Comcast has repeatedly touted its rating from J.D. Power & Associates claiming the company has been cited for the most improvement of any cable operator scored by the survey firm. That isn’t saying very much when one takes a closer look.

In fact, since 2010 Comcast has achieved very little improvement in its abysmal score. J.D. Power & Associates reports that over the last four years, Comcast has only managed to boost its TV satisfaction score 92 points and Internet satisfaction 77 points… on a 1,000-point scale.[1]

Comcast also continues to have below-average scores in all four regions for both television and broadband, with the exception of Internet service in the north-central region, where it faces competition from DSL offered by telephone company CenturyLink.

Other consumer satisfaction surveys are far less charitable to Comcast.

Consumer Reports ranked Comcast 15^th out of 17 large cable companies and called their service and customer relations mediocre. In a survey conducted in April, the consumer group found 56% of the public opposed to the merger, 11% supported it, and 32% offered no opinion. The survey found 74% believing the merger will result in higher prices and fewer choices for consumers.[2]

“A merger combining these two huge companies would give Comcast even greater control over the cable and broadband Internet markets, leading to higher prices, fewer choices, and worse customer service for consumers,” Delara Derakhshani, policy counsel in Consumers Union’s D.C. office, said in a statement.[3]

Nearly every year, Comcast CEO Brian Roberts acknowledges the problems with customer service and promises improvements.[4] But according to the American Consumer Satisfaction Index, those improvements never arrive. Perhaps they need the expertise of professionals like those virtual assistants to turn things around.

In 2004, ACSI noted it added cable television to its index in 2000, and since that time, “customer satisfaction has gone from bad to worse, and there is no improvement in sight:”[5]

Among cable providers, Time Warner has the highest score of 60. Both Comcast and Charter Communications register at 56. For the private as well as public sector, including the IRS, this is the lowest level of customer satisfaction of any organization in ACSI. Consumer complaints are also much more common relative to any other measured industry. Almost half of all cable customers have registered complaints about one thing or another.

When buyers have meaningful choice alternatives, this level of customer (dis)satisfaction is neither competitive nor sustainable. Cable is the only industry to score below 60 in ACSI. With the satellite companies removed, the weighted average for the cable industry is 59.

Under normal competitive conditions, there would be mass customer defections. The reason this is not the case for the cable industry is due to local monopoly power, which means that in most markets, the dissatisfied customer has nowhere to go.

In 2007, ACSI foreshadows what a merger between two giant cable companies is likely to mean for customers as the two companies eventually attempt to integrate their disparate computer systems and management:[6]

After a minor gain in 2006, the first ever for the industry, satisfaction among subscribers to cable and satellite TV service drops 2% to 62, the lowest level of customer satisfaction among all industries covered by ACSI.  None of the providers has improved on customer satisfaction this year.  Comcast (down 7% to 56), DirecTV (down 6% to 67) and Time Warner Cable (down 5% to 58) tumble.  High system loads causing problems with reliability and pricing were major culprits.  Both Comcast and Time Warner have acquired many new subscribers in their deal to divide up troubled cable provider Adelphia Communications – integrating these acquisitions often leads to short-term problems with customer satisfaction.

In 2008, things deteriorated further for Comcast customers, according to this ACSI assessment:[7]

Comcast is down 4% to 54, an all-time low for the largest cable provider in the country. Rapid growth may have contributed to difficulties in operations as Comcast continues to add cable subscribers, often through acquisitions of companies in smaller markets.

[…] As is often the case, small is often better in terms of being able to provide good customer service. Cablevision, for example, with some 3 million subscribers, is barely 1/8th the size of Comcast. These companies don’t generally seek to expand quickly beyond their geographic footprints and are often targets of acquisition by larger firms, companies that may be able to withstand depressed customer satisfaction in the short term as operations of the smaller providers are integrated.

This year, both Comcast and Time Warner Cable fell even further according to ACSI:[8]

Cable giants Comcast and Time Warner Cable have the most dissatisfied customers. Comcast falls 5% to 60, while Time Warner registers the biggest loss and plunges 7% to 56, its lowest score to date.

