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Charter Spectrum Raises Rates (Again); Broadcast TV Surcharge Reaches $17.99/Month

Phillip Dampier May 6, 2021 Charter Spectrum, Consumer News No Comments

Charter Spectrum is notifying customers rates are increasing once again on selected services and equipment, taking effect June 2, 2021.

The Broadcast TV Surcharge, which covers the fees charged by local, over-the-air stations, is increasing $1.54 a month — from $16.45 to $17.99/month. The surcharge applies to all video customers, including those on promotional plans.

The special tier of Spanish language channels, known as Latino View, is up $1 a month to $9.99. So is the cost of renting Spectrum’s set-top box. The old fee of $7.99/mo increases to $8.99 per box.

Altice USA’s Optimum Selling Gigabit Service for $45 a Month… With a $200 Prepaid Visa Card

Altice USA is pushing hard to grab market share away from Verizon FiOS — its biggest competitor in the northeastern U.S., with a new customer promotion that offers a year of gigabit broadband speed for $45/month, as well as a $200 prepaid Visa gift card just for signing up.

To qualify for this rate, you must be a new Altice customer (or a customer that disconnected Altice service for at least 30 days). To get the gift card, you must be a new customer and have not received an earlier gift card from Altice in the last 12 months. This offer is good for residents of New York, New Jersey, and Connecticut.

The Bill Breakdown:

  • $50/mo for 1 gigabit service (up to 940 Mbps download/up to 50 Mbps upload) + $5/mo discount for signing up for paperless billing and autopay (total equals $45/mo)
  • $10/mo optional gateway modem/router rental fee
  • $3.50/mo mandatory “Network Enhancement Fee”
  • Your out the door price is $58.50/mo if you use their gateway, $48.50/mo if you bring your own.

Customers can also choose a 500 Mbps tier for $35 a month with similar fees.

If you sign up, you will also be offered the option of multiple TV packages, including a Basic TV package of 50 channels for $15/mo or a Core TV package of 210 channels for $25/mo. Home phone service is also available in this promotion for $10/mo. A bundle including gigabit internet, Core TV and home phone service is priced at $80/mo. There is no installation fee for customers that can manage their own inside wiring if needed.

Mobile Data Costs Plummet 88% in Five Years, U.S. Consumers Pay 4x More Than Rest of the World

Phillip Dampier May 4, 2021 Competition, Consumer News, Wireless Broadband 1 Comment

The cost to deliver a gigabyte of data over mobile networks has plummeted 88% in the last five years, yet U.S. consumers are still paying an average of four times more than the rest of the world and twice the price that Europeans pay for average, comparable mobile plans.

The average cost to deliver mobile data has dropped to around $1/GB, thanks to network upgrades including Massive MIMO, carrier aggregation, the wide use of 4G LTE and the gradual introduction of 5G technology. As a result, mobile pricing has dropped significantly in competitive market areas. In much of Europe, a mobile plan with a generous allowance of mobile data and a bundle of texting and voice calls now costs around $15 a month, largely due to market competition. In Luxembourg and Australia, two companies sell generous data, calling and texting plans for under $10 a month. Iliad, a mobile provider in Italy, offers a plan with unlimited calling/texting and a 50 GB data allowance, including hotspot service, for $9.60 a month.

Despite the increased pressure on pricing, U.S. consumers are still paying some of the highest prices in the world, especially when dealing with two dominant carriers — AT&T and Verizon. Broadband and mobile analyst Dave Burstein noted an increasing pricing gap between the U.S. and Western Europe that widened starting in 2018.

“U.S. prices are now twice the Europeans and four times the world average,” Burstein noted. “Prices continue to fall rapidly except in the U.S., [which has remained] almost flat the last three years.”

Burstein also noted Verizon and AT&T have both estimated wireless data costs decline 40% per year in cost per bit. But most consumers are not benefiting from the dramatic cost declines as wireless companies stubbornly refuse to reset rates. The pressure for further price reductions has also been reduced with the recent merger of Sprint and T-Mobile, which had been largely responsible for forcing AT&T and Verizon to offer more generous plans or reduce rates.

