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

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

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

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

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

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

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

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

Dear Secretary Burgess:

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

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

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

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

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

Phillip "I got whiplash just watching" Dampier

Phillip “I got whiplash just watching” Dampier

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

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

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

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

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

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

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

Balto

Balto

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

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

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

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

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

Cable "competition" in Minneapolis

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

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

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

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

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

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

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

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

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

Not Only Was Comcast’s Customer Retentions Guy Annoying, He Was Also Factually Wrong

astound-broadband-logoNearly two million people have listened to the Comcast customer service call from hell since it went viral earlier this week.

Comcast quickly decided it was best to apologize:

We are very embarrassed by the way our employee spoke with Mr. Block and Ms. Belmont and are contacting them to personally apologize. The way in which our representative communicated with them is unacceptable and not consistent with how we train our customer service representatives. We are investigating this situation and will take quick action. While the overwhelming majority of our employees work very hard to do the right thing every day, we are using this very unfortunate experience to reinforce how important it is to always treat our customers with the utmost respect.

csrSetting aside all that, we decided to investigate why Mr. Block was willing to subject himself to 18 minutes of phone hell to cancel his service.

At one point, we learn he is switching to Astound, a provider of cable TV, broadband internet, and telephone services on the West Coast, serving over 325,000 residential and business customers within communities in the San Francisco Bay area. Astound is an overbuilder, which means it is one of those rare instances where Comcast faces head to head competition with a company that can deliver more than DSL.

Although Comcast’s rep swore Comcast had the fastest Internet speeds (it doesn’t) and can deliver maximum savings (also wrong), it turns out Astound offers both cheaper and faster Internet service. We’d probably switch too, although we wish Astound would dump its 1TB monthly usage cap. How many customers even come close to that isn’t known, but it is likely under 1%, which makes us wonder why they bother with a cap at all?

We collected pricing information from both Astound and Comcast’s websites and here is what we found:

Stop the Cap! will include this incident in our formal filings with the FCC and New York State Public Service Commission in opposition to the merger of Time Warner Cable and Comcast. Comcast customers tell us Mr. Block’s experiences, although extreme, are not uncommon when dealing with Comcast’s customer retention department.

Here’s How to Tell the N.Y. Public Service Commission to Reject the Comcast/TWC Merger

ny pscThe New York Public Service Commission needs to hear from you about the Comcast-Time Warner Cable merger. Unlike some of the southern and midwestern states that have utility commissions that basically rubber stamp the agenda of Big Telecom companies, New York’s PSC has a reputation for being tougher and more customer-oriented. But the PSC cannot act in your interest if you don’t share your views.

It is incredibly easy to file your own comments with the PSC. Nearly 2,300 New Yorkers have done so thus far, but we need to make sure they understand our serious objections to Comcast’s usage caps, its expensive service, and customer abuse.

We have provided a sample letter below. We hope you will write your own, but offer ours as a guide that includes some of our biggest concerns. We may prepare another one soon outlining other concerns.

How to file your comment:

  • E-Mail: [email protected]
  • Mail: Hon. Kathleen H. Burgess, Secretary, Public Service Commission, Three Empire State Plaza, Albany, New York 12223-1350.
  • Phone: 1-800-335-2120 (press “1” to leave a recorded comment)

All comments should refer to “Case 14-M-0183, Petition of Comcast Corporation and Time Warner Cable Inc.”

Hon. Kathleen H. Burgess
Secretary
Public Service Commission
Three Empire State Plaza
Albany, New York 12223-1350

Re: Case 14-M-0183, Petition of Comcast Corporation and Time Warner Cable Inc.

Dear Ms. Burgess,

I am writing to ask the Public Service Commission to reject the merger proposal of Comcast and Time Warner Cable on the ground the companies have failed to show such a merger would be in the best interests of New York and its residents.

Although Time Warner Cable has never been a prize, Comcast’s reputation for bad service, high prices, rationed Internet access, and customer abuse is well documented in just about every community the company serves. Comcast has repeatedly been voted the “Worst Company in America” by Consumer Union’s Consumerist.com. The American Consumer Satisfaction Index has documented so many complaints about Comcast, it declared it the worst company it has ever scored, performing even worse than the Internal Revenue Service. For more than three years running, Harris Interactive has called Comcast one of the least reputable companies in America.

That alone should be enough to reject this merger out of hand. Permitting it would reward this company’s appalling behavior towards its own customers and expose New Yorkers to an even bigger monopoly problem than we deal with now. Unless you live in a Verizon FiOS service area, cable is your only real choice for true broadband speeds. DSL is rapidly losing favor and market share and Verizon has shown no interest in expanding it.

Comcast already uses its market power to its advantage by raising prices… a lot. Time Warner Cable charges less for its services than Comcast does.