“Comcast and Time Warner assert their proposed merger will not reduce competition because there is little overlap in their service territories,” says David VanAmburg, ACSI Director. “Still, it’s a concern whenever two poor-performing service providers combine operations. ACSI data consistently show that mergers in service industries usually result in lower customer satisfaction, at least in the short term. It’s hard to see how combining two negatives will be a positive for consumers.”

ACSI also scored Internet Service Providers this year and found even worse news:[9]

High prices, slow data transmission and unreliable service drag satisfaction to record lows, as customers have few  alternatives beyond the largest Internet service providers. Customer satisfaction with ISPs drops 3.1% to 63, the lowest score in the Index.

[…] Cable-company-controlled ISPs languish at the bottom of the rankings again. Cox Communications is the best of these and stays above the industry average despite a 6% fall to 64. Customers rate Comcast (-8% to 57) and Time Warner Cable (-14% to 54) even lower for Internet service than for their TV service. In both industries, the two providers have the weakest customer satisfaction.

Comcast claims the transaction will allow the two companies to invest in their networks, improve customer service with a topnotch phone answering service, and enhance the products available to Time Warner Cable customers.

In reality, Comcast’s largest investment will be in a $17 billion share buyback to benefit their stockholders.[10] Time Warner Cable’s current CEO has secured for himself a golden parachute package of $78 million dollars for just two months on the job as CEO of Time Warner Cable.[11]

With that kind of money on the table, it is no surprise Comcast has invested in 76 lobbyists from 24 different lobbying firms and is spending millions trying to convince regulators, including the NY PSC that this transaction is a good deal for New York. The more than 2,700 New Yorkers that have filed comments with the PSC, largely in strong opposition to this merger, disagree. Their voices should speak louder than out of state groups that have been urged by Comcast to send letters supporting this transaction.

—

[1]http://variety.com/2014/biz/news/comcast-time-warner-cable-remain-among-most-hated-tv-providers-survey-1201145921/

[2]http://variety.com/2014/biz/news/comcast-time-warner-cable-merger-poll-shows-majority-oppose-1201224277/

[3]http://consumersunion.org/

[4]http://www.dslreports.com/shownews/Comcast-CEO-Makes-His-Yearly-Promise-to-Improve-Customer-Service-128206

[5]http://www.theacsi.org/component/content/article/30-commentary-category/86-acsi-quarterly-commentaries-q1-2004

[6]http://www.theacsi.org/component/content/article/30-commentary-category/169-acsi-quarterly-commentaries-q1-2007

[7]http://www.theacsi.org/component/content/article/30-commentary-category/179-acsi-quarterly-commentaries-q1-2008

[8]http://www.theacsi.org/news-and-resources/press-releases/press-2014/press-release-telecommunications-and-information-2014

[9]http://www.theacsi.org/news-and-resources/press-releases/press-2014/press-release-telecommunications-and-information-2014

[10]http://www.cleveland.com/business/index.ssf/2014/02/comcast_agrees_to_purchase_of.html

[11]http://www.usatoday.com/story/money/business/2014/03/20/four-months-as-time-warner-cables-ceo--80-million/6658083/

Broadband will be critically impacted by any merger of Comcast and Time Warner Cable in New York. The two companies could not be more different in their philosophies regarding access, pricing, and speeds.

This merger will have an especially profound impact on broadband service in upstate New York, largely left behind out from getting Verizon’s fiber upgrades. New York’s digital economy critically needs modern, fast, and affordable Internet access to succeed. Verizon has not only ceased expansion of its FiOS fiber to the home network in New York, it has virtually capitulated competing for cable customers in non-FiOS areas by agreeing to sell Time Warner Cable service in its wireless stores.[1]  In cities like Rochester, served by Frontier Communications’ DSL, Time Warner Cable is the only provider in town that can consistently deliver broadband speeds in excess of 10Mbps.

