Austin gets a horn of plenty with free Time Warner Cable Wi-Fi because Google is coming to town.

As Time Warner Cable faces forthcoming competition from Google Fiber in Austin, the company is responding with the construction of a free Wi-Fi network for its broadband customers to protect its business.

TWC WiFi is available now from a limited number of hotspots, but hundreds more will become available across Austin in 2013 as the company builds out its wireless network.

Time Warner Cable customers with Standard Internet or above qualify for free access, as do Business Class customers. Others can trial the service for free and then buy access for $2.95 an hour.

“Increasingly, our Austin customers want to take their high-speed Internet with them out of the home and on-the-go,” said Area Vice President Kathy Brabson. “The TWC WiFi network we are building for Austin will allow our customers to greatly maximize their TWC Internet subscription at no additional charge.”

It is no coincidence Time Warner Cable has selected Austin for a Wi-Fi rollout. The Wi-Fi service was specifically intended to provide more value for Time Warner Cable customers in competitive markets to keep them from switching to a competitor.

It represents a sea change for a cable company that in 2009 targeted Austin for an Internet Overcharging scheme that would have slapped a usage limit and consumption billing on the area’s broadband customers. With the advent of strong competition from Google, Time Warner Cable is giving customers something instead of taking things away.

Austin customers can download the free TWC WiFi Finder app available in Google Play and the Apple App Store or visit www.twc.com/wificoverage to view the hotspot coverage map as the wireless network grows. Once authenticated, customers can also access Wi-Fi hotspots in other cities including New York City, Los Angeles, Chicago, Philadelphia, Atlanta, Baltimore, Boston, Washington, D.C., San Francisco, Orlando, Tampa, Kansas City, Charlotte and more.

Time Warner, Inc. (not the cable operator) and CBS Corp. are being encouraged by Wall Street to hurry up and just get married.

As the march towards media consolidation continues, dealmakers are salivating over a combination of CBS and Time Warner that would combine CBS’ programming and popular network with Time Warner’s extensive roster of cable channels and distribution outlets.

A merger “makes a lot of sense,” Michael Morris, a Richmond, Virginia-based analyst at Davenport & Co., told Bloomberg News in a telephone interview. “With the amount of collaboration they do, investors see it as a possibility as well.”

A merger would bring both CBS and the CW Network even closer together and give both companies even more outlets for their programming, forcing higher fees for cable networks and subscribers in the process.

A merger deal involving CBS would run at least $35 billion, and Bloomberg says it would be the biggest U.S. media deal in more than a decade. Time Warner is definitely the larger player among the two companies with nearly twice the market capitalization of CBS.

“Content is king,” according for CBS chairman Sumner Redstone. Program producers, stations and networks involved in programming are now responsible for a significant part of your last cable rate increase as retransmission consent fees continue to rise.

Under that paradigm, mergers and acquisitions are ripe to continue as programmers seek stronger positions to demand higher fees and distributors grow larger to fight for a volume discount.

Sinclair Broadcast Group is a prime example, spending $1.8 billion in the last 18 months buying up local television stations to force more lucrative carriage deals with cable, satellite and telco TV systems.

Among the biggest recent deals: Comcast has completed its acquisition of NBC Universal and Walt Disney, which owns ABC, also now owns Pixar, Marvel Entertainment, and Lucasfilm.

Sprint will focus its postpaid wireless business on profitability in 2013, with reductions in customer discounts and a tighter upgrade policy that will raise prices for some and slow down others seeking new subsidized smartphones.

CEO Dan Hesse today told Wall Street investors Sprint will be leveraging its upgraded LTE network to help hold the line on discounts and early upgrades, reminding customers Sprint’s Network Vision plan is delivering better service with faster speeds and fewer dropped or blocked calls.

Sprint released its 1st quarter 2013 earnings this morning, showing the company reduced its quarterly losses from $863 million in the same quarter last year to $643 million. The company spent $1.4 billion during the first quarter on network upgrades, primarily on forthcoming 4G LTE network roll-outs.

Steve Elfman, Sprint’s president of network operations reported the company activated more than 12,000 LTE-upgraded cell towers by the end of the quarter, slowed only by inclement weather. This year will see a massive increase in those numbers.