For example, Time Warner Cable offers a standard television service package that provides all the popular cable networks for one price. Comcast offers a similar package but stripped out cable networks including Cloo, CNBC World, Al Jazeera America, Discovery Fit & Health, Disney XD, DIY, a range of ESPN’s extra networks, EWTN, Fine Living, Fox Business News, Great American Country, IFC, Investigation Discovery, Lifetime Real Women, Military Channel, MLB, most of MTV’s extra networks, NBA, National Geographic Channel, NFL Network, NHL Network, most of Nickelodeon’s extra networks, OWN, Oxygen, Sundance, Turner Classic Movies, The Science Channel, and VH1′s extra networks.

Customers who want these networks, like Turner Classic Movies, National Geographic, and IFC will have to pay a stunning price of up to $86 a month — just for television. Many of these networks are especially popular with fixed income older residents, who will now face an even larger cable TV bill.

Comcast promotes the fact its Internet speeds are faster than Time Warner Cable, but that is not true as Time Warner Maxx upgrades arrive. Comcast Internet service costs more, is slower, and increasingly usage-capped. Time Warner Cable has made clear it will not limit customers’ Internet usage. Comcast has made clear it will, predicting usage limits/usage-based pricing will be imposed on customers across its entire footprint within five years. That is no improvement for New York. That is literally a downgrade. We can do better in New York with Time Warner Cable.

In fact, the company has promised extremely little to New York after winning your approval to merge. Comcast is so arrogant, it already announced it will not share any cost savings with customers, promising even higher cable bills for New York with the merger. Even its touted X1 set top system will cost New Yorkers — it comes with a steep installation price of almost $100. Again, how does this serve the public interest?

Comcast’s public service programs are also woefully inadequate. Its Internet Essentials is a bureaucratic nightmare that only provides temporary discounts to a small percentage of customers (with school age children) who need an affordable Internet option. I guess childless couples and the elderly poor don’t matter. Time Warner Cable offers a $14.99 discount program available to anyone who wants it, no paperwork or waiting periods required.

It is my understanding Comcast must prove this merger is in the public interest to win your approval. It has utterly failed to do so, and I expect my state’s Public Service Commission to reject this merger. This is one deal that can never be modified sufficiently to make it acceptable for people like myself. You are doing us no favors trying to negotiate for an Internet discount program or expanding Comcast’s service area by a small amount in rural upstate New York. The end result is that millions of New Yorkers will get worse service than we get today, at a higher price, with little/no competition on the horizon.

This is a rare opportunity for our state, which lost most of its oversight powers over the cable industry years ago. Cable operators have abused their deregulated status and have raised prices, provided dreadful customer service, and have kept competition away. Letting Comcast into New York from Buffalo to the Bronx will only encourage more abuse, wreaking havoc on New York’s growing digital economy. Let’s send a clear message to Comcast New York isn’t willing to put our broadband future in the hands of “the worst company in America.” Let’s make it clear enough is enough.

Sincerely,

 

Sun Valley Conference Could Spark More Giant Merger Deals; Murdoch, Verizon Sniffing Around

Phillip Dampier July 8, 2014 AT&T, Competition, Consumer News, Verizon, Video No Comments
big fish

All of these media and content companies may be up for grabs.

Could Rupert Murdoch become the next owner of CNN? Will Verizon consider buying out the owner of more than a dozen cable networks, or the Walt Disney Company, owner of ABC?

Since 1983, media moguls have assembled annually in posh Sun Valley, Idaho to talk business. But never have they met while several huge consolidation and merger deals are on the table among their colleagues. Comcast acquiring Time Warner Cable and AT&T buying out DirecTV are both seen as game-changers among Wall Street bankers and the media elite, leaving many self-consciously pondering whether they are no longer big enough to stay competitive in a consolidated media world.

The Wall Street Journal and the Atlanta Journal-Constitution both report that at least one huge merger deal could emerge as a result of this week’s conference. Among the most likely buyers is FOX CEO Rupert Murdoch, who is reportedly looking to buy a major content company.

The most likely target is Time Warner (Entertainment), former owner of Time Warner Cable. After spinning off its money-losing magazine unit, TW has become much more focused on content and distribution – exactly what Murdoch is looking for. Time Warner owns New Line Cinema, HBO, Turner Broadcasting System, The CW Television Network, Warner Bros., Kids’ WB, Cartoon Network, Boomerang, Adult Swim, CNN, DC Comics, Warner Bros. Animation, Cartoon Network Studios, Hanna-Barbera, MLB Network and Castle Rock Entertainment. In fact, altogether the company owns or controls dozens of television channels which could all soon fall into the hands of Murdoch.

