Goei, CEO of Altice USA

Altice USA’s Dexter Goei is on a buying spree, putting down $31 million to buy a five-story multifamily building in Greenwich Village with plans to convert the 10-unit building into his personal megamansion. Cablevision customers will help cover Goei’s extravagant salary and his shopping list with a rate hike on set-top box rentals that will reach an all-time high of $10/month.

Cablevision is notifying customers that effective Dec. 1, customers will need to pay more, in part because Altice wants to make sure its charges “align with the industry” and are “competitive with other providers.” In other words, they are not charging enough.

Optimum’s Broadcast Basic Tier is rising to $17.95/mo for new customers, with existing customers facing a price hike up to $2.39/mo. Customers with Optimum Value or higher level of service will pay $2.98 a month more for Cablevision’s Sports & Broadcast TV fee, split into a $3.99/mo fee for “Broadcast TV” and $4.97/mo for “Sports TV.”

While Altice executives continue to look for at least $900 million in cost-cutting and savings at Cablevision, top executives are under no such constraints. Goei tried to hide his megamansion deal using the name of a Limited Liability Company as the buyer of the property, located down the street from Sarah Jessica Parker’s proposed megamansion at 273-275 West 11th Street. The super wealthy often evict current tenants and then knock the walls down between each apartment to create a larger open space for themselves in otherwise notoriously cramped Manhattan real estate.

“We can’t replace the five-year old broken coffee maker in our break room without appearing before a committee which writes down the names of those who want to spend $150 on a new machine but our new CEO (Goei is CEO of Altice USA) signs off on $10 box rentals and pays himself a salary that lets him shop until he drops,” one Cablevision middle manager on Long Island tells Stop the Cap! “It’s like letting Gordon Gekko run a cable company.”

After gracing Cleveland, Ohio with the dubious honor of being the first Cox service area in the country to be treated to compulsory data caps and overlimit fees, Cox Communications has announced it is expanding its internet overcharging scheme to customers in Florida and Georgia starting Nov. 21.

Stop the Cap! readers in both states shared Cox’s service change notification introducing hard caps in both states next month.

“Cox High Speed Internet packages include 1 TB (1,024 GB) of data,” Cox explains. “Approximately 99% of Cox customers are currently on a data plan that more than adequately meets their monthly household needs.”

That begs the question: if 99% of customers are unaffected by a data cap, then why have a data cap at all?

Cox “Data Plans”

Note: Unused data does not carry over to the next month.

Content managed by Cox included in Cox-provided services do not count toward data usage:

• TV and On Demand content accessed in the Contour app while connected to Cox in-home Wi-Fi
• Cox Digital Telephone
• Cox Homelife

Note: Third party content and content identified as internet services on receivers or TVGO in the Contour app may count toward data usage.

Customers in these areas who exceed their allowance will be billed $10 for each 50GB of excess usage. Customers will get a two-month grace period to become accustomed to internet rationing before the overlimit fees are added to customers’ bills.

Cox has not said if or when it will expand the data caps to other markets.

Customers can send Cox a message by calling the company and threatening to take your business to another provider specifically because of data caps and overlimit fees. Affected customers should also file a complaint with the FCC asking the federal agency to ban data caps as unnecessary and discriminatory against competing online video services.

Let the FCC know data caps are a major concern and are unnecessary considering the steep decline in internet provisioning and transit costs and the extremely high price (and profitability) providers already get from offering unlimited broadband service.

Expect a notice similar to this in a future cable or telephone company bill.

Cable and phone companies will now need your permission before they can market sensitive private information about you to third parties.

In a 3-2 decision (Democrats in favor, Republicans opposed), the Federal Communications Commission today issued new rules that will limit how providers collect and share information about your location, the websites you visit, and the subjects you are interested in based on your online travels. Broadband providers will have to get explicit approval from their customers before they can trade or sell information they have gathered. Providers will still be able to sell your name and address to advertisers, as long as they offer a provision allowing customers to opt-out of shared marketing.

The FCC’s decision has major implications for providers’ future revenue from lucrative targeted advertising. For that reason, and others, providers were angered by the new restrictions, particularly because they don’t apply to content providers like Google, which was largely built on revenue from targeted web advertising. Consumers can avoid using Google and its services, but they cannot avoid their broadband provider, which may be why the FCC targeted the privacy measures on those selling broadband instead of those pushing web content.