Some of the most significant mobile competition has come from cable operators, which offer plans that resell access to the established 4G networks of Verizon (Charter, Comcast) and T-Mobile/Sprint (Altice USA). While AT&T and Verizon focus on high value customers and increasingly market costly “unlimited” family data plans, cable operators have offered consumers more simplified pricing focused on value for money, including per gigabyte plans and a basic unlimited data offer. Recently, Comcast’s XFINITY Mobile introduced its own family plan pricing, which can further reduce the price for multiple lines billed together and poses a more direct threat to Verizon.

Some researchers believe that marketing mobile plans by focusing on price and data allowances will be a dead end for wireless companies hoping to deliver regular increases in the amount of revenue collected from each subscriber. If competition does pressure companies to increase data allowances and reduce pricing, companies will need to find new revenue sources to deliver the financial results their investors demand each quarter.

“With many consumers picking price plans that fit their budget first and their data usage requirements second, operators need to educate users away from high-volume, low-cost plans and the idea that 150GB is meaningfully better than 100GB,” said Josie Sephton, director of Teligen. “We are in a data pricing merry-go-round that needs to be reset.”

Phil Kendall, director of the Service Provider Group and author of a report on mobile pricing suggests operators cannot provoke upgrades to higher cost plans with higher data allowances alone.

“Operators need ‘more for more’ pricing that offers revenue uplift through better experiences and richer content rather than through more data,” Kendall said.

20% of Charter Spectrum Customers Now Exceed 1 TB of Usage Every Month

Almost 20% of Charter Spectrum’s broadband-only customers now consume over 1 TB of data per month, with the average cord-cutting Spectrum customer now reaching 700 GB of usage.

Charter CEO Thomas Rutledge revealed the company’s increasing usage figures on a conference call with investors this morning. Rutledge pointed to a spike in pandemic-related, at-home video streaming, but also an explosion in video conferencing traffic from work-at-home customers. Video traffic constitutes the majority of consumer broadband traffic in the United States, and as video quality improves, so does the amount of data each customer consumes.

Recent pressure from some in Washington to increase upstream capacity has been noticed by company officials but largely dismissed. In fact, Rutledge claimed Spectrum had no capacity issues that it could not address with incremental capacity upgrades and neighborhood node splits.

“We don’t have any immediate need to expand the capacity of the plant,” Rutledge said, noting that Charter still has room to grow after adopting DOCSIS 3.1 technology. Rutledge added that with the majority of traffic still firmly originating from downloads and streaming, incremental network improvements could allow the company to boost some speeds, but only if market demand for it emerges.

Rutledge noted the company has the capacity to expand its existing infrastructure to 1.2 GHz by expanding network bandwidth. DOCSIS 3.1 can support multi-gigabit download speeds and 1,000 Mbps for uploads. Charter, along with many other cable companies, has been slow to move towards the next cable broadband standard, DOCSIS 4.0, which would exponentially increase speeds and capacity even further.

Another potential method of curtailing usage growth could come from data caps or usage-based billing, but Charter’s efforts to rid itself of its 2016 agreement not to impose data caps until at least 2023 (if ever) in return for approval of its merger with Time Warner Cable and Bright House Networks was withdrawn by the company after receiving significant opposition. The agreement’s expiration date remains May 2023.

Despite the usage growth, Charter’s chief financial officer Christopher Winfrey told investors the impact on the company’s capacity and costs were insignificant and remained confident Charter’s costs to deliver broadband service and expand it would continue to decline overall in the years ahead.

Frontier Exits Bankruptcy on Friday; Company to Focus on Gradual Fiber Upgrades

Frontier Communications is scheduled to announce its emergence from bankruptcy reorganization as early as Friday, beginning a new era with a reduced debt load, new leadership, and a plan to retire a considerable amount of its copper wire network in favor of fiber optics over the next decade.

“Frontier is ready to set a new course as a revitalized public company. Through the restructuring process, the company has stabilized its business and recapitalized its balance sheet, while making significant progress on the early stages of implementing our initial fiber expansion plan,” said John Stratton, incoming executive chairman of the board. “Frontier’s success with the Fiber-to-the-Home pilot program, which upgraded more than 60,000 locations from copper to fiber optic service in 2020, is just one example of the important work already underway. Frontier’s future is bright. I’m eager to work closely with our new board, our CEO Nick Jeffery, and the rest of the leadership team to build the new Frontier.”

