Home » TWC » Recent Articles:

Comcast-TWC Merger Now Issue in N.Y. Governor’s Race: Secret Meetings, New Questions

Gov. Cuomo

Gov. Cuomo

Does N.Y. Gov. Andrew Cuomo support or reject the merger of Comcast and Time Warner Cable and why has an administration official been meeting behind closed doors with the companies involved?

If the merger is successful, more than 95 percent of upstate New York will be served by a single cable operator – Comcast, with little chance Verizon will mount a major challenge for video, broadband, and phone service customers outside of the areas where FiOS fiber upgrades have been announced. Although the Cuomo Administration promised an in-depth investigation into the merger, the governor has kept his own views close to the vest and has not publicly supported or opposed the transaction. But an administration official has met privately with executives of both cable companies and state regulators behind closed doors according to a new report.

According to public schedules obtained by Capital, Comcast representatives met at least three times in August with PSC members or staff in what one former commissioner called unusual circumstances.

James Larocca, a N.Y. PSC commissioner from 2008-2013, said it is not typical for officials from the governor’s office to meet with state regulators and cable executives in the same closed-door meeting.

“I did not meet with the second floor on pending matters and I’m not aware that other commissioners ever did,” Larocca said.

It is not unusual for companies with business before the Commission to meet with its staff or commissioners in ex parte conversations to set the parameters of hearings, filings, and other regulatory proceedings. All such meetings appear to have been properly disclosed by the PSC staff and the companies involved. But the fact some were held behind closed doors with a Cuomo Administration official and without public disclosure of the subjects discussed bothers some.

corporate-welfare-piggy-bankSusan Lerner, executive director of Common Cause New York, said what was discussed behind closed doors should be disclosed so the public can see what top state officials are saying to the cable executives.

“There are questions as to whether the PSC is a strong enough advocate for the people or the industry,” Lerner told Capital. “The agency has lost sight of its initial mission, which is to serve the public in regulating these absolutely essential services.”

Gerald Norlander at the Public Utility Law Project ponders what would happen if there were two negotiating tables discussing the merger, one public and the other secret.

“If there is a second table where views are exchange and negotiations are occurring, it doesn’t do well for transparency,” he said.

Public statements from both Comcast and the Cuomo Administration did little to clear the air.

“It was an initial meeting to discuss the public interest benefits of the transaction for New York,” a Comcast representative said in a one-sentence statement in response to questions about the meeting.

Not exactly, says the Cuomo Administration.

“The meeting was to explain the new law, the PSC’s new powers and its expanded oversight,” Cuomo spokesman Richard Azzopardi said.

As has been the case during much of the merger debate, Time Warner Cable has remained silent and has refused to comment.

Comcast oregonThe governor himself has avoided taking sides, claiming he will abide by the recommendations made by the PSC. But if true, why involve the governor’s office in the merger or meet privately with either the PSC or the companies involved?

“The state is taking a hands-on review of this merger to ensure that New Yorkers benefit,” Cuomo said in May. “The Public Service Commission’s actions will help protect consumers by demanding company commitments to strong service quality, affordability, and availability.”

Cuomo himself has received at least $200,000 in campaign contributions from Comcast and Time Warner Cable. With customer satisfaction scores for both Comcast and Time Warner Cable in the basement, lobbying has been a necessity and Time Warner Cable is one of the state’s top lobbying forces, spending $500,000 of its subscribers’ money in New York in 2013 alone. Comcast spent $60,000, despite only serving a small sliver of customers in downstate New York.

The two companies also donated a combined $500,000 to a secretive state Democratic party account which Cuomo controls. Ironically, some of that money was used to run ads celebrating Gov. Cuomo’s efforts to get money out of politics.

New York Democratic candidate Zephyr Teachout is seeking to oust Gov. Andrew Cuomo in the fall election. One of the issues she is campaigning on is Cuomo’s significant contributions from Comcast and Time Warner Cable and his apparent lack of interest in stopping the merger. At a campaign stop in Syracuse, Teachout claims Comcast will raise your rates and offer no significant benefits to New Yorkers. She’d strongly oppose the merger and media consolidation in general, if elected. WRVO Radio reports. Aug. 29, 2014 (1:26)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Teachout

Teachout

Cuomo’s Democratic primary opponent Zephyr Teachout and her running mate, Tim Wu (who coined the term “Net Neutrality”) are less murky on the issue. Both strongly oppose the merger and cable industry consolidation generally and have expressed serious concern about the governor’s acceptance of hundreds of thousands of dollars in campaign contributions from both Time Warner Cable and Comcast.

Andrew Letson’s Politics Blog considers the differences between the two campaigns striking.

“It’s a sharp contrast – between the hypocritical man in office taking money from corporate interests and the candidates with integrity who are funding their campaign through largely individual donors,” Letson writes.

“[Both Wu and Teachout] have said that they would work to block the frightening Comcast-Time Warner merger, something that’s certainly on the minds of many New Yorkers,” says Letson. “What’s nice about that is that New York actually has a lot of power when it comes to this merger, so opposition from both the governor and lieutenant governor would go a long way.”