Time Warner Cable has never been the fastest Internet provider and had a history of being slower than others to roll out speed increases. But it is also the only cable provider in the country that experimented with usage caps and consumption billing and shelved both after subscribers bitterly complained in market tests in cities including Rochester.[2]

Then CEO Glenn Britt announced the end of the usage cap trial just two weeks after it became public.[3] Britt would later emphasize that he now believed there should always be an unlimited use plan available for Time Warner Cable customers who do not want their Internet use metered.[4] In study after study, the overwhelming majority of customers have shown intense dislike of limitations on their Internet usage, whether from strict usage caps Comcast maintained for several years or usage allowances that, when exceeded, would result in overlimit fees.[5] Just this month, the Government Accounting Office confirmed these findings in a new study that reported near-universal revulsion for usage caps on home wired broadband service:[6]

In only two groups did any participants report experience with wireline UBP [usage-based pricing].

However, in all eight groups, participants expressed strong negative reactions to UBP, including concerns about:

• The importance of the Internet in their lives and the potential effects of data allowances.
• Having to worry about data usage at home, where they are used to having unlimited access.
• Concerns that ISPs would use UBP as a way of increasing the amount they charge for Internet service.

Time Warner Cable has learned an important lesson regarding consumer perception of usage-based billing and usage caps on Internet service. In 2012, the company introduced optional usage caps for customers interested in a discount on their broadband service. Out of 11 million Time Warner Cable broadband customers, only a few thousand have been convinced in enroll such programs.[7]

Despite results like that, Comcast has not learned that lesson and has twice imposed unilateral, compulsory usage limits on their broadband customers, starting with a nationwide hard usage cap of 250GB per month introduced in 2008. Violators risked having their broadband service terminated by Comcast.[8] Today, for some that would be comparable to losing electricity or telephone service. The threat has profound implications in areas where Comcast is the only broadband provider.

Comcast temporarily rescinded its cap in May 2012, but has gradually reintroduced various forms of usage-related billing and caps with market trials in several Comcast service areas[9]:

Nashville, Tennessee: 300 GB per month with $10/50GB overlimit fee;

Tucson, Arizona: Economy Plus through Performance XFINITY Internet tiers: 300 GB. Blast! Internet tier: 350 GB; Extreme 50 customers: 450 GB; Extreme 105: 600 GB. $10 per 50GB overlimit fee;

Huntsville and Mobile, Alabama; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson, Mississippi; Knoxville and Memphis, Tennessee and Charleston, South Carolina: 300 GB per month with $10/50GB; XFINITY Internet Economy Plus customers can choose to enroll in the Flexible-Data Option to receive a $5.00 credit on their monthly bill and reduce their data usage plan from 300 GB to 5 GB. If customers choose this option and use more than 5 GB of data in any given month, they will not receive the $5.00 credit and will be charged an additional $1.00 for each gigabyte of data used over the 5 GB included in the Flexible-Data Option;

Fresno, California, Economy Plus customers also have the option of enrolling in the Flexible-Data Option.

Comcast customers in these areas do not have the option of keeping their unlimited-use broadband accounts. Despite the fact Comcast executive vice president David Cohen refers to these as “data thresholds,” they are in fact de facto limits that carry penalty fees when exceeded.[10]

Cohen predicts these usage limits will be imposed on all Comcast customers nationwide within the next five years.[11] Time Warner Cable has committed not to impose compulsory limits on its broadband customers. Verizon has never attempted to place limits on its home broadband customers. Frontier shelved a usage limit plan of 5GB per month attempted in 2008 and currently provides unlimited service.

Comcast CEO Brian Roberts sat for an interview with CNBC in June in which he implied usage growth was impinging on the viability of its broadband business, justifying usage caps. At the end of the interview, Time Warner Cable ran advertising emphasizing it has no usage caps.[12] Both companies have highly profitable broadband services, as do other providers across the country.[13]

As our group has found, usage caps and consumption billing on cable Internet and DSL are little more than a transparent rate increase and anti-competitive maneuver to restrict the growth of the industry’s biggest potential competitor: online video. If a consumer can stream all of their video programming over a broadband account, there is no reason to retain a cable TV package. Comcast’s usage cap provides a built-in deterrent for customers contemplating such a move.

While a Comcast representative offered (without any independent verification) that the average Comcast broadband user consumes fewer than 20GB of data per month, Sandvine released evidence in its Global Internet Phenomena Report 1H2014 study that cord-cutters in the U.S. – at least those whose usage indicates the use of streaming as a primary form of entertainment – now consume about 212GB of data per month (with 153GB of that going toward “real-time entertainment usage”).[14]

That would put many customers perilously close to Comcast’s current market tested usage allowance.