As part of its reorganization, Frontier shed nearly $10 billion in debt, most attributable to its earlier buying spree of castoff landline customers formerly served by AT&T and Verizon. The company’s budget busting 2016 acquisition of Verizon service areas in California, Texas, and Florida was called “a textbook case of how not to do an acquisition,” by The Dallas Morning News

For at least a decade covering 2010-2020, Frontier was regarded as one of the worst phone companies in America in consumer surveys. Most of its legacy customers still suffer with Frontier’s dilapidated and deteriorating copper wire network and the slow speed DSL service barely supported on it. Speeds of 1-3 Mbps maximum are still common in some places, even in urban areas. Frontier’s acquisition of Verizon FiOS and AT&T U-verse service areas in states like Indiana, Washington, Connecticut, Florida, Texas and California gave a minority of customers access to pre-built fiber to the home networks, but Frontier’s notoriously poor switchover from Verizon and AT&T’s billing systems to their own effectively drove off hundreds of thousands of formerly loyal customers.

Under the leadership of former CEOs Maggie Wilderotter and Dan McCarthy, Frontier dragged from one quarter to the next, promising improvements that failed to materialize for most customers. The company’s $10.5 billion acquisition of landlines in California, Texas and Florida was particularly costly as the company sold bonds offering astonishing 10.5-11% interest rates to investors to cover more than $5 billion in debt coming due for repayment. A year after the Verizon deal, a half million Frontier customers left for good and the company lost $262 million.

Frontier’s latest fiber plan is to target upgrades in its legacy service areas, noted in blue on this map. These areas are all almost entirely served by copper wire, provide slow speed DSL, and are long overdue for fiber upgrades. Frontier will also expand fiber in its acquired service areas, represented by other colors on the map. Note that Frontier sold its Pacific Northwest region, marked by the red box, to Zipply Fiber, which also plans to scrap Frontier’s copper wire network in favor of fiber. (Map courtesy of Light Reading)

By the time bankruptcy was inevitable, Frontier was saddled with billions in debt and no financial ability to embark on fiber upgrades the company should have committed to a decade ago. Almost all of its existing fiber footprint was acquired from other companies.

Stratton

Frontier’s new management includes John Stratton, a former Verizon executive. Stratton believes Frontier’s future depends on the company expanding its fiber footprint. In 2020, it put that plan to the test by expanding fiber to the home service to 60,000 additional homes in a pilot project proving Frontier can plan and execute fiber upgrades on time and on budget. But a closer look at the numbers shows the majority of homes Frontier “upgraded” were brand new. Of the 60,000 homes, 44,000 were located in new housing developments or were unwired previously. These “greenfield” locations are typically easier to provision and much less expensive to service than pre-existing homes where Frontier first needs to decommission its existing copper wiring and replace it with fiber optics. Only around 16,000 pre-existing homes saw copper wire replaced with fiber in so-called “brownfield” locations.

For Frontier to succeed, it will need to move a lot more copper customers to fiber optics to remain competitive in the marketplace. Currently, Frontier serves approximately three million fiber homes and 11 million copper homes. Frontier is expected to announce fiber upgrades for an additional six million homes and target about 85% of its footprint to be serviced by fiber… eventually.

Some proposals hint the company could take five years or more to complete upgrades at the same time independent fiber to the home providers, next generation satellite internet, and wireless home 4G/5G internet plans are expanding. Much of Frontier’s service area is serviced by cable companies already providing high speed internet. Frontier’s plan assumes it will capture about 40% of the market — a tall order in communities like Rochester, N.Y., where dominant cable provider Charter Spectrum is assumed to have 70+% of the home broadband market. When competing fiber providers enter the market, Spectrum often slashes promotional pricing to $30 a month for 400 Mbps internet service for two years. Spectrum will probably offer similar pricing in newly competitive markets to retain customers threatening to cancel service and switch to Frontier.

Frontier plans to discuss its exit from bankruptcy and where the company will go in the future in a webcast presentation this Friday, April 30, 2021 at 10:00am ET.

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