When an astroturf or telecommunications company tells consumers that laws to permit statewide franchising for cable or telephone company video services are “consumer-friendly,” here is a real world example demonstrating how wrong they are.
After a year of informal negotiations with Comcast, Champaign city officials Tuesday voted unanimously to reject the company’s franchise renewal application.
Council members said they won’t accept a bad franchise agreement.
“We have to defend the rights of 75,000 people who live in Champaign and pay phenomenal amounts of cash for cable services,” city councilperson Tom Bruno told The News-Gazette.
At issue:
City officials want Comcast to maintain a local office in Champaign-Urbana, which company officials have reportedly refused to guarantee;
Comcast objects to a request from the city to add a fifth Public, Educational, and Government (PEG) access channel unless the city assures Comcast it will have a considerable lineup of “original” programming;
Comcast wants to change the formula for computing “gross revenue,” on which the city bases its 5 percent franchise fee, substantially reducing the $700,000 annual payment the city usually receives.
Subscribers and city officials want assurances that Comcast will maintain a local presence, and not adopt a regional approach that places many Comcast employees that make decisions affecting the community well outside of the area. Comcast’s demand that the city heavily program its existing PEG channels before considering adding a fifth channel as part of a ten year franchise agreement was dismissed by Rick Atterbery, a member of Champaign’s negotiating team and the chairman of the CU Joint Cable & Telecommunications Commission.
“They would require more original programming (on PEG channels) than NBC is providing [its affiliates],” Atterbery said.
Tom Bruno
City officials discovered the state of the cable industry’s willingness to compete when it put out a formal request for proposals for any cable company to apply for the city franchise. Only one provider, the incumbent Comcast, submitted an application.
Other cities have had similar experiences, finding no cable company of size will apply for a franchise to serve a community already wired by someone else. Instead, cable companies change hands when operators conduct private negotiations to swap territories, as was the case in Memphis, Tennessee when city officials learned Time Warner Cable was leaving and Comcast was taking over, or through mergers and acquisitions, such as in Buffalo, New York where incumbent operator Adelphia’s franchise was taken over by Time Warner Cable.
In the end, Comcast holds all of the cards. Should Champaign officials be unable to negotiate an agreement with an intransigent Comcast, the cable company can use the telecommunications industry-friendly statewide franchise law it fought heavily against in 2007. Like in Tennessee and several other states, AT&T (among others) has been spreading campaign contributions around to attempt to pass legislation to adopt a single franchise agreement for entire states, reducing the time and effort AT&T would have otherwise spent making agreements with individual communities. Comcast, being the incumbent likely to face competition, strongly opposed the bill in an effort to slow down AT&T.
It would be ironic if Comcast had to resort to a statewide franchise to “opt out” of the local franchise negotiations that it fought so hard to force AT&T to comply with.
The News-Gazette confirms that the city really has little to work with:
The city could theoretically require Comcast to remove or abandon its city facilities, but Comcast could fight a council rejection in court or seek a state franchise, making Comcast’s ouster highly unlikely, Atterbery said.
Deb Piscola, Comcast’s director of government affairs, attended the meeting and said she was optimistic a franchise agreement can be hammered out. She said informal negotiations can continue along with the formal process simultaneously.
“Ninety-nine percent of franchise renewals are completed through the informal process,” she said. “I feel very confident we will reach an agreement.”
Piscola also said she believes Comcast will retain a local office, and that the differences over the franchise fee can be worked out.
[Update: 6:39pm ET — Clarified article to recognize this week’s action involved the Champaign city council, not Urbana. Our reader Bob reminds us that AT&T U-verse has launched in parts of both cities in the past few weeks, should customers want to take their business elsewhere.]
AT&T launched its U-verse service in parts of the Memphis area Monday, promising competition for Comcast, the dominant cable company in southwest Tennessee. But some area residents expected much more to come from last year’s controversial industry-friendly statewide franchising law that promoters promised would bring lower prices for service across the state.
AT&T plans to offer U-verse within the next two years to subscribers in Arlington, Bartlett, Collierville, Covington, Dyersburg, Germantown, Lakeland, Memphis, Piperton and Ripley. Monday’s launch only covers a portion of Memphis, and doesn’t cover large portions of downtown.
Unlike traditional cable services, AT&T’s U-verse is typically delivered on a copper wire and fiber optic based Internet Protocol network. Not as advanced as Verizon FiOS, which provides a fiber optic connection straight into the home, AT&T’s system still relies in part on traditional copper phone wire that runs from the pole to your home. AT&T uses this approach to save money — company officials claim 100% fiber networks are too costly to build, and Wall Street investors balk at the up front costs.
