail on their merits, not on how much money they are willing to spend.

Since the FCC website is jammed today, we recommend e-mailing the Commission by this Friday at: [email protected]

Our friends at Free Press have published some sample comments they are getting, which may help you formulate yours. Here is ours as well:

Dear Chairman Wheeler,

Although we believe your intentions are good, your proposed Net Neutrality rules simply do not afford enough protection to preserve a free and open Internet. Troubling signs are already clear as providers test how much they can get away with meddling with Internet traffic. The wireless experience is replete with examples of selective speed throttling, usage caps, and traffic discrimination that allows some content to escape the usage meter and throttle while competitors cannot.

The Internet is a transformative experience for many Americans because for the first time in a long time, entrepreneurs can build online businesses that are judged on their merit, not on how much money they have to spend to achieve and maintain prominence. Anything that allows an ISP to collect additional funds for a “preferred” traffic lane will come at the detriment of others who have to share the same broadband pipe. This is especially evident in the wireless world, which escaped even the light touch regulatory framework of your predecessor. Providers promptly began creating new schemes to further monetize growing data traffic, bandwidth shortage or not. Almost none of these changes really benefit customers — they are simply new revenue-making schemes.

A foreshadowing of what is likely to happen under your proposal is also apparent with Comcast and Netflix. For several years subscribers had no trouble accessing online video. But when the issue of traffic compensation was reintroduced by Internet Service Providers, the upgrades to manage natural Internet growth largely stopped and the Netflix viewing experience on these ISPs deteriorated. Verizon, AT&T and Comcast all argue that a paid traffic deal would adequately compensate them to enhance the viewing experience customers already pay good money to receive with or without a paid peering arrangement with Netflix.

Money drives these debates. If an ISP properly managed their broadband infrastructure, there would be no incentive for any company to contract for a better online experience on a so-called “fast lane” because existing service would perform more than adequately. When a company cuts back on those upgrades, a market for paid prioritization appears. Customers will ultimately pay the price, primarily to ISPs that already enjoy an enormous margin selling broadband service at inflated prices.

A rising tide floats all boats, so your focus should not be as short-sighted as allowing ISPs to divide up the limited broadband highway. The FCC should instead focus on setting the conditions to hasten new competition and force existing providers to upgrade and maintain their networks for the benefit of all subscribers and content producers. The FCC must also move swiftly to cancel state bans on community broadband networks, eliminate regulations that deter broadband start-ups, and maintain enough oversight to guarantee a level playing field on which all can compete.

There is only one way to effectively accomplish all that. Reclassify broadband service the way it should have been classified all along: as a telecommunications service subject to common carrier regulations. Canada has been very successful requiring ISPs to open their last mile networks to competitors, which have allowed people to avoid compulsory usage caps. Customers have a choice of multiple providers from their local phone or cable company, giving rise to much-needed competition.

With strong Net Neutrality, consumers can reach the websites they want without interference. Ignore nonsense suggesting Net Neutrality is a government takeover or censors the Internet — two provably false assertions. In fact, Net Neutrality is the opposite.

I urge you to move with all speed towards reclassification, if only to prevent the inevitable legal challenges to any future policies built on the shakier ground of the current framework, which has not held up well under court scrutiny. I hope the voices of more than a half-million Americans contacting you on this issue will be more than enough to overcome industry objections. We are not asking for 1950s-style telephone regulations. We just want a legally affirmed platform that allows the Internet of today to continue being successful tomorrow.

Yours very truly,

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Comcast’s Gain, Our Pain: New Yorkers Flood PSC With Comments Opposing Merger Deal

Nearly 2,000 New York residents and counting have urged the state Public Service Commission to reject the proposed merger of Time Warner Cable and Comcast.

A review of the comments finds little interest in compromise and setting conditions in return for merger approval. Those commenting overwhelmingly want nothing to do with Comcast even if the company agrees to broaden its Internet Essentials program for the poor or agrees to continue voluntarily supporting Net Neutrality principles.

comcast no

Consumers Union stormed the streets of Philadelphia during Comcast’s annual shareholder meeting to protest its merger deal with Time Warner Cable.

“There are ample examples of the rottenness of Comcast,” wrote I. VanKeuren from Wallkill. “It seems to me that instead of holding hearings on a possible merger of these two bad companies, the PSC should be investigating why Comcast has been so bad for so long.”

VanKeuren is hardly alone in his thinking.

A new survey from the Consumer Reports National Research Center found scant support for the merger among Americans.

