Gov. Newsom

California’s efforts to address the state’s ongoing rural broadband problems made little headway in 2019, as Democratic Gov. Gavin Newsom in the past week vetoed (or allowed to expire) the only two broadband measures surviving the treacherous journey through the California legislature.

Assembly Bill 1212 would have made rural broadband a priority for Caltrans — California’s Department of Transportation and the Department of Water Resources, including broadband on recommended lists of projects for funding consideration by two of the state’s largest pension investment funds: the California Public Employees Retirement System and the California State Teachers Retirement System. Current state law only allows pension boards to invest in in-state infrastructure projects that meet certain fiduciary responsibilities. By expanding investment projects to include telecommunications, funding from two major pension funds might have been unlocked and made available to future rural internet projects.

Assembly Bill 417, also known as the Agriculture and Rural Prosperity Act, included several measures targeting rural farming. Two passages in the bill would have included broadband expansion as a new priority for the California Department of Food and Agriculture (DFA):

Due to the central role of agriculture in rural California, it is necessary to achieve a detailed understanding of the economic value that agriculture brings to rural communities and to identify opportunities to improve agricultural productivity, including by increasing broadband access, advancing agricultural innovation, technology, and education, and supporting a well-trained, productive rural workforce, to benefit rural communities.

[…] Making recommendations to the secretary on actions to further the development of rural agricultural economies, including, but not limited to, increasing broadband access, providing technical, resource, and regulatory compliance assistance, advancing agricultural innovation and technology, establishing programs for education and workforce development, and evaluating recreation and tourism opportunities.

Several other proposed measures, including AB 1409 which would have created a fund for providing wireless hotspots for students and Wi-Fi service on school buses was killed last spring behind closed doors in the California Assembly’s Appropriations Committee. The annual attempt by AT&T and other telecom companies to write their own laws to deregulate themselves (this time AB 1366), was suddenly pulled from committee consideration by its author back in September.

That the two mild measures made it through the legislature to the governor’s desk was not surprising considering the sheer number of minor bills that pile up on Newsom’s desk. But for both to suffer quiet deaths through veto or expiration despite almost no public opposition speaks to the power of Sacramento insider politics.

Newsom’s explanation for killing AB 1212 was hardly compelling, as he explained he felt the measure was “unnecessary” because “existing law already encourages public retirement systems to invest in state infrastructure.” But that explanation ignores decades of state government bureaucracy, where agencies zealously guard their funding and protect their own existing project priorities to the hilt. AB 417 would have expanded the mission of the DFA, something the governor argued should only be done in the state budget and only within the specific context of the broader mission of the department, whatever that means. The head of the DFA was likely thrilled anyway.

Telecom consultant Steve Blum notes Caltrans and other state agencies were unlikely to ever consider rural broadband a funding priority, unless it was intended for their own use. Blum also believes the most likely suspects responsible for convincing the governor to kill both bills were the heads of the departments themselves.

“The simplest explanation for Newsom’s vetoes is that Caltrans, DWR and/or DFA staff asked him to do it, because those are jobs they don’t want to do,” Blum wrote on his blog. “That sort of opposition was why a Caltrans dig once policy bill was watered down in 2016.”

Blum believes the state’s largest phone companies will benefit the most from the outcome of the 2019 legislative session.

“Newsom’s vetoes bolster AT&T’s and Frontier’s rural monopoly business model, which redlines poorer and less densely populated communities and leaves them with low speed DSL service, if they’re lucky enough to get anything at all,” he wrote.

The loss of AB 1212 and 417 won’t change much for Californians waiting for rural broadband. Neither measure would have led to any immediate improvement in internet access in the less populated areas of the state. But the measures would have set a foundation to bring two more state agencies into the fight to tackle rural broadband issues.

Ultimately, just as in other states, a large amount of money will have to be found to wire those still without internet access. Governments and regulators can either make rural internet expansion a contingency of future merger deals or other business-government transactions or find suitable funding to subsidize the cost of internet expansion by for-profit companies, rural co-ops, or local governments willing to tackle the problem on the local level.

Jeff Kagan is a name familiar to anyone that follows the cable industry. For over 30 years, Kagan has been tracking consumer perceptions about the telecom industry and offering insight into the challenges these and other businesses were likely to face in the future. More recently, Kagan has been fretting about the growing trend of retail businesses paying more attention to cultivating their relationships with Wall Street while targeting their customers for abuse.