A Murdoch acquisition would be the last death-blow for Ted Turner’s Turner Broadcasting System, which launched CNN, TBS, and TNT and is now a division within Time Warner. Murdoch’s Fox News Channel was launched as a conservative alternative to CNN’s perceived left-leaning reporting. A Murdoch buyout would either deliver bipartisan profits to the media mogul or allow him to shut down the network or relaunch it under the Fox News brand.

Such an acquisition would not be cheap. Time Warner is worth as estimated $62 billion.

A Murdoch buyout would be especially troublesome for those already upset with corporate media consolidation. Murdoch would end up controlling three major U.S. networks – FOX, CW, and MyNetworkTV, multiple cable news channels, dozens of local television stations in major media markets, and more cable networks than most people can count. In fact, the assembled list of Murdoch-owned media properties is enormous:

Murdoch: The next owner of CNN?

Murdoch: The next owner of CNN?

Adult Swim, Boomerang, Cartoon Network, CNN Worldwide, HLN, Inside CNN Tour & Store, TBS, TCM, TheSmokingGun.com, TNT, truTV, Turner Sports, Fox Business Network, Fox News, Star India, YES Network, Twentieth Century Fox, Fox 2000 Pictures, Fox Searchlight Pictures, Fox International Productions, Twentieth Century Fox Television, Fox Home Entertainment, Shine Group, Twentieth Century Fox Animation, The Sun, The Times, The Sunday Times, Times Literary Supplement, The Wall Street Journal, The New York Post, The Australian, The Daily Telegraph (Australia), The Sunday Telegraph (Australia), The Herald Sun, The Sunday Herald Sun, The Courier Mail, The Sunday Mail, The Advertiser, NT News, The Sunday Territorian, The Sunday Times (Australia), The Sunday Tasmanian, Mercury, Warner Bros. Pictures, Warner Bros. Pictures International, New Line Cinema, Warner Home Video, Warner Bros. Advanced Digital Services, Warner Bros. Interactive Entertainment, Warner Bros. Technical Operations, Warner Bros. Anti-Piracy Operations, Warner Bros. Television Group, Warner Bros. Television, Telepictures Productions, Warner Horizon Television, Warner Bros. Animation, Warner Bros. Domestic Television Distribution, Warner Bros. International Television Distribution, Warner Bros. International Television Production, Warner Bros. International Branded Services, Studio 2.0, The CW Television Network, DC Entertainment, Warner Bros. Theatre Ventures, HarperCollins General Books Group, HarperCollins Children’s Books Group, HarperCollins Christian Publishers, HarperCollins UK, HarperCollins Canada, HarperCollins Australia/New Zealand, HarperCollins India, FX, FXX, FXM, National Geographic Channel, Nat Geo WILD, Nat Geo Mundo, FSN, FOX Sports 1, FOX Sports 2, FOX Soccer Plus, FOX College Sports, FOX Deportes, FOX Life, Baby TV, Fox Broadcasting Company, Sky 1, Sky Atlantic, Sky Living, Sky Arts, Sky Sports, Sky Movies, Sky News, Sky Deutschland, Sky Italia, MyNetworkTV, MundoFox, FOX International Channels, Fox Sports Enterprises, HBO, HBO On Demand, HBO GO, Cinemax, Cinemax on Demand, MAX GO, HBO2, HBO Signature, HBO Family, HBO Comedy, HBO Zone, HBO Latino, More Max, Action Max, Thriller Max, 5 Star Max, Max Latino, Outer Max, Movie Max, Barron’s, MarketWatch, Factiva, Dow Jones Risk & Compliance, Dow Jones VentureSource, All Things Digital, Amplify, News America Marketing, and Storyful.

Murdoch has already shown a willingness to spend big. He has recently taken an ownership interest in the up and coming Vice Media, popular with the under 30-viewing crowd. He also spent $415 million to buy romance novel publisher Harlequin Enterprises.

But Murdoch may not be the only one shopping for a deal. The Wall Street Journal offered a shopping list:

  • Small cable network owners: Nobody just owns three or four cable networks these days. Content conglomerates like CBS, Disney, Time Warner and Comcast own 15, 30, or even 40 different channels. Smaller players are ripe for the picking. Chief among them include Scripps Networks Interactive (Food Network, HGTV), AMC Networks (AMC, IFC, Sundance), and Crown Media (Hallmark).
  • Small studios: Owning a small Hollywood studio is quaint, but Wall Street investment bankers think the time is long past to sell out to larger corporate entities who can better leverage distribution of their releases, easy enough if you own your own theater chain, pay cable network, broadcast stations, and basic cable outlets.
Both phone companies are attending Sun Valley for the first time.

Both phone companies are attending Sun Valley for the first time.