Wheeler

“It is the consumer’s information. How it is to be used should be the consumers’ choice, not the choice of some corporate algorithm,” said FCC chairman Thomas Wheeler.

The two Republicans on the Commission immediately attacked the privacy protections as unnecessary, echoing the sentiments of the cable and phone companies.

Commissioner Michael O’Reilly warned broadband providers could still buy the information they would have collected themselves, and as a result, prices will rise for consumers. Commissioner Ajit Pai accused the Democrats on the Commission of “corporate favoritism” towards Google.

Here are the full details about the new privacy policies:

The rules separate the use and sharing of information into three categories and include clear guidance for both ISPs and customers about the transparency, choice and security requirements for customers’ personal information:

• Opt-in: ISPs are required to obtain affirmative “opt-in” consent from consumers to use and share sensitive information. The rules specify categories of information that are considered sensitive, which include precise geo-location, financial information, health information, children’s information, social security numbers, web browsing history, app usage history and the content of communications.
• Opt-out: ISPs would be allowed to use and share non-sensitive information unless a customer “opts-out.” All other individually identifiable customer information – for example, email address or service tier information – would be considered non-sensitive and the use and sharing of that information would be subject to opt-out consent, consistent with consumer expectations.
• Exceptions to consent requirements: Customer consent is inferred for certain purposes specified in the statute, including the provision of broadband service or billing and collection. For the use of this information, no additional customer consent is required beyond the creation of the customer-ISP relationship.

In addition, the rules include:

• Transparency requirements that require ISPs to provide customers with clear, conspicuous and persistent notice about the information they collect, how it may be used and with whom it may be shared, as well as how customers can change their privacy preferences;
• A requirement that broadband providers engage in reasonable data security practices and guidelines on steps ISPs should consider taking, such as implementing relevant industry best practices, providing appropriate oversight of security practices, implementing robust customer authentication tools, and proper disposal of data consistent with FTC best practices and the Consumer Privacy Bill of Rights.
• Common-sense data breach notification requirements to encourage ISPs to protect the confidentiality of customer data, and to give consumers and law enforcement notice of failures to protect such information.

Down the rabbit hole

Google has quietly announced an indefinite suspension of further fiber expansion as it prepares to downsize fiber division employees and re-evaluate its fiber business model.

In a blog post tonight from Craig Barratt, senior vice president of Alphabet and CEO of Google’s Access division, it becomes clear Google is rethinking its entire fiber strategy and is likely moving towards fixed wireless technology going forward:

Now, just as any competitive business must, we have to continue not only to grow, but also stay ahead of the curve — pushing the boundaries of technology, business, and policy — to remain a leader in delivering superfast Internet. We have refined our plan going forward to achieve these objectives. It entails us making changes to focus our business and product strategy. Importantly, the plan enhances our focus on new technology and deployment methods to make superfast Internet more abundant than it is today.

Barratt outlines the immediate implications of Google’s dramatic shift:

• In the cities where we’ve launched or are under construction, our work will continue;
• For most of our “potential Fiber cities” — those where we’ve been in exploratory discussions — we’re going to pause our operations and offices while we refine our approaches. In this handful of cities that are still in an exploratory stage, and in certain related areas of our supporting operations, we’ll be reducing our employee base.

Barratt

Barratt himself is jumping ship (or was pushed). He announced in his blog entry he is “stepping away” from his CEO role, but will remain as an “adviser.”

Observing Google’s recent fiber efforts and acquisitions, it seems clear Google no longer thinks fiber-to-the-home service is an economically viable solution in light of competitors like AT&T rolling out increasing amounts of fiber and the cable industry is on the cusp of launching DOCSIS 3.1, which will dramatically boost internet speeds without a substantial capital investment.

Google’s investors have been lukewarm about the company’s economic commitments relating to its fiber broadband networks. Often built from the ground up, Google’s fiber construction complexities also include trying to navigate costly roadblocks established by their competitors (notably Comcast and AT&T), dealing with bureaucracies and red tape even in states where near-total-deregulation was supposed to make competition easy. Google Fiber has also not proved to be a runaway economic success, and now faces more challenges in light of upgrades from their competitors. Cable companies have slashed prices for customers threatening to cancel and have added free services or upgrades to persuade customers to stay, and Google’s proposition of selling consumers $70 gigabit access has proved tougher than expected.

