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Charter-Time Warner Cable-Bright House Merger Likely Stalled Until Next June

charter twc bhAny final approval of Charter Communication’s planned acquisition of Time Warner Cable and Bright House Networks will likely not come before next summer, as regulators in California decide to take a closer look at the blockbuster merger deal that would make Charter the second largest cable company in the country.

An administrative law judge is contemplating the merger’s impact on California, and a decision is unlikely to come before May 2016, with a final vote of the California Public Utilities Commission tentatively scheduled for June 16th. The judge agreed with consumer groups that the deal warrants evidentiary hearings — a sign the deal deserves additional scrutiny.

New York State’s Public Service Commission is also still reviewing the transaction, although it is expected to render a decision within the next few months. On the federal level, the FCC has also not held back, recently requesting answers to a number of questions regarding John Malone’s involvement in the future of “New Charter.” Malone remains Charter’s biggest single shareholder and could wield considerable control over New Charter’s operations. Considering Malone’s long history of antagonizing customers and engaging in what lawmakers called anti-competitive behavior during his realm at Tele-Communications, Inc. (TCI), regulators may not want to see history repeat itself.

What was originally anticipated by industry observers to be an ‘easy approval,’ is now looking more like Comcast’s failed bid for Time Warner Cable, as regulators seem to be in no hurry to give Charter’s deal a green light.

If regulators do ultimately approve the deal, it is likely to come with a number of conditions designed to at least temporarily protect consumers and competitors. Stop the Cap! argued in filings with state and federal regulators Charter’s proposal was uncompelling and consumers were unlikely to benefit from the deal. Time Warner Cable’s ongoing Maxx upgrade program delivers faster Internet speeds and better service than Charter’s more modest proposal offering upgrades up to 100Mbps. Time Warner Cable Maxx offers customers up to 300Mbps broadband for the price the company now charges for 50Mbps.

Bradford County, Pa. Complains About Poor Service, Frontier Sends ‘Cease & Desist’ Letter

The slow lane

The best way Frontier Communications believes it can resolve service problems in Pennsylvania is to threaten those complaining with a cease and desist letter that accuses the complainant of misrepresenting Frontier’s excellent service.

Bradford County, Pa. officials learned this first hand when Commissioner Darryl Miller wrote to Frontier alerting them that service outages in northeastern Pennsylvania are becoming a public safety issue. The company responded with a letter warning the commissioner to end the criticism or else.

“We’re simply looking for answers,” Commissioner Miller told WNEP-TV’s investigations reporter Dave Bohman. Miller adds he thinks it’s heavy-handed to use the words, “cease and desist.”

Miller isn’t the only one looking for answers. WNEP interviewed Susan Moore, who lives alone in the rural community of Orwell. Her phone service went out of service at least once a week over the summer.

“I’ve got a lot of health issues,” she told the TV station. The implications of not having landline service became all too clear to Moore in August when she needed to send for an ambulance.

Bradford County, Pa.

Bradford County, Pa.

Moore pressed her lifeline call alert button which relies on Frontier phone service to reach medical aid in case she falls and cannot get up or has a medical emergency. Nothing happened. Her phone service was out again.

“Without the phone service, my Life Alert doesn’t work,” Moore said. “That’s when I decided, as much pain as I was in, I got in a car and drove 20 miles to get to a hospital.”

Bradford County officials hear stories like Moore’s so often, they now eclipse complaints about potholes and taxes.

The problems affect both traditional landline dial tone service and DSL. If outages are not the subject of the complaint, slow and unresponsive Internet access usually is. Some customers were told Frontier oversold its DSL service in Bradford County and the company is waiting for federal broadband subsidies to improve service in the area.

Frontier Communications vice president Elena Kilpatrick said Frontier will spend part of a $2 million broadband improvement subsidy to deliver better service in Bradford County over the next six years. At the same time Frontier is tapping a ratepayer-funded subsidy to improve its existing service, the company is spending $10.5 billion of its own money to acquire Verizon landline infrastructure and customers in Florida, Texas, and California.

Despite the fact it will take up to six years to fully spend the subsidy, Kilpatrick claims the company has already upgraded phone and Internet service and fixed several problems reported by customers. She defended the company’s use of a threatening “cease and desist” letter sent to Commissioner Miller, claiming Frontier wanted the “misrepresentation of the facts” to stop.

Despite Kilpatrick’s claims, the complaints keep rolling in.

Randy, a Frontier customer in Bradford County reports he endures Frontier outages just about every Saturday since October, despite repeated service calls. Janise Groover wrote a Frontier technician tried to blame cobwebs for interfering with her Wi-Fi signals and poor DSL speeds — problems that are still unresolved — for which she pays Frontier $103 a month. Janice Bellinger complained her Frontier DSL connection drops “three or four times a day.” Customers in Monroe, Luzerne and Sullivan counties echoed Frontier service is dreadful in their areas as well.

Customers experiencing problems with their phone service in Pennsylvania can file an informal complaint with the state Public Utilities Commission and the FCC.

http://www.phillipdampier.com/video/WNEP Scranton Frontier Service Problems 11-16-15.mp4

WNEP in Scranton reports Frontier’s solution to a county commissioner’s complaints about service was to send him a “cease and desist” letter. (3:16)

Frontier Makes Excuses for Customer Losses: People Moved Away

frontierFrontier Communications continues to face challenges keeping customers in its legacy copper wire service areas, where only modest investments in network upgrades have proved insufficient to stop customers shopping around for better service.

Company officials reported a loss of about 30,000 residential customers during the last quarter, a drop of nearly 1% of its total customer base. Nearly 2% of Frontier’s business customers also took their business elsewhere, leaving the company with 3.1 million remaining residential customers and 294,000 business customers.

Frontier CEO Dan McCarthy blamed many of the customer losses on customers moving.

“During the summer, we do tend to see an uptick in customer [losses] that might have double play and in some cases triple play, as they move or make their decisions about moving their homes to a different location,” McCarthy said, claiming that most of Frontier’s losses overall came from voice-only customers.

As Frontier expands rural broadband opportunities, the phone company is still adding Internet customers, picking up a net gain of 27,200 broadband accounts. The company depends heavily on broadband to replace revenue lost from landline disconnects.

“We continue to see more customers choose higher-speed broadband products,” McCarthy said on a conference call to investors earlier today. “In the third quarter, 47% of the broadband activity was above the basic speed tier of 6Mbps. More than 70% of our residential broadband customers are still utilizing our basic speed tier, so we have substantial opportunity to improve our average revenue per customer as they upgrade their service.”

McCarthy offered no statistics about how many of Frontier’s DSL customers can substantially upgrade their speeds using Frontier’s existing infrastructure. Many Frontier broadband customers have complained their speeds reflect the maximum capacity of Frontier’s network in the immediate area, and many claim they do not consistently receive the speed level Frontier advertises.

Service is appreciably better in areas upgraded before being acquired by Frontier. McCarthy said some areas of Connecticut, acquired from AT&T, are now able to get speed “in excess of 100Mbps over our copper infrastructure.”

“Over time, we will be expanding the technology we use for 100Mbps in Connecticut to more of our markets elsewhere,” McCarthy promised. “In our FiOS markets, we already offer speed up to one gigabit and we have seen the benefit of offering these higher speeds as customers choose speed tiers to match their lifestyle choices.”

Frontier also separately notified the Federal Communications Commission it has no immediate plans to slap usage caps or metered service on customers.

“Frontier does not apply usage-based pricing to any of its broadband offerings,” Frontier said in an FCC filing. “Frontier has no plans at this time to offer a metered broadband service. We continue to monitor the market and continue to consider a usage-based offering as an option.”

Frontier suggested several factors would be considered when discussing usage-based billing: “the FCC’s Open Internet rules, policies of other companies, consumer demand, network capacity, and cost, among other factors.”