“We now have zoning complete on over 32,000 sites and leasing complete on over 31,000 sites. More than 25,000 sites already or have already begun construction,” Elfman reported. “Our weekly construction starts are now at a level to achieve our goals for the year. There are over 600 cities under construction and we have now launched 4G LTE in 88 cities with over 170 expected to launch in the months to come.”

Hesse

While Elfman oversees LTE upgrades, Sprint is also busy working towards decommissioning its Nextel network on June 30. Despite repeated warnings Nextel’s demise was close at hand, at least 1.4 million Nextel customers, nearly all business accounts, are still active on that network. Sprint is focusing most of its promotional budget again this quarter on convincing those customers to convert to Sprint service. But only 46 percent of Nextel customers took Sprint up on their repeated offers during the first quarter. Many others left for Verizon Wireless, switching off not only their Nextel commercial phones, but also those on Sprint’s network as well.

Sprint expects to hold on to a declining number of its Nextel customers as the second quarter progresses, until the network is switched off for good at the end of June.

That hurts, because Sprint has also been losing customers due to “pardon our dust” construction-related service interruptions as part of LTE 4G upgrades. Those disruptions are expected to accelerate  as more cities are prepared for LTE service.

Sprint’s Lifeline cell phone service for the poor, Assurance, also took major hits during the quarter after the FCC tightened eligibility requirements for the free/low-cost cell phone service. The company switched off 224,000 accounts in the last three months that either failed to re-certify eligibility or were never qualified in the first place. Sprint’s wholesale customers, which resell access on the Sprint network, are also busy deactivating unqualified Lifeline wireless lines, so Sprint expects a similar number of disconnects during the second quarter as those accounts are dropped from the network.

As Sprint turns its attention to profitability, revenue numbers at Sprint improved slightly. Sprint’s prepaid division added 568,000 net prepaid customers, and Virgin Mobile raised its minimum top up amount for 90 days of service to $20 (up from $15 with a credit card). As customers upgrade their Sprint postpaid phones, more customers are also encountering Sprint’s $10 “premium data” surcharge.

Customers will also discover a tightening of Sprint’s discounts and upgrade promotions. Among the efforts underway:

• curtailing or eliminating certain customer credits and discounts;
• tightening device upgrade policies to end early upgrades, although Sprint still retains its 20 month upgrade policy for now;
• holding the line on phone subsidies for increasingly expensive smartphones.

Sprint’s prepaid mobile division

Slowing phone upgrades is particularly important for Sprint’s bottom line.

“I think the policy shifting is important in the industry because subsidies just keep going up and I think from the economic model perspective of the carriers we just can’t afford to upgrade as often,” said Sprint CEO Dan Hesse. “We’re not seeing any evidence yet that customers are interested in upgrading less often if they see less difference or improvement year-over-year in terms of what’s going on with these devices. In fact the opposite might be true which means these policies are really quite important for the industry.”

Hesse admitted that the drive to increase profits could cost Sprint some of its postpaid business, and probably already has over the last three years. But Hesse noted many of those contract customers have migrated to the company’s prepaid service, which keeps revenue in-house. Hesse expects as long as popular phones are available on prepaid plans, price-sensitive customers will continue to migrate towards prepaid service.

“I think what you are seeing is maturing of the U.S. markets beginning,” Hesse noted. “The U.S. has always been or traditionally been almost exclusively postpaid and it’s beginning to look like other markets that have a higher prepaid mix in terms of the number or percentage of customers.”

The German Internet is functionally broken.

Deutsche Telekom, the largest telecommunications company in Germany, has announced it will introduce a brazen Internet Overcharging scheme for customers signing up for its broadband DSL service, including a throttle that reduces speeds to just 384kbps after as little as 75GB of monthly broadband usage.

For now, only new Telekom Deutschland customers signing up after May 1 will be affected by the usage limits. Customers will be offered the option of upgrading their Call & Surf package to get a larger usage allowance, although many parts of Germany are still reliant on DSL and its variants that cannot deliver the advertised speeds that go with the larger allowances:

• Up to 16Mbps: 75GB per month
• Up to 50Mbps: 200GB per month
• Up to 100Mbps: 300GB per month
• Up to 200Mbps: 400GB per month

“We want to offer customers the best network in the future and we will continue to invest billions to make that happen,” said Michael Hagspihl, marketing director of Telekom Deutschland. “However we cannot continue to sustain higher usage demand while lowering our prices. Customers with very high data volumes will have to pay more in the future.”