In addition to buyout offers from the largest networks around, Discovery Networks is also in the mood to grow larger at the urging of its board of directors, which includes Dr. John Malone, CEO of Liberty Global. Malone is behind much of the cheerleading to consolidate the cable industry and helped spark the Comcast-Time Warner Cable deal when his partly owned Charter Communications sought a takeover of Time Warner Cable itself.

Wall Street bankers love even better the idea of selling Discovery to a new owner – Disney.

For the first time, phone companies AT&T and Verizon are also in attendance at Sun Valley, and analysts don’t believe the CEOs are there for summer vacation.

Jimmy Schaeffler, chairman of media and telecom consulting firm Carmel Group, says Verizon has been most lacking in the content ownership department and “needs something else right now” as rivals bulk up. AT&T’s acquisition of DirecTV only underlines that sentiment among many Wall Street analysts who think Time Warner (Entertainment) could be an option if Verizon isn’t outbid by Murdoch.

All of this shopping has caused alarm for some, including CNN’s media reporter Brian Stelter who declared, “I will eat my remote control … in fact, I will eat my copy of the New York Post … if Murdoch becomes the owner of CNN.” 

http://www.phillipdampier.com/video/WSJ Digits Media Consolidation 7-7-14.flv

The Wall Street Journal’s ‘Digits’ explores the ongoing consolidation of media creators and distributors. This year’s media conference in Sun Valley could spark more merger deals. (5:02)

Antitrust Us: Is ComVerizablAsT&TWCDirecTV Really Best for American Broadband?

Bad enough

Bad enough

A big company needs a big name, and so what if you can’t say it out loud, so long as your check reaches the cable cartel on time to avoid those inconvenient late fees.

The shock waves of the $45 billion dollar proposed merger of Comcast and Time Warner Cable (not to mention AT&T and DirecTV) have reached as far as Great Britain where appalled editorial writers in the British press are pondering whether Washington has lost its mind or just its integrity… or a combination of both, by actually contemplating the unthinkable rebirth of the American Robber Baron.

Only instead of railroads powering America’s early 20th century economy, today its broadband. Overseas, broadband is plentiful, fast, and cheap. Back home, cable operators are hard at work in a comfortable monopoly/duopoly working on excuses to justify Internet rationing with usage caps, outrageous equipment rental fees, rate hikes, and usage billing for a product about as cheap to offer as a phone call on one of those unlimited calling plans you probably already have.

From The Economist:

“On “OUTLAW”, a drama that aired on NBC, a Supreme Court justice leaves the bench to join a law firm. In real life he might have begun working for Comcast, America’s largest cable company, which owns NBC. Many of Washington’s top brass are on Comcast’s payroll, including Margaret Attwell Baker, a former commissioner of the Federal Communications Commission (FCC), America’s telecoms regulator, who in government had helped approve Comcast’s takeover of NBCUniversal in 2011. Even Barack Obama has Comcast ties. “I have been here so much, the only thing I haven’t done in this house is have seder dinner,” he quipped at a fundraiser hosted last year at the home of David Cohen, Comcast’s chief lobbyist.

“It helps to have influential friends, especially if you are seeking to expand your grip on America’s pay-TV and broadband markets.

“[...] The deal would create a Goliath far more fearsome than the latest ride at the Universal Studios theme park (also Comcast-owned). Comcast has said it would forfeit 3m subscribers, but even with that concession the combination of the two firms would have around 30m—more than 30% of all TV subscribers and around 33% of broadband customers. In the cable market alone (ie, not counting suppliers of satellite services such as DirecTV), Comcast has as much as 55% of all TV and broadband subscribers.

Worse

Worse

“Comcast will argue that its share of customers in any individual market is not increasing. That is true only because cable companies decided years ago not to compete head-to-head, and divided the country among themselves. More than three-quarters of households have no choice other than their local cable monopoly for high-speed, high-capacity internet.

“For consumers the deal would mean the union of two companies that are already reviled for their poor customer service and high prices. Greater size will fix neither problem. Mr Cohen has said, “We’re certainly not promising that customer bills are going to go down or even that they’re going to increase less rapidly.” Between 1995 and 2012 the average price of a cable subscription increased at a compound annual rate of more than 6%.”

Before blaming it all on President Obama’s close relationship with Comcast’s top executives, it was the Republicans in Washington that set this tragic monopolistic farce into motion. Michael Powell, President George W. Bush’s idea of the best man in America to protect the public interest at the FCC, represented the American people about as well as ‘Heckuva Job Brownie.’ Instead of promoting competition, Powell used his time to beef-up his résumé for a very cushy post-government job heading America’s top cable lobby – the National Cable & Telecommunications Association. Attwell-Baker was even more shameless, departing the FCC for her sweet new executive digs at Comcast just a short time after enthusiastically voting in favor of its NBCUniversal merger deal.

snakePowell and others made certain that Internet Service Providers would not be classified as “common carriers,” which would require them to rent their broadband pipes at a reasonable wholesale rate to competitors. The industry and their well-compensated friends in the House and Senate argued such a status would destroy investment in broadband expansion and innovation. Instead it destroyed the family budget as prices for mediocre service in uncompetitive markets soared. Today, consumers in common carrier countries including France and Britain pay a fraction of what Americans do for Internet access, and get faster speeds as well.