Letson is a Teachout campaign volunteer, so it is no surprise which candidate he supports.

Share

Time Warner Cable’s Nationwide Outage; Politicians Protest, Customers Can Get Service Credits

Just one technician can bring Time Warner Cable service to its knees for millions of customers nationwide.

Just one technician can bring Time Warner Cable to its knees.

Time Warner Cable broadband and on-demand television services were unavailable for about three hours this morning after routine maintenance turned into a nationwide outage that affected early risers trying to go online.

Things began to go wrong at around 4:30am ET when Time Warner Cable Internet connections began dropping across the country. The problems also affected on-demand viewing for Time Warner Cable TV customers and brought down Time Warner Cable’s own website.

The company blamed a problem with their backbone connection during routine maintenance. The company said it schedules such work for the very early morning hours to minimize customer disruptions. But once alarm clocks on the east coast began ringing, customers discovered they had no Internet service.

The outage persisted until around 6am ET, although some customers were not back online until after 7am.

Although complaints about Time Warner Cable began flooding social media networks as the sun went up, customers also used the outage as an opportunity to oppose the Comcast-Time Warner Cable merger. The outage demonstrates that a single technician making a mistake at one of the nation’s largest cable companies can disable services for millions.

Virtually every provider experiences a significant outage affecting many or most of their customers at least once a year:

This outage map illustrates this morning's service disruption at Time Warner Cable.

This outage map depicts this morning’s service disruption at Time Warner Cable.

Time Warner Cable will credit you for their outage, but only if you ask:

Meanwhile, New York Gov. Andrew Cuomo promised an investigation in a statement issued Wednesday:

Today’s widespread internet outage that has apparently impacted more than 11 million customers at Time Warner – which is based in New York – is a stark reminder that our economy is increasingly dependent on a reliable broadband network. That is one of the reasons why I pushed for a stronger standard of review for cable company mergers earlier this year.

I have directed the New York State Department of Public Service to investigate this outage as part of its review of Comcast’s proposed merger with Time Warner. The Department will also review whether the outage affected Time Warner’s provision of telephone service in any way. In addition, the Department will include its analysis of this event in its ongoing study of the telecom industry, which is exploring potential changes to the regulatory landscape pertaining to telephone, internet and cable. Dependable internet service is a vital link in our daily lives and telecommunications companies have a responsibility to deliver reliable service to their customers.

Share

Stop the Cap! Files Testimony in Opposition to Comcast-Time Warner Cable Merger With FCC

Stop the Cap! completed and today filed a formal submission with the Federal Communications Commission opposing the merger of Time Warner Cable and Comcast.

We joined tens of thousands of filers — mostly consumers — strongly opposed to the merger on the grounds it is not in the public interest.

Earlier today, Consumers Union filed its petition with more than 20,000 signatures of ordinary Americans across the United States who want nothing to do with Comcast.

Back here in New York, Comcast this afternoon filed a response with the Public Service Commission regarding our (and other) submissions opposed to the merger. We will be analyzing and rebutting their response straight away. Comcast went all-out name-dropping people and groups (many with direct, usually undisclosed financial ties to Comcast) to sell New York regulators the theory ‘the groups and people who matter’ are in favor of their merger while those opposed are mostly out-of-state rabble or unsubstantial individuals of few words.

“Given these many concrete benefits, and the lack of any harm to competition or consumers, it should come as no surprise that the overwhelming majority of the substantive comments (approximately 110 out of a total of about 140 substantive comments) filed in this proceeding support Commission approval of the transaction,” writes Comcast.

Comcast did not share their subjective standard of what constitutes “substantive” but a quick review of the groups cited in Comcast’s response show some substantive was involved - a check from Comcast either recently or in the past. Our view is that it doesn’t take more than a sentence to express extreme displeasure about Comcast taking over Time Warner Cable, and those views should matter just as much as a virtual Hallmark card from a group or politician that used a Comcast-provided “template” with a detachable check at the bottom.

Our favorite was Comcast’s highly defensive ‘hey New York PSC, it’s none of your business that Comcast is testing usage caps and you cannot use it against us’:

The Writers Guild of America, West, Inc. (“WGAW”), Zephyr Teachout and Tim Wu, and Stop the Cap! argue that Comcast will extend data caps and usage-based pricing to New York to impose restraints on online content and drive up consumer costs.

This broadband-related claim is irrelevant to this proceeding and beyond the Commission’s jurisdiction. Indeed, the FCC expressly approved of usage-based billing in its 2010 Open Internet Order and is again examining the issue in the pending Open Internet rulemaking.

In other words, whether data caps are appropriate is a matter of federal regulatory concern, not one that relates to this proceeding or that is even transaction specific (since nothing precludes TWC from adopting caps at any time, as it has in the past).

