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Cord Cutting Could Hit 2 Million This Year: 6,200 Americans Cancel Cable TV Every Day

Phillip Dampier August 19, 2015 Consumer News 3 Comments
courtesy: abcnews

Time to cut the cable TV bill down to size.

Cord-cutting, the often denied and downplayed practice of canceling cable television service, is becoming trendy in the United States, with up to two million customers likely to turn their backs on pay TV in 2015.

The Financial Times reports about 566,000 customers have canceled cable television between April and June on this year. The subscriber losses are occurring at most cable operators except for Verizon, which picked up a few new customers during the last quarter.

That translates into 6,200 customers a day dropping service, despite aggressive efforts by providers to rescue their business. For at least 10 years, cable television prices have risen at nearly twice the rate of inflation, helping give the industry a public black eye. But with few alternatives until recently, consumers bared their teeth but paid the bill. With the advent of online video services and digital over the air television, that is finally changing.

cord cutToday, customers in or near large cities can watch an average of 12-24 over the air stations and digital “sub-channels” for free. Add a Netflix and Hulu subscription and customers can watch “on-demand” shows as well.

Some cable companies have resisted dramatic rate increases realizing they will continue to bleed customers with every rate hike notice. But many others have resorted to tricks like adding surcharges at the bottom of the bill. Many cable companies today include sports programming and broadband TV surcharges of $1-4 each, hoping customers will blame someone else for their higher bill. Most surcharges are not covered by customer retention or new customer discounts, either, and those fees are rising.

Time Warner Cable added a $2.75 sports surcharge on many customer bills in addition to the Broadcast TV surcharge. Most providers charge between $2-6. Within three years, customers can expect to see surcharges hiked to the $8 range.

As the cord cutting numbers add up, broadcast executives may still be in denial, but Wall Street isn’t. Traders did some cutting of their own, slashing $50 billion off the value of media stocks after major entertainment companies reported declining ad revenues and expected poorer financial results in the future.

Conservatives Call for Cord Cutting to Starve “Left Wing” Networks Out of Business

Phillip Dampier August 12, 2015 Competition, Consumer News, Online Video 4 Comments
Time to cut the cord and starve left-wing media.

Nolte: Time to cut the cord and starve left-wing media.

The only solution to stop the “largest swindle big business ever played on the American people” is to cut cable television’s cord and stop paying for channels you do not want or need.

That advice comes from the conservative Breitbart News Service, among the first to make cable television bundling a political issue:

Meanwhile, for around $100 a month pay TV is not only pummeling you with about 20 minutes of ads an hour, but forcing you to pay for a ton of networks you hate. Moreover, many of these networks get a chunk of your cable bill. Even if you don’t watch left-wing CNN and MSNBC, if they are on your package, chances are a part of your bill is going directly to both.

If you want to put CNN, MSNBC, MTV, and all these other low-rated, left-wing networks out of business, not watching them makes absolutely no difference.

You have to cut the cord.

Nearly half of CNN’s revenue comes from this immoral revenue stream. CNN is taking your money to attack you all day every day.

And that is the great con the gigantic left-wing multinationals have pulled off for decades. Something like 100 million homes keep hundreds of networks profitable by forcing those customers into overpriced cable packages. Maybe 15 cable networks could survive solely on ad revenue generated by actual eyeballs. The rest would go poof, and good riddance.

scissorsAuthor John Nolte, editor-at-large for the news service, blames big cable bills on the “Hollywood rich” who he writes just keep getting richer. He thinks a better solution is to sign up with Netflix or Amazon and say goodbye to cable television.

Breitbart News, Nolte writes, “has been way ahead of the curve” predicting the demise of the one-size-fits-all cable television bundle that customers can hardly afford “while Obama’s economy falters and an influx of illegal aliens keep wages depressed.” Nothing stops the rate increases until consumers cancel the service, Nolte believes.

Reader reaction to the piece quickly identifies one shortcoming for conservatives: the loss of Fox News Channel. But many comments expressed the view Fox News has gone “Republican In Name Only” and isn’t worth paying for either. Many conservatives taking anti-corporate political views prefer alternative media like Breitbart News Service and Glenn Beck’s TheBlaze, which ironically has tried to land cable carriage agreements for years with only limited success.

Verizon DSL: The Love is Gone – Rate Hikes, Availability Problems, Low Speeds

Sandra Hartman has been a Verizon DSL customer for more than 10 years. She doesn’t have much of a choice.

In her small town outside of Binghamton, N.Y., Verizon is her only option. Time Warner Cable doesn’t come close to providing service in this part of upstate New York and cell service is abominable, even with Verizon and AT&T.

“I live in an area just large enough to have given Verizon the justification to offer DSL, but 3Mbps service is about all we have ever been able to get, but it has been better than nothing,” Hartman tells Stop the Cap!

Hartman signed up for a package that included $19.99 DSL with her landline a decade ago, a price that went up $10 after the sign-up promotion ended but has remained stable for years.

“Then Verizon decided to raise the price without improving the service,” Hartman says.

In fact, the price hikes have been fast and furious lately, beginning last fall when Hartman received this notice Verizon was raising the price to $34.99 a month:

Verizon-logo

Dear Valued Verizon Customer,

We realize you have choices when it comes to choosing your Broadband provider, and would like to take this opportunity to say thank you for being a loyal customer and for choosing Verizon.

In order to continue to bring you quality service and product innovation, at times we need to raise our rates. Your monthly rate will increase by $5.00 and will be reflected on your bill within the next two months. This rate will remain in effect for one year. If you currently have any credits or discounts on your account, these will remain in effect until their original expiration date.

If you would like to review your account to see if you may qualify for additional savings or if you have any questions, please log on to verizon.com/myverizon or give us a call at 1.888.213.9932.

We value you as a customer and look forward to continuing to serve you.