“I have been noticing how in recent years, retail is becoming increasingly unfriendly to the customer. This is a mistake,” Kagan offers in a new opinion piece on Equities.com. “New technologies and new ideas may be good for the bottom line in the short-term. They may solve problems like shoplifting, and that may make investors happy today. However, in the long-term, these customer unfriendly trends will take their toll as customers will shop where they feel appreciated, respected and wanted. Customers shop at stores they love. Love is an emotion. So, we must think of winning the customer with emotion. This is difficult for most businesspeople to understand.”

‘My way or the highway’-type attitudes from retailers come from all sorts of businesses. Warehouse clubs make you pay for the honor of shopping there. This is by far the best warehouse, with a good structure and flooring from warehouse-flooring.uk. And if it happened that you encountered concrete floor damage, don’t hesitate to call the concrete repair professionals from a site like https://concrete-repair.uk for help. Chains like Walmart are beefing up security teams, and in some places, they now demand to see receipts from customers exiting the store. But nobody has abused customers better and longer than the telecom industry. Not even the cattle-car-like airlines.

Kagan

After literally decades of almost bragging about their “don’t care” customer service while throwing attitude and intransigence at customers unhappy with service or pricing, the nation’s biggest cable and phone companies are now experiencing long-overdue customer revenge. Kagan notes that cord-cutting is not just about switching to a competitor for service. Many customers are literally thrilled to see the back end of their long hated provider.

Decades of monopoly service made abusing customers a risk-free and very profitable strategy for companies like Comcast, AT&T, Charter, Cox, Mediacom, and Verizon. In fact, someone turned the concept of the “cable guy” into a horror movie. Did you stay home from work to wait for a service call that never materialized? Tough luck. Don’t like yet another rate increase? Too bad.

“The reason they did this was, they had no competition in their market area. That meant the customer could not leave them,” Kagan noted.

After years of getting a bad reputation, only two things threatened to scare telecom companies straight — the fear of imminent regulation, such as what happened in 1992 when reregulation of cable companies turned out to be the only bill that year to be vetoed by President George H. W. Bush and overridden by the U.S. Senate to become law.

The other, much more scary fear is competition. In the mid-1990s, the nation’s biggest phone companies including what we now know as AT&T and Verizon were contemplating getting into the video business. This proved far more threatening than the much smaller home satellite dish business, which attracted around three million Americans at the time. The cable industry spent years taking shots at satellite competitors, including sticking dishowners with the cost of buying a $300 descrambler box up front, and charging as much (or even more) for programming than cable customers paid, despite the fact homeowners had to purchase and service their own dish, often 6-12 feet wide and not cheap to install.

The cable industry feared phone companies would charge ratepayers to subsidize their entry into the television business and sought protective legislation prohibiting the same cross-subsidization the cable industry would later rely on to introduce broadband and phone service.

More recently, after the country reached “peak cable” — the year the highest number of us subscribed to cable TV, the industry recognized it was likely all downhill from there. Comcast, in particular, specialized in empty lip service gestures to improve the customer service experience. For years, it promised to do better, only to do worse. The company even attempted to shed its bad reputation by changing the brand of its products from Comcast to “XFINITY.” Customers were not fooled, but that did not stop Charter from following Comcast’s lead, introducing the “Spectrum” brand to its products and almost burying its corporate name, which it barely references these days.

Kagan notes not following through on the customer service experience made cable companies ripe for stunning customer losses as new competitors for video service emerged. Comcast and Charter are among the biggest losers of cable TV customers, but their bad attitudes persist. Their latest ideas? Keep raising prices, rely on tricky Broadcast TV surcharges that are soaring in cost, end customer retention offers for dissatisfied video customers, and make up the difference in lost revenue by jacking up the price of broadband service, which is already nearly all-profit.

“The bottom line for any business is always focus on the customer. If they are happy, your business will remain strong and growing,” Kagan warned.

At some point, customers will get more choices for broadband service. Community owned broadband solutions have been very successful in communities that have experienced the worst abuse AT&T, Comcast, and Charter can deliver. In the future, fixed 5G wireless may provide perfectly respectable internet service if it is not data capped. Next generation satellite providers, interloping independent fiber to the home providers, and mesh wireless providers may offer consumers a number of options that can deliver suitable service and perhaps finally put cable and phone companies in their place.

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The Wall Street Journal believes the majority of Americans are paying for internet speed they never use or need, but their investigation largely ignores the question of traffic bottlenecks and data caps that require many customers to upgrade to premium tiers to avoid punitive overlimit fees.