So regardless of whether data caps are in the public interest or not, New York should not be allowed to weigh in because former FCC chairman Julius Genachowski said usage based billing could be an innovative way to bill for broadband.

In reality, New York can decide for itself what is in the best interests of its residents, and Time Warner Cable determined what was best after a two-week firestorm in 2009 that taught them compulsory usage caps were a really bad idea. But Comcast isn’t terribly interested in the views of the unsubstantive masses — which is comparable to their attitude toward customers, so no change there. It’s just a free preview weekend of what we all have in store if Comcast takes over.

Share

NYS Assembly Leader Joe Morelle Plagiarizes Comcast Testimony in Letter to Regulators

New York State Assembly Leader Joe Morelle (D-Rochester) plagiarized large sections of a Comcast press release and the Congressional testimony of Comcast’s executive vice president David Cohen in a letter sent to the New York Public Service Commission endorsing the cable company’s bid to merge with Time Warner Cable.

Morelle evidently ignored or was unaware of his constituents’ overwhelming opposition to the merger deal and seemed unfazed about Comcast’s long record of dreadful customer service, constant rate increases, and the company’s plan to reimplement usage limits on consumer broadband accounts. Morelle simply cut and pasted Comcast’s own words in his letter about the merger, as we illustrate below:

 

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

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

 

morelleJoe Morelle: “Comcast has a proven record of investing in new technologies, facilities and customer support to provide the best in broadband Internet access, video and digital voice services.”

cohenDavid Cohen: “Comcast has a proven record of investing in new technologies, facilities, and customer support to provide the best in broadband Internet access, video, and digital voice services.”

 

morelleJoe Morelle: “Similarly, TWC has made significant strides in offering a diverse array of video, broadband, and voice services to its customers.”

cohenDavid Cohen: “Similarly, TWC has made significant strides in offering a diverse array of video, broadband, and voice services to its customers.”

 

morelleJoe Morelle: “Combining the two companies’ complementary strengths will accelerate the deployment of next-generation broadband Internet, video and voice services across the new company’s footprint.”

cohenDavid Cohen: “Combining the two companies’ complementary strengths will accelerate the deployment of next-generation broadband Internet, video, and voice services across the new company’s footprint.”

 

morelleJoe Morelle: “Residential customers will benefit from technological innovations including a superior video experience, higher broadband speeds and the fastest in-home Wi-Fi, while also generating significant cost savings and other efficiencies.”

comcastComcast Press Release: “Through this merger, more American consumers will benefit from technological innovations, including a superior video experience, higher broadband speeds, and the fastest in-home Wi-Fi. The transaction also will generate significant cost savings and other efficiencies.”

 

morelleJoe Morelle: “In just two-and-a-half years, over 350,000 families, representing approximately 1.4 million low-income consumers, have been connected to the Internet thanks to this program. This proposed merger would extend this vital program to many more low-income households in New York by providing access to it in certain areas of the state currently only served by Time Warner.

cohenDavid Cohen: “In just two and a half years, over 300,000 families, representing some 1.2 million low-income consumers, have been connected to the transformative power of the Internet thanks to this program. The transaction will extend this vital program to millions more Americans in the areas currently served by TWC.”

Share

Wining and Dining the FCC: Comcast Sponsors Honors Dinner for Commissioner During Merger Review

FCC Commissioner Mignon Clyburn

FCC Commissioner Mignon Clyburn

Comcast will pay $110,000 to sponsor a major dinner honoring FCC commissioner Mignon Clyburn at the same time the regulator is considering whether to approve the cable company’s application to acquire Time Warner Cable.

In a barely noticed Senate lobbying disclosure released last month, Time Warner Cable admitted it was also spending $22,000 of its subscribers’ money on the same meal.

The money gets Comcast a top-level commitment as a “presenting sponsor” at the Walter Kaitz Foundation dinner next month, which features Clyburn receiving a “diversity advocate” award. Comcast will be prominently recognized with marquee recognition, get premier seating for 40 of its guests, and inclusion in a variety of ads and “E-News Blasts.”

Some good government groups hope Clyburn can arrange for a last-minute scheduling conflict to avoid the obvious conflict of interest of a cable operator honoring a commissioner who could decide the fate of its multibillion dollar merger deal.

“I think that the timing is curious,” said Carrie Levine, research director at Citizens for Responsibility and Ethics in Washington (CREW), which noted the corporate sponsorships in a blog post Monday. “They’re honoring an FCC commissioner at the exact same time they’re trying to get approval for a merger. And that doesn’t look so good.”

CREW found TWC listed as a “benefactor” on the event’s supporters’ page and the cost of a “benefactor” level table package at the dinner is $22,000. Comcast, meanwhile, is listed on the foundation’s web site as a “presenting sponsor” for the dinner, which costs $110,000.