N.Y. City Council Investigates Verizon Foot-Dragging FiOS, Possible Contract Violations

fios_logo182More than 100,000 Verizon customers in New York City asking for FiOS fiber optic service are still waiting — 75% of them for more than a year — for a service Verizon promised would be available to every city resident by 2014.

In many of those cases, Verizon gave customers nothing but excuses and false information, sometimes in apparent violation of Verizon’s contract with the City of New York.

That was the opening contention of Vincent J. Gentile, chairman of the New York City Council’s Committee on Oversight and Investigations, in a four and a half hour-long hearing on Verizon FiOS availability held Oct. 14.

City officials are frustrated with Verizon’s performance under its FiOS franchise. Complaints about service availability have persisted for years and Mayor Bill de Blasio has been critical of Verizon’s foot-dragging to make fiber service available to every New Yorker that wants the service. As little as 30 minutes before the hearing, complaints continued to reach public officials from customers being told FiOS was not available. In fact, many were instead steered to a Verizon package that bundled satellite television instead of fiber optics.

special reportNew York City is Verizon’s largest market for FiOS fiber optic service. Verizon’s Leecia Eve, vice president of government affairs for the Tri-State Region, claimed the company has invested more than $3 billion upgrading New York City for fiber service and took umbrage at suggestions the company was reneging on its commitments, telling committee members Verizon fulfilled its FiOS commitments “one thousand percent.”

Such claims cause Verizon FiOS-less customers across New York City to bristle. In August, the New York Times reported Barbara Cooke-Johnson, a resident on Putnam Avenue in Bedford-Stuyvesant, Brooklyn had waited for two years for Verizon to reach her block. She isn’t alone. City Council members have been inundated with complaints from residents unable to get FiOS service, even after placing orders well over a year ago.

“For years, I have heard complaints from residents in my district, who have attempted to sign on to the Verizon FiOS service, but learned their area did not provide coverage, “said council member Annabel Palma, who represents the neighborhoods of Parkchester, Soundview, Castle Hill, Clason Point and Harding Park in the Bronx. “New Yorkers need affordable and reliable high-speed broadband access throughout all the five boroughs, but especially in the Bronx.”

Several council members blamed the prior Bloomberg Administration for negotiating a broadly Verizon favorable contract that maintained a largely hands-off policy on oversight of the company’s fiber optic deployment, with few penalties at the city’s disposal to keep Verizon to its word. The Bloomberg Administrated granted multiple requests made by Verizon between 2008-2011 to reduce the performance bond the company agreed to secure as an assurance to city officials it would meet the terms of its franchise agreement.

Kevin Service (L), vice president, region operations - New York City and Leecia Eve, vice president of government affairs - New York, New Jersey, and Connecticut testify before the City Council of New York.

Kevin Service (L), vice president, region operations – New York City and Leecia Eve (R), vice president of government affairs – New York, New Jersey, and Connecticut testify before the City Council of New York.

Verizon’s agreement with the city required it to “pass all households” with fiber optic service within the franchise service area by June 30, 2014. Verizon blamed Hurricane Irene and Superstorm Sandy for missing that deadline, but claims it finally achieved it in October 2014.

Councilman Gentile pressed Service for more information about the gap between what city officials consider to be “homes passed” and what Verizon considers that term to mean.

“We do consider it to be passed if we’re in the realm of ‘substantial fiber placement,'” responded Kevin Service, Verizon’s vice president of region operations – New York City. “I’m not a lawyer, so here is what I would say. We’ve passed a household if when we get a request for service and have the necessary rights of way, what we have left to do does not create a delay in bringing service to that customer. Under that ‘Kevin Service definition,’ we’ve passed every household in New York City.”

Gentile countered that Verizon officials sent documents to the city admitting 23.6% of New York City blocks that Verizon deems “passed” have no buildings with Verizon FiOS service installed.

Much of the dispute between Verizon and New York City officials now centers on a widening gap between the city’s definition of “homes passed” and the one Verizon is now relying on to defend itself against charges it is violating its agreement.

Both sides agree nobody bothered to precisely define “premises passed” in the contract. The term is commonly used by the cable industry to reflect availability of cable service. Nielsen Media, among others, defines it to mean, “households with the ability to receive a particular cable service, and which may opt to subscribe.” The Fiber to the Home Council offers a more detailed definition, one used by the city’s auditors reviewing Verizon’s performance:

“The number of “Homes Passed” is the potential number of premises to which an operator has capability to connect in a service area, but the premises may or may not be connected to the network. This definition excludes premises that cannot be connected without further installation of substantial cable plant such as feeder and distribution cable (fiber) to reach the area in which a potential subscriber is located.” (emphasis added).

Verizon dismissed the Fiber to the Home Council’s definition as one prepared only “for purposes of its ‘market research,'” and claimed it had no standing because the organization is not party to the agreement between Verizon and the city.

Verizon used a dictionary to create its own definition of the phrase in a rebuttal to the city audit:

“General dictionary definitions of the term refer to going by, past, beyond, or through a place (such as a building), and include no requirement as to how close a place must be approached in order to constitute a “passage.” Thus, there is nothing inherent in the word itself that would require Verizon to run cable directly in front of every building in the City in order to “pass” those buildings.”

NYCDOITT.svg“The argument that ‘passing’ a premises with fiber optic cable includes no requirement of any proximity to that premises is manifestly untenable,” city auditors concluded.

If the dispute ends up in court, Verizon’s definition loophole may not prove much of a defense when a judge reviews the rest of the agreement. Whether Verizon has fiber facilities sufficiently nearby or not may not matter once a customer requests service. Under the terms of the contract, Verizon generally has to deliver FiOS within 6-12 months of a customer request, and there is ample evidence Verizon is not meeting that obligation.

The auditors found Verizon customer service agents were quick to tell customers FiOS service was unavailable to them and often failed to offer customers a “non-standard installation” (NSI), which starts the 6-12 month deadline to provide service. Even requesting an NSI was no guarantee of getting fiber service. Auditors found 74.68% of the 41,928 customer requests for an NSI were still outstanding as of Dec. 31, 2014, more than 12 months after the order was taken.

A raucous audience in the hearing room frequently jeered Verizon’s claims it was in full compliance with its franchise contract. Verizon officials defended the company’s performance, noting it was the first in New York City to offer service to every borough to compete with Cablevision and Time Warner Cable (and their predecessors) — cable companies that built their networks under the protection of a monopoly and given more favorable terms to gradually expand their infrastructure over a decade or more. Eve said Verizon achieved success despite the obstacles that have arisen, including objections from some building owners that have refused to admit Verizon technicians to install FiOS service for tenants.

Service admitted Verizon currently has a backlog of at least 100,000 requests for Verizon FiOS service in the city it has not yet met. Service blamed that number mostly on building access disputes, an excuse that allowed him to insist Verizon was in compliance with its agreement.

Service also suggested the city’s Department of Information Technology and Telecommunications (DoITT – pronounced “Do-It”) and some of the company’s unions have sought to muddy the waters by unilaterally redefining Verizon’s contract with New York.

http://phillipdampier.com/video/WNBC New York Verizon FiOS Not Installing High-Speed Internet for 25 Percent of NYers Who Want It 7-15-15.flv

WNBC-TV in New York reported 25% of New Yorkers seeking Verizon FiOS Internet were turned away by the company. [Report originally aired: July 15, 2015] (2:01)

“To simplify the issue, the pass all homes obligation involves strategically placing fiber optic cables throughout the streets of New York City such that the fiber optic network can then be extended into specific buildings upon request, provided that we can get access to the building and into that building,” Service said. “It does not mean, contrary to some public confusion, that Verizon’s network would have been extended into every New York City household. Where we have not brought our FiOS service to a customer that has requested it, it’s because we haven’t yet secured all the necessary rights of way to do so.”

Verizon workers install fiber optic cables in New York City.

Verizon workers install fiber optic cables in New York City.