Approving the transfer of franchises from Time Warner Cable to Comcast has the potential of saddling the majority of New York residents with usage caps and/or consumption billing with little or no savings or benefit to the consumer while introducing a major impediment to potential online video competition to help curtail cable television pricing.

—

[1]http://www.verizonwireless.com/wcms/page-unavailable.html?e=404&req=/home-services/twc.html

[2]https://www.reuters.com/article/us-timewarnercable/time-warner-cable-shelves-broadband-usage-billing-idUSTRE53F6EQ20090416

[3]http://stopthecap.com/2009/04/16/we-won-time-warner-killing-usage-caps-in-all-markets/

[4]https://newsroom.charter.com/

[5]

[6]

[7]http://stopthecap.com/2014/03/13/time-warner-cable-admits-usage-based-pricing-is-a-big-failure-only-thousands-enrolled/

[8]https://arstechnica.com/uncategorized/2008/08/its-official-comcast-starts-250gb-bandwidth-caps-october-1/

[9] 

[10] 

[11]https://techcrunch.com/2014/05/14/comcast-wants-to-put-data-caps-on-all-customers-within-5-years/

[12]http://stopthecap.com/wp-content/uploads/2014/04/nocaps.png

[13]https://gigaom.com/2014/02/12/comcast-and-time-warner-cable-forget-tv-it-is-all-about-broadband/

[14]http://www.multichannel.com/news/technology/cord-cutters-gobble-down-bits-sandvine-study/374551#sthash.JYFP7o69.dpuf

Despite claims from Comcast that it will improve broadband speeds for Time Warner Cable customers, Time Warner has managed to do that without any help from Comcast. Through its TWC Maxx upgrade program, Time Warner now delivers faster broadband speeds than most Comcast customers receive, at a lower price, and without the threat of usage caps.[1]

Residents in parts of New York City are already getting more than triple the broadband speeds they used to receive without any additional charges. A customer in Queens that used to pay $57.99 a month for 15Mbps broadband service now receives 50Mbps from Time Warner. In contrast, Comcast’s Performance plan delivers half that speed and costs $66.95 a month.[2]

Time Warner’s 300Mbps service now costs $107.99. For $114.95, Comcast customers only get 150Mbps.

The public interest is not served replacing Time Warner Cable’s broadband with Comcast’s Internet which charges higher prices and delivers less speed and brings the extremely high likelihood of usage limits on broadband service in the near future.

Time Warner Cable has already announced eight new cities targeted for Maxx upgrades with plans to accelerate upgrades across their service areas over the next two years.[3] It appears to be well worth the wait.

After selecting your broadband plan, customers of both Comcast and Time Warner Cable are confronted with modem rental fees. The vast majority of customers of both companies still pay to rent their cable broadband modem.[4] They pay less renting it from Time Warner Cable at $5.99 a month.[5] Comcast customers pay one of the highest equipment lease rates in the country – $8 a month.[6]

Time Warner Cable Maxx brings these broadband speed upgrades when it reaches your area.

—

[1]http://ir.timewarnercable.com/investor-relations/investor-news/financial-release-details/2014/Time-Warner-Cable-to-Transform-TV-and-Internet-Experience-in-New-York-City-and-Los-Angeles/default.aspx

[2]All Comcast and Time Warner Cable broadband prices reflect regular retail rates (not promo rates) obtained from: http://www.comcast.com/internet-service.html (Comcast) and http://www.timewarnercable.com/en/support/account-and-billing/topics/retail-rates.html (Time Warner Cable).

[3]https://newsroom.charter.com/

[4]http://stopthecap.com/2013/07/29/time-warner-cable-raising-modem-rental-fee-again-5-99month-starting-next-month/

[5]https://gizmodo.com/time-warner-cable-is-once-again-increasing-its-modem-re-964861165

[6]http://www.dslreports.com/shownews/Comcast-Bumping-Modem-Rental-Fee-to-8-126117

The Commission has heard repeatedly from New Yorkers concerned about Internet access for the poor and disadvantaged. Comcast and its supporters have frequently pointed to Internet Essentials as an example of the kind of altruism Comcast is allegedly known for in its vast service areas.