Comcast is working minority groups hard for letters and votes supporting its merger with Time Warner Cable, notes CREW:

TWC and Comcast’s contributions in honor of Commissioner Clyburn were made at a time when the two companies are aggressively working the levers of power to get their merger approved. As CREW has noted, using honorary contributions to lawmakers and regulators’ favored charities to curry favor is one of the more under the radar moves in Comcast’s merger playbook—a playbook that also emphasizes lobbying, campaign contributions, and winning support from third-party groups, especially those representing minorities.

Regulators must approve the deal, and Congress has been scrutinizing it. Several lawmakers have voiced reservations in hearings about the merger’s potential impact, and this month, more than 50 House members sent Comcast and TWC a letter saying they should commit to carrying independent Latino-focused channels as a condition of the merger. In May, CREW found that between 2011 and 2013, Comcast had spent heavily to honor the Congressional Black Caucus (CBC) and the Congressional Hispanic Caucus (CHC), whose members could be important supporters of the merger. Comcast also gave big to the Asian Pacific American Institute for Congressional Studies (APAICS), honoring, among others, Rep. Judy Chu (D-CA), who is a member of the House Judiciary Committee’s Subcommittee on Intellectual Property and the Internet and supported the Comcast/NBC Universal Merger approval in 2011. TWC made fewer honorary contributions than Comcast during the same period, but also contributed $100,000 in honor of the CHC.

A review of the two companies’ 2014 mid-year lobbying contribution reports reveals money is still flowing to these key groups, and there has been a significant uptick in giving to the CHC. In the first six months of 2014, Comcast contributed $273,454 in honor of the CHC, more than the company contributed in any individual year between 2011 and 2013. Comcast also reported giving $125,000 in honor of the CBC and $50,000 to the APAICS in honor of Rep. Chu and Rep. Mike Honda (D-CA).

TWC increased its giving to other Latino advocacy groups as well. On February 18, 2014, the company contributed $25,000 to the League of United Latin American Citizens (LULAC) in honor of several members of Congress and Secretary of Labor Thomas Perez, an increase from its $20,000 contribution to LULAC in 2013. In addition, on March 5, 2014, Time Warner Cable contributed $25,000 to the National Council of La Raza (NCLR) in honor of the “Gang of Eight” senators who passed a comprehensive immigration reform bill in June 2013. TWC previously contributed a total of $45,000 between 2011 and 2012 to NCLR.

Stop the Cap! will continue to expose the names of elected officials and non-profit and civil rights groups that have thrown their support behind Comcast, which in turn delivers contributions, free exposure, and in some cases future employment with the cable operator.

Share

Stop the Cap!’s Letter to N.Y. Public Service Commission on Comcast/TWC Merger Deal

psctest

August 6, 2014

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

Dear Ms. Burgess,

The country is watching New York to learn if our state regulators believe a merger between two unpopular cable operators is in the best interest of New York residents.

For the first time in a long time, the Public Service Commission has been empowered to provide much needed oversight over two companies that have enjoyed both deregulation and a near-monopoly across the region, particularly for High Speed Internet service at speeds above 10Mbps.

New Yorkers, like the rest of the country, consistently rank both Comcast and Time Warner Cable as some of the worst companies around.[1] The PSC has the power to facilitate franchise transfers that would effectively combine the two into one giant monolithic cable company dominating the northeastern U.S., or it can reject the proposed assignment of franchises to Comcast, letting both companies know “in the public interest” means something in New York State.

Section 222 of the New York Public Service law[2] provides the PSC with the authority to reject the application for a transfer of a franchise, any transfer of control of a franchise or certificate of confirmation, or of facilities constituting a significant part of any cable television system unless, and I paraphrase, the transfer is in the public interest.

The Commission is on record partly articulating its standard for determining the public interest. In 2013, the Commission stated several principles it considered in the matter of the acquisition of Central Hudson Gas and Electric by Fortis, Inc., to determine if the transaction would provide customers positive net benefits.[3] The Petitioners in that case were held to a standard requiring them to demonstrate the expected intrinsic benefits of the transaction exceeded its detriments and risks.

However, there are considerable differences between energy utilities and the largely deregulated marketplace for multichannel video distributors and broadband providers. While legacy telephone regulations still provide for significant oversight of this vital service, cable operators have won the right to set their own rates, service policies, and broad service areas.

Although many of us believe broadband has become an essential utility service, federal regulators do not, especially after telephone and cable companies have successfully lobbied on the federal level to weaken or eliminate regulation and oversight of television and broadband service with arguments they do business in a fiercely competitive marketplace.[4]

Regulators cannot compel cable operators to provide service in communities where they have chosen not to seek a franchise agreement, and broadband expansion programs in rural, unserved areas have largely only been successful when communities elect to construct their own broadband networks or federal funds (tax dollars and subsidies funded by ratepayers) defray the expense of last-mile networks.  While it is enticing to seek a voluntary agreement from the applicant to expand its rural service area, the public interest benefit to the relatively small number of New Yorkers getting broadband for the first time must be weighed against the interests of millions of existing subscribers in New York who are likely to see further rate increases, usage-limited broadband service, and worse service from Comcast.