“I think it’s important to note that the city’s franchise agreements with Cablevision and Time Warner included an express obligation to run facilities in front of each building in the city,” Service reminded the audience. “In stark contrast, Verizon’s agreement does not include that language. This is no accident. The parties recognized while the agreement was being negotiated that Verizon would deploy its all-fiber network as an upgrade to its existing copper network, running the fiber along the same routes as it historically used to serve the buildings in the city. […] Although there are now attempts by some to unilaterally and retroactively revise the intent and meaning of the agreement, the word ‘passed’ was always understood and used by Verizon and the city in that context.”

Service explained getting FiOS service involves a multi-step process and it is not as simple as passing a fiber cable through a neighborhood.

“In order to fulfill [our] obligation [to provide FiOS] to a resident in an [multi-dwelling unit] not only does the building have to be passed by Verizon’s facilities, as all buildings are today, it also must be network created,” Service said. “In other words, the deployed fiber used to serve the building must be extended into the building from the street or backyard, or is frequently the case, through adjoining buildings to provide service to the individual units in the building.”

Customers can expect delays if they are the first in a building to request FiOS service.

“When a single resident requests service, it is Verizon’s policy to make the entire building ready for FiOS service. After that is complete, subsequent requests for service will no longer be considered NSI requests. Instead they are standard installation requests,” Service added, noting this is more efficient than simply provisioning service one customer at a time.

Union members who work for Verizon scoffed at Service’s explanations, accusing the company of systematically cutting back on FiOS spending and diverting money into its more profitable Verizon Wireless operation.

“They tend to blame landlords,” CWA representative Pete Sikora told Gothamist. “They tend to blame everyone but themselves. They didn’t have a gun held to their heads; they signed that agreement willingly, because they want to make more money. What they’re doing here is effectively picking and choosing which streets to serve.”

http://www.phillipdampier.com/video/CWA Verizon FiOS Broken Promises 10-13-15.mp4

The Communications Workers of America have begun running ads criticizing Verizon for failing to bring FiOS service to New Yorkers. (0:30)

Customers didn’t readily accept Verizon’s explanations either.

“As a board member of my co-op, I’ve been trying to get FIOS in our building for four years now,” wrote one Gothamist reader. “I’ve spoken with everybody at Verizon about this and the outcome has been that Verizon will wire the block and its buildings when Verizon feels like it.

Council member Brad Lander

Council member Brad Lander

Most of those seeking FiOS service and not getting it learn FiOS is “not available” from Verizon’s website or a customer service agent. When asked when the service might be available, it is common for representatives to answer they have no idea. Critics say that violates the terms of the contract, which requires Verizon to make a good faith effort to give an estimated wait time before an installation can be made. Service was on the defensive explaining why customers are routinely told no service is available.

“There is no area in the city [we do not service] and nobody should be told that,” Service said. “Having said that, we have 12,000 employees — we have a large employee body that we are constantly training and retraining and to the extent that they have told somebody that service is not available, that’s an indication that we have more to do in that area.”

“I must tell you that Councilman Lander just whispered in my ear that he was told 30 minutes ago that where he lives in Brooklyn is not serviced,” responded Councilman James Vacca.

Councilman Brad Lander, the deputy leader of policy, later confronted the two Verizon representatives about his own unsuccessful attempts to get FiOS service at his own home in Park Slope and questioned their solution to the problem.

“It sounds to me like you are saying the problem is not that FiOS is unavailable at my house, the problem is that Stacy [a Verizon customer service representative] didn’t say to me ‘Mr. Lander it’s available in your neighborhood, just not to you.'”

http://www.phillipdampier.com/video/Council Member Brad Lander Takes Verizon Apart.mp4

Council member Brad Lander shares his experience not being able to get FiOS service from Verizon at last week’s City Council hearing. (2:45)

Municipal Provider EPB Introduces Chattanooga to 10Gbps Residential Broadband: $299 a Month

nextnetThe first provider in the country to offer community-wide gigabit fiber broadband to residential customers today announced it would far surpass the rest of the marketplace with a new 10 gigabit broadband package dubbed NextNet, available throughout the Chattanooga, Tenn. service area of municipal utility EPB for $299 a month.

“Five years ago, Chattanooga and Hamilton County became the first in the United States to offer up to 1 Gig Internet speeds,” said Harold DePriest, president and CEO of EPB. “Today, we become the first community in the world capable of delivering up to 10 Gigs to all 170,000 households and businesses in our service area.”

Its largest competitor — Comcast, charges $299 for up to 2Gbps service in limited service areas, if the customer can wait 6-8 weeks for installation, can afford up to $1,000 in activation and installation fees, and can commit to a two-year contract with a steep early termination fee. EPB will offer its five-times-faster-than-Comcast service to any customer with no lengthy waiting period, no contract, and free installation.

EPB will leverage Alcatel-Lucent’s TWDM-PON broadband technology to deliver scalable fiber broadband, and is also introducing 5 and 10Gbps plans for small businesses and 3, 5, and 10Gbps plans for larger commercial customers. Customers will receive an ONT unit installed by technicians about two weeks before installation is complete. The box, about the size of a DVD player, is required to support the new high speeds. It is usually mounted on a wall near the computer.

“Chattanooga’s 10 Gig fiber optic network is a world-class platform for innovation,” DePriest said. “In recent years, the need for faster Internet speeds has increased rapidly. Chattanooga is the perfect place for companies to enhance their productivity today and test the applications everyone in the country will want tomorrow.”

Despite detractors that claim municipal/public broadband services are economic failures waiting to happen, EPB has delivered tangible economic benefits across the Chattanooga region and is now recognized internationally as one of the country’s most successful public broadband projects.

A study recently released by University of Tennessee at Chattanooga Finance professor Bento Lobo shows “the Gig Network” helped the Chattanooga area generate at least 2,800 new jobs and at least $865.3 million in economic and social benefits. The study also found the EPB smart grid, which is the cornerstone application of the utility’s community-wide fiber optic network, has allowed customers to avoid an estimated 124.7 million minutes of electric service interruptions by automatically re-routing power (often in less than a second) to prevent an outage or dramatically reduce outage duration.

EPB has proven so successful, it has attracted visitors from around the world to study how community fiber broadband can transform a local economy.

Comcast, Frontier: It’s Too ‘Hilly and Woodsy’ to Bring Broadband to Rural Connecticut

no signalAn aversion of open, hilly landscapes and trees is apparently responsible for keeping residents of rural Connecticut from getting broadband service from the state’s two dominant providers — Comcast and Frontier Communications.

In the Litchfield Hills of northwestern Connecticut, you can visit some of the state’s finest antique shops and Revolutionary War-era inns, tour vineyards and even establish roots in the Upper Naugatuck Valley in towns like Barkhamsted, Colebrook, Goshen, Hartland, Harwinton, Litchfield, Morris, New Hartford, Norfolk, Torrington, and Winchester. Just leave your cellphone, tablet, and personal computer behind because chances are good you will find yourself in a wireless dead spot and Internet-free zone.

Obtaining even a smidgen of cell phone service often means leaning out a second story window or worse, climbing the nearest church steeple. The wealthiest residents, often second-homeowners from New York or California, can afford to spend several thousand dollars to entice the cable company to extend a coaxial cable their way or buy commercial broadband service at eye-popping prices from Frontier Communications, which acquired AT&T’s wireline network in the state. But for many, dial-up Internet remains the only affordable or available option.

Despite the area’s significant number of high income residents ready and willing to pay for service, Comcast and Frontier blame hilly terrain and dense woods for staying away. Those excuses get little regard from residents who suggest it is all about the money, not the landscape.

Northwest Connecticut region is shown in green and the Litchfield Hills region in blue.

Broadband-challenged areas in northwest Connecticut are shown in green and the often “No signal” and “No Internet” Litchfield Hills region is shown in blue.