Letting Comcast grow even larger, The Economist argues, will allow one company to dominate not just your Internet experience, but also the content consumers access and at what speed.

“There is plenty for Mr Obama and Mr Cohen to discuss at their next dinner,” concludes the magazine. “But better yet, officials could keep their distance from Comcast, and reject a merger that would reduce competition, provide no benefit to consumers and sap the incentive to innovate.”

Considering the enormous sums of money Comcast has shown a willingness to spend on winning over supporters for its business agenda, restraint on the part of Washington will need voter vigilance, much the same way calling out non-profits who gush over Comcast while quietly cashing their contribution checks must also be fully exposed to regulators who will ultimately decide the fate of the merger.

http://www.phillipdampier.com/video/Antitrust Us.mp4

Antitrust Us: Cartoonist Mark Fiore takes on the corporate idea that merging cable companies together creates more competition. (1:50)

Los Angeles Has Accumulated $35 Million in Cable Franchise Fees It Has No Idea How to Spend

35-LACityView

Channel 35 is Los Angeles’ Government Access station

Los Angeles cable subscribers are paying $30-50 a year in extra franchise fees the city government has no idea what to do with, allowing a bank account dedicated to housing the unspent funds to reach $35 million and counting.

A new audit by the Office of the City Controller found no misappropriation or ethical lapses by the city government, but it did criticize the lack of long-term planning regarding how franchise revenue should be used, as well as lax auditing of expenses that were paid from the fund. Los Angeles City Controller Ron Galperin added the city’s lack of consistent auditing of the five major cable operators servicing greater Los Angeles may be allowing cable operators to charge customers franchise fees the companies are keeping for themselves. A 2006 law passed at the behest of Verizon and AT&T allowing statewide video franchise agreements in California isn’t helping either.

For decades, communities have been able to demand up to a 5% franchise fee from cable and phone companies offering video services in their areas in return for access to public rights-of-way and other public property. Most cities, including Los Angeles, have requested the maximum allowed – 5% of the provider’s gross annual revenue earned within the city. Cable operators retaliated by recouping the franchise fee by billing cable customers for it on a separate line on monthly cable bills.

In Los Angeles, 60% of all franchise fees ($31 million) paid are transferred to the city’s all-purpose General Fund, used for all types of city expenses. The remaining 40 percent ($12.4 million) is supposed to be earmarked for a Telecommunications Fund, but the city often raids that account as well. Time Warner Cable subscribers account for 85% of Los Angeles’ cable franchise revenue, AT&T U-verse contributes another 10% with other operators paying considerably less. Last year, Charter Cable wrote a check for less than $5,000, primarily because only a tiny part of the city of Los Angeles is served by Charter today.

So where is the excess money still in the account coming from?

fund balance

The Unintended Consequences of Statewide Video Franchising

Eight years ago, Governor Arnold Schwarzenegger signed AB 2987:  the “Digital Infrastructure and Video Competition Act of 2006” (DIVCA). In reality, DIVCA was just another statewide video franchise bill heavily pushed by the state’s dominant phone companies — AT&T and Verizon — to let them begin offering video services without having to sign franchise agreements with thousands of local governments across the state.

verizon attAT&T and Verizon sold the legislation to the public as a red-tape cutter to bring Verizon FiOS and AT&T U-verse to millions of Californians without unnecessary bureaucratic delay.

But lobbyists from both phone companies, as well as several cable companies, were successful in inserting their own amendments into the law that undercut their arguments for passing the legislation:

  • As local franchise agreements expired, companies took their franchise renewal business direct to the state, cutting off local oversight. Communities could no longer require operators to expand into rural areas or impose fines for sub-standard service;
  • Cable companies won the right to toss Public, Educational, and Government Access (PEG) channels out of their buildings. Many communities assigned responsibility for housing and operating PEG channels as part of their franchise agreement. DIVCA rendered those agreements void and unenforceable;
  • Cable companies no longer had to offer institutional broadband networks for free or at a discount to local governments, schools and libraries, and many existing networks were closed down as soon as the local franchise agreement expired and communities balked at the new prices charged by telecom companies.

But perhaps the most controversial amendment was language that gets AT&T and Verizon out of meeting obligations to build out their fiber networks where they choose not to built them, while still compelling smaller independent telephone companies to offer service to every customer within their telephone service area within a reasonable amount of time.

