Comcast will forfeit $2.3 million to settle a nationwide investigation into the company’s negative option billing practices — charging customers for services and equipment they declined or never requested.

The fine from the Federal Communications Commission’s Enforcement Bureau is the largest penalty ever assessed against a cable operator, and comes with a requirement that going forward, Comcast get clear consent from customers approving any future products or services that could impact their cable bill.

The FCC, in a news release, compared Comcast’s actions to “cramming” unauthorized/fraudulent charges on telephone bills and said FCC rules specifically prohibited cable providers from charging customers for services or equipment they did not request.

“It is basic that a cable bill should include charges only for services and equipment ordered by the customer—nothing more and nothing less,” said Travis LeBlanc, chief of the Enforcement Bureau. “We expect all cable and phone companies to take responsibility for the accuracy of their bills and to ensure their customers have authorized any charges.”

The FCC was showered with complaints for years about Comcast’s allegedly unethical business practices of billing for customer-owned modems, modems that were returned, unwanted premium channels, extra set-top boxes and DVRs. Many complainants accused Comcast of sending equipment or adding services even when those customers specifically declined them. Others discovered they were being billed for equipment they did not request, never received, or returned previously.

The FCC found consumers were inconvenienced and spent “significant time and energy” attempting to prove their case to get the unauthorized charges removed from current and past bills.

Under a consent agreement with Comcast, the company must  implement a five-year compliance plan.

“Specifically, Comcast will adopt processes and procedures designed to obtain affirmative informed consent from customers prior to charging them for any new services or equipment,” the FCC news release stated. “Comcast will also send customers an order confirmation separate from any other bill, clearly and conspicuously describing newly added products and their associated charges. Further, Comcast will offer to customers, at no cost, the ability to block the addition of new services or equipment to their accounts. In addition, the settlement requires Comcast to implement a detailed program for redressing disputed charges in a standardized and expedient fashion, and limits adverse action (such as referring an account to collections or suspending service) while a disputed charge is being investigated.”

A Comcast spokesperson denied the FCC’s accusations and called reports of erroneous billing “isolated errors” that resulted from “employee error” and “customer confusion.”

“We have been working very hard on improving the experience of our customers in all respects and are laser-focused on this,” Comcast said in a statement. “We acknowledge that, in the past, our customer service should have been better and our bills clearer, and that customers have at times been unnecessarily frustrated or confused. That’s why we had already put in place many improvements to do better for our customers even before the FCC’s Enforcement Bureau started this investigation almost two years ago. The changes the bureau asked us to make were in most cases changes we had already committed to make, and many were already well underway or in our work plan to implement in the near future.”

With the advent of AT&T/DirecTV Now, AT&T’s new over-the-top streaming TV service launching later this year, AT&T is preparing to bury the U-verse brand.

Earlier this year, AT&T customers noticed a profound shift in the company’s marketing priorities. The phone company began steering potential customers to AT&T’s latest acquisition, satellite television provider DirecTV, instead of U-verse. There is an obvious reason for this – DirecTV has 20.45 million customers as of the second quarter of 2016 compared to 4.87 million customers for AT&T U-verse TV. Volume discounts make all the difference for pay television companies and AT&T hopes to capitalize on DirecTV’s lower programming costs.

AT&T’s buyout of DirecTV confused many Wall Street analysts, some who believe the days of satellite television are past their peak. Satellite providers lack the ability to bundle services, although some phone companies partner with the satellite company to pitch phone, broadband, and satellite TV to their customers. But consider for a moment what would happen if DirecTV introduced satellite television without the need for a satellite dish.

Phillip Dampier: The “U” in U-verse doesn’t stand for “unlimited.”

AT&T’s DirecTV Now will rely on the internet to deliver television channels instead of a satellite. AT&T is currently negotiating with most of the programmer conglomerates that own popular cable channels to allow them to be carried “over-the-top” through broadband connections. If successful, DirecTV Now could become a nationwide powerhouse alternative to traditional cable TV.