It is highly likely the future of Google’s Access business will be deploying wireless broadband solutions powered by Webpass, a company Google acquired earlier this year. Webpass uses a high-speed point to point wireless transmission system the company claims can deliver gigabit broadband access to customers in multi-dwelling buildings and other urban areas. Webpass sells access for $60 a month (discounted to $550/yr if paid in advance) for 100Mbps-1,000Mbps speed depending on network density and capacity in the customer’s building. So far, Webpass has not been able to guarantee speed levels, and some customers report significant variability depending on their location and network demand.

Webpass’ wireless infrastructure costs a fraction of what Google has coped with building fiber to the home networks, and the installation of point-to-point wireless antennas on participating buildings has been less of a regulatory nightmare than digging up streets and yards to lay optical fiber.

But despite Webpass’ claim its performance is comparable to fiber, its inability to guarantee customers a certain speed level and its tremendous performance variability from 100 to 1,000Mbps exposes one of the weaknesses of fixed wireless networks. At a time when capacity is king, only fiber optic networks have shown a consistent ability to deliver synchronous broadband speeds that do not suffer the variability of shared networks, poor antenna placement/signal levels, or harmful interference.

There is room for wireless technology to grow and develop, as evidenced by the wireless industry’s excitement surrounding future 5G networks and their ability to offer a home broadband replacement. The emergence of 5G competition is almost certainly also a factor in Google’s decision. But even AT&T and Verizon acknowledge a robust 5G network will require a robust fiber backhaul network to support both speed and user demand. The more users sharing a network, the slower the speed for all users. No doubt Webpass has made the same assumption that cable operators did in the early days of DOCSIS 1 — current internet applications won’t tax a network enough to create a traffic logjam that would be noticed by most customers. The phone companies also learned a similar lesson trying to serve too many DSL customers from inadequate middle mile networks or traffic concentration points. (Some phone companies are still learning.)

Whether it was yesterday’s peer-to-peer file sharing or today’s online video, capacity matters. That is why fiber broadband remains the gold standard of broadband technology. Fiber is infinitely upgradable, reliable, and robust. Wireless is not, at least not yet. But technology arguments rarely matter at publicly-traded corporations that answer to Wall Street and investors, and it appears Google’s backers have had enough of Google Fiber.

Stop the Cap!’s View

At Stop the Cap!, we believe these developments further the argument broadband is an essential utility best administered for the public good and not solely as a profit-motivated venture. The path to fiber to the home service in rural, suburban, and urban communities has and will continue to come from a mix of private and public utilities, just as local public and private gas and electric companies have served this country for the last century. Where there is a business model for fiber to the home service that investors support, there is a for-profit fiber provider. Where there isn’t, now there is often no service at all. So far, the FCC in conjunction with Congress has seen fit to solve broadband availability problems by bribing private providers into offering service (usually low-speed DSL that does not even meet the FCC’s definition of broadband) with cash subsidies, tax write-offs, or occasional tax abatement schemes. Imagine if we followed that model with the nation’s public roads and highways. We would today be paying tolls or a subscription to travel down roads built and owned by a private company often financed by tax dollars.

Not every product or service needs to earn Wall Street-sized profits. Nobody needs to get rich selling water, gas, and electricity… or broadband. Public broadband networks can and should be established wherever they are needed, and they should be priced to recover their costs as well as expenses that come from support, billing, and ongoing upgrades. Naysayers like to claim municipal broadband is socialism run wild or an instant economic failure, yet the same model has provided Americans with reliable and affordable gas, electricity, and clean water for over 100 years.

Maine was made for municipal broadband.

In New York, publicly owned/municipal utilities often charge a fraction of the price charged by investor-owned utilities. In Rochester, where Stop the Cap! is headquartered, one need only ask a utility customer if they would prefer to pay the prices charged by for-profit Rochester Gas & Electric or live in a suburb where a municipal provider like Fairport Electric or Spencerport Electric offers service. RG&E has charged customers well over 10¢ a kilowatt-hour when demand peaks (along with a minimum connection charge of over $21/mo and a “bill issuance charge” of 72¢/mo). Spencerport Electric charges 2.9¢ a kilowatt-hour and a connection charge of $2.66 a month, and they issue their bills for free. There is a reason real estate listings entice potential buyers by promoting the availability of municipal utility service. The same has proven true with fiber-to-the-home broadband service.