So instead of promoting a rush towards video competition, both AT&T and Verizon won concessions that let them cherry pick — on their own schedule — customers for AT&T U-verse and Verizon FiOS:

  • Verizon is in compliance with DIVCA as long as 25% of the households where service is available are low-income and within 5 years, Verizon increases that to at least 40%;
  • AT&T stays out of trouble with DIVCA by providing video service to 35% of low-income households where service is available. Within five years, AT&T must reach at least 50%.

One of the biggest victims of DIVCA are PEG channels which lost the sponsorship of the cable companies that used to underwrite them as part of their franchise agreements. American Community Television reported in California, Illinois and Indiana, where statewide video franchising laws were passed, cable operators that operated PEG channels closed the doors, sometimes with only 30 days notice. Even in states where PEG funding remained, channels have been exiled to Channel Siberia (eg. Channel 1,512) or are under constant threat of losing their channel if they don’t meet an operator’s arbitrary quality of programming criteria.

Time Warner Cable has moved PEG channels to digital service in a majority of their service areas, requiring many customers to have an added-cost cable box to watch.

To help Californian PEG services cope, a state law permitted cities to collect an extra 1% of gross revenue from cable operators to keep funding these channels. But if a city already collects a full 5% franchise fee, any money collected from PEG channels must only be spent on their operations — no raiding of funds allowed. If the local government thinks there are bigger priorities than supporting public, educational, and government access, the future of PEG channels is questionable.

How to Spend the Untouchable Proceeds

The new home of Los Angeles' Government Access channel

The new home of Los Angeles’ Government Access channel

With Los Angeles-area cable companies collecting and sending on the proceeds of the 1% PEG surcharge to city coffers, the money has been more or less just piling up over the last seven years, unspent.

As of the end of June last year, the city had squirreled away about $22 million collected from cable TV customers stashed in a non interest-bearing account. PEG operations across the United States are not known for being profligate spenders, relying on budgets that would be insufficient to keep the lights on at a typical local public television station. So some question whether Los Angeles’ Public Access, Educational Access, and Government Access networks need $22 million to continue operations.

The city has decided the Government Access channel — the one that airs council meetings and other political functions — does need a new home.  So the city is spending $20 million to completely renovate one of the oldest buildings in Los Angeles, the long-vacant three-story Merced Theater near Olvera Street.

When complete, the state-of-the-art digital facilities of Cityview Channel 35 may rival those of some commercial television stations in Los Angeles. The building will house a small performance venue on the first floor, a studio with space for a 70-person live audience, and plenty of office space on the third floor. What it evidently won’t have room for is the Public Access and Educational Access channels that make up the rest of the PEG trio. The new facility is for the exclusive use of Channel 35.

Local residents are happy someone is finally doing something with the theater, which has been empty and unused for at least 30 years. The project could also make Los Angeles’ Government Access channel one of the most capable in the country, producing high quality programming well beyond the ubiquitous city council meetings.

“Space for a live audience of about 70 people will allow us to engage the public with debates, town halls and other events that we weren’t able to do,” Mark Wolf, executive officer at the city Information Technology Agency, which oversees Channel 35, told Downtown News. “The venue also gives us a full upgrade to digital technology, as we’ve been operating in an analog environment.”

Downtown News partly misled its readers when it suggested cable providers are footing the bill for the renovated home of Channel 35. Although money from the city’s general fund won’t be used for the project, the money did originate from cable subscribers who have paid higher cable bills since 2007 because the city elected to collect a 1% PEG franchise fee.

Galperin

Galperin

Even after spending $20 million on the Merced Theater, the money from Time Warner Cable, Cox, AT&T, Verizon, and Charter cable TV subscribers will keep rolling in. The audit found that by the time the new Merced Theater facility opens in 2016, the city will again have between $21-25 million in unspent PEG funds.

Galperin thinks throwing more money at traditional PEG operations would be a mistake, particularly when younger audiences are not even subscribing to cable television.

“We’re in a new era,” Galperin said. “The old rules that envisioned everybody getting their programming from cable are changing before our very eyes. We are in a totally different era in terms of how people get their information, so much of viewership is on the Internet now, not necessarily on cable.”

Because PEG funds can only be spent on PEG operations, as a starting point, funds could be spent to build up what is now an anemic, barely functioning website for Channel 35. Although the channel does stream online, it is intermittent in our experience. Channel 35 might also partner with local public broadcasting and minority-interest channels in co-production ventures. It should also develop a robust on-demand library of its content for site visitors because that is increasingly how Americans choose to watch television.

Galperin suggested other uses including a public Wi-Fi network and city Internet sites for programming and other information, but these may stray outside of the boundaries of what is permissible under current California and federal law.