New Yorkers will remain captive in most areas to choosing between one telephone and one cable company for packages of phone, television, and Internet access.[5] Promises of competition have never materialized for vast numbers of state residents, particularly those upstate who have been left behind after Verizon ceased its FiOS fiber to the home expansion project.

Unless Comcast was compelled to wire the entire state, any proposal seeking a voluntary agreement to expand Comcast’s service area in New York is likely to be insufficient to solve the pervasive problem of rural broadband availability. It would also saddle millions of New Yorkers with a company unwelcomed by consumers, with no alternative choice.

As you will see in our filing, Comcast has often promised improvements it planned to offer anyway, but held back to offer as a “concession” to regulators.

The result of past deals is one monopolistic cable operator is replaced by another, and as the American Consumer Satisfaction Index reported, bigger is not better for consumers.[6]

The nation’s two largest cable operators, Comcast and Time Warner Cable, now seek further “value creation” for their already very profitable businesses by merging.[7]

News reports indicate further consolidation is likely in the telecommunications marketplace, largely in response to this merger proposal. Soon after Comcast made its announcement, AT&T announced its desire to acquire DirecTV,[8] and Charter Communications’ efforts to bolster its size are likely to be realized acquiring Time Warner Cable customers cast off as part of the Comcast-Time Warner Cable transaction.[9]

How does this benefit New Yorkers? In our attached statement, we go far beyond the testimony offered by Comcast’s representative at the public information meeting we attended in Buffalo. It is vital for any merger review to include a careful analysis of exactly what Comcast is proposing to offer New York. But it is even more important to consider the costs of these improvements. As you will see, many of the promised upgrades come at a steep price – set top box platforms that require a $99 installation fee, the prospect faster broadband speeds will be tempered by broadband usage limits and usage penalties largely unfamiliar to New Yorkers, and other technology upgrades that are accompanied by subscriber inconvenience and added costs.

Comcast’s promised commitments for customers must also be carefully weighed against what it promised shareholders. While Comcast claims it will spend millions to upgrade acquired Time Warner Cable systems (many already being upgraded by Time Warner Cable itself), the merger announcement includes unprecedented bonus and golden parachute packages for the outgoing executives at Time Warner Cable, including a $78 million bonus for Time Warner Cable CEO Rob Marcus, announced less than 60 days after taking the helm.[10] Comcast’s biggest investment of all will be on behalf of its shareholders, who will benefit from an estimated $17 billion share repurchase plan.[11]

The PSC should be aware that previous efforts to mitigate the bad behavior of cable companies have nearly always failed to protect consumers.

Professor John E. Kwoka, Jr., in his study, “Does Merger Control Work? A Retrospective on U.S. Enforcement Actions and Merger Outcomes,[12]” found past attempts at behavioral remedies spectacularly failed to protect against rapacious rate increases after  mergers are approved.[13]

In short, it is our contention that this merger proposal offers few, if any benefits to New York residents and is not in the public interest even if modestly modified by regulators.

The implications of this transaction are enormous and will directly impact the lives of most New Yorkers, particularly for broadband, now deemed by the industry (and consumers) its most important product.[14]

We have attached a more detailed analysis of our objections to this proposal and we urge the New York Public Service Commission to recognize this transaction does not come close to meeting the public interest test and must therefore be rejected.

 

Yours very truly,

 

Phillip M. Dampier

[1]http://arstechnica.com/business/2014/05/comcast-time-warner-cable-still-have-the-angriest-customers-survey-finds/
[2]http://codes.lp.findlaw.com/nycode/PBS/11/222
[3]http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={A55ECCE9-C3B2-4076-A934-4F65AA7E79D1}
[4]http://www.mi-natoa.org/pdfs/The_Ten_Disappointments_of_Cable.pdf
[5]http://www.newyorker.com/news/daily-comment/we-need-real-competition-not-a-cable-internet-monopoly
[6]http://www.theacsi.org/component/content/article/30-commentary-category/179-acsi-quarterly-commentaries-q1-2008
[7]http://corporate.comcast.com/images/Transaction-Fact-Sheet-2-13-14.pdf
[8]http://www.usatoday.com/story/money/business/2014/05/13/att-directv-deal-analysis/9044491/
[9]http://www.reuters.com/article/2014/04/28/us-charter-communi-comcast-idUSBREA3R0N620140428
[10]http://money.cnn.com/2014/03/21/news/companies/time-warner-cable-golden-parachute/
[11]http://www.cleveland.com/business/index.ssf/2014/02/comcast_agrees_to_purchase_of.html
[12]John E. Kwoka, Jr., “Does Merger Control Work? A Retrospective on U.S. Enforcement Actions and
Merger Outcomes,” 78 Antitrust L.J 619 (2013)
[13]7 John E. Kwoka, Jr. and Diana L. Moss, “Behavioral Merger Remedies: Evaluation and Implications for
Antitrust Enforcement,” at 22, available at
http://antitrustinstitute.org/sites/default/files/AAI_wp_behavioral%20remedies_final.pdf
[14]http://online.wsj.com/news/articles/SB10001424052702303657404576359671078105148
Share

Comcast’s “Improvements,” Including Digital TV, Come at a High Cost for Customers

psctest

Comcast has offered the Commission a vague preview of how it intends to improve cable television service for New York customers, but rarely discloses important details about the costs and limitations their “improvements” will bring.

comcast octupusWhile Comcast is excited about the proposition of transitioning Time Warner Cable customers away from the current mixed analog-digital platform to an all-digital lineup, Time Warner Cable customers have paid less and avoided costly, unwanted extra equipment as a result of the choices consciously made by Time Warner Cable.