The newspaper’s examination was an attempt to test the marketing messages of large cable and phone companies that claim premium speeds of 250, 500, or 1,000 Mbps will enhance video streaming. A total of 53 journalists across the country performed video streaming tests over a period of months, working with researchers at Princeton University and the University of Chicago to determine how much of their available bandwidth was used while streaming videos from Netflix, Amazon Prime Video, YouTube and other popular streaming services.

Unsurprisingly, the newspaper found most only need a fraction of their available internet speed — often less than 10 Mbps — to watch high quality HD streaming video, even with up to seven video streams running concurrently. That is because video streaming services are designed to produce good results even with lower speed connections. Video resolution and buffering are dynamically adjusted by the streaming video player depending on the quality of one’s internet connection, with good results likely for anyone with a basic broadband connection of 10-25 Mbps. As 4K streams become more common, customers will probably get better performance with faster tiers, assuming the customer has an unshaped connection that does not throttle video streaming speeds as many mobile connections do and the streaming service offers a subscription tier offering 4K video. Netflix, for example, charges more for 4K streams. Some other services do not offer this option at all.

Image: WSJ

WSJ:

For most modern televisions, the highest picture clarity is the “full” high-definition standard, 1080p, followed by the slightly lower HD standard, 720p, then “standard resolution,” 480p. The Journal study found a household’s percentage of 1080p viewing had little to do with the speed it was paying for. In some cases, streaming services intentionally transmit in lower resolution to accommodate a device such as a mobile phone.

When all HD viewing is considered—1080p and 720p—there were some benefits to paying for the very highest broadband tiers, those 250 Mbps and above.

Streaming services compress their streams in smart ways, so they don’t require much bandwidth. We took a closer look at specific services by gathering data on our households’ viewing over a period of months. Unlike the “stress test,” this was regular viewing of shows and movies, one at a time.

Netflix streamed at under 4 Mbps, on average, over the course of a show or movie, with not much difference in the experience of someone who was paying for a 15 Mbps connection and someone with a one gigabit (1,000 Mbps) connection. The findings were similar for the other services.

There is a brief speed spike when a stream begins. Netflix reached the highest max speeds of the services we tested, but even those were a fraction of the available bandwidth.

Users watching YouTube might launch a video slightly faster than those watching Netflix, and at lower resolution, but this is a function of how those services work, not your broadband speed, the researchers said.

Whereas Netflix tries to load “nice high quality video” when you press play and hence has higher spikes, YouTube appears to “want to start as fast as possible,” said Paul Schmitt, one of the researchers.

A spokeswoman for Alphabet Inc.’s YouTube said the service chooses playback quality based on factors including type of device, network speed, user preferences and the resolution of the originally uploaded video. A Netflix Inc. spokeswoman said the company aims to deliver quality video with the least possible bandwidth. Amazon.com Inc. had no comment.

The Journal finds little advantage for consumers subscribing to premium speed tiers, if they did so hoping for improved streaming video. The unanswered question is why customers believe they need faster internet speeds to get those improvements in the first place.

The answer often lies in the quality of the connection between the streaming provider and the customer. There are multiple potential bottlenecks that can make a YouTube video stutter and buffer on even the fastest internet connection. Large providers have had high profile disputes with large streaming companies over interconnection agreements that bring Netflix and YouTube traffic to those internet service providers’ customers. Some ISPs want compensation to handle the increasing amount of incoming video traffic and have intentionally not allowed adequate upgrades to keep up with growing subscriber demand. This creates a traffic bottleneck, usually most noticeable at night, when even a small YouTube video can get stuck buffering. Other streaming videos can suffer from repeated pauses or deteriorate into lower resolution video quality, regardless of the speed of your connection.

Another common bottleneck comes from oversold service providers that have too much traffic and not enough capacity to manage it. DSL and satellite internet customers often complain about dramatic slowdowns in performance during peak usage times in the evenings and on weekends. In many cases, too many customers in a neighborhood are sharing the connection back to the phone company. Satellite customers only have a finite amount of bandwidth to work with and once used, all speeds slow. Some other providers do not pay for a large enough pipeline to the internet backbone, making some traffic slow to a crawl when that connection is full.

Customers are sold on speed upgrades by providers that tell them faster speeds will accommodate more video traffic, which is true but not the whole answer. No amount of speed will overcome intentional traffic shaping, an inadequate connection to the video streaming service, or an oversold network. Too bad the Journal did not investigate these conditions, which are more common than many people think.