AT&T uses its fiber network from the phone company office to individual neighborhoods to reduce the distance between the homeowner and the company’s equipment, which delivers a digital signal across the customer’s existing phone line. Just like DSL, the shorter the distance between the customer and the telephone company equipment, the faster the speeds. AT&T U-verse requires fast speeds to handle the video channels, digital phone, and broadband components that are part of the U-verse product line.
AT&T’s U-verse pricing ranges from $49 a month for an enhanced basic service package of 130 channels to $109 for 390 channels. Premium channels are extra. Plans include one AT&T set top box. AT&T’s system will require a set top box for each television, at a monthly rental of $7 for each additional set, which can increase costs significantly for houses with several televisions. An HD package runs $10 per month. AT&T specials often include discounted or free installation, which takes between four to seven hours to complete and is only done on weekdays. No contracts are required and customers can cancel at any time.
AT&T U-verse pricing in Memphis (click to enlarge)
AT&T claims that 70% of their customers choose a bundled package that includes television, broadband, and/or telephone service.
Company officials credited the passage of the Competitive Cable and Video Services Act, which became effective in July 2008, for paving the way for AT&T U-verse in the city. AT&T’s praise also included crediting elected officials by name who supported the company’s lobbying efforts towards passage of that bill, which stripped cable franchising authority from local communities and adopted a statewide franchise system.
“We are thrilled to offer this innovative video choice to customers in the Memphis metropolitan area. As we celebrate this Memphis launch, I want to remember the contributions of the Tennessee General Assembly to open Tennessee’s video services marketplace to competition which is truly benefiting consumers. I would like to again thank Memphis area legislators including Speaker Emeritus Jimmy Naifeh, Senator Mark Norris, House Speaker Pro Tem Lois DeBerry, Chairman Ulysses Jones and the many others who supported competition and choice for consumers,” said Gregg Morton, president, AT&T Tennessee.
“As Tennessee policymakers, our goal was to increase investment throughout the state and give consumers more choices and innovative new services,” said Senator Norris. “AT&T has been a great community citizen and the launch of AT&T U-verse also supports economic growth in Memphis.”
“We are excited that AT&T has brought their 100 percent Internet Protocol-based television service to Memphis,” said Chairman Jones. “Consumers in Memphis have asked for this and today, AT&T has delivered.”
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p style=”text-align: center;”>AT&T Group President for Operations Support John Stankey discusses the company’s fiber strategy and provides an update on its progress in deploying its groundbreaking IPTV service, AT&T U-verse TV. (11 minutes) You must remain on this page to hear the clip, or you can download the clip and listen later.
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p style=”text-align: center;”>
The Municipal Technical Advisory Service, in association with the Tennessee Municipal League, noted that the lobbying effort to pass the Act was among the most expensive lobbying campaigns in state history.
This legislation is part of the national trend to diminish or eliminate the franchising authority of cities by granting cable companies the right to provide services without negotiating agreements with local governments.
In recent years, several cable companies operating in Tennessee permitted local franchise agreements to expire and refused to negotiate contracts with cities in anticipation that legislation would be adopted that would give cable companies great advantages in negotiating new agreements.
This tactic has paid off, as this law essentially grants a statewide franchise to these companies. Current franchise holders may now terminate their local agreements and seek a state franchise. A city that has previously negotiated a franchise agreement with one cable provider may be forced to permit other cable companies to serve its area under the same terms and conditions of the existing agreement
Such legislation has traditionally been advocated by telephone companies like AT&T and Verizon who are introducing video services in a bid to remain competitive with cable, which now offers its own telephone service. Seen as a shortcut to negotiating with each individual municipality, the statewide franchise advocates claims it reduces the time and expense of bring needed competition to communities.
In addition to an expensive lobbying campaign, astroturfer FreedomWorks coincidentally showed up to promote their “Choose Your Cable” campaign, which in fact mirrors AT&T’s public policy advocacy of statewide franchising.
FreedomWorks Chairman Dick Armey commented, “FreedomWorks and our thousands of Tennessee members were proud to take part in the grassroots battle in Tennessee that finally saw this ground-breaking legislation through. We salute the Tennessee state legislature for its leadership in giving Tennessee consumers the advantages of increased competition in the video services market. The Competitive Cable and Video Services Act will offer cable consumers more choices and more innovation. And when businesses are forced to compete for customers, the customers win.”
Incumbent cable operators have had mixed reactions to such proposals, generally opposing them in areas where they would likely face the entry of AT&T or Verizon into their markets, and taking a more favorable approach in areas where they are unlikely to face a strong telephone company competitor.