Comcast and Time Warner Cable have different philosophies about how to best deliver the bulging cable television packages most cable systems now offer:

  • Time Warner Cable adopted “Switched Digital Video” from BigBand Networks, a technology that lets Time Warner deliver only the digital signals that are being watched in a service group or node, instead of the entire lineup.[1] Since it is unlikely subscribers are watching every niche channel on offer, Time Warner has been able to reclaim unused bandwidth. As a result, customers using older cable-ready televisions can continue to access analog television channels without the use of a costly, often unwanted set top box.
  • Comcast has more aggressively chosen a  path to all-digital television service, moving most of their television channels to encrypted digital technology that requires a Comcast set top box, a less costly Digital Transport Adapter (DTA) designed for secondary-use televisions, or a CableCARD. Customers must choose one of these technologies, usually at an added-cost to access their cable television service.[2]

Time Warner Cable also began deploying DTA equipment in certain areas to free up additional bandwidth on its cable systems while still leaving most analog channels intact. The DTA boxes are supplied free of charge during an introductory phase lasting up to a year, after which a $0.99 monthly charge for each box is imposed.[3] (That fee has recently been raised in certain markets, including New York City, to $1.50/mo.[4] [5])

In contrast, Comcast customers were initially entitled to receive up to three no-cost DTAs to install on televisions not equipped with a Comcast set top box.[6]

comcast-cisco-dtaOn January 1, 2013 Comcast began informing subscribers a new $1.99/month “additional outlet service charge,” now applied for each DTA installed. [7]

Public officials in Eagan, Minn., responding to consumer complaints about the new charge, suspected Comcast was attempting an end run around the Federal Communications Commission’s prohibition of “excessive fees for cable equipment.”[8] The additional outlet fee was deemed by Comcast to be a service fee, not an equipment charge.[9]

Attorney Mike Bradley was hired by a group of suburban Minneapolis cable commissions to investigate the legitimacy of Comcast’s new DTA service charge. If the fee were classified as an equipment charge, Comcast would charge 50 cents per DTA based on rate forms filed with the Minnesota cable commissions he represents, Bradley told The Pioneer Press.[10]

For the average Comcast subscriber, the result was another rate increase in return for digital television service. Subscribers with three DTA’s now pay up to $5.97 extra per month in order to continue to receive the exact same programming on the same number of televisions within their household – a $25 annual surcharge per DTA, $75 if the customer uses three DTA’s, complained Eagan, Minn. Mayor Mike Maguire in a letter to Sen. Amy Klobuchar.[11]

Comcast’s fees, in addition to being well in excess of the actual cost of the equipment, will earn the company at least $550 million annually in new revenue – all for equipment that costs the company around $50 per unit.[12] Because Comcast is encrypting its lineup, even televisions equipped with QAM tuners, capable of receiving digital television signals without a set top box, will also eventually need the new equipment to unscramble television signals.

[1]http://www.cedmagazine.com/news/2009/09/time-warner-cable-serves-up-sdv-in-n.y.,-dallas,-l.a.
[2]http://customer.comcast.com/help-and-support/cable-tv/how-bill-will-change-with-digital-migration
[3]http://www.cedmagazine.com/news/2012/01/time-warner-cable-wraps-up-all-digital-conversion-pilot-in-maine
[4]http://www.twcableuntangled.com/2013/04/were-converting-analog-signals-to-digital-across-the-new-york-region/
[5]http://www.timewarnercable.com/en/residential-home/support/faqs/faqs-tv/basictvencryption/what-will-the-digital-adapter-cost.html
[6] http://www.twincities.com/ci_22617153/comcast-fee-plan-cause-confusion-controversy
[7]http://customer.comcast.com/help-and-support/cable-tv/how-bill-will-change-with-digital-migration
[8]http://transition.fcc.gov/Bureaus/Cable/News_Releases/nrcb4009.txt
[9]http://stopthecap.com/2013/02/21/comcast-calls-1-99-charge-for-digital-adapters-a-service-fee-to-avoid-fcc-complications/
[10]http://www.twincities.com/ci_22617153/comcast-fee-plan-cause-confusion-controversy?IADID=Search-www.twincities.com-www.twincities.com
[11]https://dl.dropboxusercontent.com/u/9008/pioneerpress/yourtechweblog/Eagan%20-%20Sen%20Klobuchar%20ltr%20re%20Cable%20Rate%20Concerns%203-5-13.pdf
[12]http://cisco-news.tmcnet.com/news/2011/04/25/5464600.htm
Share

How Comcast’s Volume Discounts Will Kill Cable-TV Competition

psctest

You can still read a book instead of everything else.

