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Call to Action! Tell the FCC “No” to Charter Spectrum on Data Caps!

Charter Communications has petitioned the FCC for permission to impose DATA CAPS on customers at least two years before the FCC’s prohibition on caps — a key condition imposed on the cable company in return for approval of its 2016 merger with Time Warner Cable and Bright House Networks — is scheduled to expire.

In 2016, the FCC told Spectrum its merger was NOT in the public interest without requiring some changes and conditions that would benefit you as a Spectrum customer. Because the FCC recognized that competition was uncommon in the cable industry, it knew there would be a temptation after a merger to slap data caps on internet customers for no good reason, other than the fact the company could. In fact, data caps have long been discussed as a deterrent to keep customers from dropping cable TV subscriptions in favor of streaming video. Why? Because if you stream TV programming from Netflix, Hulu, YouTube TV, Sling, and others, that data usage would quickly eat up any data allowances Spectrum would include with its data cap. Most companies with data caps make sure you pay dearly if you go over your allowance. The de facto standard overlimit fee is $10 for each 50 GB of usage, up to a maximum ranging between $100-200 a month! That kind of bill shock would likely push you back to cable TV.

The FCC hoped that a seven-year ban on Spectrum imposing data caps would give competition a chance to develop, and not just with streaming video. In fact, the FCC argued newly arriving cable operators, fiber to the home providers, and 5G services could probably create so much competition, data caps would likely disappear. Unfortunately, consumers have seen little competition emerge in the last four years. In fact, many still have only one choice — a cable monopoly — for internet service that meets the FCC’s minimum speed (25 Mbps) to qualify as broadband. DSL from the phone company rarely provides the speed available from your local cable operator. Fiber to the home competition is growing in some areas, but many homes still lack access. Although there has been much hype in the media about 5G, robust and fast wireless home internet will only be available in a fraction of homes for years to come.

Despite this reality, Charter is asking the FCC to let the ban on data caps expire two years early, which means they could slap data caps on customers just like you by next spring. Charter argues there are lots of streaming services now competing for your business, so there is no evidence Spectrum is hurting the marketplace for streaming television. Therefore, there is no need to protect consumers from data caps.

We argue several points in response:

Since this graphic was created, Time Warner was sold to AT&T and CBS and Viacom have merged.

Most large streaming video providers are owned by giant satellite, cable and telephone companies (Comcast’s Peacock, AT&T’s TV/TV Now and HBO Max, Dish Network’s Sling TV), giant TV conglomerates (ABC-Disney’s Hulu/Disney +, CBS-Viacom’s All Access), or tech companies (Apple TV, YouTube TV). Netflix has raised prices for its service, in part because it has been pushed to pay cable companies like Comcast “interconnection fees” to guarantee Comcast customers will get suitable service. Most streaming services not affiliated with telecom companies have opposed data caps all along, understanding they can be anticompetitive and hurt subscriber numbers.

What competition? Charter Spectrum customers likely still have the same competitive options they had in 2016, if any, which is not enough. Imposing data caps on home broadband service illustrates that lack of competition in action. Comcast has avoided imposing data caps on its customers in the more competitive northeast and mid-Atlantic regions, where it faces Verizon’s FiOS service, which does not have data caps.

Charter asked for and was granted approval of a merger consumers did not need or want. Charter voluntarily agreed to the FCC’s conditions to close the deal. A deal is a deal, but Charter now wants to walk away. The company is spending thousands on its attorneys to free itself from the FCC’s data cap ban while claiming they have no plans to implement data caps. Do you honestly believe them?

Consumers hate data caps. In fact, just having data caps on internet service can undermine a provider’s marketing and ad campaigns and make signing up new customers difficult. Companies with data caps lose more customers than those that don’t because customers switch if a new cap-free competitor comes to town. Just dealing with implementing complicated usage meters and upset customers complaining about their accuracy costs more than any revenue companies earn from overlimit fees. Remarkably, those are not just the views of Stop the Cap! Charter itself told the FCC those were just some reasons there was a strong business case against implementing data caps. Now it is asking the FCC for permission to impose data caps despite all that!

Monroe County Legislator Rachel Barnhart has teamed up with Stop the Cap! to fight Charter’s request to allow it to data cap customers.

Data caps do not protect broadband networks from congestion, and they are not about equitably sharing internet capacity. The ongoing pandemic just proved that big cable and phone companies have existing broadband networks more than capable of handling a large spike in network traffic. Reasonable, cost-effective upgrades will continue that success story for years to come with no need for arbitrary data caps. Make no mistake. Data caps are just another way telecom companies can monetize your usage to increase their already fat profits.

What can you do?

