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Time Warner Cable’s CEO Reflects on His Efforts to Transform Company’s Image; Gigabit Speed Arrives by 2017

Marcus

Marcus

Even as some of the largest investment banks on Wall Street are assembling a $24 billion loan package to further Charter Communication’s next effort to acquire Time Warner Cable, CEO Robert Marcus has learned not to take his eyes off the day-to-day business of running the country’s second largest cable operator.

Marcus turned up late last week at Le Parker Meridien in New York to speak at the 2nd Annual MoffettNathanson Media & Communications Summit, largely an affair putting Wall Street investors together with top cable executives to learn about industry trends.

Immediately peppered with questions about the failed merger between Time Warner and Comcast, Marcus sought to turn the page on the deal that would have handed him an $80 million golden parachute.

“The horse is dead,” Marcus said in response to continued questions about the deal.

But Marcus did say he felt the deal was rejected for reasons that were never explained to him or the industry, which could have an impact on future cable mergers and acquisitions. Regulator-inspired uncertainty could make some companies think twice about pursuing the next big deal, but so far that does not seem to apply to Charter Communications — still hot on the trail for a deal with the much larger Time Warner Cable.

twc maxxMarcus claims he understood Time Warner Cable’s image with customers was a real problem that needed to be addressed immediately after becoming the company’s new CEO in  January 2014.

“The residential business was where the work needed to be done,” said Marcus.

Reliability became the top priority for Marcus’ team.

“It trumped features and functionality,” Marcus said, noting that if its network performed as it should, that would result in fewer calls into its customer care centers and reduced “truck rolls” to customer homes, saving Time Warner Cable time and money and improving its image. Marcus claims those efforts paid off.

“It works, we’re not pixelating, and we don’t have [huge] outages,” Marcus said.

Under Marcus’ leadership, Time Warner has adopted a “non-sexy stuff” approach to the cable business, focusing on making sure its existing products work before jumping into new products. That may explain why Time Warner has traditionally been behind other operators introducing vast broadband speed increases, cloud-based set-top boxes with improved user interfaces, more TV Everywhere contract arrangements allowing Time Warner customers to access online video content from third-party cable network websites, and the largest on-demand video libraries.

Not much is likely to change for the time being. Marcus reiterated his plan for major network upgrades under his Time Warner Cable Maxx program remain on track to reach 75% of Time Warner Cable service areas by the end of 2016.

When Maxx upgrades are complete, customers are transitioned to an all-digital television platform and Standard broadband customers move from 15/1Mbps service to 50/5Mbps at no additional charge. Although the top speed for Time Warner Cable broadband is currently 300/20Mbps in Maxx markets like New York, Los Angeles, Austin and Kansas City, Marcus said he was ready to bring 1Gbps broadband to Time Warner Cable customers sometime in late 2016, after DOCSIS 3.1 equipment becomes available.

“As the market evolves to that place, we’ll make it available,” Marcus said.

Recent movement at the Federal Communications Commission to introduce additional oversight over the cable industry has not made much impact at Time Warner Cable, which plans business as usual.

“I live in a different world than Chairman Wheeler in terms of the competitive dynamic,” Marcus said. “We’re fighting it out everyday in the trenches to gain and keep High Speed Data subscribers. The idea we would pull back and not press any competitive advantages of product enhancements we’re capable of delivering, just feels counter-intuitive and bad business.”

The idea that policy changes in Washington would somehow impact the investment in and introduction of new and better services from Time Warner Cable was ridiculous to Marcus.

“I cannot translate that into holding back the product and I can’t imagine what the policy objective would be that would encourage holding back the product,” Marcus said.

Cable Stock Fluffer Craig Moffett Encourages Cable Operators to Add Usage Caps Before Title II Takes Effect

"More Caps" Moffett

“More Caps” Moffett

If you are a cable executive looking to further gouge customers captive to your “only game in town” broadband speeds, now is the time to slap around customers with usage caps and overlimit fees, because your company may no longer be able to do that after June 12, when the FCC’s new Title II regulations officially take effect.

“If you’re a cable operator, you might want to strike while the iron is hot,” said MoffettNathanson principal and senior analyst Craig Moffett, who has shared his love for all-things-cable with investors for years.

Moffett regularly asks cable industry executives about when they plan to introduce usage limits or usage-based billing for customers who often have no other choice for 25Mbps service, the lowest speed that now qualifies as broadband.

But tricking customers into accepting industry arguments about “fair pricing” must be handled carefully, because making a mistake with customers could cost your executives their summer bonuses if the pocket-picking policies cause a revolt.

Multichannel News reminds its cable industry readers Time Warner Cable failed to start their usage cap experiment in 2009 due to a “furor” by customers (often led by us). Instead of filling their coffers with the proceeds of overlimit fees, “the cable giant [was forced] to rethink its pricing strategy, keeping prices the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter.”

Image: schvdenfreude

Image: schvdenfreude

Unable to get its definition of “fairness” across to customers, Time Warner Cable never had to look back, raking in greater and greater unlimited broadband profits quarter after quarter, even as their costs to deliver service continued to drop.