Despite the need for service, deregulation largely allows cable and phone companies to decide where to offer broadband service, and arguments about fulfilling a public need and performing a community service don’t get far with Wall Street and shareholders that constantly pressure companies to deliver profits, not expensive investments that may never pay off.

State Rep. Roberta Willis (D-Salisbury) told the Register Citizen News the status quo is not acceptable — telecommunications companies are not doing enough to build out their networks.

“You just can’t say it’s the topography and walk away,” she told the newspaper. “If electricity companies were deregulated like this there would be no electricity in my district.”

Comcast spokeswoman Laura Brubaker Crisco claims the company extended cable service nearly 62 miles in northwest Connecticut since 2005 (ten years ago) and completed nearly 100 projects extending fiber more than 10 miles in the past two years. But many of those projects overhauled Comcast’s existing middle-mile network and extended cable service to profitable new markets serving commercial customers, especially office parks and commercial storefronts. Comcast’s other priority was to reach new high-income residential developments being built as the area continues to grow. Rural customers who could not meet Comcast’s Return On Investment formula in 2005 are still unlikely to have service in 2015 unless population density increases in their immediate area.

Connecticut's effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Connecticut’s effort to extend gigabit fiber statewide is dismissed as a waste of money by incumbent cable operators.

Crisco admits Comcast does not wire low density areas and isn’t surprised other providers won’t either.

Frontier prefers to blame the area’s topography for keeping broadband out.

David Snyder, vice president for engineering for the east region of Frontier Communications, told the newspaper “it’s just natural the investment and the time become more challenging.”

Frontier does say it has expanded broadband to 40,000 additional households in Connecticut since taking over for AT&T a year ago. But nobody seems to know exactly who can get broadband in the state and who cannot. The have-nots are the most likely to complain, and those businesses that serve visitors are in peril of losing business without offering reasonable Wi-Fi or Internet access. Rural families with school-age children are also at risk from having their kids fall behind those that can get broadband.

Wireless Internet Service Providers, which offer long-range wireless broadband in rural areas, complain the federal government is wasting money on studies instead of helping to underwrite solutions that can quickly bring Internet access to the rural masses.

Others believe talking to Frontier and Comcast is futile. They prefer to follow the lead of western Massachusetts, where 24 small communities across the region have joined forces to build a public fiber to the home broadband network. One estimate suggests 22 Connecticut towns covering 200,000 residents could be reached with a bond-financed fiber network completed by 2018. That network would likely reach more unserved customers than Frontier or Comcast will elect to serve over the next three years combined.

A separate effort to establish gigabit fiber broadband across the state — the CT Gig Project — promptly ran into a buzzsaw of opposition, primarily from incumbent telecommunications companies that refuse to offer that service now. With a threat to current profitable business models, it was not unexpected to hear opposition from Paul Cianelli, CEO of the New England Cable & Telecom Association — a cable company lobbying group.

He called public broadband unnecessary and “potentially disastrous.” He wants assurances no government subsidies or loan guarantees are given to the project. He also said providing gigabit service was unnecessary and faster Internet speeds were not important to the majority of customers in the state. Public broadband proponents respond Cianelli should tell that to the residents of Litchfield Hills and other unserved and underserved communities.

AT&T Charges Customers $40 More for Gigabit Service In Cities Where Google Doesn’t Compete

In Bexar County, Texas Public Radio found only a small number of customers qualify for AT&T GigaPower service. (Image: TPR)

In Bexar County, Texas Public Radio found only a few customers (shown in green) qualify for AT&T GigaPower service. (Image: TPR)

AT&T charges customers $40 a month/$480 a year more for its U-verse with GigaPower gigabit broadband service in cities where it does not face direct competition with Google Fiber.

AT&T has announced six new cities will eventually get gigabit speed service, including Chicago, Atlanta, Nashville, Orlando, Miami and San Antonio. Whether customers will pay $70 or $110 for the same service depends entirely on one factor: Google Fiber.

The Consumerist notes communities with forthcoming competition from the search engine giant will pay $40 less for gigabit service from AT&T than communities without Google Fiber.

In San Antonio, Nashville, and Atlanta — all forthcoming Google Fiber cities, customers will pay AT&T $70 a month. In Google Fiberless Orlando, Chicago, and Miami, customers will pay $80 for a 300Mbps tier or $110 for 1,000Mbps service.

Although AT&T is usually the first to market 1,000Mbps service in its service areas, actually qualifying to buy the service is another hurdle customers have to overcome. In San Antonio, most customers will have to wait.

In an informal survey conducted by Texas Public Radio on social media, about 60 Bexar County residents checked to see if their home addresses could connect to AT&T’s GigaPower. Only 11 could, most in far west Bexar County beyond Leon Valley. Other limited service areas south of Live Oak also qualified. Most of the rest of metro San Antonio does not qualify for GigaPower and AT&T will not say when customers can get the service.

AT&T later admitted gigabit service was available in “parts” of San Antonio, Leon Valley, Live Oak, Selma, Schertz, Cibolo, as well as portions of New Braunfels, Medina, and unincorporated Bexar County.

u-verse gigapowerThe Consumerist writes AT&T is proving the importance of robust broadband competition. Communities that have it pay less and get quicker upgrades for faster Internet speeds. Those without pay AT&T a premium or are long way down on the upgrade list.

In the northeastern United States, now a no-go for Google Fiber, broadband is often a feast or famine proposition. Those served by Verizon FiOS in New York City also have the competing options of network-upgraded Cablevision or Time Warner Cable Maxx. Those in New York not served by FiOS have a much poorer choice of Time Warner Cable (up to 50/5Mbps) or <10Mbps DSL service from Verizon, Frontier, Windstream, and other phone companies. In Northern New England, Comcast routinely outclasses DSL service from FairPoint Communications, but significant parts of Vermont, New Hampshire, Maine, and western Massachusetts often have no broadband options at all.

http://www.phillipdampier.com/video/KSAT San Antonio GigaPower Internet coming to San Antonio 9-21-15.mp4

KSAT-TV in San Antonio covered AT&T’s launch of U-verse with GigaPower in San Antonio. As elsewhere, AT&T routinely invites city officials to share the good news with local residents. But it may take a year or more for the service to become available to everyone in the area. Even when it is, a snap poll conducted by KSAT found just over half of its viewers had no interest in getting gigabit service from AT&T. (1:51)

Stop the Cap!’s Formal Testimony to N.Y. PSC Opposing Charter/Time Warner Cable Merger

charter twc bhSTATE OF NEW YORK



Joint Petition of Charter Communications and Time

Warner Cable for Approval of a Transfer of Control

of Subsidiaries and Franchises, Pro Forma                                Case 15-M-0388

Reorganization, and Certain Financing Arrangements.                               


Statement of Opposition to Joint Petition and

Response to Redacted Comments of DPS Staff

Phillip M. Dampier, Director and Founder: Stop the Cap!

Rochester, New York

September 25, 2015

Stop the Cap! is a Rochester-based consumer group founded in 2008 to fight against the introduction of artificial limits on broadband usage (usage caps, consumption billing, speed throttling) and to promote better broadband speeds and service for consumers. Our group does not solicit or accept funding from lobbyists, companies, or others affiliated with the telecommunications industry. We are entirely supported by individual donors who share our views.


Our opposition to the Joint Petition is based on our belief it does not meet the “public interest”  test established in Section 222 of the New York Public Service law, and must therefore be denied.

For the sake of brevity, we wish to associate ourselves with most of the views of the DPS Staff contained in their redacted comments regarding this case, published on the DPS website on September 16, 2015. Most of our testimony will seek to expand on their findings or add additional information to the record for the Commission’s consideration.

As we stated in our remarks regarding the Comcast-Time Warner Cable merger, New York law obligates the applicant alone to demonstrate its proposal is in the public interest. If the Commission finds the application does not meet the public interest or provide sufficient public benefits, it should be rejected. The DPS staff has reported to you Charter Communications and Time Warner Cable have not met their burden. We agree.