Sincerely,
Your Verizon Team

“What choices?,” Hartman wondered. “We have no choice and after the rate increase, we’ve seen no improvement in the quality of the service or any evidence of Verizon’s ‘product innovation.’ It’s the same DSL service we’ve had for a decade — we’re just paying $60 more a year for the same thing.”

In Pennsylvania, Verizon is required by regulators to provide access to broadband to any customer that wants the service by the end of 2015. This map shows Verizon's service areas, 96% of which now have access to at least DSL service.

In the unusual case of Pennsylvania, Verizon is required by law to offer access to broadband to any customer that wants the service by the end of 2015. This map shows Verizon’s service areas in green, 96% of which now have access to at least DSL service. That same requirement is absent in most states.

To save money, Hartman downgraded her Verizon landline to the cheapest possible plan and switched to Voice over IP provider Ooma, which works over her DSL line. But Verizon is now back for more with another rate increase notice — this time looking for another $7 a month starting this fall, putting the price of 3Mbps DSL up to $41.99 before fees, surcharges, and taxes.

“I called Verizon and they told me rates are reviewed ‘for competitive reasons’ and reflect the cost of providing the service, which is apparently now up another $84 a year,” she said. “Verizon’s equipment, sitting in the elements on a phone pole or humming away in their phone office actually appreciates in value it seems. I wish my 10-year-old laptop was worth more today than the day I bought it, but my laptop wasn’t made by Verizon.”

Hartman complained to customer service the successive rate increases do not seem to be spent on any improvements. In fact, it seems Verizon is no longer accepting new DSL customers in her area.

“A real estate agent friend of mine told me selling homes in this town has gotten difficult because Verizon will simply not sell DSL to new customers here, claiming they have no capacity,” Hartman said. “If you can’t get DSL from Verizon, you don’t have broadband service, it’s as simple as that.”

DSL availability from Verizon is not just a problem for Hartman. Several central offices in upstate New York no longer accept new Verizon DSL customers, claiming the service is at capacity. Some customers in the Finger Lakes region keep DSL service year-round at their seasonal cottages, fearing if they suspend service for the winter they will not get it back next spring. Time Warner Cable offers service to many lakefront properties, but those who own cabins and homes away from the lakeshore usually cannot get cable service and depend on Verizon for service.

The Verizon DSL forum on DSL Reports has more examples of customers that discover their entire exchange is no longer qualified to get Verizon DSL. One such example is in Purcellville, Va., west of Washington, D.C., a quick drive to the Maryland and West Virginia borders.

“DSL suddenly has disappeared from my wire center entirely – regardless if your 10 feet from the CO or out of a remote terminal with a DSLAM,” wrote Zenit. “Even the industrial section of town which has its own fiber fed DSL equipped RT shows negative for service, and there are plenty of vacant units there.”

Similar stories were reported in communities like Pittsfield, Mass. and Netcong, N.J.

Customers have been able to push back against Verizon’s price increases, especially in competitive areas. Some customers are switched to lower cost bundled packages while others are given straight service credits that lower a customer’s bill. Customers need only ask Verizon for a better price and let them know you are shopping around for a better deal.

Time Warner Cable Continues Commitment to Keep Unlimited Data, Expand Maxx Upgrades

timewarner twcTime Warner Cable will continue to offer customers unlimited data plans and further expand its Maxx upgrade program until it reaches the company’s entire service area or the merger with Charter Communications is approved by regulators.

CEO Robert Marcus told investors on a morning conference call the company has been “completely committed to delivering an unlimited broadband offering in connection with whatever else we do, because we know customers do place a value on the peace of mind that comes with unlimited plans.”

Marcus continued to admit his company’s experiments with voluntary usage pricing have largely failed, noting the “vast majority” of customers choose unlimited plans, and Time Warner “never had any intention of substituting the availability of unlimited with exclusively usage-based programs.”

The original goal for Time Warner’s voluntary usage pricing options “was to offer customers who use less bandwidth, who maybe just do e-mail, an opportunity to pay less and have an Internet offering that better meets their demands for both usage and price.”

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.”

Most broadband customers do not want usage-based billing or usage-capped Internet, but some providers force such usage plans on customers anyway.

“Different providers have had different philosophies on these things,” Marcus offered.

Marcus reported TWC Maxx deployment in Austin is finished, and the company is working on completing upgrades in Dallas, San Antonio, Raleigh, Charlotte, Kansas City and Hawaii by year-end. The latest markets to be upgraded — San Diego, Wilmington and Greensboro, N.C., will start this year, but speed increases will not begin until next year. The upgrades are improving customer satisfaction with a 35% drop in voluntary disconnects in Maxx service areas, but will cost an estimated $4.45 billion in spending this year by the country’s second largest cable operator.

Time Warner Cable Maxx has been very successful at bringing new customers to Time Warner, attracted by improved broadband speeds and better service, Marcus told investors. Maxx customers see broadband speed upgrades that dramatically boost speeds at no additional cost. Standard Internet speeds in non-Maxx markets are 15Mbps. In Maxx areas, customers receive 50Mbps. Customers signed up for 50Mbps “Ultimate” Internet in Maxx markets see that speed raised to 300Mbps.

Large sections of Time Warner Cable territory have yet to be upgraded, however. Marcus today said he plans to continue the Maxx upgrade effort as the Charter merger proceeds through a lengthy regulatory review process. If the merger is delayed or unsuccessful, Time Warner likely will announce additional cities targeted for upgrades in 2016, but customers should not expect speed changes until later that year or 2017. If the Charter merger is approved, areas bypassed for Maxx upgrades will likely get a more modest upgrade promised by Charter, with maximum broadband speeds of 100Mbps.

Marcus

Marcus

Time Warner Cable spent the last quarter pushing lower priced promotions to attract new and returning customers. That, combined with higher programming costs, increased spending on network upgrades, and pension expenses cut into the cable company’s profits, which declined 7.2% in the last quarter.