Faced with the prospect of a newly empowered FCC to keep cable industry abuses in check, Multichannel News tells cable executives the money party may be over before it begins if they wait too long:

Title II regulations, which reclassify broadband as a common- carrier service, are about to take effect June 12, and the Federal Communications Commission has said it would look closely at any usage-based pricing plans to determine if they discriminate against online video providers. That could force some Internet service providers to move to implement their version of usage-based pricing before the deadline.

To “soften the blow,” the trade journal reported Cox significantly increased usage caps and are setting the overlimit fee at $10 for each 50GB of excessive usage, much lower than wireless plan overlimit fees. Multichannel News suggests this will help customers “get accustomed to overage charges.”

But Cox customers in the Cleveland area may be able to turn the table on Cox.

“Let them get accustomed to the fact I am dumping them for WOW! the moment I receive official notification about the caps,” said Stop the Cap! reader Dave, who has a choice between Cox, AT&T, and WOW! — a competing cable operator without usage caps. “AT&T isn’t enforcing its cap around here either, so I am definitely canceling my service and have two other choices. People have to be willing to send a clear message usage caps are an absolute deal-breaker.”

Although usage caps are not affected by Net Neutrality regulations, the fact the cable industry faces added regulator scrutiny under Title II allows the FCC to put an end to practices it considers to be anti-competitive. Introducing usage caps for customers trying to find an alternative to Cox’s cable television package by watching online video instead may qualify.

Cox Cracking Down on Internet Customers With Hard Usage Caps and Overlimit Fees: Let the Gouging Begin!

cox say noCox Communications will begin testing overlimit fees this summer starting in its Cleveland, Ohio service area with plans to introduce hard usage allowances and excess usage violation charges nationwide if customers tolerate the market test in Cleveland.

DSL Reports learned that Cox will formally notify customers beginning May 19 it has increased broadband usage allowances and will introduce an overlimit fee of $10 for each 50GB allotment a customer exceeds their limit starting this fall.

Cox’s marketing machine is attempting to justify its usage based pricing scheme with a pre-written script to appease anticipated customer complaints:

A draft customer support script obtained exclusively by DSLReports states that this lead-in period will “give customers the opportunity to familiarize themselves with their typical data usage and take action, such as secure their WiFi network or change service plans, if they exceed their limit.”

The script also notes that customers will be notified via e-mail and a browser popup when they’ve reached 85% and 100% of their monthly data allotments. Cox services like Cox TV Connect, Cox Digital Telephone and Cox Home Security will not count toward the usage cap, a Cox insider claims.

To make the idea of potential bill shock more palatable to their customer base, Cox generously increased usage allowances last week:

  • Starter: 150 GB/month
  • Essential 250 GB/month
  • Preferred 350 GB/month (the most popular plan)
  • Premier 700 GB/month
  • Ultimate 2 TB/month

Exceed those limits and the company will slap penalty fees on your bill as a matter of “fairness.” Customers will get a preview of any specific overlimit fees they would incur starting in June, but the company will not begin to actually charge them until October.

price-gouging-cake“Data usage plans promote fairness by asking the high-capacity Internet users to pay a greater share of network costs,” argues Cox. “Some critics of data usage plans push a flat fee pricing model, meaning that users would pay a flat fee whether they simply use the Internet to surf the web and check email or if they are a ‘super user’ and consume copious amounts of bandwidth. Data usage plans are a far more fair approach, giving consumers a choice based on their personal needs rather than forcing all customers to absorb the network costs incurred by the 5% of customers who exceed their allowance.”

Stop the Cap! would point out we’ve heard those same talking points since 2009 and they were not credible then and are even less so today.

First, we’d note Cox is attacking the business plans of some of the most successful broadband providers in the United States. Time Warner Cable, Cablevision, Google, and a myriad of other phone and cable operators not only deliver on their commitment to offer unlimited use Internet, they actually market it as a good reason to buy Internet access from them.

Cox’s concerns for fairness might be a bit less hypocritical had Cox not sold customers unlimited use plans for years. Were they being unfair to their customers then, now, or both?

Second, the company’s claimed noble intentions for keeping the cost of broadband down might be more believable if it didn’t charge its base customers a whopping $34.99 a month for “up to 5Mbps” Internet that it now wants to limit. Five years ago it charged customers just $21.99 a month for that service. By 2015, it had raised the price more than 59%.

In comparison, Time Warner Cable charges less than half that for unlimited “$14.99 Everyday Low Price Internet” – a tier that has not increased in price since its introduction. Time Warner has also offered its light users an optional plan to win a discount if they keep their usage down. As a reflection of customer interest in plans that place limits (even optional) on broadband service, out of some 11 million Time Warner Cable customers, only a few thousand have shown any interest in plans that introduce a usage allowance component.

coxThird, Cox’s excuses are very similar to those given by Time Warner Cable when it tried (and failed spectacularly) to impose usage allowances on its broadband customers in 2009. Time Warner officials promised it would represent greater fairness and would help pay for network improvements, while only a small percentage of customers would face higher charges. In fact, none of those claims were true. Customers seeking to keep unlimited access faced a tripling of the cost of broadband, Time Warner Cable only committed to network improvements in their most-populous service areas (which were excluded from the usage cap market trials and had significant competition), and at the usage caps Time Warner proposed in 2009 – 5, 10, 20, and 40GB, more than half of today’s Time Warner customers would be subject to overlimit fees. At the time, Time Warner claimed their proposed usage allowances were generous and fewer than 5% of customers would exceed them. That is eerily familiar to the “5% of customers” Cox refers to today.