The survey found 56% of Americans oppose the merger, and only 11% of respondents were in favor of it, with the rest either undecided or resigned to the belief it is out of their hands.

Cable companies rank among the least trusted organizations that most Americans do business with, so it’s not surprising that the people are concerned. Seventy-four percent of the public says they believe that prices will rise if the merger goes through, and two-thirds say that Comcast will have less incentive to improve customer service. The study, which drew on a nationally representative pool of 1,573 people, was conducted on behalf of the Consumers Union, the policy and advocacy arm of Consumer Reports.

“Most Americans don’t have time to follow complicated corporate mergers but this deal has definitely captured the public’s attention,” Delara Derakhshani, policy counsel for Consumers Union, said. “Consumers are tired of rising monthly bills and lousy customer service for cable and Internet and have little faith that this mega merger will make things any better.”  The new Comcast would control more than two-thirds of all cable television subscribers in the country, and nearly 40 percent of the high-speed Internet market.

Those statistics and past experiences dealing with Comcast have New York consumers like VanKeuren concerned.

“If [...] the PSC approves this merger, then the PSC itself should [itself] be investigated with a complete reorganization as its goal,” said VanKeuren.

http://www.phillipdampier.com/video/No ComcastTime Warner Mega Merger 5-23-14.mp4

Consumers Union protested outside of Comcast’s annual meeting in Philadelphia in opposition to its proposed merger with Time Warner Cable. (1:48)

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Independent Cable Companies Unify Against Cable TV Programmer Rate Increases

big 7Subscribers of more than 900 independent cable companies may face an unwelcome surprise this summer in the form of a mid-year rate increase.

For years, members of the National Cable Television Cooperative (NCTC) have joined forces to negotiate for the kinds of volume discounts only the largest cable and satellite companies like Comcast, Time Warner Cable, DirecTV, Dish Networks, Charter, and Cablevision have traditionally received. NCTC members range from family owned cable operators, rural co-ops, community-owned providers, independent telephone companies, and small multi-system operators servicing multiple communities. With group-buying power, NCTC-member cable companies used to be able to negotiate volume discounts that could keep their rates competitive with larger providers.

But as consolidation among major network media, cable, satellite, and phone companies marches on, only the largest operators — some directly affiliated with the cable programming networks — are getting the best deals at contract renewal time. All NCTC members combined serve just five million cable TV subscribers. Comcast has 21 million, DirecTV: 20 million, Dish Networks: 14 million, and Time Warner Cable: 11 million.

When NCTC’s contract with Viacom was up for renewal, the owner of networks like MTV and Comedy Central raised the renewal price more than 40 times the rate of inflation. In fact, Viacom’s asking price was so high, operators like Cable ONE pulled the plug on 15 Viacom networks for good and replaced them with other programming. NCTC members eventually compromised on a deal to renew Viacom-owned networks, but customers of companies like Massillon, Ohio-based MCTV are paying the price in the form of a mid-year rate hike Bob Gessner, MCTV’s president, did not want to have to pass on to customers.

MCTV“I don’t like to do this because it puts me in a difficult position of raising prices, which no one likes, or reducing the product, which no one likes, or cutting back on the quality of our customer service, which no one likes,” said Gessner. “Large media companies control all the TV programming and they are raising the price.  The cost of TV programming is rising very rapidly and it is causing this rise in retail prices.”

Some facts about cable TV programming:

  • Nine media companies control 95% of the paid video content consumed in the U.S.;
  • The average household watches only 16 channels, yet networks package their channels to force you to buy those you don’t want to get those that you do want;
  • tvonmysideProgramming network fees account for the bulk of your monthly cable bill;
  • The cost of basic cable has risen 3½ times the rate of inflation over the last 15 years because of demands from networks for higher programming fees;
  • One media company honcho recently stated that, “…content is such a fundamental part of daily life that people will give up food and a roof over their heads before they give up TV.” This shows that they have lost their perspective and the demands for huge increases will continue.
Gessner

Gessner

Gessner has broken ranks with many cable operators that say little more at rate hike time than “increased programming costs.”

Gessner has produced a 20-minute video that carefully explains to his customers what is going on in the cable programming industry and why providers like MCTV are forced to shovel networks onto cable lineups few customers want or watch and how the biggest cable and satellite companies are now negotiating volume-discounted renewal pricing at the expense of smaller providers.

While the largest cable companies in the country secure lower rates through those volume discounts, programmers have found a way to make up the difference: demanding even higher rates for smaller cable companies to cover what they lose from Comcast and other big players.