Time Warner Cable added 66,000 residential customers overall, its best ever second quarter and its first rise in any quarter since 2008, according to Marcus. Time Warner added 172,000 new broadband customers and 252,000 voice subscribers, primarily from a promotion that allows any subscriber to add phone service to their package for $10 a month. But Time Warner is not immune to cord cutting, and lost 45,000 video customers in the second quarter.

The cable company may have stepped up promotions to be certain it can report good results as investors wait for the Charter Communications merger to win or lose regulator approval. A triple play promotion for new customers runs as low as $89 a month and despite touting an earlier philosophy the company did not see much value promoting cheap phone service, it has apparently reversed course, boosting triple play upgrades as a result of reduced pricing.

It is also continuing strong customer retention policies, a sign Time Warner Cable will continue to respond when customers threaten to cancel unless they get a better deal.

“Our whole view of retention hasn’t really changed since the middle part of 2014,” said William F. Osbourn, Jr., acting co-chief financial officer. “Our view is that we will always rather save the customer than lose the customer, but I think we’re pretty disciplined about not giving away the farm in doing that.”

Some other highlights:

  • Programming costs rose 11%, a sure bet another rate increase will be forthcoming in the future;
  • Marcus loves mergers: “The only thing I’d add to that is that from an industry structure perspective, in roughly a quarter of our footprint, the deal [between AT&T and DirecTV] results in two competitors becoming one. And, generally speaking, that’s a positive for all the players in the industry”;
  • Time Warner Cable will continue to encourage customers to use their own set-top box devices (Roku, Apple TV, etc.) as an alternative to the traditional cable set-top box;
  • Roughly 12% of customers now own their own cable modems to escape Time Warner’s rental fee;
  • Despite the clamor for “skinny bundles” 82% of Time Warner Cable customers subscribed to the full video package;
  • In Maxx areas, customers need set-top boxes on all of their connected televisions. Most are opting for the cheapest option, taking an average of two less-capable DTA boxes instead of more expensive set-tops. DVR subscriber numbers have remain largely unchanged after Maxx upgrades.

Still Paying After All These Years: Verizon Raised NY Landline Rates for Phantom FiOS

Phillip Dampier July 15, 2015 Consumer News, History, Public Policy & Gov't, Verizon 1 Comment

Verizon's FiOS expansion is still dead.

Verizon customers in New York are paying artificially higher telephone rates justified to encourage Verizon investment in FiOS fiber to the home upgrades most New York State communities will never receive.

Starting in 2006, the New York Public Service Commission granted Verizon rate increases for residential flat-rate and message-rate telephone service and a 2009 $1.95 monthly increase for certain residence local exchange access lines to encourage Verizon’s investments to expand FiOS fiber to the home Internet across New York State.

“We are always concerned about the impacts on ratepayers of any rate increase, especially in times of economic stress,” said then-Commission chairman Garry Brown in June 2009. “Nevertheless, there are certain increases in Verizon’s costs that have to be recognized. This is especially important given the magnitude of the company’s capital investment program, including its massive deployment of fiber optics in New York. We encourage Verizon to make appropriate investments in New York, and these minor rate increases will allow those investments to continue.”

After Verizon announced it was suspending further expansion of its FiOS project a year later, the company continued to pocket the extra revenue despite reneging on the investments the PSC considered an important justification for the rate increases.

nypsc

“The commission allowed Verizon rate increases in 2006 and 2008 based, in significant part, upon the assumption that the revenue from the higher rates would lead Verizon to invest in fiber optic lines, presumably for the benefit of wireline customers,” argues a coalition of state legislators, consumer groups, and unions. “Serious questions exist regarding the extent to which funds may instead have been used to build out the network for the benefit of wireless customers. Publicly available reports, while fragmentary, suggest that Verizon may have included construction costs for significant benefit of its wireless affiliate to be included in the costs of the Verizon New York wireline company, thus adding to its costs and tax losses.”

shellAlmost a decade later, Verizon is still receiving the extra revenue while some public officials complain Verizon is not meeting its commitments even in cities where Verizon has introduced FiOS service.

Last week New York City Mayor Bill de Blasio ordered all future city contracts with Verizon be reviewed and authorized by City Hall. City officials complain Verizon promised in 2008 it would make FiOS available to every city resident no later than mid-2014. A year later, the service is still not available in some areas.

Verizon has blamed access issues and uncooperative landlords for most of the delays, but city officials are not happy with Verizon’s explanations.

“They [Verizon] have to demonstrate to us that they are good corporate actors if they want us to use our discretion in ways that benefit them,” the mayor’s counsel, Maya Wiley, told the New York Post.

Meanwhile, upstate New York residents now indefinitely bypassed by Verizon FiOS want a refund for the rate increases that were supposed to inspire Verizon to keep expanding fiber optics.

“Verizon has made at least $250 from me and every other upstate customer for nine years of broken promises,” said Penn Yan resident Mary Scavino. “Not only don’t they offer us fiber optics, we cannot even qualify for DSL service from them. If you can’t get Time Warner Cable in the Finger Lakes, you often don’t have broadband at all. It is them or nothing. Where did our money go?”

And, we're done. Verizon FiOS availability map also showing areas subsequently sold to Frontier.

And, we’re done. Verizon FiOS availability map also showing areas later sold to Frontier.

Fred, a Stop the Cap! reader in the city of Syracuse, thinks the PSC should immediately revoke the rate increases and force Verizon to refund the money to customers who will not get upgraded service.

“It’s not like Verizon cannot make money in a city like Syracuse,” writes Fred. “It’s clear the CEO thinks even more money can be made off Verizon Wireless customers off the backs of landline customers, and the PSC continues to look the other way while they do it.”