The real money is to be made selling broadband, already amazingly profitable.

The real money is to be made selling broadband, already amazingly profitable.

Cox’s need for strict usage allowances comes at a time when other Internet Service Providers in competitive markets are either abandoning or not strictly enforcing them. Alienating customers has proven bad for business, and there is still plenty of money to be made selling unlimited access. Both broadband and telephone service is declining in cost for the operator to offer, particularly when examining bandwidth expenses.

Cox Communications is a privately held company and does not disclose specific financial data to the public, but similarly sized Charter Communications is publicly held and revealed in 2014 it had revenue of $9.1 billion and Adjusted EBITDA of $3.2 billion – each rising 8.2% on a pro forma basis, year over year. In plain English, broadband is already a real moneymaker for the cable industry, with revenue boosts recorded across the board. In comparison, cable television expenses have taken a toll on the profitability of offering television service. Charter is making so much money on broadband it dropped its usage caps recently.

Because the cable industry relies almost exclusively on existing hybrid fiber-coax networks to deliver products and services, the capital costs of providing Internet access have continued to drop for years. The industry’s decision to invest in and adopt DOCSIS 3 was considered a “no brainer” because it did not need major upgrades to network infrastructure and could recoup its cost by allowing companies to market higher-profit, higher-speed tiers.

In contrast, new entrants like Google Fiber are constructing new all-fiber network infrastructure at an enormous cost, but remain comfortable marketing broadband service with no usage allowances. So do many community-owned providers, including EPB in Chattanooga, GreenLight and Fibrant in North Carolina, among many dozens of others. Even Comcast has committed to not imposing usage caps for its premium 2Gbps fiber service, on which residential customers will be capable of racking up enormous amounts of usage.

In short, Cox’s usage cap regime is completely unjustifiable under current marketplace conditions and represents little more than an effort to raise prices and block online video competition, which Cox customers may decide will eat too much into their usage allowance.

Time Warner Cable goes out of its way to advertise "No Data Caps."

Time Warner Cable goes out of its way to advertise “No Data Caps.”

There are a number of questions Cox customers should ask:

  1. Why did nobody ask us whether we thought usage allowances and overlimit fees were fair?
  2. Why not offer optional discounts for low-usage customers and see how many actually enroll in such a program?
  3. Why has Cox removed the option of an unlimited use tier for customers that want unlimited service?
  4. Why won’t Cox commit to a price freeze on its broadband service if usage caps are really about controlling costs?
  5. How is it fair to offer a more generous allowance to a customer sold a higher speed tier that can easily chew through more data than customers on lower speed tiers?
  6. Why do low-speed customers get a smaller usage allowance when they cannot effectively use the highest bandwidth web applications?
  7. Why can’t customers roll unused portions of their usage allowance over to future months?
  8. How many customers, if any, actually asked for this type of pricing?
  9. Why can Google, Time Warner and other operators provide unlimited access for the same or less than Cox charges and your company can’t?

Source: FCC Will Get Serious About Data Caps if Comcast Moves to Impose Them Nationwide

fccA well-placed source in Washington, D.C. with knowledge of the matter tells Stop the Cap! the Federal Communications Commission is prepared to take a hard look at the issue of Internet data caps and usage-based billing if a major cable operator like Comcast imposes usage allowances on its broadband customers nationwide.

Comcast introduced its usage cap market trial in Nashville, Tenn. in 2012 but gradually expanded it to include Huntsville and Mobile, Alabama; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson, Mississippi; Knoxville and Memphis, Tennessee; Charleston, South Carolina; and Tucson, Arizona.

“Two and a half-years is exceptionally long for a ‘market trial,’ and we expected Comcast would avoid creating an issue for regulators by drawing attention to the data cap issue during its attempted merger with Time Warner Cable,” said our source. “Now that the merger is off, there is growing expectation Comcast will make a decision about its ‘data usage plans’ soon.”

In most test markets, Comcast is limiting residential customers to 300GB of usage per month, after which an overlimit fee of $10 per 50GB applies. Despite that, Comcast’s forthcoming premium gigabit speed plans are exempt from usage caps, the company announced.

Comcast sustomers in market test cities have not been happy with the usage caps, some confronted with inaccurate usage measurement tools or “bill shock” after claiming to find surprise charges on their cable bill. One federal employee offered his own story of bill shock — $200 in overlimit fees on his April Comcast bill. The customer spent $70 a month on broadcast basic cable television and Comcast Internet service. As an almost cord-cutter, he could instead rely on one of several alternative online video providers like Netflix or Hulu, but watching video that did not come from Comcast’s cable TV package contributed to eating his monthly usage allowance and subjected him to hundreds of dollars in extra fees.

cohen“I’ve reviewed [the] account to see and can confirm the charges are valid,” responded a Comcast representative who defended the company’s usage cap trials. “Please understand that we are not here to take advantage of customers. We are here to provide a great customer service experience.  After researching [the] account, at this time no matter what level of service you obtain, the Internet usage [allowance] will remain the same.”