Of course, there is one other alternative – rescind the PEG fee altogether until there is a legitimate need to collect the money from already overburdened cable subscribers.

franchise fees

http://www.phillipdampier.com/video/Surviving DIVCA.mp4

Silicon Valley Community Television aired this lengthy conference last fall for the benefit of local governments across California still trying to make sense of the 2006 Digital Infrastructure and Video Competition Act, a provider-influenced piece of legislation that has tied the hands of most communities to manage their local telecommunications infrastructure for the good of their citizens. (2 hours, 47 minutes)

 

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

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

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

comcast no

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

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

VanKeuren is hardly alone in his thinking.

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

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

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

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

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

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

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

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

Comcast Using Ethically Disgraced Ralph Reed to Advise on Time Warner Cable Merger

That "paragon of virtue" Ralph Reed is helping Comcast with their merger problems.

That “paragon of virtue” Ralph Reed is helping Comcast with their merger problems. (Image: Mark Fiore)

The owner of left-leaning MSNBC has engaged a religious conservative activist to handle consulting work on Capitol Hill for a cable company so hated, even ardent pro-business conservative Republicans are holding their noses contemplating a merger that would make Comcast even larger.

Ralph Reed has tried to keep his head down during his 8-10 year “association” with Comcast, whose executives make regular major contributions to Democratic Party candidates and play golf with President Barack Obama.

Reed’s ethically challenged past has made him notorious in Washington, and many well-connected lobbyists avoid publicly associating with the man who helped the disgraced lobbyist Ralph Abramoff rip off Native Americans for $100 million. Even worse, while Abramoff and Reed were working to rob various tribes blind in Mississippi, Alabama, and Louisiana,  the next mission would be protecting off-shore sweatshops in the Northern Mariana Islands, a U.S. possession that lacks American labor law protections. Workers were paid less than half the American minimum wage, had their movements restricted, were sexually exploited, and churned out products for corporations that could still claim they were proudly “Made in the U.S.A.”

Both men kept it ‘klassy with a k’ with respect to their paying clients. Abramoff routinely called  tribal leaders “monkeys” and Reed wanted to use his new found expertise in corporate lobbying to enrich himself. Reed sent e-mail to Abramoff recommending himself as a corporate lobbying asset, because of his ability to mobilize hundreds of thousands of religious conservative households through an extensive network of politically active pastors willing to use religion to advance the agendas of his corporate clients.

“I need to start humping in corporate accounts,” Reed wrote Abramoff, noting he could quickly create anti-gambling astroturf groups morally opposed to allowing new gambling ventures on religious grounds. In reality, his opposition was actually designed to protect Abramoff’s existing clients — Native American tribal casinos — from facing new competition.

comcast twcReed is theoretically trying to promote the Comcast merger with skeptical political and religious conservatives who have heard loud complaints from constituents about the cable company. But one of Reed’s self-proclaimed selling points is that he prefers to move in the shadows.

“I want to be invisible. I do guerrilla warfare,” Mr. Reed told a Virginia newspaper in 1991. “I paint my face and travel at night. You don’t know it’s over until you’re in a body bag.”

Had Reed kept a lower profile, his association with Comcast might have never seen the light of day.

“It’s widely known because Ralph’s been on conference calls,” one insider said. “It has been at least eight years; it’s been some time.”

Century Strategies, the Atlanta-based firm Reed owns, has been on retainer with Comcast for eight or 10 years, the source said.

ralph reed bio

Unfortunately for Comcast, Reed has appeared at one too many microphones lately, spouting off at various conservative functions including the annual Faith & Freedom Coalition, where he loudly compared the Supreme Court’s decision in favor of same-sex marriage as a historical mistake as explosive as the 1857 Dred Scott decision. That was the one where the court ruled that all blacks — slaves as well as free — were not and could never become citizens of the United States. How could I have missed the similarities!

Comcast didn’t respond to a request for comment about its reported engagement of Reed’s company. Century Strategies also didn’t respond to a request for comment from the Washington Blade, which exposed the Reed-Comcast link, to confirm the reports.

Much of what constitutes official paid lobbying vs. an informal conversation is just part of the murky world of Beltway lobbying. So far, Reed has not filed as an official lobbyist.

Time Warner Cable Prepares to Unveil Set-Top-Box-Less Initiative That Comcast Limits to College Campuses

roku

Roku

Time Warner Cable is preparing to solve one of its customers’ biggest annoyances — the expensive and unruly set-top box — by getting rid of them for customers who don’t want them.

CED reports Time Warner Cable provided insight into its “Boxless Home” project at the SCTE Rocky Mountain symposium held last week in Denver.