Verizon claims it has lost money on its copper wireline network for years, something the PSC seems to accept in its 2009 press release announcing rate increases:

The rate increases will generate much needed additional short-term revenues as the company faces the dual financial pressures created by competitive access line losses and the significant capital it is committing to its New York network. For 2008, Verizon reported an overall intrastate return of negative 6.7 percent and a return on common equity of negative 48.66 percent. The current trend in the market is toward bundled service offerings, and Verizon believes the proposed price changes to its message rate residential service will encourage the migration of customers towards higher-value service bundles.

That migration costs New York ratepayers even more for telephone service. Verizon’s website prompts customers seeking new landline service to bundle a package of long distance discounts and calling features that costs in excess of $50 a month before taxes, fees, and surcharges. Bundling broadband costs even more. Verizon does not tell customers ordering online they qualify for a bare bones landline with no calling features and pay-per-call billing for less than half the cost of Verizon’s recommended bundle.

Verizon's discount calling program "Message Rate B" is only available to Washington, D.C. residents who have been threatened with final disconnection by Verizon.

This Verizon discount calling program known as “Message Rate B” is only available to Washington, D.C. residents who have been threatened with disconnection or have an outstanding balance owed to Verizon. It costs $7.29 a month and includes 75 local calls.

More than three dozen New York State legislators also question whether Verizon’s “losses” are actually the result of Verizon’s purposeful “misallocation of costs” — moving expenses to the landline business even if they were incurred to benefit Verizon’s more profitable wireless division.

“The result has been massive cost increases for consumers, especially for the garden-variety dial tone service at the bottom of the technological ladder,” argues their 2014 petition. “For example, in New York City […] since 2006 the price of residential ‘dial tone’ service (one line item on the bill) went up 84%, while other services, such as inside wire maintenance, went up 132%.”

The petitioners claim there is evidence to dispute Verizon’s assertion its legacy copper network is as big of a money loser as the company suggests, thanks to “cooking the books” with accounting tricks. The petitioners want the PSC to order a review of Verizon’s books to be certain consumers are not being defrauded or manipulated.

Verizon-Tax-Dodging-banner

Community leaders were arrested in 2013 during a protest outside Verizon’s NYC headquarters (at 140 West Street at the West Side Highway) to out the company for its history of avoiding taxes. (Image: Vocal NY)

From 2009-2013, Verizon New York reported losses of over $11 billion dollars, with an income tax benefit to Verizon Communications of $5 billion, and significant tax revenue losses for state, city and federal governments. Verizon New York has apparently paid no state, city or federal income tax for the last five years or more.

If Verizon is using accounting tricks to inflate the cost of legacy landline service while reducing costs to its wireless service, it could prove a win-win for Verizon and a lose-lose to ratepayers. Verizon could use its “losses” to argue for greater rate increases for landline customers while further reducing its tax obligations. On the wireless side, Verizon would enjoy praise from Wall Street analysts and shareholders pleased by the company’s apparently effective cost controls.

The best evidence of these techniques in action are the statements of company officials which suggest wireless costs are being paid by wireline customers.

Verizon’s chief financial officer, Fran Shammo, indicated to investors that Verizon wireline construction budgets are charged for expenses related to wireless service.

“The fact of the matter is wireline capital — and I won’t get the number but it’s pretty substantial — is being spent on the wireline side of the house to support the wireless growth,” Shammo told investors at Verizon at Goldman Sachs Communacopia Conference, Sept. 20, 2012. “So the IP backbone, the data transmission, fiber to the cell, that is all on the wireline books but it’s all being built for the wireless company.”

“It seems to me Verizon Wireless, already considered the Cadillac of wireless companies, doesn’t need a hidden subsidy from Verizon paid for by ratepayers all over the state,” Fred argues. “It seems very curious to me Verizon pioneered a large regional fiber optic upgrade that just a few years later it considers too costly to continue expanding, even as AT&T, Google, Comcast, and other companies are now entering the fiber business. A Public Service Commission that wants better broadband for New Yorkers ought to get to the bottom of this because it just doesn’t look right.”

CBS’ Idea of Choice: $5.99/Mo for CBS Library and Live Local CBS Station Streaming

broken bankThink you are already paying too much for cable television? If you thought Comcast charges too much, consider what CBS thinks is fair to charge for an on-demand library of CBS shows and a single live stream of your local CBS station – $5.99 a month.

Retransmission consent disputes are all about the money. As your local provider fights with a local station or cable network over their latest demand for more money, channels get dropped, providers get blamed and the content owners get richer when networks are restored.

One of the richest of all is CBS, which has told investors it plans to empty $2 billion from the pockets of American cable customers by the year 2020, up from $500 million in 2013. Not only will CBS demand new programming fees from its affiliates, it is also cajoling stations to demand not less than $1.75 a month from every cable subscriber for access to the local CBS over the air station.

Each time a retransmission consent contract comes up for renewal, cable operators know as certain as the sun will rise from the east that programmers will demand a healthy rate increase for the next contract period. That is why many cable companies now look to broadband for much of their future profits, because the TV business is getting very expensive when everyone has their hand out looking for more.

Some cable companies want an end to being stuck in the middle of these disputes and are supporting a plan to compel programmers like CBS, ESPN, TNT, HBO, and all the rest to publish a retail rate for their channel or network and let consumers decide whether it is worth the asking price.

cable-inflation-comparison

A proposal introduced last year called “Local Choice” would start the process with local television stations, which have demanded ever-higher carriage fees over the last 10 years, especially for network-affiliated stations.

Under the concept, customers would be given a choice of local stations by their provider. Theoretically, a customer could subscribe to CBS and ABC and tell NBC (and its local affiliate) to take a hike if they demanded too much. Another might be happy just paying for FOX and grab the rabbit ears for anything else they wanted to watch over the air for free.