To date, the Federal Communications Commission has left the issue of data caps and usage-based billing on the back burner, despite a Government Accounting Office report that found little justification for usage limits or compulsory usage allowances on broadband.

In 2012, former FCC chairman Julius Genachowski defended the practice, claiming it would bring lower prices to light users, spur “innovation” and enable consumer choice. But Comcast customers have found little, if any savings from Comcast’s so-called “data usage plans.” The only savings comes from enrollment in Comcast’s Flexible Data Option, which offers a $5 discount if a customer keeps usage under 5GB a month on just one plan — Comcast’s 3Mbps $39.95/mo Economy Plus tier.

“We don’t see much innovation coming from Comcast’s usage limit trials because Internet pricing continues to rise and the plans have the side effect of discouraging customers from using competing video providers, which can consume a lot of a customer’s usage allowance,” our source adds.

You're over our arbitrary usage limit!

You are over our arbitrary usage limit!

As far as enabling consumer choice, Comcast’s own representative put the kibosh on that, unless a customer wants to pay higher Internet bills.

Net Neutrality and issues surrounding Title II have consumed much of the FCC’s attention in the residential broadband business during the first half of the Obama Administration’s second term. Usage billing and data caps are likely to become bigger issues during the second half if there is a decisive move towards compulsory usage limits and consumption billing by large operators.

“An operator the size of Comcast absolutely will draw scrutiny,” said our source. “If Comcast decides to impose its currently tested market trial plans on Comcast customers nationwide, the FCC will take a closer look. Under Title II, the agency is empowered to watch for attempts to circumvent Net Neutrality policies. Usage caps and charging additional fees to customers looking for an alternative to the cable television package will qualify, especially if Comcast continues to try to exempt itself.”

Cable industry officials have also become aware of the buzz surrounding usage caps and growing regulator concern. Some reportedly discussed the possibility of FCC intervention behind closed doors at the recent cable industry conference in Chicago. Multichannel News reported (sub. req.) cable industry executives increasingly fear federal officials will ban usage pricing for wired broadband service on competitive grounds. Online video competitors rely on large cable and phone companies to reach prospective customers, many that may think twice if usage allowances are imposed on consumer broadband accounts.

Verizon Buys AOL for $4.4 Billion; Bolsters Verizon’s Mobile Video/Advertising Business

aolVerizon Communications this morning announced it will buy AOL, Inc., in a $4.4 billion cash deal that will provide Verizon with powerful mobile video and advertising platforms.

Originally known for its ubiquitous dial-up Internet access, AOL today is better described as a content and advertising aggregator — putting online video in front of viewers bolstered by AOL’s powerful advertising technology that can match a targeted advertising message to a specific viewer in milliseconds.

AOL’s portfolio also includes the well-known EngadgetTechCrunch and Huffington Post websites, which many analysts expect will not be part of the deal, quickly spun off to a new owner(s) to avoid any political headaches over Verizon’s control of the well-known content sites, some including coverage critical of Verizon.

Verizon-logoAll signs point to the AOL acquisition as more evidence Verizon management is shifting priorities to its mobile business, Verizon Wireless. In 2014, Verizon acquired the assets of Intel Media, which was planning an Internet TV service called OnCue. Verizon’s acquisition will help it develop an alternative television platform and many analysts expect it will primarily reach Verizon Wireless customers.

Complimenting online video with AOL’s ad placement and insertion platform will likely be the best chance Verizon has to monetize that video content.

“Certainly the subscription business and the content businesses are very noteworthy,” confirmed Verizon’s president of operations, John Stratton. “For us, the principal interest was around the ad tech platform.”

http://www.phillipdampier.com/video/Bloomberg Why Verizon Coveted AOLs Ad Technology and Mobile Video 5-12-15.flv

Bloomberg says Verizon’s real interest in AOL is their online advertising platform, which can bolster Verizon Wireless’ mobile video service. (2:39)

Verizon’s $4 billion investment in AOL did not go into expanding its fiber optic platform FiOS.

Verizon Wireless Multicast

Verizon Wireless Multicast

“For the price it’s paying for AOL, Verizon could deploy its FiOS broadband service across the rest of its service area, bringing much-needed services and competition to communities like Baltimore, Boston and Buffalo,” said Free Press research director S. Derek Turner. “Instead, the company is spending a fortune to wade into the advertising and content-production markets. In terms of the latter, Verizon has already shown a willingness to block content and skew news coverage.”

As Stop the Cap! reported last week, that isn’t a surprise to some utility companies that believe all signs point to Verizon’s growing disinterest in its wireline division. Florida Power & Light expects Verizon will become a wireless only company within the next 10 years.

While AT&T explores expanding its wireless service internationally and seeks approval for its acquisition of satellite service DirecTV, Verizon Wireless is moving to monetize increased customer usage of its network with the forthcoming introduction of a video service this summer. The product would offer a mix of ad-supported and paid short video content and may offer live multicast programming that can reach a larger audience without disrupting network capacity.