COMCAST: NOW SERVING BOLOGNA – $9.95 — Protesters outside of Comcast’s Philadelphia headquarters upset about Internet Essentials onerous terms and pre-qualification conditions. (image: Kevin McCorry/WHYY)

Unfortunately, the truth is very different. Internet Essentials is both a political tool for Comcast’s image-building effort and a discount program that carefully avoids cannibalizing the revenue the company already receives from hard-working, income-challenged broadband subscribers – many who might otherwise have qualified for the program had they know about it and made it through the onerous application process without being disqualified.

The Washington Post reported a remarkable admission from Comcast senior vice president David Cohen, who admitted he stalled the introduction of the program to use it as an incentive to win approval of its merger with NBCUniversal:[1]

In fall 2009, Comcast planned to launch an Internet service for the poor that was sure to impress federal regulators. But David Cohen, the company’s chief of lobbying, told the staff to wait.

At the time, Comcast was planning a controversial $30 billion bid to take over NBC Universal, and Cohen needed a bargaining chip for government negotiations.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a recent interview.

John Randall, program manager at the Roosevelt Institute/Telecommunications Equity Project, after studying the terms and conditions and pre-qualifications necessary to sign up for Internet Essentials declared it was more a public (and government) relations exercise than a charitable endeavor.[2] Comcast’s terms protect its revenue base by disqualifying current customers (who presumably pay the regular price for Internet service), establishing a lengthy 90 day waiting period without cable or Internet service before current customers can sign up for the discount program, not allowing participation unless you have school age children qualifying for the National School Lunch Program, and not have an overdue bill or unreturned equipment.[3]

Perhaps that explains why, in 2013, only 150,000 out of 2.6 million households eligible for Internet Essentials were able to sign up. In Comcast’s home city of Philadelphia, only 3,250 families were signed up as of last summer.[4]

Jump through hoops for $9.95 Internet

Comcast continues its revenue protection efforts to this day, even after announcing a recent “Amnesty” program for customers rejected from getting Internet Essentials because of a past due balance.

Just in time for regulators taking a hard look at Internet Essentials, Comcast has announced a 1.5 month special offer that includes “up to” six months of complimentary Internet Essentials service, but only to those who have never applied for the program before. Rejected applicants and current participants don’t qualify. Comcast does not specify whether customers will get an entire six months or a shorter term that seems to be indicated by the language Comcast uses.[5]

Comcast’s new “Amnesty Program,” for Internet Essentials is also replete with pre-conditions and fine print.[6]

Customers with a past due balance more than one year old will, “as long as they meet all the other eligibility criteria, provide amnesty for that back due bill for the purpose of connecting to Internet Essentials.”

It is unclear whether “amnesty” means Comcast will cancel collection efforts on the back balance or simply ignore it as grounds to reject an Internet Essentials application. Customers with a past due balance less than one year old don’t get much “amnesty” at all. Comcast wants them to pay up before they can sign up for Internet Essentials, but might accept an installment plan in certain circumstances.

Time Warner Cable, by accident, has managed to create a superior alternative to Internet Essentials that is open to everyone without pre-conditions or limits, although it costs $5 a month more than Comcast’s program.

Time Warner’s Everyday Low Price Internet ($14.99/month) was originally designed as  a marketing campaign targeting price-sensitive DSL customers. But Time Warner Cable also recognized the 2/1Mbps Internet service would appeal to the income-challenged.[7]

Time Warner’s program is vastly superior to Comcast’s Internet Essentials because every customer automatically qualifies for the service if they choose to enroll. There are no forms to fill out, income qualifications, account audits, waiting periods, or limits on how long you can keep the discounted service. Time Warner Cable seems unconcerned about whether this discounted Internet will cannibalize revenue from higher-priced plans and has launched aggressive marketing campaigns across its service areas.[8]

—

[1]https://www.washingtonpost.com/business/technology/david-cohen-chief-dealmaker-in-washington-is-comcasts-secret-weapon/2012/10/29/151e055e-080a-11e2-858a-5311df86ab04_story.html

[2]http://stopthecap.com/2013/07/10/comcasts-internet-essentials-facade-padding-the-bottom-line-without-cannibalizing-your-base/