Rockefeller

Rockefeller

No local station or network would voluntarily say goodbye to the golden goose that lays compulsory retransmission consent fees programmers currently collect from every cable subscriber, so last summer Congress proposed to mandate the concept in a clause of the Satellite Television Access and Viewer Rights Act (STAVRA).

Then Senate Commerce Committee Chairman Jay Rockefeller (D-W.V.) and Ranking Member John Thune (R-S.D.) beat the bipartisan drum loudly for change. But lobbyists also had drums. Rockefeller and Thune began wavering almost immediately.

“During the last month, Chairman Rockefeller and Ranking Member Thune have successfully begun a discussion on Local Choice, which would empower TV viewers, maintain our policy of broadcast localism, and ensure TV stations get fairly compensated for the retransmission of their signals,” read a joint statement issued last September. “Because it is a big and bold idea, Local Choice deserves more discussion and a full consideration by policymakers, and the committee may not have time to include it as part of STAVRA. Rockefeller and Thune are focused on passing STAVRA next week, and continuing to work with their colleagues on Local Choice.”

After the sudden insertion of Local Choice into a satellite television bill, an orange glow filled the night sky at 1771 N Street in Washington. It was Gordon Brown’s hair on fire. Brown is president and CEO of the National Association of Broadcasters (NAB), the very powerful lobby representing television stations and networks. But that night, he sounded exactly like a cable guy.

“NAB opposes this proposal because it eliminates the basic [cable] tier upon which millions rely for access to lifeline information,” Brown responded in a statement. “It proposes a broadcast a-la-carte scheme that will lead to higher prices and less program diversity. Furthermore, STAVRA appears to confer unfettered and unprecedented authority for government intervention into private marketplace negotiations.”

8679-2_NAB_logos_csThe cable industry has fought its own battle against a-la-carte on exactly the same ground Brown was now occupying.

Rockefeller later claimed he was only poking the Broadcast TV Bear to provoke a response, and he got one. The idea of Local Choice was stripped out of the bill by the fall. Rockefeller was reduced to saving face.

“What we wanted to do was introduce those ideas,” Rockefeller later told The Hill. “We made it sound like it was the focus of the bill, and K Street just went crazy, which is always good. But we knew that we’d have to take it out.”

Yes they did, after the NAB and their allies launched a major PR campaign against Local Choice, attracting over 130,000 comments against the plan.

Polka

Polka

But Rockefeller knew the idea was not going away.

“As people get a taste of being able to say ‘I only watch 10 channels so I should only pay for 10 channels,’ they’re going to love that. It’s going to spread like wildfire,” Rockefeller said.

Fast forward to this spring and it was back to business as usual. Retransmission consent disputes yanked several networks and stations off cable systems, providers mailed their annual rate increase notices, and the cable industry’s popularity and reputation with customers now rivaled ISIS.

Much of the collateral damage (apart from the collective emptying of your wallet) continues to be felt by America’s smallest cable operators that cannot negotiate for what passes as fair and reasonable programming rates from networks like ESPN and CBS. They cannot qualify for volume discounts that are so compelling, it drove AT&T (U-verse TV) into the arms of DirecTV just to get enough subscribers to knock a few more cents off the monthly price of regional sports channels. Only the biggest players in the game have the power and get the savings.

Matthew Polka, president of the American Cable Association (ACA), the other cable trade association representing the interests of small, often family owned cable systems, may not have the most power but he could have the strongest argument against the status quo. While the National Association of Broadcasters spent tens of thousands of dollars arguing today’s retransmission consent system works just fine, some of America’s smaller TV stations apparently didn’t read the NAB’s talking points.

GotchaThe “TV Station Group,” an informal collective of small market TV stations seeking a renewal of their carriage contract with DirecTV has been stonewalled by DirecTV for months. Last week, the station owners filed a complaint with the FCC asking them to stop or block AT&T’s merger with DirecTV until the satellite provider agreed to negotiate in good faith. It was clear from their filing DirecTV’s idea of negotiation is to send ‘take it or leave it’ nastygrams to the TV stations, serving markets like Spokane, Wash., and Yuma, Ariz. The only thing clear from the back and forth is that DirecTV has no doubt it can squash the stations like little bugs:

[W]e will not fall victim to your silly and obvious tactics to try to audit our retrans deals so you can see them all. We did not ask you to send to us your supposed rates, and your unilateral decision to do so doesn’t give you the right to see our other deals. But trust [us], no other station group – especially small groups such as Northwest – are paid by DIRECTV nearly what you have proposed, let alone what your sheet says.

A few weeks later, in response to another request from the broadcasters, DirecTV scolded them like a misbehaving teenager:

To repeat yet again, DIRECTV is not going to get pulled into your transparent trap to define what is ‘market’ by seeing our other deals. That is a precedent we will not set, including for NW. Please do not ask again.

“Judging from the TV stations’ complaint, it is evident that the retransmission consent market is broken and not working for these broadcasters any better than for cable operators,” Polka wrote in a press release issued today. “The time has come for these TV stations and others that have also filed good faith complaints to step out from NAB’s long shadow and join ACA in supporting efforts to update the rules and equip them with a strong referee that can help protect consumers and competition when negotiations break down.”

Polka continues to advocate letting customers decide whether they want to pay for local stations and cable networks. He argues CBS is already doing that today with its All Access program for broadband customers. In 94 markets, serving 64% of U.S. households, consumers can voluntarily subscribe to a live stream of their local CBS station and access a large 6,500 title on-demand library of CBS content for $5.99 a month.

cbs all accessNobody besides CBS knows how many have agreed to pay for All Access, but executives have told investors they are pleased with how the program is working. Still, Marc DeBevoise, executive vice president and general manager of CBS Digital Media at CBS Interactive knows he walks a very fine line promoting a product that could eventually undermine CBS’s current commitment to today’s retransmission consent system. DeBevoise told The Drum it does not market or intend to offer All Access as an alternative to the current cable model.