Gessner, as well as other NCTC member companies, confront huge programmers like Comcast-NBCUniversal, Viacom, Time Warner (Entertainment), Discovery and Disney that first demand 3-7 year renewal contracts with built-in, automatic annual rate increases averaging 5-10 percent, regardless of the ratings of their networks. Most also demand that all of their cable networks be carried on their systems, whether customers are interested in them or not. If these companies dream up new cable networks, like ESPN’s SEC Network and the Longhorn Network, MCTV is committed to carry those channels as well, even though they are of little interest to residents of northeastern Ohio where MCTV operates.

These dream contracts (for cable programmers) are the single biggest reason cable-TV rates are skyrocketing. But Gessner says it gets even worse when those contracts expire. When renewal negotiations begin, programmers these days inevitably demand a “rate reset” which starts rate negotiations at a price 10, 30, even 60 percent higher than under the expiring contract.

local cleveland tv

Those dollar amounts cover local station retransmission consent agreements nationwide.

Gessner says he doesn’t know how much longer MCTV can afford to carry expensive networks like sports channels. If he drops them, angry subscribers could cancel cable service and switch to a provider willing to pay the asking price. Unless all of his competitors stand together, programmers will maintain the upper hand.

Some cable companies, like Cable ONE, are starting to risk the wrath of their customers by refusing to negotiate for terms they consider unreasonable. When subscribers learned the reasons why Cable ONE dropped more than dozen Viacom channels, many were supportive because the company replaced the networks with other channels and promised to keep rate increases down because they won’t have to pass on Viacom’s higher prices. Viacom retaliated by locking out Cable ONE’s Internet customers from accessing any of Viacom’s free-to-view online programming.

“Viacom lets web surfers from Albania watch Spongebob but Viacom blocks people who live in Alabama, and if you are an advocate of this thing called Net Neutrality, you should be very concerned,” Gessner said. “Viacom is blatantly violating the spirit of Net Neutrality by discriminating against certain Internet users in order to extract higher fees from TV viewers. That’s the sort of vicious bullying behavior many of the content companies use to maintain their stranglehold on the U.S. television industry.”

Gessner and other independent cable operators hope cable operators’ willingness to drop cable networks over their price is the start of something big — a pushback that could eventually force programmers to charge rational rates.

“Hopefully this will serve as a wakeup call to the rest of the industry to stop paying these ridiculous prices for TV rights,” said Gessner. “I have no illusion that sanity will come to the industry overnight — it will take time — but this is a step in the right direction.”

http://www.phillipdampier.com/video/MCTV Rate Increase 2014.flv

MCTV president Bob Gessner hosted this thoughtful presentation to carefully explain why his customers are facing a $1-3 mid-year rate increase for cable television. Gessner breaks with tradition by explaining the cable television business model is effectively broken and needs serious reform, including more choices for customers seeking fewer channels and a lower bill. It’s well worth 20 minutes of your time. (20:11)

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Rep. Bob Latta’s 99.9%-Fact Free Anti Net Neutrality Bill, Now Packed With Extra Industry Goodness

Phillip "How far will $20 get me in your office?" Dampier

Phillip “How far will $20 get me in your office?” Dampier

Congress is famous for obfuscation when it comes to introducing legislation that promises one thing and delivers something quite different. Take the 2003 “Clear Skies Initiative,” which would have allowed the energy industry to increase polluting emissions, or “The Disclosure of Hydraulic Fracturing Fluid Composition Act,” which allows frackers to keep secret the ingredients of millions of gallons of chemicals pumped into the ground to displace natural gas, and potentially your potable drinking water.

So it shouldn’t be much of a surprise that Rep. Bob Latta (R-Ohio) wants to “protect” the open and free Internet by introducing a new bill that opens and frees the telecom companies that steadfastly support his campaign coffers to install paid Internet toll booths. Like many pieces of legislation coming from some House Republicans these days, “freedom” only extends to corporate interests, not to you or I (unless we want to start a corporation of our own.)

Reclassifying broadband as a telecommunications service under Title II of the Communications Act is the Holy Grail for Net Neutrality supporters. It offers clear oversight authority that would make future lawsuits from Comcast, Verizon and other telecom companies untenable. Earlier court decisions have laid a foundation for broadband oversight under Title II, but the FCC itself must take advantage of that opportunity, and so far it has not.

Congressman Latta has introduced legislation to make sure the FCC can never take that step. His bill would specifically prohibit the FCC from reclassifying broadband Internet access as anything beyond an unregulated “information service.”