The DPS staff then proposes a mitigation strategy in an effort to tip the balance in favor of the applicant. It remains our view it is not the Commission’s responsibility to help tip the balance in favor of an applicant that has failed to meet its burden.

Nevertheless, we offer the Commission our insight about Charter Communications, its proposals, and the DPS staff recommendations with the hope it will be useful to win commitments from Charter should the Commission choose to proceed with approval, enforcing modifications to deliver the public interest benefits consumers across New York tell us they actually want and need from their providers.


Phillip Dampier

Phillip Dampier

New York State, particularly across the upstate region, is not well positioned to take advantage of next generation broadband networks. Just two providers deliver telecommunications services to the majority of New York: Verizon Communications and Time Warner Cable. Although Frontier Communications and Cablevision also deliver service, their service areas are much smaller than the two dominant incumbents. The decisions Verizon and Time Warner Cable make about their investments in broadband and telephone service affect millions of New Yorkers.

Many New York residents have only one choice for Internet service that meets the Federal Communications Commission’s definition of broadband: 25Mbps download speed and at least 3Mbps upload speed.[1] In areas where Verizon FiOS is not available, Time Warner Cable is the only significant provider consistently providing service options at or above 25Mbps. The most common alternative is DSL, which rarely meets the FCC’s minimum definition of broadband.

With this in mind, the FCC reported 53 percent of rural Americans lack access to broadband service achieving speeds of 25Mbps or better. As much as 20 percent still lack access to broadband at speeds achieving the FCC’s old benchmark of 4Mbps. Upstate New York, in particular, is a long way away from achieving the goals of 100Mbps broadband set by Gov. Cuomo, unless you have access to a cable broadband provider.

In Rochester, the majority of residents have only one choice for a provider that meets the FCC’s definition of broadband: Time Warner Cable. While Frontier Communications has made investments to improve their wireline network, only a small minority of customers qualify for DSL service that can meet the FCC’s benchmarks.

While Verizon Communications has done an admirable job delivering its fiber to the home service FiOS to portions of New York, the company has suspended expansion of the service and has not even met its service obligations in cities like New York.[2]

Even more concerning is the fact none of the significant incumbent providers serving New Yorkers have expressed any interest in providing residential gigabit speed service. Google Fiber has not announced any expansion into New York State and other significant gigabit speed providers, including AT&T, do not provide wireline service in New York.

In contrast, in states including Texas, North Carolina, Georgia, Missouri, and Tennessee, many consumers have the option of choosing at least two gigabit service providers (Google or AT&T) as well as municipal or public broadband providers such as EPB, which serves the Chattanooga area. Time Warner Cable has focused much of its upgrade activity on these communities to remain competitive, delivering 300Mbps broadband service for the price it used to charge for 50Mbps speeds.

In western New York, the fastest broadband speed most residential customers can buy is just 50Mbps. Charter Communications proposes to increase that speed in some areas to a maximum of 100Mbps, along with their entry level 60Mbps plan. Although helpful, that offers little solace to residents and small businesses that would like the option to purchase considerably faster Internet speeds that are now becoming available in other parts of the country.

The Commission’s decision will have an enormous impact on what kinds of telecommunications services will be available to New Yorkers for years to come. Verizon has shown no interest in resuming fiber service upgrades, so most customers will continue to purchase Internet access from the incumbent cable operator to obtain the broadband speeds they require. Today that usually means Time Warner Cable. Sometime next year, that could be Charter Communications.

Time Warner Cable vs. Charter Communications

The most important question before the Commission is which cable operator is better positioned to deliver the services customers in this state want and/or need. We argue that operator is Time Warner Cable, not Charter Communications.

Since the termination of the Comcast-Time Warner Cable merger, Time Warner Cable has responsibly invested in their infrastructure without assuming an irresponsible amount of debt.

twc maxxTime Warner Cable CEO Robert Marcus reported significant progress in their first quarter 2015 report to shareholders and customers, despite the distraction of the Comcast merger[3]:

Over the past 16 months, we’ve made significant investments to improve our customers’ experience:

  • Investing more than $5.2 billion to, among other things, improve the reliability of our network and upgrade customer premise equipment – including set-top boxes and cable modems – with the latest technologies and expand its network to additional residences, commercial buildings and cell towers;
  • Launching TWC Maxx, which features greater reliability, all-digital video, advanced TV services, standard tier of Internet speeds at 50 Mbps, and higher tiers of service up to 300 Mbps. New York, Los Angeles and Austin are complete; Dallas, San Antonio and Kansas City are underway; Charlotte, Raleigh and Hawaii are slated for later this year; and San Diego is expected to be done in early 2016;
  • Introducing Enhanced DVR, a six-tuner set-top box that allows customers to record up to six shows simultaneously and store up to 150 hours of HD content;
  • Increasing the number of Cable Wi-Fi hotspots available to our customers to 400,000;
  • Rolling out our cloud-based video guide to 8 million set-top boxes to date. The guide also makes it easier to browse our On Demand library, which now sits at 30,000 free and paid titles and continues to grow;
  • Expanding our industry-leading TWC TV app – which allows customers to watch live TV and On Demand content and control and program their DVR from inside and outside the home. TWC TV is now available on Xbox One, Xbox 360, Amazon Kindle Fire HD and HDX tablets, Android and IOS phones and tablets, Fan TV, PCs, Samsung TV and Roku;

Serving customers on their schedules rather than ours. We expanded one-hour appointment windows across the company and in Q1 met that window 97 percent of the time. We continue to add nighttime and weekend appointments.



Since that report, Time Warner Cable has announced new Maxx service upgrade areas – Greensboro and Wilmington, N.C. At least 45 percent of Time Warner Cable’s national footprint will be serviced with Maxx upgrades by the end of this year, and Marcus has indicated additional cities will receive upgrades in 2016.[4]

Marcus has indicated repeatedly he intends to see Maxx service upgrades extend even further. On the January 29, 2015 quarterly results conference call with investors, Marcus indicated Maxx upgrades delivered tangible benefits to the company, including increased customer satisfaction, higher network reliability, and a stronger product line. Based on those factors, it would be logical to assume Time Warner Cable would continue its upgrade project, and indeed Marcus confirmed this in his remarks:

“Our aim is to have 75% of our footprint enabled with Maxx […] by the end of [2016], and my guess is we’re continuing to roll it out beyond that,” said Marcus[5]. “So the only question is prioritization, and obviously as we think about where to go first, competitive dynamics are a factor. So that includes Google, although it’s not explosively dictated by where Google decides to go. In fact I think we announced the Carolinas before Google did their announcement this week. So competitors are certainly relevant obviously.

At the rate Time Warner Cable has been rolling out Maxx upgrades, which were first announced on January 30, 2014[6], with 45% of its service area upgraded within 23 months, it is likely the company would complete its Maxx upgrade to all of its service areas within the next 24-30 months. The DPS staff also notes, “there is no indication that Petitioner’s plan for converting to all-digital in New York is any different from Time Warner’s existing plan.”

Charter’s upgrade proposal is, in fact, generally inferior to what Time Warner Cable is accomplishing on its own. We strongly recommend the Commission carefully consider whether Charter’s proposal is as truly compelling as they claim.

Charter Communications’ upgrade proposal is not a good deal for New York.

We agree with the DPS staff’s conclusion Time Warner Cable, on its own, would likely complete its Maxx upgrade program across upstate New York at or around the same time Charter’s proposed upgrades would be complete. Therefore, when comparing Charter’s proposal with Time Warner Cable’s existing service, we urge you to use Time Warner Cable Maxx service as the benchmark, not the existing level of service provided in upstate New York today.

chartersucksTime Warner Cable Maxx offers 50/5 Mbps speeds under its most popular Standard plan. In contrast, Charter proposes to offer 60/5Mbps service under its most-popular Spectrum plan. While Charter’s offer is superior at first glance, it comes at a cost to customers looking for more budget-priced service or those seeking faster speeds.