“At a high level, our strategy in launching CBS All Access was two-fold. First, to delivery our best fans access to the most CBS content we could on any device at any time – really delivering a service for our ‘superfans,'” DeBevoise said. “Additionally this service enables us to reach ‘cord-nevers’ that want to watch CBS content but don’t have a traditional cable package –a significant audience, with industry estimates ranging from 6.5 to 16 million households.”

But at $5.99 a month, that price may prove too steep for many casual viewers looking only for a show or two. Many viewers now rely on ad-supported Hulu, a project of the major American broadcast networks except CBS. Most Hulu customers watch their favorite network shows for free. The future possibility of paying $6 for each of four major American broadcast networks will likely be seen as out of line, especially by more casual viewers.

But for Polka and ACA member cable systems, the idea that customers will direct their All Access price shock wrath out on CBS, not the cable company, may be worth it.

John Malone Gets Puerto Rico Cable Monopoly: Liberty Global Takes Over Choice Cable

choice-300x169John Malone’s Liberty Global has bought out Puerto Rico’s second biggest cable television operator — Choice Cable TV — and will convert its customers to Liberty Cablevision of Puerto Rico.

Liberty joined Searchlight Capital Partners to close the $272.5 million purchase, which will make Liberty Puerto Rico’s largest cable company, passing more than one million homes and serving about 750,000 customers.

Liberty put $267.5 million of the purchase on its credit card, using debt borrowing from another Malone-controlled entity — Liberty Cablevision — to fund most of the deal. Liberty Global contributed just $10.2 million in equity and its partner Searchlight kicked in $6.8 million in equity.

The deal gives Malone’s company a total cable monopoly on the island. Choice Cable was the last standing cable operator not owned by Liberty, and served customers in western, southern, and central Puerto Rico. Choice itself consolidated several independent cable operators, including Cable TV Northwest (Aguadilla), Dom’s Cable TV (San Germán), Cablevision Mayaguez and TelePonce Cable TV. Now it has been consolidated itself.

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Choice Cable used to offer service in these Puerto Rican communities. Most of the rest of the island is served by Liberty Cablevision, which will now have a total cable monopoly across the unincorporated U.S. territory.

According to Liberty Global, the combined cable company will be expected to generate at least $390 million in annual revenue. If it doesn’t, rate increases could be on the way. Channel changes have already been introduced.

Liberty Puerto Rico added 18 new channels to the Choice Cable lineup at no extra cost. The Choice Pak package includes the new channels: AMC, AXS TV, beIN in Spanish and English, Cablevision, Disney Jr., Fox Sports 1, FX, Lifetime Real Women and PBS Kids. The Top Choice package will include: Crime & Investigation, DIY, Esquire, Fox Sports 2, History in Spanish, IFC, Military History and NBA TV.

But several other channels will be dropped: MTV, VH1 and Nickelodeon, Comedy Central, Spike, TV Land and Palladia HD. These Viacom-owned channels were discontinued last year by Liberty in a dispute over programming fees.

Liberty intends to offer up to 120/4Mbps Internet speeds, over 100 HD channels (352 channels total), and a “better balance of English and Spanish language networks” to current Choice customers.

Comcast System Audit in Tallahassee Takes Away Dozens of Channels It Will Restore for a Price

Phillip Dampier June 2, 2015 Comcast/Xfinity, Consumer News No Comments

comcast sucksA system audit by Comcast has created a firestorm across Florida’s Panhandle after customers lost dozens of channels while Comcast used it as an opportunity to sell customers more expensive television packages.

The cable company has been installing new technology that will help it verify customers are not getting channels or services they are not entitled to receive. After auditing subscribers in the Tallahassee area, many long-time Comcast customers found their TV lineup dramatically reduced, often with no warning.

“We found customers had access to channels not included with their service level,” Comcast spokeswoman Mindy Kramer told the Tallahassee Democrat. “Meaning, they were getting some channels that they had not subscribed to in their specific package.”

Comcast used the audit to upsell customers to a pricier package to get those missing channels back, annoying customers.

“During a recent system audit, it was discovered that you may be receiving channels that are not part of the video service to which you currently subscribe,” a Comcast letter said. It then gave an example of a channel the person had been receiving in error and suggested the customer upgrade if they wanted to continue receiving the same service.

“We apologize for any inconvenience this change may cause,” the letter said. “We appreciate your business and thank you for being a loyal Comcast customer.”

comcast flaNumerous Tallahassee customers contacted the newspaper and local media outlets to complain they lost dozens of channels without notice, many they had received for years. More recent subscribers also discovered their packages were suddenly much smaller.

Among seniors, the loss of Turner Classic Movies brought the most complaints. Customers who had received the network erroneously as part of a Digital Starter TV package ($43.45-68.95/mo) were told they must upgrade to Digital Premiere service to get that single channel back. That represents a rate increase of $22.94-47.54 a month, depending on the area. Digital Premiere costs $90.99-$131.99/mo., according to Comcast’s website.

Ron Crolla ended up paying a promotional rate increase of about $20 a month to restore his 85-year-old father’s Comcast service in a Tallahassee assisted living facility. Crolla said Comcast dropped about half of his father’s TV channels and did the same for many others in the same facility.

“The TV is his primary form of entertainment; he can’t drive, he can’t walk much,” Crolla told the newspaper. “It just seems all underhanded,” he said. “It just seemed like a crappy thing to do.”

Others thought about the same, judging from the newspaper’s Facebook page, overwhelmed with so many complaints about Comcast, a reporter covered the angry responses in another story:

tallahassee-democratMan, do people hate Comcast.

I can say that because that’s what many people told me this week, after a story ran in this newspaper about Comcast stripping cable customers of channels they weren’t paying for.