[3]https://www.salon.com/2013/07/10/comcasts_new_partner/

[4]http://stopthecap.com/2013/07/10/comcasts-internet-essentials-facade-padding-the-bottom-line-without-cannibalizing-your-base/

[5]https://corporate.comcast.com/comcast-voices/comcast-to-offer-six-months-of-free-internet-essentials-service-and-announces-debt-forgiveness-plan

[6]https://corporate.comcast.com/comcast-voices/comcast-to-offer-six-months-of-free-internet-essentials-service-and-announces-debt-forgiveness-plan

[7]https://newsroom.charter.com/

[8]https://newsroom.charter.com/

Should this merger be approved, Comcast will control 40-50 percent of all broadband access nationwide.[1] That offers Comcast market power that can be used to discriminate against others.

Comcast paid homeless people to “hold their seats” at an FCC hearing in 2008. (Image: Free Press)

Comcast’s recent past contains several disturbing incidents that came as a result of its market power and its vast resources to influence telecommunications public policy debates:

• In 2008, Comcast admitted to paying homeless people in Boston to pack an FCC meeting on Net Neutrality, keeping company critics out of the room.[2]
• The company that now promises to abide voluntarily to Net Neutrality regulations is also one of the few found culpable for violating the principle. In mid-2008, the FCC ruled that Comcast’s policy of interfering with peer-to-peer file traffic was a violation of Net Neutrality rules. When customers found out, the company voluntarily ended the speed throttling, imposing usage caps instead.[3]
• This month, Comcast reportedly stepped in and ordered the removal of news content critical of its Net Neutrality policies from a publication in which it has an ownership interest.[4]
• In May 2011, a Comcast manager threatened to pull funding from a Seattle-based media advocacy group that criticized the company for hiring a former Republican FCC official, Meredith Attwell Baker, just after she supported the NBC Universal deal.[5]
• Comcast has aggressively pursued agreements with over-the-top (online video) competitors that effectively force them to sign special connection agreements that mitigate the deteriorating quality of streamed video Comcast customers receive from services like Netflix.[6] Comcast’s size gives it de facto control over its customers’ online experiences.

While we note Comcast has agreed to temporarily abide by Net Neutrality principles, the Commission should know Comcast has a long record lobbying against Net Neutrality on philosophical grounds.[7]

Comcast agreed to abide by Net Neutrality principles as a condition to win approval of its acquisition of NBCUniversal, approved by the FCC in 2011. But as Brian Fung from the Washington Post noted, its agreement with the government will expire just four years from now[8]:

But what Comcast doesn’t say is that its commitment to “full” net neutrality expires in 2018. After that, it will no longer be legally bound to follow the 2010 rules, and it’ll be free to abandon that commitment literally overnight.

Just one year earlier, Comcast was before the United States Court of Appeals – D.C. Circuit suing the FCC over its authority to enforce Net Neutrality policies. Comcast won its suit.[9]

If Comcast now feels favorable towards Net Neutrality, it should voluntarily agree to abide by its guiding principles in perpetuity.

—

[1]http://www.broadcastingcable.com/news/washington/judiciary-raises-programming-broadband-control-issues-comcasttwc/130396

[2]http://www.adweek.com/digital/homeless-comcast-will-pay-to-attend-fcc-hearings/?red=ny

[3]https://www.dailydot.com/layer8/net-neutrality-violations-history/

[4]http://www.republicreport.org/2014/comcast-affiliated-newsite-censored-my-article-about-net-neutrality-lobbying/

[5]https://www.washingtonpost.com/blogs/post-tech/post/comcast-yanks-funds-for-nonprofit-after-tweet-about-fcc-bakers-jump/2011/05/19/AF7aGG7G_blog.html

[6]http://dr.marketwatch.com/dr/

[7]http://dr.marketwatch.com/dr/

[8]https://www.techdirt.com/articles/20140724/13525627992/comcast-ramps-up-ad-campaign-claiming-to-support-net-neutrality-even-as-it-really-supports-killing-it.shtml

[9]https://www.cadc.uscourts.gov/internet/opinions.nsf/EA10373FA9C20DEA85257807005BD63F/$file/08-1291-1238302.pdf