Increased viewing of high bandwidth video will force Verizon customers to continually upgrade data plans, further monetizing Verizon’s wireless business. AOL’s ad insertion technology will allow Verizon to earn advertising income from viewers, creating a dual revenue stream.

Verizon can also sell advertisers information about its massive customer base of wired and wireless customers, including their browsing habits and demographic profile to deliver “data-driven marketing and addressable advertising.”

http://www.phillipdampier.com/video/Bloomberg Verizon-AOL Deal 1999 All Over Again 5-12-15.flv

Bloomberg News puts together several of Verizon’s puzzling recent acquisitions, which point to a shift of Verizon’s business towards its mobile and content platforms. (5:42)

Top Cable Lobbyist Laments Cable’s Self-Made Bed Has Weighed Down and Damaged the Industry’s Reputation

Powell

Powell

Decades of bad service, rate increases, and abusive employees have given the cable industry a bad name and America’s top cable lobbyist, former FCC chairman-turned-president of the National Cable & Telecommunications Association is sad about that.

“I hate the name […] cable,” Powell lamented Tuesday in Chicago during the opening of the NCTA-rebranded INTX 2015 show (formerly known as The Cable Show).

While years of bad service have done little to tangibly affect the industry’s fortunes in a barely competitive marketplace, Powell seemed convinced it was Comcast’s appalling reputation with customers (including regulators and politicians working in Comcast’s District of Columbia service area), that did more to derail its recent merger effort with Time Warner Cable than anything else.

intxCable’s bad reputation has come home to roost, allowing everyone to assume the worst and see a need to erect protective fences like Net Neutrality to keep cable companies from capitalizing on new fees for Internet usage.

As long as cable has a “frayed relationship” with customers, Powell said he believed the industry will lose more policy battles than it wins, and it should be aware of that.

But those in attendance later told Communications Daily (subscription required) they disagreed with Powell and believed the industry has faced down bigger threats than Net Neutrality and online video. They also disagreed with any name change that de-emphasized “cable” and complained the industry didn’t get enough credit for its role in bringing faster Internet to American homes.

Because cable operators both own the pipes and have a strong working relationship with content producers, many attendees believe cable is in an excellent position to face down competitors, because most depend on cable broadband to deliver their services.

http://www.phillipdampier.com/video/NCTA Michael Powell and ReCode Kara Swisher Kick off INTX 2015 5-5-15.mp4

NCTA president Michael Powell talks with ReCode’s Kara Swisher about the state of the cable industry and the Internet at the start of INTX ’15 in Chicago. (18:53)

If You Can’t Beat ‘Em, Join ‘Em: Cablevision to Sell Hulu+ to Cable Subscribers

Phillip Dampier April 29, 2015 Cablevision, Competition, Consumer News, Online Video 1 Comment

hulu-plusCablevision has conceded online video is now increasingly challenging its cable television package, so instead of trying to put a lid on “over the top” video, the Long Island, N.Y.-based cable company is embracing it with a deal to offer the streaming service Hulu to its customers.

“There is a new generation of consumers who access video through the Internet, and whatever their preference, Cablevision will facilitate a great content experience,” said Kristin Dolan, chief operating officer of Cablevision, in a statement.

cablevisionThe deal covers the service’s entire catalog of on-demand television shows and movies and will be available to Cablevision broadband customers online and possibly through set-top boxes for traditional cable television customers.

The arrangement is unlikely to prove compelling to current broadband customers who can enroll in Hulu free of charge and Hulu + for $7.99/mo, without Cablevision’s help. But if the cable operator bundles the service into existing packages at no extra charge or offers the advertiser-supported pay service at a discount, it may provide a useful option for customers considering cutting Cablevision’s cord.

Hulu has not proved as popular with online video fans as Netflix, perhaps because it forces viewers to sit through a very heavy ad load, even with its premium service. Even with the announcement this week Hulu acquired the streaming video rights to all 180 episodes of Seinfeld, a show that aired its last original episode in 1998, Hulu is unlikely enough to seal a deal with subscribers.

Cablevision may also be interested in Hulu to bolster its new broadband-only “cord-cutting” packages (shown below), which Cablevision hopes will help it save a customer’s business if they are ready to drop cable television. Hulu is often a “must-have” by cord-cutters who enjoy first-run network shows.

CEO Jim Dolan even admitted there may come a day when Cablevision exits the cable TV business completely and relies entirely on selling broadband service.

cord cutter cablevision 1

cord cutter cablevision 2

Our Long Nightmare is Over At Last: Stop the Cap! Ponders the Failed Comcast-Time Warner Cable Merger

Phillip "Victory is Ours" Dampier

Phillip “Victory is Ours” Dampier

It has been 14 months since we heard for the first time Comcast was planning to acquire Time Warner Cable. It was the night of February 12, 2014. I still remember where I was the moment I first learned the news.

Stop the Cap! has maintained a civil relationship with Time Warner Cable for the most part over our seven-year struggle fighting usage caps, lousy broadband, and high prices. We fought one major battle with the company in April of 2009, when Time Warner executives planned a compulsory usage cap experiment on customers in Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C.