Dozens of emails and hundreds of Facebook and online comments came in hot. Most people shared their stories in gritty detail, breaking down their channel line-ups, what they paid and when. Some even passed on the name of the customer service representative they were dealing with, others just spun into a tirade.

People freely tossed out words like “furious,” “worst,” “sucks,” “hate” and others not fit for print. Something was triggered. People were pouring their hearts out in emails. It was personal. They were feeding off each other, finding solace in having a common enemy.

For many, it wasn’t about justifying the fairness of getting the extra channels for free, it was about Comcast’s method of ferreting out customers and dropping the channels with what many claim was no warning.

“If they wrote me a letter and told me I was getting extra channels for free, I probably wouldn’t even realize it because Comcast’s packages and lineups are so confusing,” said Tallahassee resident and Stop the Cap! reader Neil. “The classy way to handle it would be Comcast admitting it was entirely at fault and offering a special deal to keep the channels on at their wholesale cost for 6-12 months. I don’t want them to have to pay for something I am getting for free, but they decided to profit from their mistake at the customer’s expense. That is why Comcast is so despised around here. It is always an angle with them to get more money. If I make a mistake, I own up to it. If they make a mistake, they want to bill me for it.”

Comcast Raising Rates July 1st; Higher Cable TV Surcharges, $3 More for Double-Play Broadband/TV Package

Phillip Dampier May 26, 2015 Comcast/Xfinity, Consumer News 7 Comments

comcastJust in time for the summer fireworks, Comcast’s own rate explosion may be arriving in your mailbox. The cable company is boosting rates on cable television and broadband service in several regions, including higher Broadcast TV surcharges and, for some, the introduction of a new compulsory sports programming fee. Comcast customers shared their rate increase letter with Broadband Reports.

The original notification letter was littered with grammatical and spelling errors and obviously was never proofread. Maybe they are using the extra money to hire someone to help out with that. We’ve translated the text into the English language:

At Comcast, we are committed to constantly improving your entertainment and communications experience, and we continue to invest in making your services even better. Due to increases we incur in programming and other business costs, we periodically need to adjust our prices as we make these and other investments.

Starting on July 1, 2015, the prices of select XFINITY TV and Internet services and equipment will change. We’ve included the changes in this notice. Among these price changes, we have itemized a Regional Sports fee for customers receiving Digital Starter service tiers and above to offset the rising costs of distributing regional sports networks.

In the Atlanta area, a sample of rate changes include: a Limited Basic rate hike between $1-3 a month, a Standard Cable increase of $1 a month, a $2 hike in HD DVR Service (was $8, soon to be $10), a $1 Regional Sports fee, a $1.75 a month increase in the Broadcast TV Fee (this varies widely in different Comcast markets), and a $3 increase in the cost of Blast! With XFINITY TV or Voice Service (was $67.95, now $70.95). The modem rental fee remains unchanged at $10/mo.

Rates are unaffected for customers on term contracts or promotions until those plans expire. It will also not affect customers who have previously received a notification of a rate hike during 2015.

Analysis: Charter Communications Will Acquire Time Warner Cable/Bright House – What It Means for You

charter twc bhAs expected, Charter Communications formally announced its acquisition of Time Warner Cable and Bright House Networks in a deal worth, including debt, $78.7 billion.

The deal brings Dr. John Malone, a cable magnate during the 80s and 90s, back into the top echelon of cable providers. Malone orchestrated today’s deal as part of his plan to dramatically consolidate the American cable industry. Malone’s Liberty Broadband Corp. assisted in pushing the deal across the finish line with an extra $5 billion (supplied by three hedge funds) in Charter stock purchases.

The companies expect to win regulator approval and close the deal by the end of 2015.

“No one has ever had a better sense of the multichannel world than John [Malone],” Leo Hindery, a veteran cable-industry executive, told the Wall Street Journal. “Obviously he sees in Charter and Time Warner Cable a way to perpetuate a legacy that is unrivaled.”

But the man who may have made today’s deal ultimately possible was FCC chairman Tom Wheeler. Last week, he personally called cable executives at Charter and Time Warner Cable to reassure them the FCC was not against all cable mergers just because it rejected one involving Comcast and Time Warner Cable.

But Wheeler warned he would only approve deals that were in the public interest.

“In applying the public interest test, an absence of harm is not sufficient,” Mr. Wheeler said.

Consumer groups are wary.

“The cable platform is quickly becoming America’s local monopoly broadband infrastructure,” said Free Press Research Director S. Derek Turner. “Charter will have a tough time making a credible argument that consolidating local monopoly power on a nationwide basis will benefit consumers. Indeed, the issue of the cable industry’s power to harm online video competition, which is what ultimately sank Comcast’s consolidation plans, are very much at play in this deal.”

“Ultimately, this merger is yet another example of the poor incentives Wall Street’s quarterly-result mentality creates,” Turner added. “Charter would rather take on an enormous amount of debt to pay a premium for Time Warner Cable than build fiber infrastructure, improve service for its existing customers or bring competition into new communities.”

new charter

http://www.phillipdampier.com/video/Bloomberg Inside the Charter Plan to Buy Time Warner Cable 5-26-15.flv

A panel of Wall Street analysts discusses the chances for Charter’s plan to buy Time Warner Cable and Bright House Networks. Some analysts continue to frame regulator approval over video programming costs, while others argue broadband is the key issue the FCC and Justice Department will consider when reviewing the merger. From Bloomberg TV. (5:36)

A heavily indebted Charter Communications will not own the combined entity free and clear. At the close of the deal, Time Warner Cable shareholders will own up to 44% of the new company, Liberty Broadband up to 20%, Advance/Newhouse (Bright House) up to 14%. Charter itself will own just 22%, but will be able to leverage voting control over the entity with the help of Malone’s Liberty, which will get almost 25% of the voting power. That will give Charter just enough of a combined edge to control the destiny of “New Charter.”