Charter has no plans to continue Time Warner Cable’s $14.99 Everyday Low Price Internet service – a very important offer for low income residents and senior citizens who are unable to afford the nearly $60 regular price both companies charge for their 50 or 60Mbps tiers. Time Warner Cable offers this tier without preconditions, restricted qualifiers, contracts, or limits on what types of services can be bundled with it. Any consumer qualifies for the service and can bundle it with Time Warner Cable telephone service for an additional $10 a month, which offers a nationwide local calling area, as well as free calls to the European Union, Mexico, Puerto Rico, and several Asian nations.

The loss of a $25 plan that includes basic Internet access and a bundled, 911-capable telephone line would be devastating to low-income New Yorkers and senior citizens. During the Comcast-Time Warner Cable hearings, no topic elicited as much interest as Internet affordability. Time Warner Cable clearly offers a superior product line for these customers, including two other Internet service tiers offering stepped up Internet speeds in $10 increments. These options would be unavailable from Charter.

Charter’s proposed solution to serve low-income New Yorkers is adoption of Bright House Networks’ Connect2Compete program, which offers restricted access to $9.95/month Internet service for those who qualify.

Stop the Cap! investigated Bright House Networks’ existing offer in a report to our readers[7] in June 2015, and we urge the Commission to look much more closely at the specific conditions Bright House customers have had to endure to qualify to subscribe:

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

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

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

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

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

5) Bright House does not take orders for the Low-Income Internet plan over the Internet. You have to enroll by phone: (205) 591-6880.

connect2competeFamilies fall into poverty every day of the year, and poverty-stricken families move from one school district to another every day of the year. So it’s horribly unfair to tell them they’d qualify for this program if only they had fallen into poverty sometime between the middle of August and the middle of September.

It has been our experience covering service providers across all 50 states that most design these low-cost Internet access programs with revenue protection first in mind. Charter Communications is no different. As with Comcast, Connect2Compete is only available to families with school age children. Applicants face an intrusive, complicated, and time-restricted enrollment process designed to dampen and discourage enrollment.

The interest in meeting the needs of low-income customers would be laudable if not for the insistence otherwise-qualified existing customers cannot downgrade their regular price broadband plan to Connect2Compete unless they voluntarily go without Internet service for three months.

We strongly recommend Charter Communications be compelled to continue Time Warner’s $14.99 Internet plan, but at speeds no less than 25Mbps, the minimum definition of entry-level “broadband” by the FCC. We also recommend Charter be required to further discount this plan to $9.95 a month for qualified customers who meet a simple income test the Commission can define and establish. These discount programs should not just be available to families with school-age children. Everyone needs affordable Internet access, whether you are single and looking for your first job or a fixed income senior citizen.

All restrictions for existing customers or those with an outstanding balance must be prohibited and sign-ups must be accepted 365 days a year with re-qualification occurring not more than once annually.

Charter’s broadband offers for lower-income New Yorkers are not adequate, and neither are their plans for customers who need enhanced service.

Time Warner Cable Maxx delivers a more compelling offer for consumers and small businesses that need much faster Internet access. Charter’s upgrade will offer customers two choices: 60 or 100Mbps service. Time Warner Cable Maxx offers considerably more[8]:


Charter Communications has only committed to provide customers with unlimited Internet access for three years. Time Warner Cable CEO Robert Marcus has repeatedly made it clear compulsory usage caps are off the table at Time Warner Cable – a lesson they learned after customers pushed back and forced them to shelve a usage cap experiment planned for Rochester and other cities in April 2009[9]. The company has never raised the possibility of compulsory usage limits or usage-based billing again.

“We have no intention of abandoning an unlimited product we think that something that customers value and are willing to pay for,” said Time Warner Cable CEO Robert Marcus. “The way we’ve approached usage-based pricing is to offer it as an option for customers who prefer to pay less because they tend to use less. And we’ve made those available at 5 gigabytes per month and 30 gigabytes per month levels.[10]

Time Warner Cable again offers a better choice for New Yorkers. With many New Yorkers having no practical alternatives, imposing usage limits or forcing customers into even higher-priced usage billing plans would only make New York even less attractive for those who need high quality Internet access for education, telecommuting, or to assist in running a small business. Google Fiber, in contrast, offers 1,000Mbps service with no usage caps at all. Many other providers also have no plans to introduce usage caps.

Charter Communications has a history of capping their customers’ usage. Less than three months before announcing it would acquire Time Warner Cable, Charter Communications quietly dropped usage caps in place on its broadband plans since 2009, without explanation and the FCC now wants to know why, as they also contemplate the impact of the merger[11] [12]. In addition to the anti-consumer practice of placing customers on an unnecessary usage allowance, such usage limits may also be established for anti-competitive reasons to limit exposure to online video streaming, which competes directly with cable television. Customers who watch a lot of online video are those most likely to face service suspension or find overlimit usage fees applied to their bill.

junk3Almost all of Charter’s so-called customer-friendly commitments and policies have a very unfriendly expiration date of three years, which should be unacceptable to the Commission. There is no reason Charter cannot extend its commitments to not charge modem fees, adhere to the basic principles of Net Neutrality, and not impose usage caps or other forms of usage billing permanently. Without such a commitment, consumers could soon pay much higher prices for broadband service, and without robust competition unlikely to develop in most of New York over the next three years, there will be every incentive for Charter to further boost earnings by imposing modem fees and usage pricing on its customers.

One of those incentives is the level of debt Charter Communications will assume in this transaction. DPS staff is correct when they noted New Charter’s debt and lowered credit rating “represents the single most substantial risk of the proposed transaction.”[13]

Debt servicing costs and more expensive credit are both deterrents to investment and are likely to limit the scope of Charter’s ongoing system upgrades and maintenance. Charter is a much smaller cable operator than Time Warner Cable, and is itself still in the process of repairing and upgrading its own cable systems and those it acquired in earlier acquisition deals. Time Warner Cable, in contrast, is in a much stronger financial position to carry out its commitments associated with the Maxx upgrade program.

consumer reportsSpecifics about Charter’s commitments to expand service into unserved areas of New York were either vague and non-specific or redacted. The past history of winning expansion commitments from cable operators who rely on Return On Investment (ROI) formulas to determine which homes and businesses they will serve have met with limited success.

The pervasive problem of rural broadband availability is unlikely to be resolved substantially by this transaction without the strongest buildout requirements. But even that is unlikely to be of much help for large sections of New York outside of existing video franchise areas. Compelling Charter Communications to adopt universal service obligations within all existing Time Warner Cable franchise areas may be a good start. Under such a requirement, any consumer or business that wants cable service and lives within the geographic boundaries of an existing franchise area would receive it upon request without construction fees, surcharges, or other passed-along fees to reach that customer, regardless of their distance from the existing cable plant or ROI formula. The largest impact of this would be to extend cable service into business parks and commercial buildings, which often lack cable service, but many suburban and exurban residential customers would also benefit.

But the Commission must look carefully at Charter’s financial capacity to meet these obligations after assuming control of a company much larger than itself. No commitment is worth much if a company ultimately fails to deliver on it.

An overburdened cable operator is also unlikely to make substantial investments in improving customer service, and that makes the risk of depending on Charter Communications to improve Time Warner Cable’s already poor customer service rating doubtful. Competition is the biggest incentive to improve customer service and responsiveness, and that is unlikely to prove much of a factor for large sections of New York over the next few years. In fact, we argue customer service is likely to deteriorate for New Yorkers in the short term because of the disruptiveness of any ownership change and eventual billing system integration. Again, Charter’s proposal offers no compelling public interest benefit to New Yorkers. The fact DPS staff is proposing a performance incentive mechanism to compel service improvements illustrates absent punitive measures, Charter Communications is unlikely to offer any improvement over Time Warner Cable, and may in fact perform worse.