In Tennessee, with AT&T itching to bring U-verse to state residents, cable operators launched a major opposition effort.
Local municipalities and many consumer advocates strongly oppose statewide franchising legislation, noting such laws remove local oversight over operators that do not perform responsibly and reasonably in their communities. Additionally, in many states where statewide franchise bills have become law, local communities find franchise fees paid into state bodies that do not always pass on the full amount of that revenue to towns and cities.
Other common problems include:
Threatened loss of local Public, Educational, and Governmental (PEG) local access channels;
Reduced control over zoning regulations prohibiting digging and construction without permits;
Loss of “free service” provisions that deliver cable programming to public schools, community centers, and town, police and fire halls at no charge;
Loss of authority to help manage customer complaints.
In Tennessee, those opposing the legislation managed to get rid of statewide franchise fee administration, retained control over their existing PEG channels, and kept existing “free service” provisions, as well as reasonable zoning requirements. However, the telecommunications industry did manage to include language banning municipally owned broadband networks in any area where an incumbent provider exists:
Memphis, Tennessee
Broadband joint venture authority.
The law creates the “Tennessee broadband deployment fund” to be used to promote the deployment of broadband service to rural areas. Guidelines will be developed to govern use of the funds, and grants will be available to local governments, cable companies, and telecommunications companies.
Cities now have the authority to enter into joint ventures with one or more third parties to provide broadband services. Joint ventures will be authorized only in areas that are historically unserved. City electric companies and electric cooperatives that participate in these joint ventures must still comply with other applicable statutes, and no revenues from utility operations may be used to subsidize the joint venture.
Cable operators also managed some concessions, and after the bill was signed into law, the state cable television association said they could live with the result.
Stacey Briggs, executive director of Tennessee Cable Telecommunications Association:
“This has been a good process – not easy, but good – and Speaker Naifeh should be commended for managing this outcome on a highly complex policy.
The cable industry, including Comcast and Charter, stood firm to make sure that our members were treated fairly and that AT&T and other companies were not granted advantages in the law. And, most important for consumers, Tennessee’s cable companies will continue making substantial and meaningful investment in Tennessee. Cable companies will continue to be the leader in bringing the most advanced products, services and newest technologies to consumers across the state.
AT&T and other companies have had the right to compete under local franchising rules for more than a dozen years. This new policy streamlines the franchise process, but it remains to be seen whether new entrants will compete in Tennessee.”
After all of the lobbying was done, the bill was signed into law, and the competition FreedomWorks was touting did arrive, the only thing missing from the consumer perspective was lower pricing.
Comcast, the local cable operator serving Memphis, seemed unfazed by AT&T’s entry into the area.
“We have competed successfully against satellite TV and other competitors for many years,” said Trevor Yant, vice president and general manager of Comcast of Memphis. “AT&T will become another player in the market with the services they choose to offer.”
One of the possible reasons for Comcast’s apparent lack of concern may stem from the reaction of many Memphis residents, who note AT&T’s prices are often higher than those charged by Comcast.
Among the mostly unimpressed reactions on local message boards:
mrhmeisme:
“$109.00 for 390 channels doesn’t sound like a very competitive price for a yet untested product. That’s some 20 percent higher than my current package that has all the channels that interest me. I suppose the proof will be in the pudding.”
Not_Chicken_Little:
“The website for U-verse presents the packages very poorly, and the prices don’t seem to be any bargain. But I am glad to see some competition, even though I don’t think they’ll make much headway. They need to show what they’ve got in a more attractive and understandable way, and cut prices – they don’t make me even think of switching with the lame sales pitch they have now.”
dmat7777:
“I just did a comparison of cost between my current Comcast and the U-verse. For comparable services, U-verse would be about $15 more per month for me. Some of the packaging/options might look better. For example, the Flickr photo being included, but I’m more concerned about how much $$$ per month. I don’t see AT&T taking this seriously. They seem to be doing the typical huge corporate thing, and not addressing the customers real concerns. No surprise there.”
ChickPea:
“$49 a month is too rich for my blood. When someone offers a decent package available for $25-$30 a month, I’ll be in.”
Oddly, the most common requests and complaints among Memphis area residents continue to be unanswered by Tennessee officials who were eager to support the Competitive Cable and Video Services Act, but left out a few things:
umbluegray:
“I want a plan where I can pick and choose the channels I want. I hate paying money to some of the basic channels like MTV, etc.”
ladydonald:
“I would be a big fan of a-la carte programming if it were ever enacted.
A-la carte channels are a niche that all of the providers are totally ignoring. Just think what would or could happen if those options were available.”