Company officials argue German broadband usage demands are accelerating at an ever-increasing rate, putting strain on the company’s network resources.

But critics question if usage demands are the root of the problem, why is DT exempting itself and its “preferred partners” from the data cap, including certain services that offer very high bandwidth video?

The Net Neutrality activist group Netzpolitik.org says DT is “massively violating Net Neutrality while the federal government looks away dreaming that the free market will solve the problem somehow.”

The group points out DT has admitted the speed throttle only applies to content providers who have not partnered up with the German telecom giant.

DT is exempting all of its own in-house content providers, the private television service Entertain, and telephone services (when provided by DT). For everyone else: the speed throttle gets closer the more customers use services like Apple iTunes or Amazon’s Lovefilm service. But DT says those companies can also get special treatment for the right price.

DT’s preferred partner cooperating agreements let “high quality content producers” pay for a managed services contract that guarantees exemption from the speed throttle and prioritization of their traffic on DT’s network, even if it means slowing down non-preferred partner content.

A parody future offer from DT.

“You cannot thumb your nose at Net Neutrality principles any better if you tried,” said Rene Pedersen, an Internet activist in Köln. “DT will have their emasculated two-tier Internet and all of Germany will have to suffer the consequences. Their own arguments do not even make sense. If there is a capacity crisis, how can they exempt some video providers that now consume the most network resources?”

“Until a few years ago, providers – just like the post – were just deliverers of packages,” said Netzpolitik’s Andre Masters. “This principle is called Net Neutrality – the equal treatment of data packets on the Internet, regardless of sender, recipient, or content. Now providers want to have a direct influence on the content sent, because they want to earn more money.”

Technology publisher Heise Online says the new usage restricting tariff has “triggered a veritable sh**storm” among net users who consider a 75GB usage limit untenable, particularly for families with multiple Internet users.

Heise is also critical of claims DT has made in the press that suggests German Internet users must either accept the usage caps or understand the company will have to spend at least €80 billion ($108 billion) to build a national fiber network to manage growing traffic.

In contrast, Goldman Sachs last year estimated the cost of wiring every home in the United States with Google Fiber would cost $140 billion, a number now considered inflated. Verizon FiOS managed to get costs down for its own fiber network to a level that suggests Google would only need around $90 billion — $10 billion more than DT claims it needs.

“DT is being disingenuous when they suggest it will cost €80 billion to solve their capacity problem. For that amount every household in Germany would get their own fiber cable with 200Mbps speeds or more,” Heise writes in their editorial. “To avoid slowing users down with a speed throttle, only a small fraction of this amount is needed to extend the Internet backbone and peering agreements between providers. For years network traffic has grown exponentially and DT has kept up with demand. So why does DT suddenly need to reshuffle the cards now?”

DT has also received criticism for how it has depicted its heavy users — mostly as content thieves and software pirates using file swapping networks to steal copyrighted works. But instead of dealing with copyright violations, DT wants a sweeping usage cap system that punishes every customer that wants to use their broadband connection.

“Customers are not insatiable Gierschlünde who want everything for free,” writes Heise. “They already pay a lot of money to Telekom: 12.5 million DSL customers roughly translates into around a half billion euros in sales per month.”

Back to the future.

The German news magazine Spiegel writes DT’s usage limits strangle the Internet for millions of Germans, especially for competing video providers:

When throttled, customers will need more than 23 hours to watch a DVD-quality movie. At Blu-ray resolution, it will take about two weeks to watch just one film.

[…] The implications of the end of Net Neutrality in Germany represents a form of economic censorship, and German politicians are standing by to watch it happen.

The federal government sees the Internet as a political bargaining chip and not as the social, cultural and economic tool it represents. The government acts in the interests of certain lobbyists, not Germany’s digital future. This allows German telecommunications companies to focus on their economic self-interests without government policies that demand investment in digital infrastructure.

A number of German Internet users are expected to switch to a cable provider, where available, to escape DT’s impending speed caps.