As with the aborted deal with Comcast, lucrative golden parachutes are expected for Time Warner’s top executives who will be departing if the deal wins approval. In their place will be Charter Communications CEO Thomas Rutledge and a board compromised of 13 directors (including Rutledge himself). Seven directors will be appointed by independent directors serving on Charter’s board, two designated by Advance/Newhouse and three from Liberty Broadband, again giving Rutledge and Malone effective control.

Current Time Warner Cable and Bright House Networks customers will see major changes if Charter follows through on its commitment to bring Charter’s way of doing business to both operators.

No More Analog Television

all digitalCharter told investors at today’s merger announcement it will accelerate the removal of all analog television signals on TWC and Bright House cable TV lineups to free capacity for faster Internet products, more HD channels, and “other advanced products.”

Time Warner Cable CEO Rob Marcus told investors earlier this month TWC was already well-positioned with excess spectrum from moving lesser-watched analog channels to digital service and using “Switched Digital Video,” a technology that conserves bandwidth by only sending certain cable channels into neighborhoods where customers are actively watching them. This allowed Time Warner Cable customers to avoid renting a cable box for lesser-watched, cable-connected televisions in the home.

Charter’s plan requires a cable box on every connected television, at an added cost. The standard lease rate for the digital decoder box is $6.99 per month, and those customers on the lowest basic tier will likely receive at least two devices for up to two years for free, or five years for customers on Medicaid. Customers who subscribe to higher tiers of service or premium channels may receive only one device for free for one year before the monthly lease rate applies. For a home with an average of three connected televisions, this will eventually cost an extra $21 a month. DVR boxes cost considerably more.

No More Modem Lease Fee, But Only Two Choices for Internet Service

The good news is Charter does not apply any modem lease fees and there is a good chance if you already purchased your own modem, Charter will continue to let you use it. The bad news is that if you were used to sticking with a lower-speed broadband tier to save money, those days are likely coming to an end. Charter’s “simplified” menu of broadband options cuts Time Warner’s six choices and Bright House’s five options to just two:

  • 60/4Mbps for Spectrum Internet ($59.99)
  • 100/5Mbps for Internet Ultra ($109.99)

Charter_Spectrum_Mobile_Internet-finalThis is likely to be a red flag for regulators concerned about broadband affordability. Although it is likely Charter may offer concessions by grandfathering existing Time Warner Cable and Bright House customers under their current plans, Charter has nothing comparable to Time Warner’s “Everyday Low Price Internet” for $14.99 a month or a 6Mbps Basic broadband alternative far less expensive than Charter’s entry-level Internet tier. Bright House customers are not likely to experience something similar. The entry-level 15Mbps broadband-only plan is $65 a month without a promotion, according to Bright House.

Charter is rumored to be testing speed boosts for those two tiers for deployment in areas where they face fiber competitors. The first phase would raise Spectrum speeds to 100/25Mbps and Ultra to 300/50Mbps with plans to further increase speeds when DOCSIS 3.1 arrives — likely to 300/50Mbps for Spectrum and 500/300 for Ultra, at least where Google Fiber, U-verse with GigaPower, and Verizon FiOS offers competition.

Recently, Charter has followed Time Warner Cable’s marketing script and is actively promoting the fact the company has no data caps on broadband service, but Charter had a history of loosely enforced “soft caps” for several years in the recent past, so we’re not convinced data caps are gone for good at Charter.

Pricing & Service

billCharter enjoys a higher rate of revenue per customer than either Time Warner or Bright House, which is a sign customers are paying more. It is likely Charter’s reduced menu of choices is responsible for this. Although customers do get a better advertised level of service, they are paying a higher price for it, with no downgrade options. Ancillary equipment rental fees for television set-top boxes are also a likely culprit.

Charter also tells investors its merger with Time Warner and Bright House will bring “manageable promotional rate step-ups and rate discipline” to both companies. That means Charter will likely be less generous offering promotions to new and existing customers. Like Time Warner and Bright House, Charter will gradually raise rates on customers coming off a promotion until they eventually reset a customer’s rates to the regular price. But while Time Warner, in particular, was receptive to putting complaining customers back on aggressively priced promotions after an old promotion ended, Charter is not.

Charter customers tell us the company’s customer service department is notoriously inconsistent and promotional rates and offers can vary wildly. For some, Charter only got aggressive on price after they turned in their cable equipment and closed their accounts.

As far as service is concerned, CEO Thomas Rutledge has managed significant improvements while at Charter. What used to rival Mediacom in Consumer Reports’ annual ranking of the worst cable companies in America is now ranked number nine (Bright House took fourth place, Time Warner Cable: 12th).

But the presence of Malone in this deal, even peripherally, is a major concern. Malone-run cable companies are notorious for massive rate increases and poor customer service. Sen. Al Gore routinely called his leadership style of Tele-Communications, Inc. (TCI), since sold to Comcast, the Darth Vader of a cable Cosa Nostra and Sen. Daniel Inouye from Hawaii once remarked in a Senate oversight hearing that Malone’s executives were a “bunch of thugs.”

http://www.phillipdampier.com/video/Bloomberg Charter CEO Comfortable With Price Paid for Time Warner 5-26-15.flv

Watch Charter Communications CEO Thomas Rutledge stumble his way through an answer to a simple question: What are the public benefits of your merger with Time Warner Cable that the deal with Comcast didn’t offer? Did you like his answer? (5:28)

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  • Phillip Dampier: I agree. We successfully fought off usage caps with a concentrated campaign directed at both Frontier Communications and Time Warner Cable. Both compa...
  • Phillip Dampier: Just a side note for information purposes: AT&T only enforces its usage caps on DSL customers. To date, I know of no one actually penalized for exceed...
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