The economic arguments predicting doom and gloom are far more wrong than right. Municipal utilities are often best positioned to offer broadband because they already have experience providing reliable service and billing and answer to the needs of their local communities. Incompetence is not an option when providing reliable clean water or electricity to millions of homes and customers have rated their public utilities far superior to private phone or cable companies.

Google’s wireless future may prove a success, but probably only in densely populated urban areas where a point-to-point wireless network can run efficiently and profitably. It offers no solution to suburban, exurban, or rural Americans still waiting for passable internet access. Clearly, Google is not the “free market” solution to America’s pervasive rural broadband problem. It’s time to redouble our efforts for public broadband solutions that don’t need a seal of approval from J.P. Morgan or Goldman Sachs.

AT&T will launch its anticipated DirecTV Now all-streaming cable television alternative next month at an unprecedented price of $35 a month for more than 100 channels, viewable for free without counting against your AT&T smartphone or tablet usage allowance.

Targeting cord-cutters, the new service will not require a satellite dish or expensive equipment — just a reasonably fast internet connection.

AT&T CEO Randall Stephenson used the announcement at a Wall Street Journal-sponsored event to claim the new service was an example of how AT&T won’t increase prices as a result of its proposed merger with Time Warner, Inc.

“That’s not a medium for raising prices,” Stephenson said, referring to AT&T’s new service. “Anybody who characterizes this as a means to raise prices is ignoring the basic premise of what we’re trying to do here.”

AT&T and Time Warner’s respective CEOs appeared together at the event as part of a week-long press blitz to promote their $85.4 billion merger deal, which is getting considerable blowback from politicians, consumer groups, and Wall Street.

Stephenson and Time Warner CEO Jeff Bewkes claim they are re-inventing the cable television business model and forcing innovation.

“If there was ever an environment that was begging for innovation, it was this environment,” Stephenson said. Bewkes added: “We would say and we’ve been saying it since 1995, every channel in the country should look like HBO or Netflix—there’s no reason we can’t.”

AT&T defends its $35 price point, which is half the price many cable companies charge for cable television, claiming it can afford to charge those prices by doing away with service calls, equipment, satellites, and infrastructure that traditional cable operators have to cover. DirecTV Now will rely on smartphone and desktop apps, and presumably third-party set-top boxes like Roku and Apple TV to provide its lineup.

AT&T hasn’t announced an official channel list for the service, but AT&T has been in serious negotiations with most of the major content conglomerates, so the lineup is likely to cover all the major cable networks, presumably local stations, and include an on-demand library. Customers may not get some of the secondary cable networks most cable systems bury on three or four digit channel numbers in Channel Siberia, but few viewers are expected to miss channels that attract fewer than 50,000 viewers nationwide.

Stephenson promised that future programming cost increases would be offset by developing “new ad models” that will cover most of the price increases.

One impediment to AT&T and Time Warner’s grand plan is the pervasive issue of data caps and usage-based billing, which could prove a lethal deterrent to customers ditching traditional cable TV in favor of online alternatives. AT&T itself imposes data caps on its DSL service, and has an unenforced cap on U-verse. Comcast continues to charge overlimit fees for customers exceeding 1TB of usage per month and smaller cable operators often include even smaller usage allowances.

Customers are highly skeptical of DirecTV Now because AT&T is involved. David Hill shared his prediction:

Undoubtedly you will get a $35 rate… for 6 months.  Then because you have been a good, paying customer, they will raise it to $75 a month.  But of course, new customers, can still get the $35 deal plus a $400 Amazon gift card.

When you call customer support (if you can actually get through to a living person) and ask for the same $35 rate the new guys get, why you will be told that you cannot get that rate because, well, you already ARE a customer.  So eat dirt.

Then when you work your way via the endless menu items to cancel the service about 2 weeks later and for years after you will be flooded with endless postcards and letters BEGGING you to come back.  You were a GREAT customer and WE want YOU BACK.  Right now!

Is this a stupid marketing policy or not?  In my MBA classes we were somehow mislead into believing exiting customers were your top A, number one priority.  Yet these internet companies cannot be bothered with keeping you.  Jerks, plain and simple.

AT&T CEO Randall Stephenson said the company’s deal with Time Warner will result in a new TV service that will offer more than 100 premium channels for $35 per month. He sat down with Time Warner’s Jeff Bewkes and WSJ’s Rebecca Blumenstein at the WSJDLive conference in Laguna Beach, Calif. (5:05)