Just as we had done with Frontier Communications a year earlier, we successfully beat down their efforts to impose usage allowances on customers already paying a significant chunk of money for broadband Internet access. After that battle ended, Time Warner Cable changed their position on usage caps and stated emphatically that customers should always have the option of unmetered/unlimited access. They have kept their word. In fact, their optional usage cap experiments have been a spectacular flop, attracting less than 1% of their customer base and delivering the message we’ve tried to get across the industry for years: customer hate usage caps, usage-based billing, and speed throttles.

Comcast is a company that long ago stopped listening to their customers. It applied an arbitrary usage cap on all their customers in retaliation for a FCC decision that disallowed them from running hidden speed throttles on peer-to-peer Internet traffic. Comcast lied about throttling traffic, paid homeless people to stack a hearing on the issue to keep company critics out of the room, and slapped the caps on in the fall of 2008 with the flimsy excuse it represented “fairness” to customers. Only later, we would learn usage caps were never about “fairness” or good traffic management. It’s just a way to deter customers from spending too much time on the Internet, especially if that time is spent watching online videos. Too much time spent watching Netflix might convince you your cable TV package isn’t necessary any longer.

comcast twcComcast customer service horror stories reached a level unparalleled by other cable companies when a Comcast predator-installer was convicted of raping and strangling to death 23-year old Comcast customer Urszula Sakowska,  whose lifeless body was found in a bathtub inside her Chicago-area home back in 2006. But Triplett’s violent service calls didn’t stop there. He also faced charges in the death of 39-year old Janice Ordidge, a Comcast customer in Hyde Park. Those two Comcast customers lost their lives. In 2009, another Comcast installer set a Pennsylvania customer’s house on fire. Other installers stole jewelry right out of customers’ homes. Others have exposed themselves in front of female customers or fallen asleep on their couches.

Billing errors are the stuff of legend at Comcast. Offshore call centers with language barriers, inept customer service, and long, long, long lines at cable stores with windows only partially manned by agents sitting behind bullet-proof glass also helped cultivate a customer relationship that can best be described as “perp and victim.”

Comcast isn’t just a bad cable company, it’s a menace. We didn’t have to spend hours proving our case. Fortunately, Comcast’s appalling reputation preceded it. Outside of two executive suites in Philadelphia and New York, nobody was for supersizing Comcast. Just to make sure our regulators knew this, we traveled to Buffalo in June of last year to testify at a Public Service Commission hearing on the subject of the merger. We didn’t mince words.

Sure, there were non-profit groups like the Boys & Girls Club that absolutely sullied their reputation pushing for the merger (Comcast wrote large checks to the organization so you need not give the group a single penny of your money in the future). “Civil Rights” organizations like the Urban League, NAACP, and others that used to defend minority rights now concern themselves with defending the interests of giant cable companies, just as long as they get a nice check in the mail with Comcast’s name on it. Among the worst of all – Shakedown Al Sharpton who will either be your merger deal’s best friend or will go away and leave victims of racism in peace, if you cut his organization a big fat check. (Now that the merger has collapsed, perhaps Comcast-owned MSNBC will end the thinly veiled quid-pro-quo arrangement it has with the man that gives him an hour a night to perform a talent train wreck.)

My own state assemblyman, Joe Morelle, who served as New York’s interim assembly speaker for about five minutes literally plagiarized his letter in support of the Comcast merger (after cashing their check) almost word-for-word from Comcast press releases and congressional testimony. Say it ain’t so, Joe!

morelleN.Y. State Assembly Leader Joe Morelle: “The combination of Comcast and Time Warner Cable will create a world-class communications, media and technology company to help meet the increasing consumer demand for advanced digital services on multiple devices in homes, workplaces and on-the-go.”

 

cohenDavid Cohen, executive vice-president, Comcast: “The combination of Comcast and TWC will create a world-class communications, media, and technology company to help meet the insatiable consumer demand for advanced digital services on multiple devices in homes, workplaces, and on-the-go.”

 

There was not a doubt in my mind that replacing Time Warner Cable with Comcast would be a disaster for Time Warner Cable customers. Despite promises Comcast would upgrade Time Warner’s network, it would also upgrade customer bills, resorting in higher priced service, higher modem fees, and lousy customer service. Comcast vice president David Cohen also made it clear usage caps would be a part of our life within five years. No amount of protesting or rational argument would stop Comcast from being Comcast. Don’t like it? Just try to cancel.

Time Warner Cable can be bad but it is no Comcast.

Malone: Waiting in the wings?

Malone: Waiting in the wings?

Life will be just fine without Comcast, but danger lurks on the horizon. Still interested in the possibility of taking over Time Warner Cable is the smaller Charter Communications, now effectively controlled by cable magnate John Malone (he owns his own castles). Malone has a long history of enriching himself at the expense of customers with no other choices for cable/broadband service. He used to control Tele-Communications, Inc. (TCI), a cable company that literally threatened city officials who didn’t do what TCI wanted.