Consumer Reports rates both companies’ Internet Service poorly[14]:

  • Charter: 63 (Reader Score), Poor Value, Fair Reliability, Good Speed, Mediocre Phone/Online Support, Fair In-Home Support
  • Time Warner Cable: 57 (Reader Score), Poor Value, Fair Reliability, Fair Speed, Mediocre Phone/Online Support, Fair In-Home Support

Virtually nothing Charter Communications has offered as a public interest benefit meets that criteria. Its commitment to improve cable television does not offer any significant benefit to New York cable TV subscribers. Both Time Warner Cable and Charter propose to move to all-digital cable television to free up bandwidth to offer improved broadband.



While consumers clamor for smaller, less-costly cable television packages, Charter Communications’ CEO Thomas Rutledge is credited for inventing the “triple play” concept of convincing customers to package more services – broadband, television and telephone — together in return for a discount. Reuters cited his penchant for “simplified pricing,”[15] which is why Charter offers most customers only two options for broadband service and one giant television package dubbed Spectrum TV containing more than 200 channels.[16]

Unfortunately, any benefits from an all-digital television package are likely to be dismissed when customers get the bill. Currently, many Time Warner Cable customers watch analog television channels on television sets around the home without the need to rent a costly set top box. Any transition to digital television will require the rental of a set top box or purchase of a third-party device to view cable television programming. These can represent costly add-ons for an already high cable bill.

With approximately 99 percent of customers renting their set-top box directly from their pay-tv provider, the set-top box rental market may be worth more than $19.5 billion per year, with the average American household spending more than $231 per year on set-top box rental fees. These are some of the findings from Senators Edward J. Markey (D-Mass.) and Richard Blumenthal’s (D-Conn.) query of the top-ten pay-tv multichannel video programming distributors (MVPDs).[17]

Passed by Congress in December, the STELA Reauthorization Act of 2014 repealed the set-top box integration ban, which enabled consumers to access technology that allowed use of a set-top box other than one leased from their cable company. Without the integration ban, by the end of this year, cable companies will no longer be required to make their services compatible with outside set-top boxes, like TiVo for example, bought directly by consumers in the retail marketplace.

American cable subscribers spend, on average, $89.16 a year renting a single set-top box. The average set-top box rental fee for each company was used to calculate an overall set-top box rental cost average across companies: $7.43 a month, or $89.16 per year. Considering many homes rent a DVR box to make and view recordings and maintain less-capable boxes on other televisions, the total cost adds up quickly. The average household spends $231.82 a year on set-top box rental fees, according to Sens. Markey and Blumenthal.

Charter proposes to introduce a new generation of set top boxes but as far as we know, has not disclosed the monthly cost of these IP-capable boxes to subscribers. We anticipate they will cost more than the current equipment provided by Time Warner Cable, which has also been increasing the cost of its set top box rentals.

Time Warner Cable’s entry level Digital Transport Adapters, which convert digital/HD signals for older analog-only television sets, almost tripled in price over just one year. Originally introduced for $0.99 a month, the rental fee increased this year to $2.75 a month for customers in Rochester.[18]

Other points the Commission should consider in reviewing this transaction:

  1. DPA staffers claim the transaction is unlikely to alter the competitive landscape because Charter Communications and Time Warner Cable do not have overlapping service areas. While it is true Charter and Time Warner don’t compete for the same customers, it is inaccurate to suggest the transaction will not alter competition. Cable industry consolidation is underway, in part, to help larger combined operators secure better volume discounts for increasingly expensive video programming.

    AT&T’s primary motivation to acquire satellite provider DirecTV was to secure better prices for video programming, both for DirecTV customers but more importantly for its own, much smaller, U-verse TV operation.[19]

    The cost barrier for new, directly competing entrants into the cable television business is well-recognized, even by smaller independent cable television providers that are having difficulty staying profitable and maintaining investments in broadband as they lack the ability to secure similar volume discounts for themselves. The American Cable Association, representing small operators, warned the FCC “existing providers of both broadband and MVPD services and new entrants will be deterred from expanding their broadband networks or otherwise undertaking new builds” as a result of increasing programming costs.[20]

    As a result, it is unlikely a new provider will be able to develop a sustainable business model that includes cable television while paying wholesale programming costs that are dramatically higher than what combined companies like New Charter will pay.

  2. The Commission must insist that upstate New York is treated equally to the New York City market. If the deal is approved, Charter must be compelled to commit to continue Time Warner Cable’s Maxx upgrade initiative across all of its service areas in New York State, to be completed within 30 months. Nothing less than that should be acceptable to the Commission. We agree with the DPS staff’s recommendation that Charter also be compelled to upgrade facilities to support gigabit broadband, but this should be extended to include all of its service areas in New York, not just the largest cities.

    This does not pose a significant challenge to any cable operator. With the upcoming introduction of DOCSIS 3.1 technology, cable operators even smaller than Charter will support 1Gbps broadband speeds as they drop analog television signals. Suddenlink[21], MidContinent[22], Cox[23], and Mediacom[24] already have gigabit deployment plans in the works. If Fargo, N.D. is getting gigabit broadband from MidContinent Communications in the near future, Charter should have no problem offering similar service to customers in Jamestown, Penn Yan, Watertown, Binghamton, and beyond.

  3. The Commission must establish and enforce meaningful enforcement mechanisms should Charter fail to achieve its commitments as part of this transaction. Cable consolidation has never significantly benefited consumers. Charter is not guaranteeing Time Warner Cable customers will receive a lower bill as a result of this merger. Nor is it committing to pass along the lower prices it will achieve through negotiations for video programming volume discounts. Cable rates, especially for broadband, will continue to increase. Without meaningful competition, there is no incentive to give consumers a better deal or better service.

    That is why if the Commission feels it must approve this transaction, the conditions that accompany it to achieve a true public interest benefit must be meaningful and ongoing. Any failure to deliver on those commitments must include a direct benefit to customers, not just to the state government. If fines are imposed, customers should receive a cash rebate or equivalent service credit for services not provided as part of any agreement.

Cable operators know once they secure a franchise or become the incumbent provider, no other cable company will negotiate with city officials to take over that franchise if the current provider’s application is denied during renewal. Once Charter (or any other cable company) establishes a presence, there is little or no chance a community will be able to get rid of that provider if it fails to perform. That is why any franchise transfer that comes from an acquisition or merger must be treated with the upmost seriousness. Customers will likely live with the decision the Commission makes for the next 10-20 years or more.

dpsAs Time Warner Cable customers loudly reminded the Commission in the Comcast merger proceeding, there is such a thing as a cable operator even worse than Time Warner Cable, already one of the lowest rated companies in the country. Comcast’s reputation preceded its intended entry into New York on a massive scale and the application was eventually withdrawn.

As the Commission must realize, this transaction does not just involve entertainment. Last week the Obama Administration declared broadband Internet access a “core utility.”[25]

“Broadband has steadily shifted from an optional amenity to a core utility for households, businesses and community institutions,” according to a report from the administration’s Broadband Opportunity Council. “Today, broadband is taking its place alongside water, sewer and electricity as essential infrastructure for communities.”

Unfortunately, the federal government has seen to it that this core utility is provided without the ability of local and state governments to properly deliver needed oversight. While the Public Service Commission lacks the authority to enforce consumer protections and quality of service standards for Internet access, it retains the very powerful ability to determine whether a company seeking to make a fortune selling consumers broadband service in a monopoly/duopoly market for many New Yorkers is a good or bad thing for consumers.

Our group strongly believes New York should not take a risk on Charter’s less-then-compelling offer when Time Warner Cable has demonstrated it is in a better financial position and has a proven track record of delivering on its commitments to improve service with its Maxx upgrade project. Time Warner Cable has superior options for low-income New Yorkers, has a large number of New York-based call centers providing valuable employment for our residents, offers more broadband options and faster speeds for entrepreneurs remaking themselves in the digital/information economy, and has committed to providing unlimited Internet access – a critical prerequisite for consumers choosing to drop cable television’s one-size-fits-all bloated video package and watch only the shows they want to see and pay for online.