Until July 22, 2020, you can send a comment directly to the FCC urging them NOT to allow Charter’s request to sunset merger deal conditions early. Monroe County (N.Y.) legislator Rachel Barnhart and Stop the Cap! have teamed up to push this message through to Spectrum customers everywhere. We need to put the FCC on notice it must leave well enough alone and allow the deal conditions to remain in place. We also want to send a clear message to executives at Charter that customers do not want data caps… ever. It’s a message Stop the Cap! successfully delivered in 2009 to the top leadership of Time Warner Cable, and they listened. It’s now time to send another message to the folks at Charter. We sincerely hope they will listen too.

Here is a sample letter, which we urge you to adjust to reflect your own views and circumstances before submitting:

To Whom It May Concern:

Please reject Charter’s request to sunset the deal conditions it agreed to as part of its merger with Time Warner Cable and Bright House Networks.

A deal is a deal, and Charter agreed not to impose data caps on its customers for at least seven years. It now wants that prohibition lifted two years early, arguing competition has flourished over the last four years. In fact, little has changed for us. Competition has not flourished. We still do not have choices for broadband service and although there are more streaming video providers, most are owned by large cable, satellite, and phone companies or giant media conglomerates. Data caps will make me reconsider using these services because I cannot afford an even higher internet bill.

Competition is supposed to bring pricing down in a healthy marketplace. But my bill is only going up. What kind of company would ask for permission to slap usage limits on customers in the middle of a pandemic, after telling everyone their networks were more than robust enough to handle increased stay-at-home usage? The answer is a company that faces little competition and has no fear a competitor will use this request against them. Internet affordability is already an enormous problem, and data caps just make internet service even more expensive. We already pay among the highest prices in the world for service.

My family did not ask for this merger, and the FCC in 2016 determined it was not in the public interest to approve it without imposing a handful of conditions to allow consumers to benefit from the transaction. The FCC should insist Charter be true to its word and not impose data caps. Charter told the FCC in 2016 it had an “aversion to data caps, stating that instead of enforcing usage limits it chooses to market the absence of data caps as a competitive advantage” and that “there is a strong business case for not implementing caps” and that caps “undermined” its marketing messaging. Was Charter being honest with the FCC in 2016? Their current request for permission to lift data caps seems to ignore the positions Charter itself took with the FCC just a few years ago.

We urge you to deny Charter’s petition, which will allow Charter to continue making plenty of money from the sale of unlimited internet access and continue honoring its advertising commitments to sell internet service “with no data caps” as it does now.

To submit your comments on this issue:

First, click this link to be taken to the FCC website.

Second, click the link on the left sidebar marked “+Express” as circled below:


Third, fill out the form as completely as possible, and leave your comments in the “brief comments” box at the bottom.

You can also mail your written comments:

Mail TWO COPIES of your written comments, which should open with the greeting “Dear Secretary Dortch,” and close with your signature to this address:

Ms. Marlene H. Dortch
Office of the Secretary
Federal Communications Commission
445 12th Street SW
Washington, DC 20554

Providers Look for New Ways to Boost Broadband Bills with “Value Added Services”

Phillip Dampier July 7, 2020 Consumer News No Comments

Parks Associates: Broadband VAS Adoption & Awareness

Cable and phone companies may increasingly turn to selling broadband subscription add-ons to restore the high level of profitability investors expect from the nation’s internet service providers.

With an increasing number of people deciding to ditch cable TV subscriptions, cable and phone companies are seeing lower growth in the average amount they charge subscribers every month, leaving many to consider finding new broadband “value-added” products and services to sell.

Falling video subscription revenue and increased programming costs have made it difficult for operators to report the glowing results Wall Street has come to expect over the last 20 years. In 2017, only 34% of customers were signed up for broadband-only service. By the first quarter of this year, that number had risen to 42%. Broadband only customers pay less than customers who choose a bundle of services. Parks Associates found the average internet-only customer paid $60 a month for service, with rates up 36% from the first quarter of 2012 to the third quarter of 2019. In comparison, cable operators only managed to raise rates for bundled video/internet packages from $107 to $127 a month over the same period. When a customer downgrades to internet-only service, the average revenue per subscriber (also known as “ARPU”) drops significantly, sometimes by as much as half.

To keep revenue growing, providers have a few options:

  1. Raise prices: Cable and phone companies have traditionally raised prices on services least likely to be dropped as a result of price hikes. For years, cable operators could significantly raise prices for cable TV packages with little fear customers would cancel service. Cord-cutting changed that, and as a result video-related rate hikes have slowed. Instead, operators have found broadband to be the service most cannot do without, and have shifted rate hikes accordingly.
  2. Offer upgraded services: The most popular and effective revenue enhancer is upselling customers to better packages and services. For broadband, that traditionally means a faster speed package. Most companies charge a comparatively small amount (often $10-20 more) for a considerably faster speed tier.
  3. Sell value-added services: These are ancillary services that offer subscribers more value from their existing subscription. Examples include: Unlimited Access (waiving data caps), Enhanced Technical Support, Anti-Virus/Malware Protection, Enhanced Streaming Video Services, Enhanced Network Performance for Gameplay, Wiring Maintenance/Insurance, Home Security/Automation, and Cloud Backups.