Hogs2009:
“It would be nice if you could pick out what cable channels you want and skip the rest. 90% of cable channels I do not want but am charged for. I mainly have cable for sports broadcasting channels, like ESPN, ESPN2, and ESPN Classic. I also like having local on cable because it is more clear, again because some games are on local channels. A-la carte is a great idea!”
Many residents were also suspicious of just how good a local competitor AT&T will be against Comcast, which itself took over providing cable service formerly provided by Time Warner Cable:
DanWesson:.
“Since Comcast bought out service from Time Warner locally, our service has been sub-par. I have had technicians out the house multiple times due to inexplicably losing certain HD channels and internet service that continually drops or can be agonizingly slow, on par with dial-up some days (particularly the hot ones, which is very strange). Their technicians on the phone and who come to the house have been polite and friendly, but they aren’t exactly going out of their way to fix the problem.
Comcast also charges me more than Time Warner did in addition to charging a “modem-rental” fee when the cable modem was free from Time Warner and I haven’t exchanged it since the change.
All that said, I’m not sure AT&T is the way to go as their corporate practices are the worst in the Telecom industry. Customer service has always been non-existent as the customer is merely a cash-cow. I’m all for competition in the marketplace, though. If Direct TV didn’t require a contract that might would be the route I went, but I’d still be reliant on one of these other worthless companies for internet.”
Not_Chicken_Little:
“On the website trying to check availability, U-verse tells me it cannot find my address! It suggests I try again using my AT&T phone number instead and directs me to continue to another screen. That screen, however, has no option to enter a phone number – only the address.
So I already see the level of competence I would have to endure if I choose U-verse. And like dmat7777, I see that the price for comparable service would be considerably higher than what I have now.”
apollo1377:
“AT&T can’t handle phone service. Do you think they can take on more? I think NOT.”
ima_cracker:
“If AT&T could deliver a more reliable package some would pay more to get it.
Instead they are mortgaging the company’s reputation for wireline services, which they continually deride, to try and emulate the cable companies financial model, which has produced a reputation for reliability that is the envy of nobody.
If instead of trying to destroy the value in wireline AT&T decided to pursue a higher quality, more reliable service for cable, they could at some point expect to capture a substantial amount of market share. But they assume the consumer is too stupid to make the distinction between one service and another.”
ChickPea:
“AT&T websites are a perennial problem. Ever since BellSouth was taken over by AT&T, getting any information on local service online has been a struggle. A site map would probably look like a birds nest.
That said, I’m loving my AT&T DSL lite! Cheap and plenty fast for a non-gamer.”
The city of Philadelphia will witness a three-way battle for your broadband dollar in the coming months as three competitors race to upgrade their networks to deliver the kind of “blazing fast speeds” only dreamed about in much of the rest of the country.
Comcast, the dominant cable provider in Philadelphia, today announced 50Mbps broadband service for greater Philadelphia residents for $99 a month. The new, faster speeds are available because Comcast’s Freedom Region has been upgraded to the DOCSIS 3 standard. Comcast’s Freedom Region includes metro Philadelphia and the counties of Bucks, Chester, Delaware, and Montgomery, as well as northern Delaware and southern New Jersey.
Comcast also doubled the speeds of many of its broadband customers today. Here’s a roundup of the affected tiers:
Performance — 12Mbps/2Mbps — $42.95/month Performance Plus — 16Mbps/2Mbps — $52.95/month (no change of upload speed from previous tier) Ultra — 22Mbps/5Mbps — $62.95/month Extreme 50 — 50Mbps/10Mbps — $99/month
*DOCSIS 3 modem upgrade required.
Meanwhile, cable overbuilder RCN, which serves parts of Philadelphia and the Lehigh Valley to the west announced it was aggressively moving to upgrade its own network to DOCSIS 3, and is taking the dramatic step of dumping all of its analog channels from the lineup, switching to all-digital cable, starting in Allentown. RCN has already confirmed it will offer up to 50Mbps service in upgraded areas, but has the capacity to expand to 100Mbps service if needed. RCN had been planning to launch upgraded DOCSIS 3 service starting in New York and Boston, but market conditions in Philadelphia will make it necessary to expand there as well.
The newest player in town is Verizon, whose fiber to the home FiOS service is capable of the fastest download and upload speeds in the marketplace. Verizon has offered packages with equal download and upload speeds (20Mbps/20Mbps being the most common) in the past, but is capable of achieving even faster speeds. It currently provides 50Mbps/20Mbps service in many areas.