According to Latta, only with his legislation can America be assured the Internet will stay “open and free.” — “Open and free” for the picking by companies who dream of new revenue monetizing Internet traffic. Not satisfied charging some of the world’s highest prices for Internet access, many of the largest cable and phone companies in the country now want the right to “double-dip” — charging consumers to reach Internet content and content producers for delivering it. It would be like paying postage to mail a letter and having it arrive postage due or letting the phone company charge both the caller and the person called for a long distance telephone call.

“The legislation comes after the FCC released a proposal to reclassify broadband Internet access under Title II as a telecommunications service rather than an information service,” says a press release from Latta’s office.

Would I lie to you? Rep. Bob Latta (R-Ohio)

Would I lie to you? Rep. Bob Latta (R-Ohio)

That is patently false. In fact, FCC chairman Thomas Wheeler has twisted himself into a human pretzel with clever language and a clear determination not to reclassify broadband under Title II. Wheeler prefers sticking to the rickety Section 706 faux-authority for Net Neutrality — the same section that keeps handing FCC lawyers loss after loss in federal court. After Wheeler announced his intention to propose allowing Internet companies to build paid fast lanes for Internet traffic, the resulting backlash from content companies and the public made him grudgingly offer a “discussion” about utilizing Title II.

That kind of “discussion” will be familiar to every 16-year old teenage girl who is told “we’ll talk about it” after asking mom and dad if she can take her new 22-year old boyfriend on vacation and stay in their own hotel room.

Ironically, detractors like Latta are the ones that usually accuse Net Neutrality of solving a problem that doesn’t exist. But that didn’t stop Congressman Latta from introducing legislation to stop the current ex-telecom lobbyist chairman of the FCC from going all Elizabeth Warren on us, suddenly imposing draconian pro-consumer regulations against those job creators at the cable companies Wheeler used to represent. But on the bright side, when Wheeler doesn’t do what Latta’s bill wouldn’t let him do, Latta can still declare victory against “big government.” If you live in Latta’s district, you can read all about it in the forthcoming government-subsidized, no-postage-needed “newsletter” he and other members of Congress will pelt your mailbox with right before election time.

“In light of the FCC initiating yet another attempt to regulate the Internet, upending long-standing precedent and imposing monopoly-era telephone rules and obligations on the 21st Century broadband marketplace, Congress must take action to put an end to this misguided regulatory proposal,” said Latta. “The Internet has remained open and continues to be a powerful engine fueling private enterprise, economic growth and innovation absent government interference and obstruction. My legislation will provide all participants in the Internet ecosystem the certainty they need to continue investing in broadband networks and services that have been fundamental for job creation, productivity and consumer choice.”

Consumers not included. Maybe he just forgot.

“At a time when the Internet economy is thriving and driving robust productivity and economic growth, it is reckless to suggest, let alone adopt, policies that threaten its success. Reclassification would heap 80 years of regulatory baggage on broadband providers, restricting their flexibility to innovate and placing them at the mercy of a government agency. These businesses thrive on dynamism and the ability to evolve quickly to shifting market and consumer forces. Subjecting them to bureaucratic red tape won’t promote innovation, consumer welfare or the economy, and I encourage my House colleagues to support this legislation, so we can foster continued innovation and investment within the broadband marketplace.”

thanksGuess not. The Internet should only be about business in Latta’s mind. Consumers that support Net Neutrality are nothing more than parasites sucking away valuable potential profits from the dynamic, flexible and innovative world of traffic shaping, usage caps, and double-dipping.

Latta isn’t interested that your provider is turning your weekend Netflix binge into an exercise of maddening rebuffering futility as your cable/phone company waits for protection racket proceeds a paid peering agreement with Netflix. That is because he doesn’t represent you. He represents AT&T, Time Warner Cable, Comcast, and CenturyLink.

Latta can afford to travel through the Internet toll booth when one considers who his top contributors keeping his campaign flush with cash are:

  • More than $32,000 in contributions from AT&T and its executives;
  • $29,500 from Tom Wheeler’s old haunt — the National Cable & Telecommunications Association (Big Cable lobby);
  • $15,000 from the American Cable Association (Small Cable lobby);
  • $21,000 from Time Warner Cable and its executives;
  • $16,000 from Verizon and its executives;
  • $11,400 from CenturyLink;
  • $11,000 from Comcast (they are ditching Ohio customers to Charter after merging with Time Warner Cable so why throw good money after bad).