Currently, only a few providers aggressively promote value-added services. Many already provide anti-virus/malware software as part of their broadband service offering. Others, like Charter/Spectrum, have soured on selling value-added services in favor of a simplified menu of services and options. Spectrum ceased supporting Time Warner Cable and Bright House Networks’ legacy home security/automation services in early 2020. Some phone companies, notably Frontier Communications, have long depended on value-added services to bolster revenue for its increasingly beleaguered DSL internet service. Frontier heavily markets anti-virus, enhanced tech support, and wiring maintenance services to customers, which can add a considerable amount to a customer’s bill.

Parks Associates, a market research and consulting company, is now offering insight on value-added services to phone and cable companies in its latest research report, 360 Deep Dive: Broadband Value-added Services (for $7,500 a copy):

As the broadband market becomes increasingly commoditized, broadband providers are seeking way to differentiate themselves through new products and services. This research investigates consumer perception and interest in value-added services from service providers including Wi-Fi services, network optimization, and data security and monitoring services.

The report finds most consumers have traditionally ignored or were unaware of value-added services from internet providers. As a result, the impact on revenue from sales of such services has been usually negligible.

“Value-added services (VAS) have little impact on ARPUs because [internet] speed, which correlates with VAS adoption, is the primary driver of ARPUs,” said David Drury, Parks’ research director. “In other words, speed rather than the number of VAS broadly determines ARPU levels, even though those with higher speeds also have a higher number of VAS.”

But Parks suggests the ongoing coronavirus pandemic may open fresh opportunities to introduce customers to value-added services. Among the services consumers may now be using for the first time are telehealth services, which allow for virtual online doctor visits, video conferencing with friends, family, and colleagues, and remote learning tools. After the COVID-19 crisis passes, providers could begin marketing service and support for these applications, either directly or in partnership with other companies.

Still undetermined is whether companies should bundle these types of services into existing subscriptions for free as a customer retention tool, or offer them for sale to customers.

“Broadband growth has plateaued, so the next opportunity is in VAS,” Drury said. “Providers have generally used VAS as a marketing tool to attract and retain subscribers, so for them to make the transition to a revenue source, companies need a clear understanding of the gaps in consumer satisfaction and demand for strategic and successful VAS deployments.”

Telecom Industry Lobbyist Gets Friendly Reception on C-SPAN

The cable industry’s public affairs network — C-SPAN, gave a friendly reception to a top telecom industry lobbyist over the weekend, responding to soft ball questions about rural broadband and telecommunications public policy debates.

Jonathan Spalter, president and CEO of USTelecom appeared on C-SPAN’s “The Communicators” to answer questions about broadband service in the era of COVID-19. USTelecom’s members, primarily telephone companies, have been strong proponents for government funding of rural broadband expansion, are opposed to telecom industry regulation and net neutrality policies, and argues that the more oversight and regulation the industry deals with, the less investment Wall Street will direct towards broadband networks.

Spalter was asked about how American broadband networks handled the work/learn-from-home requirements during the coronavirus pandemic. Spalter said networks handled the increased traffic well, but noted many rural Americans still lack access to high-speed internet. Some Democrats have proposed regulating broadband service as a utility to deal with issues of access and affordability, an idea that Spalter rejects.

“To wrap it in the red tape of regulatory strictures, the overhang of bureaucracy that would be required if we were to make it a utility, would take us backward,” Spalter said, adding he prefers “light touch” regulation. But Spalter had no objection to spending taxpayer dollars to pay for-profit telephone companies to expand broadband service in high-cost rural areas. Spalter called estimates that it would cost $100 billion to bring high speed internet service to all Americans “adequate.”

Jonathan Spalter, USTelecom’s president and CEO, talked about the coronavirus’s impact on telecommunications, regulatory issues, and solving the problems of rural internet access. (28:52)

ATSC 3.0 (Or Why You Need a New TV Set If You Watch Over-the-Air TV) is Coming Sooner Than You Think

Phillip Dampier July 2, 2020 Competition, Consumer News, Public Policy & Gov't 1 Comment

America’s next over the air broadcast TV standard is arriving this year and you will need to purchase a new television capable of receiving it or rely on a converter add-on box that is currently almost impossible to purchase to receive ATSC 3.0 broadcasts on your existing television sets.

ATSC 3.0 (dubbed “NextGen TV” by the marketing people), will be available to watch in over 60 cities this year, reaching up to 70% of all U.S. television households. The benefits of the new television standard include significantly improved pictures, better reception (especially in fringe areas away from the transmitter), a dramatically larger number of available “sub-channels” available to offer ancillary services like Me-TV, Grit, Retro TV, and dozens of others, and customized, targeted advertising based on your viewing habits.