According to the Frankfurter Rundschau, many German cable companies also reserve the right to limit speeds for customers. But in practice, most don’t impose limits until traffic exceeds 60GB daily, and the speed cap is lifted the next day. A cable industry official says its cap currently impacts about 0.1 percent of customers, almost all who use peer-to-peer file swapping networks. Exempt from measurements that bring customers closer to a speed cap: web browsing, video streaming, and video-on-demand.

For now, Germany’s cable operators facing the same traffic growth DT speaks about find no need to impose further limits, stating their networks are handling the traffic with network upgrades as a normal course of business.

“It calls out DT’s claims as fraudulent, because cable Internet users visit the same websites and do the same things DT’s customers do and there only seems to be an ‘urgent’ problem in need of a speed throttle solution on BT’s network,” says Pedersen. “What needs to be throttled are the financial expectations of DT management and shareholders. The Internet is not their personal vault waiting to be plundered.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/What if Net Neutrality.mp4[/flv]

What if Net Neutrality did not exist?  [Subtitled] (1 minute)

The Lifeline program became campaign fodder last fall when the Drudge Report released a video showing a minority voter praising Obama for “free phones.”

Two competing philosophies to address the digital divide will clash in Congress this week as Democrats introduce legislation to subsidize Internet access for the poor and Republicans hold hearings critical of the FCC’s existing Lifeline program, which provides low-cost phone service for those on public assistance.

The Broadband Adoption Act, introduced by California Democrat Rep. Dorris Matsui, would reform and expand the Lifeline program to allow participants to choose between a discounted landline, cell phone, or broadband Internet access.

“In today’s digital economy, if you don’t have access to the Internet you are simply at a competitive disadvantage. For example, more than 80 percent of available jobs now require online applications,” Matsui said. “The Internet is increasingly the economic engine for growth and innovation.”

Matsui has introduced similar legislation in the past, but it has never been taken up by the Republican-controlled House.

The bill is co-sponsored by ranking member Henry Waxman (D-Calif.), communications subcommittee ranking member Anna Eshoo (D-Calif.) and five other Democrats.

The thought of discounted Internet access is about as popular with some House Republicans as Lifeline-subsidized cell phone service, which some conservatives have derided as “Obamaphones.”

The House Energy and Commerce Committee will hold a hearing on Thursday to look at Lifeline and consider its future. Members are expected to share stories of waste, fraud, and abuse, particularly over the controversial subsidized cell phone service.

Senator Tom Coburn (R-Okla.) is a regular critic of the program and offered the House committee anecdotal reports that some subscribers have eight or more subsidized cell phones with one subscriber saying that to get one, “she just goes across the street and gets it.” Coburn claimed to have evidence in one case where a man kept a “bag full of subsidized phones that he sells for about 10, 15, 20 bucks each.”

Still seen by some as a luxury, a program that subsidizes cell phones was likely to attract critical attention among politicians.

Senators Claire McCaskill (D-Mo.) and David Vitter (R-La.) both drafted amendments that would end the Lifeline subsidy in its entirety, calling it a waste and abuse of resources.

The program and providers have admitted there have been lapses in eligibility verification and there was fraudulent participation in the program.

Last year, the FCC modified the program to tighten eligibility requirements:

• Required all subscribers to recertify their eligibility and to do so annually by providing documentation of income or program participation;
• Confirmed the program’s restriction of one subsidy per household;
• Started a process to create a State-by-State and/or a National Lifeline Accountability Database to prevent multiple subsidies to the same household;
• Eliminated Link-Up support except for recipients on tribal lands that are served by ETCs that take part in both the low-income Lifeline and high-cost support programs;
• Imposed independent audit requirements on carriers receiving more than $5 million in annual support;
• Directed the FCC and Universal Service Administrative Company staff to take action no later than December 31, 2013, to offer an automated means of determining enrollment in the Medicaid, Food Stamps, and Supplementary Security Income programs, the three most common criteria for Lifeline eligibility;
• Set an interim base subsidy amount of $9.25 per month for non-tribal subscribers.

Lifeline was first enacted by Congress in 1985, during the Reagan Administration. In 2005, the Bush Administration expanded the program to include cell phone service.