Latta’s close friendship with Big Telecom is so obvious, it has made co-sponsoring his fact-free bill about as popular as Justin Bieber at an NAACP convention. Even his like-minded Congressional colleagues are staying away. But his industry friends sure appreciate his efforts on their behalf.

One wonders why his constituents return him to office when he would be obviously much more comfortable in his next job — lobbying for AT&T or Comcast. Before our Internet connections slow, let’s hope his constituents hasten a much-needed turbo-speed departure for the congressman, already a shadow employee of AT&T.

HBO’s John Oliver Nails it on Net Neutrality: It Prevents Cable Company F*ckery

Oliver points out President Obama is very close to Comcast's top lobbyist (and Democratic fundraiser) David Cohen.

Oliver points out President Obama is very close to Comcast’s top lobbyist (and Democratic fundraiser) David Cohen.

John Oliver, host of HBO’s “Last Week Tonight,” took nearly 15 minutes out of his show last night to present a detailed and unusually apt explanation of why Net Neutrality should matter to Americans.

Using a timely chart depicting Comcast’s Al Capone-like Internet protection racket, Oliver showed how Netflix performance rapidly deteriorated for Comcast customers until Netflix agreed to pay Comcast for a direct connection in February. Within days, performance rebounded to new highs.

In essence, Oliver explains, Net Neutrality is about the controversy of allowing Internet toll lanes.

Oliver shows an industry mouthpiece defending the concept as a “fast lane for everybody and a hyper speed lane for others,” to which Oliver responds, “Bullsh*t!”

“If we let cable companies offer two speeds of service, they won’t be [Jamaican sprinter] Usain Bolt and Usain Bolt on a motor bike,” Oliver warns. “They’ll be Usain Bolt and Usain Bolted to an anchor.”

Oliver added he was concerned most Americans were not paying attention to the issue, proclaiming it “boring.”

“And that’s the problem. The cable companies have figured out the great truth of America: if you want to do something evil, put it inside something boring,” he said. “Advocates should not be talking about protecting Net Neutrality. They shouldn’t even use that phrase. They should call it preventing cable company fuc*ery. Because that is what it is.”

Comcast's Internet protection racket. Netflix watched customer streaming performance degrade on Comcast's network until it signed a paid peering agreement with the cable company in February.

Comcast’s Internet protection racket. Netflix watched customer streaming performance degrade on Comcast’s network until it signed a paid peering agreement with the cable company in February.

Oliver’s prescription for change is somewhat more dubious, however. He wants Internet trolls to overwhelm the FCC’s Net Neutrality comment mailbox:

I would like to address the Internet commenters out there directly. Good evening monsters, this may be the moment you spent your whole lives training for.

You’ve been out there ferociously commenting on dance videos of adorable 3-years-olds, saying things like, “Every child could dance like this little loser after one week of practice.” Or you’d be polluting Frozen’s Let It Go with comments like, “Ice Castle would give her hypothermia and she dead in an hour.” Or, and I know you’ve done this one commenting on this show: “F*ck this a**hole anchor [...] ur just friends with terrorists xD.”

This is the moment you were made for commenters. Like Ralph Macchio, you’ve been honing your skills waxing cars and painting fences, well guess what? Now it’s time to do some f*king karate.

For once in your life we need you to channel that anger.

http://www.phillipdampier.com/video/HBO Last Week Tonight with John Oliver Net Neutrality 6-1-14.flv

John Oliver’s Last Week Tonight addresses Net Neutrality to viewers who probably don’t understand a thing about it. Warning: Strong language.  (13:17)

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Comcast: Usage-Based Billing for All Customers Within 5 Years; ‘We’re Also Allowed to Do Fast Lanes’

comcast highwayComcast will introduce usage-based billing on all of its broadband customers nationwide within five years, whether they like it or not.

Comcast’s executive vice president David Cohen told Variety he predicts the new usage limit will likely be 350GB a month but could increase to 500GB in 2019. Cohen claims consumers in usage-capped test markets prefer a preset usage limit and an overlimit fee of $10 for each additional 50GB of usage.

But Stop the Cap! has learned at no time has Comcast surveyed customers about whether they want their Internet usage metered or capped. That question is evidently not an option.

If Time Warner Cable territories are merged under the Comcast brand, usage billing would likely immediately follow.

Usage caps will go a long way to protect Comcast’s cable television package from online video, which if viewed in significant amounts could put customers over their monthly usage limit and subject them to higher fees.