“We have a lot of work ahead of us. We will wire the entire city with the nation’s most advanced fiber-optic network, starting with Chestnut Hill, and we expect the first customers to have FiOS services by later this year,” Verizon spokesman Eric Rabe wrote in a blog post. “Other neighborhoods where we will begin building soon are Brewerytown, East and West Mount Airy, South Philadelphia, and the Kensington sections of the city.”
Verizon expects the entire city to be FiOS-ready by 2016, reaching about 660,000 houses and apartment buildings. It is already available in 182 communities surrounding the city.
It has been a busy week for the TV Everywhere test project. First, two premium movie networks — HBO and Starz agreed to participate in the trial, and now CBS, the first broadcast television network, today announced it was signing on as well.
CBS will be running a mix of older and current shows as part of the trial with Comcast subscribers, probably including its popular shows like CSI and NCIS, which are already available in some areas online through Comcast’s “Fancast” portal and through Time Warner Cable’s Primetime on Demand channel, available on digital cable.
“CBS and Comcast share the same vision of giving consumers more — more content, in more places,” said Matt Bond, Executive Vice President of Content Acquisition, Comcast Cable. “On Demand Online is a major step in extending consumers’ television experiences online, and ultimately across platforms by giving any television network, including top brands like CBS, the ability to make their content available on the Web.”
CBS historically has avoided partnerships with the cable industry. It is the only network that never launched a cable network (ABC Family, MSNBC, CNBC, fX, and others on offer from other networks), and also steered clear of a partnership with Hulu, which has ABC, Fox, and NBC among its partners.
The network is interested in the potential exposure its shows might have on-demand, particularly among younger viewers. But more importantly, being friendly to the largest cable companies around may prove fruitful when the network wants retransmission consent agreements signed, permitting cable companies to place the network’s owned and operated local TV affiliates on the cable dial without a lot of aggravation and negotiations over fees.
TV Everywhere will offer “authenticated” subscribers to cable television or satellite service access to on-demand, streamed video programming through broadband networks.
Some additional details are emerging about the content partners and networks likely to participate in the joint Time Warner Cable-Comcast TV Everywhere (as long as you are a pay cable/telco video/satellite TV subscriber) partnership.
Turner Broadcasting (long since out of the control of Ted Turner, who was essentially escorted to the door years ago) is a key partner, which means TNT and TBS original series will be an essential part of the new service. The network’s programming is already streamed to around 5,000 cable TV customers participating in a market trial.
Among the original shows the TNT and TBS networks air:
The Closer
Raising the Bar
Saving Grace
Leverage
My Boys
The Bill Engvall Show
Tyler Perry’s House of Payne
Also agreeing to participate in the venture: Rainbow Media, Scripps Networks and A&E Television Networks. That means you should also expect to see shows from these cable networks:
AMC
WE tv
The Independent Film Channel
Sundance Channel
HGTV
Food Network
DIY Network
Fine Living Network
Great American Country
A&E Network
History (Channel)
History International (Channel)
Bio (Channel)
Military History (Channel)
Crime & Investigation Network
The ultimate goal? To obliterate YouTube and Hulu TV as the most popular video websites in the United States. Jeff Bewkes, CEO of Time Warner, fully expects TV Everywhere to be the nation’s largest and most popular destination for online video.
Some technical notes about accessing the service from Multichannel News:
At first, Comcast’s On-Demand Online content will be available only to customers who subscribe to both cable TV and broadband services, over only a Comcast-provided Internet connection through a subscriber’s cable modem, and via only the Comcast.net or Fancast.com portals. The MSO chose to “authenticate down to the subscriber level” to ensure the service will have a higher level of security out of the gate, said Comcast senior vice president of new media Matt Strauss.
Whereas Comcast had intended to provide On-Demand Online to subscribers solely through its own Web sites over its own broadband networks, Time Warner’s TV Everywhere imagines a decentralized way to let consumers log in to any participating sites to access content, including those run by the content owners.
Now Comcast has agreed to eventually allow video subscribers to access Time Warner’s content via TNT.tv and TBS.com, over any broadband connection they choose, although the specific mechanism for doing this hasn’t been determined yet.
Be Sure to Read Part One: Astroturf Overload — Broadband for America = One Giant Industry Front Group for an important introduction to what this super-sized industry front group is all about. Members of Broadband for America Red: A company or group actively engaging in anti-consumer lobbying, opposes Net Neutrality, supports Internet Overcharging, belongs to […]
Astroturf: One of the underhanded tactics increasingly being used by telecom companies is “Astroturf lobbying” – creating front groups that try to mimic true grassroots, but that are all about corporate money, not citizen power. Astroturf lobbying is hardly a new approach. Senator Lloyd Bentsen is credited with coining the term in the 1980s to […]
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