We remain unsure exactly what will happen next. Charter could bid aggressively to buy Time Warner Cable, Time Warner Cable could go it alone, or Time Warner Cable could start buying other cable companies (like Charter).

What we hope will happen is Time Warner Cable will refocus its energy on expanding its Maxx upgrade program as quickly as possible to reach all Time Warner Cable markets with faster broadband and a better cable TV experience. We also hope the company will stand by its word that compulsory usage caps are off the table.

I’d like to thank all of our readers who took the time to get involved in the fight and helped make a difference. Wall Street and Washington, as well as Comcast CEO Brian Roberts are all shocked the merger deal collapsed after a torrent of criticism from consumers. It also left state regulators cautious about how to proceed. New York’s Public Service Commission delayed making a decision eight times, recognizing the merger as a hot potato.

Our experience demonstrates that ordinary citizens can wield considerable power when unified and involved. We’ve proved that with multiple victories on the usage cap front as well as the AT&T/T-Mobile merger and Net Neutrality.

Let the fight for better broadband continue!

FCC Staff Recommends Sending Comcast/TWC Merger to Seventh Level of ‘Deal-Killing’ Hearing Hell

fat+lady+sings-featureThe staff at the Federal Communications Commission decided Wednesday to make a non-decision decision regarding the merger of Comcast and Time Warner Cable, and are recommending turning over the matter, including millions of pages of company documents and 14 months of investigative findings to an administrative law judge to sort out.

The procedural move, dubbed by many regulatory experts as a “deal-killer,” is known officially as a “hearing designation order.” But executives at Comcast know it really means the FCC is sending a strong signal it does not believe the merger is in the public interest.

The sudden recommendation by the FCC is seen by some observers as a coordinated move with the U.S. Department of Justice to let Comcast CEO Brian Roberts know the deal is in serious peril. In 2011, the Justice Department declared its opposition to another blockbuster merger between AT&T and T-Mobile, and the FCC announced its own opposition just a few hours later. The merger was declared dead shortly thereafter.

Placing the matter in the hands of an administrative law judge would mean a drawn-out, complicated hearing that would probably last longer than the 1995 trial of O.J. Simpson. Few companies bother. Even if Comcast decides it will fight, if the Justice Department successfully challenges the merger in court, the hearing designation order is moot and the merger fails.

Most observers expect Comcast will call off the merger before dragging the matter out in a court or hearing room.

The Wall Street Journal broke the story last night, calling it a “significant roadblock.”

Wall Street analysts were more direct.

“The fundamental problem with this transaction is there is no major constituency outside of Comcast and Time Warner Cable that want it to move forward,” said Rich Greenfield, analyst at BTIG Research, which has been predicting the deal falls apart. Mr. Greenfield noted that it would be a “very uphill battle” for Comcast to prove its case through the FCC’s hearing process that its merger is in the public interest. “Is it really worth spending more time and resources to fight the government?”

elephant“I’d never say anything was 100 percent dead, but this is in the 99 percent category,” Greenfield added. “It’s not every day that you have a transaction that is universally hated by everyone outside of Philadelphia,” where Comcast is based.

“No, the Comcast deal isn’t dead yet,” said telecom analyst Craig Moffett on Thursday. “But it’s a bit like an elephant that has been dropped out of an airplane. At around 10,000 feet, it is technically still alive. But it is falling fast, there’s not much you can do to stop it, and its odds of survival are pretty low when it hits the ground. Engaging in a war of attrition with the U.S. government is generally a bad idea and one rarely undertaken.”

The usually brash and confident Comcast was uncharacteristically muted in their response to the latest DOJ and FCC developments.

“As with all of our DOJ discussions in the past and going forward, we do not believe it is appropriate to share the content of those meetings publicly, and we, therefore, have no comment,” said a Comcast spokeswoman.

The apparent looming defeat of the Comcast/Time Warner Cable merger would be a testament to unified opposition from consumers, programmers, competitors, and emerging online video distributors that might one day fully challenge traditional cable television.

“In a democracy like this, you have gather your forces to say no to politically powerful people,” Mark Cooper, a Comcast opponent and research director at the Consumer Federation of America, told the Philadelphia Inquirer.

http://www.phillipdampier.com/video/CNN Death sentence for Comcast merger 4-23-15.mp4

A death sentence for the Comcast-Time Warner Cable merger? Analysts think so. CNN reports on the history of a merger deal that used to be “inevitable.” (1:42)

New Revelations About Comcast’s Role in Killing Hulu Sale Raise Doubts Regulators Can Trust Company

sun valleyDespite a firm commitment with the Justice Department not to be involved in the day-to-day management of Hulu as a condition of approving Comcast’s merger with NBC/Universal, new revelations suggest Comcast not only promoted the online video service to its partners as a nationwide streaming platform for the cable industry, it also convinced them not to sell the service to a Comcast competitor.

Two years ago, at the 2013 Allen & Co., conference held in the resort community of Sun Valley, Idaho, executives from Walt Disney/ABC, 21st Century Fox, and Comcast privately met to discuss the future of Hulu, the online video service. Hulu’s chief executive, Jason Kilar, had already made it clear he was preparing to leave the venture, possibly foreseeing a likely sale because of ongoing differences between two of Hulu’s three owners over the future direction of the service.