“We’re trying to go slowly, not out of a regulatory concern (but because) we have no desire to blow up our high-speed data business,” he said.

cohenIf the merger is approved, Comcast will face significantly less competition in many Verizon service areas also served by Time Warner Cable. Verizon FiOS expansion has ended and the company continues to de-emphasize its DSL service, which is the only broadband competition Time Warner Cable faces in many upstate New York and western Massachusetts communities.

An unrepentant Cohen also doubled down on paid prioritization — Internet fast lanes — declaring regardless of what the FCC decides on Net Neutrality, Comcast still has the right to offer paid prioritization to customers.

“Whatever it is, we are allowed to do it,” said Cohen, speaking at the MoffettNathanson Media & Communications Summit in New York. “We are not sure we know what paid prioritization, or what a fast lane, is. Fast lane sounds bad… (but) I believe that whatever it is, it has been completely legal for 15 or 20 years.”

The way Comcast’s lawyers read “Title II,” even if the FCC declares broadband ISPs to be common carriers, Cohen says Comcast will go right on selling prioritized access, claiming Title II doesn’t prohibit paid prioritization — indeed, he said, “the whole history” of Title II is that carriers are allowed to provide different levels of service at different prices, reports Variety.

Cohen said he expects Washington regulators will promptly approve the company’s buyout of Time Warner Cable with no delays, insisting the deal is “not that difficult” in terms of antitrust implications.

 

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Big Telecom Threatens Investment Apocalypse if FCC Enacts Strong Net Neutrality

bfaMost of the same telecom companies that want to create Internet paid fast lanes, drag their feet on delivering 21st century broadband speeds, refuse t0 wire rural areas for broadband without government compensation, and have cut investment in broadband expansion are warning that any attempt by the FCC to enact strong Net Neutrality policies will “threaten new investment in broadband infrastructure and jeopardize the spread of broadband technology across America, holding back Internet speeds and ultimately deepening the digital divide.”

Twenty-eight CEOs of some of the same cable and phone companies that have fueled the fight for Net Neutrality protections by their actions signed a letter published on the website of the industry-funded astroturf group Broadband for America.

“An open Internet is central to how America’s broadband providers operate their networks, and the undersigned broadband providers remain fully committed to openness going forward,” says the letter. “We are equally committed to working with the Commission to find a sustainable path to a lawful regulatory framework for protecting the open Internet during the course of the rulemaking you are launching this week.”

Ironically, some of the same companies signing the letter earlier successfully sued the Federal Communications Commission to overturn Net Neutrality policies the agency attempted to enact under a lighter regulatory framework.

The industry now fears the FCC will reclassify broadband as a “telecommunications service,” which makes the service subject to oversight far less likely to successfully be overturned in the courts.

That has caused a panic in the boardrooms of some of America’s largest phone and cable companies.

“In recent days, we have witnessed a concerted publicity campaign by some advocacy groups seeking sweeping government regulation that conflates the need for an open Internet with the purported need to reclassify broadband Internet access services as Title II telecommunications services subject to common carrier regulation,” the letter says.

signers1

Part of the Problem?: The CEOs that signed the letter.

 

The companies warn that any attempt to rein in the largely unregulated broadband industry would be a major disaster for the U.S. economy and further broadband expansion:

Broadband investment is falling even without Net Neutrality.

Broadband investment is falling even without Net Neutrality.

Not only is it questionable that the Commission could defensibly reclassify broadband service under Title II, but also such an action would greatly distort the future development of, and investment in, tomorrow’s broadband networks and services. America’s economic future, as envisioned by President Obama and congressional leaders on both sides of the aisle, critically depends on continued investment and innovation in our broadband infrastructure and app economy to drive improvements in health care, education and energy. Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet. An era of differentiation, innovation, and experimentation would be replaced with a series of ―Government may I? requests from American entrepreneurs. That cannot be, and must not become, the U.S. Internet of tomorrow.

Net Neutrality advocates point out that even without Net Neutrality, broadband investment has fallen in the United States for several years, a point conceded by some cable operators.

In 2010, Suddenlink CEO Jerry Kent explained cable companies are now taking profits now that they don’t have to spend as much on upgrades.

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

“We should seek out a path forward together,” suggests the CEOs. “All affected stakeholders need and want certainty and an end to a decade of legal and political wrangling.”

It may prove difficult for observers to take the CEOs seriously considering the litigation record on broadband oversight and regulation. The largest cable and phone companies have repeatedly sued to overturn policies that do not meet with their full approval, something likely to happen again if these giant providers don’t get exactly what they want.

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