A handful of stations are already up and running with NextGen TV, with many more signing on during the second half of 2020. Here is a complete list of cities where NextGen TV broadcasts will start this year:

Already on the air — These cities have NextGen TV stations already on the air:

Boise, Idaho
Dallas-Ft. Worth, Texas
Las Vegas
Nashville, Tenn.
Orlando-Daytona Beach-Melbourne, Fla.
Phoenix
Pittsburgh
Portland, Ore.
Salt Lake City
Santa Barbara-Santa Maria-San Luis Obispo, Calif.

Currently testing or preparing to launch in:

East Lansing, Mich.
Los Angeles

Planning to launch during the second half of 2020 in:

Albany-Schenectady-Troy, N.Y.
Albuquerque-Santa Fe, N.M.
Atlanta
Austin, Tex.
Baltimore
Boston
Buffalo, N.Y.
Burlington, Vt.-Plattsburgh, N.Y.
Charleston-Huntington, W.V.
Charleston, S.C.
Charlotte, N.C.
Chattanooga, Tenn.
Chicago
Cincinnati
Cleveland-Akron, Ohio
Columbus, Ohio
Davenport, Iowa-Rock Island-Moline, Ill.
Denver
Detroit
Flint-Saginaw-Bay City, Mich.
Grand Rapids-Kalamazoo, Mich.
Greenville-Spartanburg-Anderson, S.C.
Asheville, N.C.
Hartford-New Haven, Conn.
Houston
Indianapolis
Kansas City, Kan.-Mo.
Little Rock-Pine Bluff, Ark.
Memphis, Tenn.
Miami-Ft. Lauderdale, Fla.
Milwaukee
Minneapolis-St. Paul, Minn.
Mobile, Ala.-Pensacola, Fla.
New York
Norfolk-Portsmouth-Newport News, Va.
Oklahoma City
Omaha, Neb.
Providence, R.I.-New Bedford, Mass.
Raleigh-Durham, N.C.
Rochester, N.Y.
Sacramento-Stockton-Modesto, Calif.
San Antonio
San Diego
San Francisco-Oakland-San Jose, Calif.
Seattle-Tacoma, Wash.
Springfield, Mo.
St. Louis
Syracuse, N.Y.
Tampa-St. Petersburg-Sarasota, Fla.
Washington, D.C.
West Palm Beach-Ft. Pierce, Fla.

Confirmed: Spectrum Plans to Raise Rates; Broadcast TV Fee: $16.45/mo

Phillip Dampier July 2, 2020 Charter Spectrum, Consumer News 1 Comment

Several Spectrum employees have contacted Stop the Cap! to let us know a rate increase is planned for Spectrum services that will raise rates for cable television customers beginning as early as next month.

The rate increase is expected to gradually be introduced starting in August, but we are not aware of any specific schedule, nor have we been able to confirm the increase directly with Charter Communications. If our information is accurate, this specific rate increase will not apply to internet-only customers.

The Broadcast TV Fee surcharge will increase $2.95/month to an unprecedented $16.45/month. Spectrum claims this fee covers the retransmission costs local broadcasters charge the cable company to carry their channels on the cable system. Spectrum breaks this fee out of the monthly cost of cable TV and places it as a separate line item on your bill. This also conveniently allows the company to pass through rate increases even if you are on a price-locked promotional pricing package typically offered to new customers. If you do not subscribe to traditional cable television but have signed up for one of Spectrum’s streaming TV packages like TV Choice, the Broadcast TV Fee will also increase $2.95/month, raising that surcharge to $8.95/month.

Spectrum also plans to increase the cost of its cable TV packages. Spectrum’s most popular TV Select package is expected to increase $1.50/month to $73.99/month. Customers on a promotional pricing plan will not see this rate increase until their promotional pricing expires. Customers bundling multiple products should expect discounts to reduce that cost a bit.

In comparison, streaming TV providers like YouTube TV have also been increasing rates this summer, but should still be cheaper than cable television because of the various surcharges and equipment fees cable operators charge.

Updated 7/9: Rate increase confirmed.

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  • Nathat Sampson: I think it's god-awful there should not be data caps on any internet whatsoever...
  • Dylan Purner: I sent my opinion about this just now. Thanks for the link!...
  • Mark: Oh, just like the seeking public comment about net neutrality that the FCC said feedback were 'fake'? https://www.washingtonpost.com/news/monkey-cage...
  • Mark: I think that it should be stressed that Charter currently advertises 'No Data Caps' as one of the major marketing points to attract new customers. Th...
  • Eddie: I wonder what Spectrum's response would be if the situation was reversed: Hey Spectrum, remember that contract we had a while ago. Well, we're about...
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