“One of the projects that I lead is called Boxless Homes where we can take a different device and use it instead of our set-top boxes,” said Time Warner’s Louis Williamson. “We’ve actually addressed the big screen with the Roku. We’ve launched it but we haven’t officially launched what we call our Boxless Homes because its missing a couple of the key Title 6 requirements. and the most important one we’re trying to get working right now is secondary audio. We have closed captioning and other things in it.”

The new project would let subscribers pack up and return their current set-top boxes (not DVRs just yet) and replace them with Internet-enabled Roku, Xbox, and Samsung Smart TVs, potentially saving customers close to $100 a year or more. It is part of the broad transition away from analog service cable companies are making as they gradually move towards IP distribution of content — creating one large broadband pipe across which cable television, Internet access, and phone service will travel.

“We describe things like the iPhones, and iPads and other stuff as companion devices,” Williamson added. “You can use them with your TV, they work as remotes and they’re good for looking at TV for a bit. When you go to something that fits on the big screen, the 10-foot experience like a Roku or the Xbox, or our work we’ve done as an app on Samsung TV that does [live TV and video-on-demand], that’s where we look at as Boxless Homes. You don’t have to have one our boxes; you can use one of those devices as outlets in your home. We’ve been driving heavily to get to that point where we can enable all of our services on a device that is theirs. In a couple of markets the channel lineup is pretty much there except for the transactional video on demand. It’s just getting all the Title 6 compliance in and a good marketing strategy around how you drive it.”

Time Warner management likes the initiative because set-top box equipment is costly to buy and support and many customers would prefer to do away with the frustration and cost of extra equipment, especially when many cable set-top boxes installed in homes before Jan. 1, 2014 use more electricity than a home refrigerator, consuming an average of 446kWh hours each (about $50 a year per box, depending on local energy costs).

Time Warner Cable customers looking to save money already have the option of returning their old energy vampire set-top boxes for one of several new models Time Warner has introduced this year. Contact your local office to find the Time Warner set-top boxes available for service in your area:

Make
Model
Type
Features
On Power (W)
Sleep Power (W)
APD Power (W)
Total Electric Consumption (kWh/yr)
Motorola DCX3510-M Cable APD, AVP, CC, DVR, D2, HD, MR, MS 22.8 18.3 18.3 172
Motorola DCX3200-M Cable APD, AVP, CC, D2, HD, HNI 14.3 11.7 11.6 110
Cisco 8742HDC Cable APD, AVP, CC, DVR, D2, HD, MR, MS 21.7 18.4 18.4 170
Cisco 4742HDC Cable APD, AVP, CC, D2, HD, HNI 18.8 14.1 14.1 136
Samsung SMT-H3272 Cable APD, AVP, CC, DVR, D2, HD, MR, MS 30.3 25.8 25.8 239
Samsung SMT-H3362 Cable APD, AVP, CC, D2, HD, HNI 14.7 13.3 13.3 120
Feature Key
Shortcut
Feature Name
APD Automatic Power Down enabled by default
AVP Advanced Video Processing
CC CableCARD
D2 DOCSIS 2.0
D3 DOCSIS 3.0
DVR Digital Video Recorder
HD High Definition
HNI Home Networking Interface
MR Multi-room
MS Multi-stream
XCD Transcoding

For now, Time Warner expects most of those going box-less will be in the under-30 age demographic. They already have game consoles or Internet-enabled set-top boxes like Roku and are comfortable switching in and out of the Time Warner Cable TV app.

timewarner twc“I think its to early to say how its going to impact the traditional world,” Williamson said in response to a question about whether Boxless Homes will replace traditional MPEG-2 services or augment them. “Currently we don’t even market it or tell anyone about it. The IP video stuff has rolled out word of month. These are the early adopters who are understanding that there’s a TWC app that goes on the Roku box. They decide to go down to their kid’s room or somewhere else and make that their secondary outlet. That’s how it’s evolving now. I think as it gets more and more prevalent and we get on more and more devices, which is going to take time, then its going to be more interesting. Our app on Samsung TV is much closer to our same look and feel as on our se-sop box. Unfortunately these are the real high-end Samsung TVs with the smart hub technology and things like that. There’s not enough of them to understand what the impact is on our footprint.”

Comcast is also working on a box-less approach, but only for college campuses. Its “XFINITY on Campus” project offers streaming cable TV over students’ laptops or portable devices exclusively while on campus. The service is now limited to Emerson College, Drexel University, University of New Hampshire, Lasell College, and MIT. Comcast currently has no plans to offer box-less service to residential subscribers.

http://www.phillipdampier.com/video/BTIG Demo of New TWC TV App on Roku 12-23-13.flv

Rich Greenfield at BTIG Research produced this hands-on demonstration and review of the TWC on Roku app. (6:23)

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