Finally, some customers feel compelled to upgrade to premium tiers because their provider enforces data caps, and premium tiers offer larger usage allowances. Cable One, Suddenlink, and Mediacom customers, among others, get a larger usage allowance upgrading. Other providers offer a fixed cap, often 1 TB, which does not go away unless a customer pays an additional monthly fee or bundles video service.

Data caps are a concern for video streaming customers because the amount of data that can be consumed in a month is substantial. As video quality improves, data consumption increases. The Journal article does not address data caps.

Finally, the Journal investigation confined itself to video streaming, but internet users are also increasingly using other high traffic services, especially cloud backup and downloading, especially for extremely large video game updates. The next generation of high bandwidth internet applications will only be developed if high speed internet service is pervasive, so having fast internet speed is not a bad thing. In fact, providers have learned it is relatively cheap to increase customer speeds and use that as a justification to raise broadband prices. Other providers, like Charter Spectrum, have dropped lower speed budget plans to sell customers 100 or 200 Mbps service, with a relatively inexpensive upgrade to 400 Mbps also gaining in popularity.

Does the average consumer need a premium speed tier for their home internet connection? Probably not. But they do need affordable unlimited internet service free of bottlenecks and artificial slowdowns, especially at the prices providers charge these days. That is an investigation the Journal should conduct next.

Charter Communications is not obligated to upgrade New York internet customers to a minimum internet speed of 300 Mbps, according to a letter of clarification directed to Stop the Cap! and received today from the New York State Department of Public Service.

DPS:

In the Commission’s 2016 order, Charter was required to offer broadband internet service with speeds up to 100 Mbps to all customers served by its New York networks (including its Columbia County systems) by the end of 2018; and offer broadband internet service with speeds up to 300 Mbps to all customers served by its New York networks by the end of 2019. At the time of the Commission’s decision, although Time Warner operated some systems in New York that were already capable of offering customer speeds up to 300 Mbps, the majority of Time Warner customers in Upstate New York were limited to broadband speeds of 50 Mbps.

Charter was therefore required to upgrade its network to be able to offer broadband service at speeds up to 300 Mbps by the end of 2019 but was not required to increase its minimum service offering to 300 Mbps. Charter has reported that it has complied with this condition ahead of schedule and Department of Public Service Staff has begun the process of independently field-testing Charter’s network to verify compliance with the condition.

Stop the Cap! raised this issue with the Commission as part of the recent settlement agreement between New York State and Charter Communications, and sought an official clarification. Approximately 40% of Charter’s national footprint now receives 200 Mbps download speeds while most New Yorkers receive just 100 Mbps for the same price, putting the state at a disadvantage.

Dampier

“The Commission’s language in the original merger agreement was unclear, because Time Warner Cable had already embarked on a statewide upgrade to its so-called ‘Maxx’ service tiers, which included free speed increases, negating most of the benefits of the state’s condition requiring Charter to upgrade broadband speeds as part of its terms to approve the merger,” said Phillip Dampier, founder and president of Stop the Cap! “In fact, this merger made things worse for New Yorkers because customers would have been getting Time Warner Cable Maxx speeds as much as a year earlier than what Spectrum finally delivered across the state, and customers would have been offered a number of options for less costly internet service that Spectrum dropped.”

Shortly after the merger was approved, Charter placed a moratorium on Time Warner Cable Maxx upgrades and spent months attempting to knit Charter’s existing systems with the much larger Time Warner Cable.

Time Warner Cable Maxx speeds were well on the way throughout Upstate New York before Charter acquired the company and issued an upgrade moratorium.

“Consumers already know from their cable bills that this merger was just another bad deal for New York, and now nearly half of Spectrum’s national service area gets twice the speed Upstate New York gets for the same price, and there is no pressure on the company to deliver any additional upgrades,” Dampier added.

Stop the Cap! also urged the Commission to do all it could to make life easier for customers in the New York City area, where Charter has been trying to rid itself of union technicians that have been on strike for over two years.

“For all the talk by state officials, including the governor, it appears there is no end in sight for this strike and customers are caught in the middle,” Dampier said. “We hear frequently from New York City consumers about substandard repair work and unacceptable installations that suggest the company is not using the best available workforce to take care of customer needs. Charter is making loads of money in profits and can afford to offer a square deal to workers to end this strike and get these technicians back to work.”