You can still read a book instead of everything else.

Allowing Comcast to dominate New York’s cable television marketplace will deter future competitors from entering the market, particularly for television programming.

One of the arguments made by proponents of the merger is the possibility of decreased wholesale television programming costs won through volume discounts available to the largest nationwide providers. Unfortunately for consumers, Comcast has already declared customers will not benefit from those discounts in the form of lower cable bills.

A prospective new entrant considering providing cable television service will face competition with Comcast without any benefit of volume discounts on programming.[1] That makes it unlikely a provider will offer a competing television package.

This is not a theoretical problem.

In Ohio, independent cable company MCTV discovered that while large cable operators like Comcast were benefiting from volume discounts, it faced contract renewal prices more than 40 times the rate of inflation.[2] Cable ONE, owned by the Washington Post, had to drop more than a dozen Viacom owned channels for good because it could not afford the asking price.[3]

MCTV president Bob Gessner reminds us of just how concentrated the entertainment business has become, noting that nine media companies (Comcast is one of them) now control 95% of all paid video content consumed in the United States.[4]

MCTV’s survival plan includes membership in the 900-member National Cable Television Cooperative, the only way smaller providers can pool resources and win discounts of their own. It is no longer effective as mergers and acquisitions continue to consolidate the cable and telco-TV business. All 900 NCTC members serve a combined five million customers. Comcast has 21 million, DirecTV: 20 million, Dish Networks: 14 million, and Time Warner Cable: 11 million.[5]

media_consolidation

AT&T confesses it cannot compete effectively with Comcast and other larger competitors for the same reason. AT&T’s solution, like Comcast, is to buy a competitor, in this case DirecTV.[6]

Frontier Communications faced a similar problem after adopting Verizon FiOS franchises in Indiana and the Pacific Northwest after purchasing Verizon landline networks in several states. When Frontier lost Verizon’s volume discounts on programming, Frontier’s solution was to begin a marketing campaign to convince its fiber customers to abandon the technology and switch to one of its satellite television partners.[7]

[1]http://www.fiercecable.com/story/comcast-twc-deal-will-squeeze-programming-and-technology-vendors/2014-02-13
[2]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[3]http://online.wsj.com/articles/viacom-60-cable-firms-part-ways-in-rural-u-s-1403048557
[4]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[5]http://stopthecap.com/2014/06/05/independent-cable-companies-unify-against-cable-tv-programmer-rate-increases/
[6]http://www.bloomberg.com/news/2014-05-02/dish-or-directv-need-deal-most-in-at-t-love-triangle-real-m-a.html
[7]http://stopthecap.com/2011/08/16/frontiers-fiber-mess-company-losing-fios-subs-landline-customers-but-adds-bonded-dsl/
Share

Comcast’s ‘We Don’t Compete With TWC’ Argument Opens the Door to Merging With Every Cable Company

psctest

competitionComcast has argued there should be no antitrust concerns over their merger with Time Warner Cable because the two companies do not directly compete with each other.

That is precisely the problem. Nothing has ever precluded Comcast from applying to provide service throughout New York in direct competition with Time Warner Cable, but that has never happened. If one accepts Comcast’s logic, nothing should preclude it from acquiring every cable company in the United States because in almost no cases do cable operators compete head-to-head for customers.

Comcast must not be convinced of its own argument, because it has voluntarily agreed to limit its television market share to less than 30 percent by selling groups of Time Warner Cable customers to Charter Communications.[1]

The lack of competition is profound in New York, particularly upstate, and will only grow worse if this merger is permitted.

comcast whoppersWhile sections of the state enjoy competition from Verizon FiOS fiber to the home service, enormous regions, including metropolitan Rochester and Binghamton have no prospect of widely available fiber broadband speeds consistently above 10Mbps because Frontier Communications almost entirely relies on DSL and its variants in Rochester and Verizon suspended its fiber expansion before even contemplating upgrading Binghamton.

The cities of Buffalo and Syracuse can only find FiOS in wealthy suburban areas, while inner-city residents are left either choosing Time Warner Cable or Verizon DSL, if offered.

It is also critical to note both cable operators fiercely compete with each other for sports programming rights and advertising dollars, both of which have major implications in a large metropolitan market like New York. Both Comcast and Time Warner Cable have records of withholding sports programming from competitors or charging excessively for access.[2]

[1]http://time.com/79053/comcast-time-warner-cable-charter/
[2]http://judiciary.house.gov/_cache/files/665684a1-49d4-4aca-9bc1-79ae9ad387b9/grunes-testimony.pdf
Share

Comcast/Time Warner: We Dare You to Compare – ‘Our Regular Retail Prices Are a Secret’

psctest

One of the most difficult questions you can ask a customer service representative of either Comcast or Time Warner Cable is what their regular price is for service. As a Buffalo News reporter discovered in August 2013, Time Warner Cable refused repeated attempts to ascertain the non-promotional price of its broadband service.[1]

merger benefitsMaking a direct comparison between the prices charged by Comcast and those of Time Warner Cable require unnecessary perseverance made even more difficult by the fact Comcast only serves a tiny portion of New York State.