Rupert Murdoch’s FOX wanted Hulu to emphasize Hulu+, its subscription option. Disney/ABC believed Hulu worked best as a free, ad-supported service. Comcast was supposed to stay out of it, required by the Justice Department to be a perpetual silent partner after the cable company inherited a 32% stake in Hulu through its merger with NBC/Universal in 2011.

But a Wall Street Journal report late Tuesday suggested Comcast had far more involvement in critical Hulu business decisions than the Justice Department might have tolerated had it known. Earlier reports over the weekend suggested regulators were focusing on Comcast’s involvement in Hulu, concerned Comcast may have ignored a consent decree and interfered with the sale of Hulu to protect itself from increased competition.

At the time Comcast acquired NBC/Universal, the Justice Department was concerned the cable company would inherit NBC’s one-third interest in Hulu, a potential online video competitor that could eventually fuel cord-cutting. Comcast agreed to “relinquish any veto right or other right to influence, control, or participate in the governance or management of Hulu.” It also agreed to license Comcast/NBC-owned content to Comcast’s competitors on fair terms.

Despite Comcast’s commitment, people familiar with the matter told the Journal Comcast “felt hamstrung” by the conditions it agreed to in the consent decree. Although Comcast spokeswoman Sena Fitzmaurice insisted “Comcast has no role in making, evaluating or reconsidering any management decisions at Hulu,” Comcast executives in attendance at the Sun Valley meetup suggested Hulu was an important part of the cable industry’s future. The “silent partner” allegedly told Hulu’s fellow owners if they didn’t sell the venture, Comcast would make Hulu the nationwide streaming video platform for the industry’s “TV Everywhere” project, turning it into a potential major rival of Netflix.

Comcast acquired a 32% ownership interest in Hulu after buying NBC/Universal.

Comcast acquired a 32% ownership interest in Hulu after buying NBC/Universal.

According to sources who had knowledge of the matter, Comcast’s proposal, which would enlarge Hulu significantly almost overnight, influenced Disney and Fox to cancel the sale by the end of the week-long conference. At that point, two of the biggest bidders to acquire Hulu were Comcast rivals DirecTV and AT&T, both seeking to develop online video platforms that could compete with Comcast.

As news spread the Hulu sale was off, a piece in GigaOm made it clear Comcast came away the biggest winner, keeping a potential competing online cable TV video platform at bay:

Buying Hulu would have been more than just a TV Everywhere play for AT&T and DirecTV. It could have been the first step towards an online-based pay-TV subscription, with a solid consumer base, name recognition and proven technology.

Now none of this is going to happen — and Comcast couldn’t be happier about that.

Ultimately, Comcast wasn’t much better fulfilling promises to its Hulu partners than it has managed for its customers. Despite promising to market Hulu to millions of Comcast cable subscribers and integrating the service into Comcast’s own systems, discussions surrounding a formal agreement between the two went nowhere, bogged down by a deal-killing Comcast demand that any viewer accessing Hulu be redirected through Comcast’s own video player and platform, which conveniently provided the cable company with Hulu customer data and gave free exposure to Comcast’s brand. That would make pitching Hulu as an alternative to Comcast next to impossible.

After the threat of a sale was a distant memory, Comcast seemed to lose interest in Hulu, refocusing on its expensive X1 set-top box and XFINITY-branded streaming apps.

To this day, Comcast’s X1 still does not offer subscribers a Hulu app.

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  • Jason: I agree, cap to limit congestion is a lie. So with capping everyone you have high congestion for the first two weeks of the billing cycle then it fal...
  • Jason: I work from home and I'll be damned if they are going to charge me any fees or cap my usage. Just wait until Google fiber comes to Phoenix and the ex...
  • chris: was just curious to what cox had to say about all this cash cow bussiness and heres what they told me Thank you for choosing Cox Communications....
  • Joe V: I hope the people of New Jersey are happy. They voted for Chris Christie and this is exactly what they got....
  • Susan: After diligently watching my credit score for over a year and how negative as well as positive postings affect it, I have a hard time believing that o...
  • David Therchik: An intense investigation needs to put into this! As soon as one starts I bet they'll stop charging/cheating people from over usage. Before they bought...
  • Charles Bingham: I did but customer no service was no help - said it did no good to have pass word with symbols, cap and small letters and #'s. IF only I had an alte...
  • Phillip Dampier: That assumes this customer had access to a working usage meter and notification messages and ignored them. Evidently it was big enough of a problem fo...
  • Are you kidding me...: "Over the years" people are using the internet differently. If your bill went up, you have usage. Responsible would be calling and talking to them ab...
  • Charles Bingham: Actually my usage has decreased over the years as I sold my business and only kept the internet for a few tax returns that I still do, no employees no...
  • Are you kidding me...: This entire article reeks of "poor me, I'm a victim and I can't be responsible about my own Internet usage, my own bills or my own actions." Grow up....
  • a gci customer: even with the new plans, you are still data capped, they just speed rate you at that point vs charging you for overages. You are given the ability t...

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