We urge the Public Service Commission to deny Charter’s application. If it sees fit to make a different choice, we strongly recommend you demand the best possible deal for New York consumers and businesses that, as the DPS staff wrote, deserve best-in-class communications services.

  • [1] http://stopthecap.com/2015/02/03/fcc-now-defines-minimum-broadband-speed-25mbps-everything-less-now-slowband/
  • [2] http://www1.nyc.gov/office-of-the-mayor/news/415-15/de-blasio-administration-releases-audit-report-verizon-s-citywide-fios-implementation
  • [3] http://www.twcableuntangled.com/2015/04/twc-gains-momentum-with-best-ever-subscriber-growth-customer-enhancements/
  • [4] http://www.twcableuntangled.com/2015/07/twc-maxx-expands-rollout-in-2015/
  • [5] http://seekingalpha.com/article/2864536-time-warner-cables-twc-ceo-rob-marcus-on-q4-2014-results-earnings-call-transcript?
  • [6] http://www.twcableuntangled.com/2014/01/get-the-details-on-twcs-plan-to-transform-ctv-internet-experience/
  • [7] http://stopthecap.com/2015/06/25/bright-houses-mysterious-internet-discount-program-charter-wants-to-adopt-nationwide/
  • [8] http://www.timewarnercable.com/en/enjoy/better-twc/internet.html
  • [9] http://abcnews.go.com/Technology/story?id=7368388
  • [10] http://stopthecap.com/2014/10/30/time-warner-cable-recommits-mandatory-usage-caps-long-company-remains-independent/
  • [11] http://stopthecap.com/2015/09/23/fcc-demands-details-about-charters-suddenly-retired-usage-caps/
  • [12] http://www.multichannel.com/news/fcc/fcc-seeks-data-dump-charter-twc-bright-house/394010
  • [13] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={C60985CC-BEE8-43A7-84E8-5A4B4D8E0F54} (p.39)
  • [14] http://www.consumerreports.org/cro/electronics-computers/computers-internet/telecom-services/internet-service-ratings/ratings-overview.htm
  • [15] http://www.reuters.com/article/2014/01/30/us-charter-timewarnercable-rutledge-anal-idUSBREA0T01D20140130
  • [16] https://www.charter.com/browse/content/tv#/channel-lineup
  • [17] http://www.markey.senate.gov/news/press-releases/markey-blumenthal-decry-lack-of-choice-competition-in-pay-tv-video-box-marketplace
  • [18] http://stopthecap.com/2014/12/22/time-warner-cable-deck-halls-8-modem-fees-fa-la-la-la-la-la-la-la-la-2-75-dta-fee/
  • [19] http://www.usatoday.com/story/money/2015/07/24/fcc-approves-ts-acquisition-directv/30626421/
  • [20] http://www.americancable.org/node/5229
  • [21] http://www.multichannel.com/news/technology/suddenlink-boots-1-gig-broadband/392087
  • [22] https://www.midco.com/PressRoom/2014/midcontinent-bringing-gigabit-internet-access-to-the-northern-plains/
  • [23] http://www.multichannel.com/news/distribution/cox-plots-docsis-31-plans/393996
  • [24] http://www.multichannel.com/news/cable-operators/mediacom-sets-residential-1-gig-rollout/393585
  • [25] http://thehill.com/policy/technology/254431-obama-administration-declares-broadband-core-utility-in-report

Patrick Drahi Predicts 25% of U.S. Homes Will Dump Cable TV; Big Broadband Rate Hikes Predicted



Altice CEO Patrick Drahi believes up to one-quarter of all cable customers will drop their video packages in the next few years and stick solely with broadband service.

If Drahi’s prediction is true, telecom analyst Craig Moffett off MoffettNathanson predicts broadband pricing will skyrocket as the cable industry tries to replace its lost video revenue.

Cable operators may be able to leverage their monopoly/duopoly status to force higher broadband prices in markets where phone companies only deliver token competition with slow speed DSL.

Moffett believes broadband pricing strategies depend heavily on local competition. In markets like New York City that can choose between Cablevision and Verizon FiOS, dramatically raising the cost of Internet access will probably drive cable customers into the arms of Verizon. But in areas served by companies like Comcast and Time Warner Cable/Charter, Moffett predicts “more benign” competition from phone companies offering only DSL will give cable companies plenty of room to “grow the broadband business” by raising prices on consumers.

http://www.phillipdampier.com/video/CNBC Does Altice Have Cost-Cutting Plans for Cablevision 9-17-15.flv

Craig Moffett, analyst at MoffettNathanson, examines the $17.7 billion purchase of Cablevision by Altice and some of the challenges Altice faces in running a U.S. cable company. He speaks on “Bloomberg Surveillance.” (3:23)

Frontier Adds Limited Fiber to the Home Service in Rochester; $19.99 for 30/30Mbps Service

Phillip Dampier September 8, 2015 Broadband Speed, Competition, Consumer News, Frontier 5 Comments

frontier fiber

A lawn sign promoting Frontier fiber optic broadband at a new housing development in Ogden, N.Y. [Image courtesy: Craig]

Frontier Communications has introduced fiber to the home service limited to certain new housing developments in the suburbs around Rochester, N.Y., offering 30/30Mbps broadband for $19.99 a month.

Stop the Cap! reader Craig sent along word Frontier was using lawn signs to promote fiber broadband outside of the nearly complete Bella Estates — a development in the town of Ogden.

This is not the first project of this type for Frontier, which installs optical fiber in most new housing developments as they are built. Customers are typically offered fiber-fed broadband service at the same download speeds offered to Frontier’s DSL customers. With Frontier committed to providing basic telephone service throughout its operating service areas, stringing new optical fiber costs only a little more than using traditional copper wiring.

However, Frontier’s attitude about scrapping customers’ existing copper wiring in favor of fiber optics is very different. Frontier is among the last major independent phone companies not building its own significant fiber to the neighborhood or fiber-to-the-home service in its legacy service areas. Instead, it has adopted networks acquired from AT&T (U-verse in Connecticut) and Verizon (FiOS in Indiana and the Pacific Northwest, and possibly Florida, Texas and California as well).

“Once again, Frontier is only expanding where it feels like it,” writes Craig.

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Recent Comments:

  • Ralph Chastain: Stop capping it or else....
  • Fred Pilot: According to the 11/2/15 blog post excerpted below, the lower tier telcos (in this case Frontier) are accepting CAF funding but not for upgraded (fibe...
  • Joe V.: to Fred : You're referring to AT&T and Verizon who want OUT of wireline and are selling off those assets. CenturyLink, Fairpoint, Frontier and Win...
  • Fred Pilot: "The message to phone companies couldn’t be clearer: upgrade your networks or else." Or else what? They've already made a strategic decision to con...
  • Dan: Or it could offer service for even less and try to appeal to retirees....
  • Joe Villanova: So Frontier has little choice : upgrade to VDSL and G.Fast or else....
  • Dan: Looks like Dan McCarthy is the one who owned up to that 25% penetration, unless I read the transcript too fast...
  • BobInIllinois: Phil, am actually in Ireland now & for the last week. Can confirm that the above 4 providers are all advertising bundles on trucks, billboards, r...
  • Tim: Do you have 1tb a day to backup? I have customers backing up hundreds of gigs over copper connections with 12mbps up. It's the first backup that sucks...
  • John Gillespie: Worst IPS ever!...
  • Tim: I had fiber installed at my house (Gigabit pro). They already terminated the fiber and mounted it, should have the equipment in a few days. You kno...
  • Scott: This makes absolutely no sense that it's not running over TCP/IP on the same bandwidth as other internet traffic. Especially if they're saying it's a...

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