Both companies offer promotional deals to new customers as well as those threatening to cancel service, but those prices fluctuate wildly and eventually expire.

Time Warner Cable has made it even more difficult this year by completely eliminating the most popular plans from its retail price list: bundled service packages known in the industry as “double-play” (two services) or “triple play” (three services).[2]

A Time Warner Cable spokesman told the Los Angeles Times the company is required by regulators to provide pricing information for only some of its fees, and Internet rates are not one of them.[3] This year, Time Warner kept the size of its broadband rate hikes to itself. It is much the same for Comcast.

Both cable companies make a point of telling the news media that these prices, including installation, reflect the “rack rates” and that “most customers will pay less […] after cutting a deal for their programming package.”

ratehike1In 2011, Time Warner Cable raised some of its “rack rates” by up to 51.1 percent.[4]

That makes a rate comparison for television service difficult because the retail rates often do not reflect reality. But beyond rates, regulators need to understand Comcast television packages are very different from what Time Warner Cable customers are used to finding.[5] While Time Warner Cable bundles the vast majority of networks into a Standard TV package, Comcast offers a more extensive variety of packages. While at first glance this may seem to allow customers to better customize a package to meet their needs, Comcast has also taken care to break some of the most popular networks out of lower-cost packages and force customers to choose cable television packages costing much more to get them back.[6]

Sports fans and those who enjoy networks like Turner Classic Movies will have to pay Comcast $87.89 a month for its “Digital Preferred,” package[7], just to get back channels already included in the standard Time Warner Cable TV packages we are familiar with in New York.

At regular prices, a Comcast triple play customer should expect to pay $147.49 for the most bare bones TV, phone, and broadband package, $154.99 for the most popular package without premium channels, and $164.99 a month for a bundle that brings along a similar lineup to what TWC offers, along with Starz.[8] Comcast’s nearest equivalent to Time Warner Cable’s $200 Signature Home service costs $239.99 a month and offers no better Internet speeds than what Preferred Plus customers get.

[1]http://www.buffalonews.com/city-region-whats-the-big-secret-about-pricing-20130805
[2]http://www.timewarnercable.com/en/support/account-and-billing/topics/retail-rates.html
[3]http://articles.latimes.com/2014/mar/17/business/la-fi-lazarus-20140318
[4]http://articles.latimes.com/2011/dec/27/business/la-fi-lazarus-20111227
[5]http://www.timewarnercable.com/en/tv/digital-cable-tv.html
[6]http://www.comcast.com/Corporate/Learn/DigitalCable/digitalcable.html
[7]http://www.comcast.com/Corporate/Learn/DigitalCable/TVChannelLineUp.html
[8]http://www.comcast.com/shop/deals-dealfinder
Share

Search This Site:

Contributions:

Recent Comments:

  • Ian L: Yeah; in the case of GVoice, outbound calls to US numbers are free, so I'll give 'em a little slack on call quality (they've also been fine for callin...
  • Budwyzer: “We have to look out for the interests of our members,” Rick Harnish, executive director of the Wireless Internet Service Providers Association in Oss...
  • txpatriot: The Oregon PUC has been investigating rural call completion problems in that state as early as 2012: http://www.oregonlive.com/forest-grove/index.ssf...
  • Phillip Dampier: Did your service get locked which prompted the chat or was it a revelation that came after asking about something else?...
  • Jim: Here's a crazy idea, why doesn't AT&T just offer a fair price to all customers and stop playing games? They often advertise a promotional price fo...
  • Hamza: lol I have a 250gb plan and I'm at 500gb now. I joined Cox's Tech Chat and the guy told me I had 3 warnings on my account this billing cycle...and co...
  • Limboaz: Comcast up to dirty tricks to stop competition: http://www.fiercecable.com/story/centurylink-accuses-comcast-using-lobbying-heft-block-it-competitive...
  • Phillip Dampier: Register all third party call handlers and develop a protocol that includes a limit on how many times a call can be passed to another party, a provisi...
  • humbug: And anon, no I can't really afford it, but surprisingly, at least to you, I don't want to move just for decent communications access. The federal gov...
  • more humbug: GCI has a usage page where we're supposed to be able to monitor the usage. I usually quit any significant downloading about halfway through the billi...
  • JayS: Poor call completion seems to exist in all states, not just those that have recently deregulated;re-regulating, following the old rules, does not appe...
  • Michael Elling (@Infostack): Phil, Superlative work. I sincerely hope it has the much needed and necessary impact inside and outside the Beltway. Michael...

Your Account: