Residents of these Virginia homes are required to pay $146 a month for Cox Cable, Broadband, and Phone service whether they want it or not.

Marilyn Castro decided she did not need her landline phone any longer.  The Virginia Beach resident learned her provider would be happy to oblige her request to disconnect service, but she is still required to pay her phone bill, even without the service, for at least the next 25 years.

Woodland Park, Virginia resident Allan Pineda got a similar story when he wanted out of Cox Cable’s landline service.  Yes, Cox will schedule a visit to disconnect service at his convenience, but he’ll still have to pay his cable bill, including landline charges, every month.

Frederic Martin, who lives at a Mid-America Apartment Communities-owned complex in Dallas, learned he was on the hook for cable-TV service, even though he has not owned a television set for more than a decade.

In Weston, Florida, some 15,000 homeowners pay for cable television whether they want it or not and if they don’t pay, their homes are at risk from foreclosure.

It’s all thanks to the concept of “bulk billing,” a practice growing in popularity that delivers mandatory cable, phone, and broadband service to renters and homeowners whether they want the services or not.  It’s a multi-million dollar racket, and thanks to the Federal Communications Commission, it may be coming to your community or apartment complex soon.

Castro

For almost five years, mandating cable service has become a growing problem in many parts of the country, especially in Florida and Virginia.  Most of the controversy comes when large housing management and homeowner associations, builders, and corporately-owned apartment complexes cut “discount deals” with a cable company to wire a community or complex for service.  Their mission is not always altruistic.  Many builders receive generous signing bonuses and ongoing kickbacks earned from condemning residents to mandatory cable service contracts that may not expire in their lifetime.

Some apartment complexes have added charges for cable-TV service to the rent. Many earn ongoing compensation from grateful cable companies who pay 3-5 percent of revenue back to the complex.  Even homeowner associations have gotten into the act, adding cable-TV costs to required association dues for upkeep and maintenance.  For those who can’t or won’t pay, liens and even foreclosure can soon follow.

LM Sandler of Virginia Beach, a Virginia builder, is a typical player.

Sandler has built entire neighborhoods of new homes across Virginia, most of which are covered by a “bulk billing” contract with Cox.  When residents buy or rent a Sandler-built property, a triple-play package of phone, cable, and Internet service comes along with the deal.  It’s not cheap, running $146 a month.  Even worse, your grandchildren could still be paying Cox Cable if they stayed in the family home, because Sandler’s contract with Cox runs up to 75 years.

Although residents are not required to take service from Cox, they are required to pay for it, in full, every month.

It gets worse for residents in Florida.  Most contracts with cable operators include provisions that can terminate service for entire communities if even a single homeowner is 60 days past due.  To keep that from happening, homeowner associations aggressively pursue slow-paying residents.  JMB Partners, who built much the residential housing in Weston, and the governing bodies in Weston committed residents to an agreement that has enormous implications if they miss a payment:

Between Jan. 1 and Dec. 17, 2004, the Town Foundation, Weston’s homeowner association, filed liens against more than 200 homes in the city. Most of these, according to Broward County court records, are for unpaid cable TV bills, which until 2003 were collected by the foundation. The city utilities department now handles that task.

One of the upset residents is Vincent Andreano, whose mother, Lita Andreano, was faced with the predicament of losing her Weston Country Club Home for a $109 cable bill that he said had been left outstanding by the previous owner.  The Andreanos said that when closing on the home about a year and a half ago, they came upon the outstanding debt and sent a check.

”No one ever contacted me or my mother afterwards to tell us they had not gotten the check or that the debt was still outstanding,” said Andreano, an attorney. “Then a year and a half later, they slap my mother with a foreclosure lawsuit. It’s legal brutality.”

Andreano said he tried to reason with Town Foundation attorney Douglas Gonzales, whose signature appears in the lawsuit paperwork, to no avail. He said he was told to pay the debt, plus legal fees billed at a little more than $200 per hour, in addition to court filing fees and other miscellaneous charges. The final tab: more than $1,500.

In the Tampa area, mandatory cable service bills for some neighborhoods and planned communities have increased by an eye-popping 44 percent because of the foreclosure crisis.  That’s because of mandatory payment clauses many have with providers like Bright House that demand full payment even when homes are unoccupied.  When a resident’s home is in foreclosure or a resident refuses to pay, all of the remaining area residents pick up the tab for unpaid cable bills.  This wreaks havoc with homeowner association budgets, who must find the money to pay the cable company, in full, every month.  Many have slashed security, road maintenance, refuse collection, landscaping, and other quality-of-life expenses just to keep the cable company happy.

Back in 2008, when Florida first began a downward housing spiral, the impact was already being felt:

The Chapel Pines subdivision in Wesley Chapel found itself stuck in a cable contract that requires $15,000 a month payment to Bright House, and is seeing the strain of foreclosed homes no longer paying their fees. That payment represents nearly half their total association budget.

The South Fork 1 development in Riverview has a 15-year contract with Bright House that requires a $9,700 a month payment, roughly one-third of the neighborhood’s total budget.

“We still have to foot the bill whether people live in those homes or not,” said Fred Perez, the former president of the South Fork association. “You end up with a big, bad debt line item on the budget.”

With the problem worsening, that homeowner’s association even contemplated bankrupting itself just to free it from obligations to Bright House.

Other communities are levying “special assessments” on homeowners to cover cable bills in high foreclosure areas:

To cement a good deal, the community, South Bay Lakes in Gibsonton, years ago signed a bulk contract with Bright House Networks to provide cable TV in the neighborhood, in exchange for a regular fixed payment.

That arrangement worked out fine when the neighborhoods filled up and residents paid their association fees – and the association turned over the cable TV payments to Bright House. The problem occurs when neighbors go into foreclosure and stop paying their fees.

The South Bay Lakes homeowners association still must pay about $140,000 a year to Bright House, even though there’s less money coming in from homeowners.

Because about numerous homes in the 300-home development are in foreclosure, South Bay Lakes had to issue “special assessments” on residents.

Fees rose from $150 a quarter to $216, and that probably won’t cover the shortfall, according to association officials. The Bright House bill represents almost half of the association’s annual budget of $261,000.

To make matters tougher, the community is locked into that deal with Bright House until 2019, with cable rates that rise “from time to time” according to the contract.

The city of Weston collects cable payments from residents forced to pay for service from Advanced Cable Communications.

Earlier this year, Stop the Cap! covered the story of residents in Tennessee and Texas who discovered the corporate owners of their apartment complexes were making cable-TV mandatory and adding the resulting charges to lease agreements.

Defenders of these bulk billing arrangements claim they deliver savings residential customers could not obtain on their own and ensure that complexes and planned living communities are fully wired for service.  Besides, they claim, there is no obligation to use the services provided and customers can obtain service from another provider.

But they still face paying for service they don’t use.  In some communities, it is service many don’t want to use.

John Carter, who lives in Weston, told the FCC as a senior on a fixed income he cannot afford to pay a second cable bill, even though his existing service is terrible.

“I am stuck with poor programming options, outages during stormy weather, slow Internet speeds of 15kbps and poor customer service,” he wrote the agency.

In other instances, sweetheart deals fuel incentives for builders to sign lucrative contracts with providers even before a homeowner’s association is formed.  In some cases, the provider turns out to be a family member or associate of the developer.  In many others, perpetual kickbacks through “royalties” and fees are paid to the builder or complex owner as long as the agreement remains in place, even long after the builder is no longer on scene.

For impacted residents like Castro stuck with landline service she didn’t want, it was time to fight back.  She launched Ban Bulk Billing, an online forum for those who oppose mandated cable-TV service. Castro asked consumers to join her in protesting the fees with the FCC.  But it’s hard to keep a movement going when giant corporate providers and other special interests have the resources to shout down consumers.

In March, the FCC collected its thoughts and submissions from property owners, apartment complex management companies, cable and phone companies, and consumers and rendered its decision — which threw consumers under the bus:

We conclude that the benefits of bulk billing outweigh its harms. A key consideration for us is that bulk billing, unlike building exclusivity, does not hinder significantly the entry into an MDU by a second MVPD and does not prevent consumers from choosing the new entrant. Indeed, many commenters indicate that second MVPD providers wire MDUs for video service even in the presence of bulk billing arrangements and that many consumers choose to subscribe to those second video services. We find it especially significant that Verizon, which more than any other commenter in the earlier proceedings argued that building exclusivity clauses deterred competition and other proconsumer effects, makes no claim in its filings herein that bulk billing hinders significantly or, as a practical matter, prevents it from introducing its service into MDUs. Bulk billing, accordingly, does not have nearly the harmful entry-barring or -hindering effect on consumers that exists in the case of building exclusivity.

In other words, because Verizon didn’t have a problem with these bulk billing arrangements, they’re fine by the FCC.  Verizon wants into this arrangement themselves, so it’s hardly a surprise they are not objecting.  The significance of Verizon’s change in position is hardly a mystery — the earlier barriers the FCC wrote about were designed to keep Verizon out of apartment complexes and condos.

The incentives for providers earned from these bulk billing contracts are enormous:

• The cost of collections and billing are passed on to local government, homeowner associations, rental companies, or other agents.  The risk of non-payment by a homeowner’s association or city government is nearly non-existent;
• Marketing expenses and customer promotions can be slashed because customers already have the service when they move in;
• Competition is diminished, especially from capital-intensive wired competitors.  Would you contemplate wiring a community for competitive service knowing existing residents are held captive by mandatory cable contracts?;
• Innovation expenses can be curtailed because the customer is already captive to the existing level of service;
• Rate increases are built-in, allowing companies to raise rates and still keep all of their existing customers.

Residents of Staples Mills Townhomes in Richmond, Virginia understand this only too well.  When the new corporate owner, PRG Real Estate moved in a few years ago, they brought Comcast with them, mandating every resident pay for basic cable service as part of their rent.

PRG’s website highlights Staples Mills as an example of “an institutional equity partnership:” (underlining ours)

The PRG model for improvement is two-pronged — pay close attention to the details of management with a well thought out capital improvement plan. Imbedding [sic] PRG’s professional management structure would mean the implementation of aggressive PRG policies and procedures, taking virtually all contract services in-house to save the profit margin being captured by contractors. The upgrade to PRG-trained site personnel would particularly enhance the marketing effort. Although the property was 97% occupied we anticipated that, after the capital improvements, the same occupancy rate would be maintained with significantly higher rents.

[…]It was crucial that we succeed, not only in terms of return to our investor, but in terms of building our relationships and profile with other institutional investors. We needed to hit this one out of the ballpark.

New and improved Staples Mills?

Residents called a foul ball, one writing, “Residents were slapped in the face with the news that they will be forced to pay for mandatory cable (an extra $34 per month on the rent) from Comcast regardless if they don’t want it, already have satellite, or don’t even have a TV under the guise of ‘lowering cable rates.’ It’s called subsidizing the people who want it by juicing those who don’t.”

PRG may have succeeded in making their investors happy, but they alienated a number of tenants in the process, most of whom assumed Comcast was their only choice and wouldn’t contemplate paying another cable bill from a competitor.

The FCC’s decision recognized that competitors could enter a bulk-billed service area, but ignored the reality most won’t.

Indeed, the FCC itself recognized the impact of these bulk-billing arrangements on the competitive landscape in their own decision, quoting from a submission:

One bulk billing cable operator states that fewer than 5% of an MDU’s residents subscribe to another video provider. It estimates that if it lost its bulk billing contract, it would raise its prices substantially for the remaining 95% because of higher programming and labor costs per customer. The combined savings for 5% of the MDU’s residents would be dwarfed by the increased expenses for the 95%, making the MDU’s residents significantly worse off than they were before as a whole.

The Cowardly Lion is still working for the FCC.

This proves two points:

1. The FCC still cowers in fear from threats issued by providers that any attempt to rein them in will do everything from raising prices to killing jobs and innovation, despite the fact only five percent of customers in the cited case took service from a competitor.  A five percent loss of customers would create conditions for a “substantial” rate hike only in their minds.  AT&T U-verse has captured far more than 5 percent of cable customers in markets where it competes with cable, yet somehow cable manages to keep the lights on and their doors open;
2. The FCC pretends that these agreements don’t impact the marketplace when the 95 percent “take rate” for service plainly indicates otherwise.  Do 95 percent of residents in non-bulk-billed neighborhoods also take cable service?  Of course not.

Despite the FCC’s industry-friendly ruling, many impacted consumers are not giving up.

Martin, the Dallas renter paying for cable-TV even though he doesn’t own a television, is taking the fight to state Attorneys General, hoping a group effort on the state level will dislodge at least some consumers from being forced to pay for something they don’t want or need.

Martin believes it’s manifestly unfair to deliver mandated “discounted service” to some on the backs of others who don’t want a cable bill at all.

“No one should have the right to force you to buy what you don’t want from someone you don’t like,” Martin says.

He points out under Mid-America’s terms, even blind and deaf residents are forced for pay for cable service.

The only thing cheaper than a discounted cable bill is no cable bill at all.  Now that represents real savings.

Martin’s vociferous objections and intervention from his Texas state representative eventually managed to get him off the hook with Mid-America’s mandatory cable bill.  His rent was lowered by an amount equal to the monthly cable fee, but the cable company is still getting paid on his behalf.

Martin's petition to stop mandatory cable service

For Martin, that’s just plain wrong.

“I am still subsidizing an industry of which I do not wholeheartedly approve,” he writes.

Martin is now coordinator for Tenants United for Fairness and has launched an online petition demanding an end to mandatory cable-TV charges.

He has gathered more than 100 signatures from 13 states so far, and the petition is open for everyone to sign, even if they are not currently impacted.

Martin says getting signatures has proved challenging in some cases.

“It has been very hard to get tenants to sign my petition because they’re in fear of the landlords,” Martin says. “Very few of those who have signed have gone further and contacted their elected officials or the FCC to complain.”

The impact of the March decision by the FCC has given providers a green light to expand mandatory service even further.  Some communities are now finding mandatory broadband service fees being added to cable-TV charges.

The FCC’s response?  “Consumers complaining about these latest new fees are sent an unsigned form letter from the FCC advising them to “talk to your landlord,'” says Martin.

[flv width=”432″ height=”260″]http://www.phillipdampier.com/video/WVEC Virginia Beach Residents fight mandatory bundle agreement 3-16-10.mp4[/flv]

WVEC-TV in Virginia Beach covered the plight of residents struggling to understand why they should be forced to pay $146 a month to Cox for cable, broadband, and landline phone service.  (3/10/2010 — 4 minutes)

EPB’s new 1Gbps municipal broadband service is causing some serious embarrassment to the telecom industry.  Since last week’s unveiling, several “dollar-a-holler” telecom-funded front groups and trade publications friendly to the industry have come forward to dismiss the service as “too expensive,” delivering speeds nobody wants, and out of touch with the market.

The “Information Technology and Innovation Federation,” which has historically supported the agenda of big telecom companies, has been particularly noisy in its condescending dismissal of the mega-speed service delivered in Chattanooga, Tenn.

Robert Atkinson, president of ITIF, undermines the very “innovation” their group is supposed to celebrate.  Because it doesn’t come from AT&T or Verizon, it’s not their kind of “innovation” at all.

“I can’t imagine a for-profit company doing what they are doing in Chattanooga, because it’s so far ahead of where the market is,” Atkinson told the New York Times.

“Chattanooga definitely is ahead of the curve,” Atkinson told the Times Free Press. “It’s like they are building a 16-lane highway when there is a demand for only four at this point. The private companies probably can’t afford to get that far ahead of the market.”

Bernie Arnason, formerly with Verizon and a cable industry trade association also dismissed EPB’s new service in his current role as managing editor for Telecompetitor, a telecom industry trade website:

Does anyone need that speed today? Will they in the next few years? The short answer is no. It’s kind of akin to people in the U.S. that buy a Ferrari or Lamborghini – all that power and speed, and nowhere to really use it. A more apropos question, is how many people can afford it – especially in a city the size of Chattanooga?

[…]Will there be a time when 1 Gb/s is an offer that is truly in demand? More than likely, although I still find it hard to imagine it being really necessary in a residential setting – I mean how many 3D movies can you watch at one time? Maybe a service that bursts to 1 Gb/s in times of need, but an always on symmetrical 1 Gb/s connection? Truth be told, no one really knows what the future holds, especially from a bandwidth demand perspective.

Arnason admits he doesn’t know what the future holds, but he and his industry friends have already made up their minds about what level of service and pricing is good enough for “a city the size of Chattanooga.”

Comcast’s Business Class broadband alternative is priced at around $370 a month and only provides 100/15Mbps service in some areas.  Atkinson and Arnason have no problems with that kind of innovation… the one that charges more and delivers less.

For groups like the ITIF, it’s hardly a surprise to see them mount a “nobody wants it or needs it”-dismissive posture towards fiber, because they represent the commercial providers who don’t have it.

Fiber Embargo

The Fiber-to-the-Home Council, perhaps the biggest promoter of fiber broadband delivered straight to customer homes, currently has 277 service provider members. With the exception of TDS Telecom, which owns and operates small phone companies serving a total of 1.1 million customers in 30 states, the FTTH Council’s American provider members are almost entirely family-run, independent, co-op, or municipally-owned.

Companies like American Samoa Telecommunications Authority, Hiawatha Broadband Communications, KanOkla Telephone Association Inc., and the Palmetto Rural Telephone Cooperative all belong.  AT&T, CenturyLink, Frontier, Verizon, and Windstream do not.  Neither do any large cable operators.

While not every member of the Council has deployed fiber to the home to its customers, many appreciate their future, and that of their communities, relies on a high-fiber diet.

EPB’s announcement of 1Gbps service was made possible because it operates its service over an entirely fiber optic network.  Company officials, when asked why they were introducing such a fast service in Chattanooga, answered simply, “because we can.”

The same question should have been directed to the city’s other providers, Comcast and AT&T.  Their answer would be “because we can’t… and won’t.”

Among large providers, only Verizon has the potential to deliver that level of service to its residential customers because it invested in fiber.  It was also punished by Wall Street for those investments, repeatedly criticized for spending too much money chasing longer term revenue.  Wall Street may have ultimately won that argument, because Verizon indefinitely suspended its FiOS expansion plans earlier this year, despite overwhelmingly positive reviews of the service.

So among these players, who are the real innovators?

The Phone Company: Holding On to Alexander Graham Bell for Dear Life

Last week, Frontier Communications told customers in western New York they don’t need FiOS-like broadband speeds delivered over fiber connections, so they’re not going to get them.  For Frontier, yesterday’s ADSL technology providing 1-3Mbps service in rural areas and somewhat faster speeds in urban ones is ‘more than enough.’

That “good enough for you” attitude is pervasive among many providers, especially large independent phone companies that are riding out their legacy copper wire networks as long as they’ll last.

What makes them different from locally-owned phone companies and co-ops that believe in fiber-t0-the-home?  Simply put, their business plans.

Companies like Frontier, FairPoint, Windstream, and CenturyLink all share one thing in common — their dependence on propping up their stock values with high dividend payouts and limited investments in network upgrades (capital expenditures):

Perhaps the most important metric for judging dividend sustainability, the payout compares how much money a company pays out in dividends to how much money it generates. A ratio that’s too high, say, above 80% of earnings, indicates the company may be stretching to make payouts it can’t afford.

Frontier’s payout ratio is 233%, which means the company pays out more than $2 in dividends for every $1 of earnings! But this ignores Frontier’s huge deferred tax benefit and the fact that depreciation and amortization exceed capital expenditures — the company’s actual free cash flow payout ratio is a much more manageable 73%. Dividend investors should ensure that benefit and Frontier’s cash-generating ability are sustainable.

In other words, Frontier’s balance sheet benefits from the ability to write off the declining value of much of its aging copper-wire network and from creative tax benefits that might be eliminated through legislative reform.

The nightmare scenario at Frontier is heavily investing in widespread network upgrades and improvements beyond DSL.  The company recently was forced to cut its $1 dividend payout to $0.75 to fund the recent acquisition of some Verizon landlines and for limited investment in DSL broadband expansion.

Frontier won’t seek to deploy fiber in a big way because it would be forced to take on more debt and potentially cut that dividend payout even further.  That’s something the company won’t risk, even if it means earning back customers who fled to cable competitors.  Long term investments in future proof fiber are not on the menu.  “That would be then and this is now,” demand shareholders insistent on short term results.

The broadband expansion Frontier has designed increases the amount of revenue it earns per customer while spending as little as possible to achieve it.  Slow speed, expensive DSL fits the bill nicely.

The story is largely the same among the other players.  One, FairPoint Communications, ended up in bankruptcy when it tried to integrate Verizon’s operations in northern New England and found it didn’t have the resources to pull it off, and delivered high speed broken promises, not broadband.

Meanwhile, many municipal providers, including EPB, are constructing fiber networks that deliver for their customers instead of focusing on dividend checks for shareholders.

Which is more innovative — mailing checks to shareholders or delivering world class broadband that doesn’t cost taxpayers a cent?

Cable: “People Don’t Realize the Days of Cable Company Upgrades are Basically Over”

While municipal providers like EPB appear in major national newspapers and on cable news breaking speed records and delivering service not seen elsewhere in the United States, the cable industry has a different story to share.

Kent

Suddenlink president and CEO Jerry Kent let the cat out of the bag when he told investors on CNBC that the days of cable companies spending capital on system upgrades are basically over.

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Both cable and phone companies have called a technology truce in the broadband speed war.  Where phone companies rely on traditional DSL service to provide broadband, most cable companies raise their speeds one level higher and then vilify the competition with ads promoting cable’s speed advantages.  Phone companies blast cable for high priced broadband service they’re willing to sell for less, if you don’t need the fastest possible speeds.  But with the pervasiveness of service bundling, where consumers pay one price for phone, Internet, and television service, many customers don’t shop for individual services any longer.

With the advent of DOCSIS 3, the latest standard for cable broadband networks, many in the cable industry believe the days of investing in new infrastructure are over.  They believe their hybrid fiber-coaxial cable systems deliver everything broadband consumers will want and don’t see a need for fiber to the home service.

Their balance sheets prove it, as many of the nation’s largest cable companies reduce capital expenses and investments in system expansion.  Coming at the same time Internet usage is growing, the disparity between investment and demand on broadband network capacity sets the perfect stage for rate increases and other revenue enhancers like Internet Overcharging schemes.

Unfortunately for the cable industry, without a mass-conversion of cable-TV lineups to digital, which greatly increases available bandwidth for other services, their existing network infrastructure does not excuse required network upgrades.

EPB’s fiber optic system delivers significantly more capacity than any cable system, and with advances in laser technology, the expansion possibilities are almost endless.  EPB is also not constrained with the asynchronous broadband cable delivers — reasonably fast downstream speeds coupled with paltry upstream rates.  EPB delivers the same speed coming and going.  In fact, the biggest bottlenecks EPB customers are likely to face are those on the websites they visit.

EPB also delivered significant free speed upgrades to its customers earlier this year… and no broadband rate hike or usage limits.  In fact, EPB cut its price for 100Mbps service from $175 to $140.  Many cable companies are increasing broadband pricing, while major speed upgrades come to those who agree to pay plenty more to get them.

Which company has the kind of innovation you want — the one that delivers faster speeds for free or the one that experiments with usage limits and higher prices for what you already have?

No wonder Big Telecom is embarrassed.  They should be.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/EPB Interviews 9-20-10.flv[/flv]

EPB and Chattanooga city officials appeared in interviews on Bloomberg News and the Fox Business Channel.  CNET News also covered EPB’s 1Gbps service, introduced last week.  (12 minutes)

Comcast wants you to know your bill for cable television is going to keep going up and up and up, even as the company spends more of your money on political lobbying and rebranding efforts.  As a result, more of you are pulling the plug on Comcast cable television subscriptions.

Speaking Sept. 15 at the Bank America Merrill Lynch media conference in Newport Beach, Calif., Comcast CFO Michael Angelakis warned that programming costs are continuing to increase, and the cable company is going to pass those increases on to its customers through rate hikes.

Angelakis admitted these costs represent one of Comcast’s toughest challenges, because the cable programming industry has become increasingly consolidated.  If Comcast won’t play ball over fees charged by a single network, a dozen or more other channels owned by that programmer could be withheld from the cable company.

The cable programming industry increasingly relies on “Three Musketeer”-package deals that renew carriage agreements for popular cable networks only if other co-owned channels come along for the ride.  Want USA, SyFy, and Bravo from NBC-Universal?  Then you better make room for the rest of their extended family like Sleuth, Chiller, and qubo.

Most years, these cable networks increase their wholesale prices, which shows up eventually on your Comcast bill in the form of a rate hike.

Subscribers have clamored for a-la-carte opportunities to pick and choose only channels actually watched, but that’s a scary proposition to companies like Comcast, who could see revenues plunge from a “pick your own channels” plan.  Instead, Angelakis told investors he’d rather pay less for networks that simply don’t attract many viewers.

“If programmers aren’t performing, we’d like to see rates go down,” he said.

The impact of those price increases is now more apparent than ever for the nation’s largest cable operator as subscribers reach a virtual ceiling in the price they’re willing to pay for cable television.

Comcast management reported adding 165,000 new customers after the digital television transition in the first half of 2009.  Many of those customers signed up for service with one year promotional deals that are now expiring, exposing customers to Comcast’s usual retail prices.  As a result, so far this year, 169,000 customers looking for basic cable service have canceled.

The cable industry is trying to reduce the revenue impact of subscriber losses by increasing prices for the customers that remain.  Comcast is no different, and Angelakis told investors the company’s financial performance can still be strong with increased average revenue per subscriber and cost-cutting.

One expense Comcast is not cutting: political lobbying.

In the second quarter of 2010 alone, Comcast spent $3.82 million dollars on lobbying activities — a 16 percent increase from the amount it spent at the same time last year, according to the U.S. House of Representatives clerk’s office.  Comcast made campaign contributions to elected officials, paid an army of lobbyists to promote its proposed Comcast-NBC merger, and made payments to fund front groups, astroturf projects, and say “thanks” to non-profit groups engaging in “dollar-a-holler” advocacy for the company’s political agenda.

Comcast also lobbied to stop broadband reforms like Net Neutrality, advocated roadblocks for potential competitors, added its two cents on how the government promotes broadband expansion, and sought to inhibit shareholder rights to influence executive pay.

Comcast’s biggest innovation this year is — changing its name.  The march towards rebranding the company’s cable TV, broadband, and phone products continues, with 63 percent of its cable systems now flying the Xfinity flag.  Comcast hopes customers will take a second look at Comcast’s product lineup once they see the new name.  Kevin Upton, a senior lecturer in marketing at the University of Minnesota’s Carlson School of Management says companies can use rebranding to suggest the introduction of new products and services.

Starting Monday, Minneapolis and St. Paul, Minn., customers will find the Xfinity name plastered all over the place, and Upton noted Comcast’s rebranding effort worked on him.

When Upton got a flyer about Xfinity recently, he thought it would offer faster Internet service than Comcast.

“It called attention to itself, and it got me to pay attention to the stuff I’m already overpaying for anyway.”

[flv]http://www.phillipdampier.com/video/CNBC Inside Comcasts Quarter 7-28-10.flv[/flv]

CNBC covered Comcast’s second quarter financial results back on July 28th in this report.  (3 minutes)

Although the price tag may be too rich for your blood, a municipally-owned utility today announced it was bringing America’s fastest broadband to residents and businesses in greater Chattanooga, Tenn., delivering 1 gigabit per second access for $350 a month.

That’s 200 times faster than what the average American broadband consumer receives, and just a fraction of what many Chattanooga area businesses pay other providers for that level of service

“One gigabit broadband service could be compared to the introduction of electric power in the 1930’s. At that time, most people saw electricity as an alternative to the oil lamp for producing light but the larger implications were soon realized,” said Harold DePriest, president and CEO of EPB. “We believe true high-speed Internet access, to both our urban and rural areas, will make Chattanooga the frontier of a new generation of opportunity and provide our community with a platform for engineering the 21st century.”

The mega-fast fiber-to-the-home broadband comes not from a multi-billion dollar private company like AT&T, Verizon, Comcast, or Time Warner Cable, but rather a small city-owned utility that has served Chattanooga’s electricity needs since 1939.

Just over one year old, EPB Fiber Optics is the latest service from the city’s municipal utility. EPB’s fiber broadband network was built after overcoming legal actions filed to stop it by Comcast and the state’s cable lobbyist group.

Since launching service in 2009, EPB’s fiber division has won over 169,000 residents in its 600 square mile service area in Tennessee and northwest Georgia.  This despite the presence of Comcast and AT&T’s U-verse operations, both competing with EPB for customers.  Neither the cable or phone company comes close to matching the speeds and demand EPB has managed to achieve.  In fact, AT&T’s U-verse launch week event in July was marred when an AT&T technician pepper-sprayed a local woman’s pets, and she wasn’t even a customer.

Google acknowledged the arrival of another provider extending 1Gbps broadband to Americans, noting it is still in the process of selecting locations for its own “Think Big With a Gig” 1Gbps fiber service.

“We’re excited to see enthusiasm for ultra high-speed broadband,” spokesman Dan Martin said in an e-mail statement. “It’s clear that people across the country are hungry for better and faster Internet access.”  Chattanooga now joins Hong Kong and just a handful of other cities delivering gigabit broadband.

Atkinson

A broadband industry trade group funded by large telecommunications companies was left making excuses for EPB’s thunder-stealing announcement.

“I can’t imagine a for-profit company doing what they are doing in Chattanooga, because it’s so far ahead of where the market is,” Robert D. Atkinson, president of the Information Technology and Innovation Foundation told the New York Times.

Atkinson is closely involved with several industry backed front groups, including the Alliance for Public Technology (AT&T & Verizon) and the Internet Education Foundation (Comcast & Verizon).

The irony of a telecom industry group that supposedly celebrates broadband innovation downplaying today’s achievement by EPB was not lost on DePriest.

When the Times asked DePriest why EPB would offer such a high speed service, DePriest said, “The simple answer is because we can.”

EPB’s latest announcement throws down the gauntlet against the idea that broadband innovation comes only from large commercial telecom companies.  Phone and cable operators claim their record of innovation will be harmed if municipal providers like EPB are able to offer service, claiming “private investment will dry up.”

It’s the same argument they use for deregulation and minimal oversight.  Yet it was a municipally-owned provider that established a network far superior to what Comcast and AT&T have in Chattanooga, launched America’s first residential 150Mbps service, and today launched America’s first residential 1Gbps broadband service.  EPB charges lower everyday prices for its bundle of TV, phone, and broadband services, too.

The cost to taxpayers?  Nothing.

Local residents can’t wait to get the service.

Keith in Soddy Daisy, Tenn., commented about EPB service: “I’m still waiting on it to become available where I live. It’s getting close because I see them stringing fiber all over the place. The crazy thing is that there are people in their service footprint that only have dial-up. Can you imagine going from having dial-up to having 1 Gbps symmetrical fiber as an option?”

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WTVC Chattanooga EPB 1GBPS 09-13-10.flv[/flv]

WTVC-TV in Chattanooga investigates EPB’s newest 1Gbps broadband service.  (1 minute)

The dollar-a-holler crowd that takes “charitable” contributions from Comcast is enjoying an abundance of riches thanks to your cable bill payment and their corporate agenda to get the NBC-Comcast merger approved. Everyone is coming out to celebrate the deal — from the United Way in Denver to a Texas sheriff and a group opposing grave desecration.  Regular Stop the Cap! reader Bones sent word Comcast’s Money Party is just getting started.

The Wrap notes Comcast has donated $1.8 billion in cash and in-kind largess to non-profit organizations since 2001, many of which will helpfully throw 44 cents back in the form of supportive letters to the Federal Communications Commission telling them to do whatever America’s largest cable company wants.

It’s all a part of the dirty little game some non-profits play with corporate benefactors to work against your consumer interests.  Even worse, many of these same groups will also ask -you- for a donation as well.  If Comcast keeps raising its rates, perhaps the best option in response to those playing on Comcast’s side is to tell them you already sent a donation… to Comcast.

This year’s circus of money has generated a torrent of correspondence to the FCC that is often nothing less than absurd.

The Wrap found one letter from the president of the Washington, D.C.-based Cherry Blossom Festival.  Did you know cherry blossoms were deeply committed to seeing Comcast and NBC get married?

“Over the past few years, Comcast has generously donated services and sponsorship to our events,” Diana Mayhew, president of the Washington, D.C.-based Cherry Blossom Festival, wrote to the Federal Communications Commission in July. “I believe as Comcast teams up with NBC, it will continue to be a great partner for the Cherry Blossom Festival.”

But it gets much sillier.

Stop the Cap! has compiled just a sampler of comments from several interest groups all in a hurry to get their letters into the public record.  Most were bad, but we also include an example of a letter from a group that didn’t simply applaud the deal.  Our comments are in italics:

National Puerto Rican Coalition: “In our view, […] this joint venture will lead to valuable benefits and unprecedented advances in media diversity for Hispanics and other people of color.”

Do you think the fact NPRC also received valuable funding from the Comcast Foundation might have had something to do with their cheerleading letter?

Cuban American National Council
Hispanic Federation
League of United Latin American Citizens
National Council of La Raza
National Hispanic Media Coalition
SER-Jobs For Progress National, Inc.: “We strongly believe that the Memorandum of Understanding between Comcast and NBCU and the Hispanic Leadership organizations seeks to promote the goals of expanding economic opportunity for Hispanic families and preserving and enhancing programming for Hispanic audiences, and view these commitments as stepping stones to a more responsive and responsible corporate citizenry.”

These groups, many of which also receive direct funding from Comcast, went over the top cooking up a “Memorandum of Understanding” (or is it a shakedown agreement) to land positions on Comcast’s “Advisory Councils.”  These Latino groups managed to get their travel and other expenses paid for by Comcast to attend twice-yearly meetings to discuss diversity issues.  Their agreement also allows this coalition to empower itself, by getting Comcast to agree to call them when looking for “qualified” Latino law firms, suppliers and vendors, and even top management.  That provides these groups power and influence as interested candidates appeal to them to gain a spot on the “qualified” list.  But it goes even further — Comcast has to add several “qualified” (identified with the help of these groups) Latino-owned cable channels to the lineup whether subscribers want them or not.

This agreement was marked “confidential,” but you can read a copy right here.  By the way, it’s no surprise the League of United Latin American Citizens is on this list.  They’ll peddle themselves out to any Big Telecom company that comes with a check in hand, especially AT&T.

Gay & Lesbian Alliance Against Defamation (“GLAAD”): “Given the weight and significance of the Comcast/NBCU merger, GLAAD urges the FCC to ensure that the community of lesbian, gay, bisexual and transgender Americans are not forgotten in its calculus of diversity, and that the stories and visibility of LGBT people and their families are held up as part of the valued diversity in its discussions, analysis and recommendations in this merger.

GLAAD’s filing was an example of a respectable comment letter filed by a minority interest group.  They didn’t take a strong position for or against the merger.  Instead, they shined a light on the issues that concern the LGBT community and said the FCC should take a closer look.  That’s fair and appropriate.

Hmong New Life Radio Broadcasting
Hmong Women’s Heritage Association
Hmong Report At 7
Lao Family Community of Fresno
Sacramento Asian-American Minority, Inc.
National Hmong Grave Desecration Committee: “We believe Comcast’s sensitivity to our need for such programming speaks extremely well of them as a company. It is a clear indication that they will continue to exhibit their sense of the responsibility to underserved communities such as ours subsequent to a merger with NBC-Universal.”

These six groups must be new to the influence game because they each sent nearly identical (often word for word) letters to the FCC in support of the merger.  On the ludicrous scale, nothing beats the National Hmong Grave Desecration Committee finding itself compelled to write a formal letter to the FCC on a multi-billion dollar cable-broadcast merger.

Here's something to remember us by....

Mile High United Way: “Comcast has provided sizeable foundation grants for DRH projects and other meaningful financial donations to other United Way programs. In addition to philanthropy and volunteerism, the company has also provided us with top notch communications support. The company has helped us create video presentations for our key fundraising efforts; it has placed public service announcements on its cable stations in an attempt generate attention and attendance for our events; it has also provided time on its Comcast Newsmakers public service broadcast to publicize our events, our programs and our people.”

That’s all wonderful, but none of it justifies or even argues for a merger between a cable and television network.  This is nothing more than dollar-a-holler advocacy at work — United Way gets goodies from Comcast and now they are returning the favor.  What United Way won’t get from our family is another nickle.  After all, our contributions to United Way pay for this group’s time and effort peddling Comcast’s corporate agenda to the FCC.  And I thought the United Way was supposed to be a charitable organization, not a lobbyist advocating for Comcast.

Sheriff Adrian Garcia – Harris County (Tex.): “Comcast is not just a business operating in Harris County, it is a partner in our effort to be a better and safer community. I hope the FCC will keep all that Comcast does in mind and permit the NBC Universal partnership to move forward.”

Voters in Harris County might want to keep this letter in mind come election time.  This shockingly inappropriate involvement by a law enforcement agency willing to stick its nose in a corporate merger is inexcusable.  Perhaps Harris County needs a sheriff that will spend time fighting crime, not typing up letters to benefit the cable company.  Oh, and by the way Sheriff — Comcast really is just a business.

The National Zoo: “In sum, Comcast has proven to be a reliable partner that cares about our work here at the Zoo in promoting innovative science, educating children, and ultimately establishing a beautiful urban park offering families excitement as well as a welcome place to enjoy nature. We deeply care about our engagement with our local friends and families here in Washington, D.C. and appreciate the fact that Comcast shares our commitment to serving the local community.”

That’s grand, but has nothing to do with a corporate merger proposal.  Comcast’s subscribers are the ones who ultimately care about the Zoo.  It’s their money that paves the way for all those good works.

Center for the Homeless: “I hope you will consider this testimony in favor of Comcast and its strong sense of involvement in American communities and service to those who need it most. Comcast is a true partner in the important work that we do.”

Another group whose mission should be helping the homeless is devoting time and resources to sending love notes to the FCC on behalf of a giant cable company.  By the way, none of the clients your group serves can afford Comcast’s prices.

Partnership for a Drug Free New Jersey: “I look forward to our continued partnership with Comcast and am excited to welcome NBC onto their team. We will continue to reach teens all over New Jersey to help ensure that they remain drug-free and continue to bring the message of hope to so many of our state’s residents.”

The excitement is even greater when you recognize Comcast and the national umbrella group Partnership for a Drug Free America can’t thank each other enough.  The non-profit explained it all in a newsletter: “At the Partnership’s third annual Making A Difference gala held this winter in the Grand Ballroom of the Waldorf-Astoria Hotel, more than 850 guests gathered to honor Ralph J. Roberts, founder and chairman of the executive and finance committee for the Comcast Corporation, and his son, Brian L. Roberts, chairman & CEO of Comcast. Chairing the gala were Geraldine B. Laybourne, chairman & CEO of Oxygen Media and James B. Lee, Jr., vice chairman of JPMorgan Chase & Co. […] The evening generated over $2.1 million to support the Partnership’s programs for children, parents and families.”

The accolades should have stopped at a “thank you” card, not with the unseemly way this group returns the favor by advocating for a merger deal involving one of their benefactors.