AT&T is clearly considering a potential future where DirecTV could dispense with satellites and rely on broadband instead. The company quietly began zero rating DirecTV streaming in September for AT&T Mobility customers, which means watching that programming will not count against your data plan. For current U-verse customers, broadband speeds have always been constrained by the need to reserve large amounts of bandwidth to manage television viewing. Although AT&T has been boosting speeds in selected areas, a more fundamental speed boost could be achieved if AT&T dropped U-verse television and turned the service into a simple broadband pipe that relied on DirecTV Now to manage television service for customers.

AT&T seems well on the way, adding this notice to customer bills:

“To make it simpler for our customers U-verse High Speed Internet and U-verse Voice services have new names: AT&T Internet and AT&T Phone. AT&T Internet product names will now align with our Internet speed tiers. Our voice plan names will remain the same.”

An earlier internal company memo suggested AT&T would eventually transition all of its TV products into “AT&T Entertainment” after completing a transition to its “next generation TV platform.” Increasingly, that platform seems to be an internet-powered streaming solution and not U-verse or DirecTV satellite. That transition should begin in January.

Gone by end of 2016.

It would represent a formidable change, but one that makes sense for AT&T’s investors. The transition to IP networks means providers will offer one giant broadband pipe, across which television, phone and internet access will travel. The bigger that pipe becomes, the more services customers are likely to use — and that means growing data usage. Having a lot of fiber infrastructure also lays the foundation for expansion of AT&T’s wireless network — particularly towards 5G service, which is expected to rely on small cell technology to offer faster speeds to a more localized area — fast enough to serve as a home broadband replacement. Powering that network will require plenty of fiber optics to provide backhaul access to those small cells.

Last week, AT&T announced it launched a trial 100Mbps service using point-to-point millimeter-wave spectrum to offer broadband to subscribers in multiple apartment complexes around the Minneapolis area. If the initial trial is successful, AT&T will boost speeds to include 500Mbps service to those same complexes. AT&T has chosen to provide the service outside of its usual service area — Minneapolis is served by CenturyLink. AT&T acquired a nationwide license to offer service in the 70-80GHz band back in 2009, and an AT&T spokesperson claimed the wireless signal can reach up to two miles. The company is also experimenting with new broadband over power lines technology that could offer service in rural areas.

Just like its wireless service, AT&T stands to make money not just selling access to broadband and entertainment, but also by metering customer usage to monetize all aspects of how customers communicate. Getting customers used to the idea of having their consumption measured and billed could gradually eliminate the expectation of flat rate service, at which point customers can be manipulated to spend even more to access the same services that cost providers an all-time low to deliver. Even zero rating helps drive a belief the provider is doing the customer a favor waiving data charges for certain content, delivering a value perception made possible by that provider first overcharging for data and then giving the customer “a break.”

As of mid-September, streaming media analyst Dan Rayburn noted Akamai — a major internet backbone transit provider — was selling content delivery contracts at $0.002 per gigabyte delivered, the lowest price Rayburn has ever seen. Other bids Rayburn has reviewed recently topped out at 0.5 cents per gigabyte. According to industry expert Dave Burstein, that suggests large ISPs like AT&T are paying something less than a penny per gigabyte for internet traffic.

“If you use 139GB a month, that costs your provider something like $1/month,” Burstein wrote, noting doubling backbone transit costs gives a rough estimate of the cost to the carrier, which also has to carry the bits to your local exchange. In this context, telecom services like broadband and phone service should be decreasing in cost, not increasing. But the opposite is true. Large providers with usage caps expect to be compensated many times greater than that, charging $10 for 50GB in overlimit fees while their true cost is well under 50 cents. Customers buying a cell phone are often fitted with a data plan that represents an unprecedented markup. The extent of price increases customers can expect can be previewed by looking at the cost of phone service over the last 20 years. The average, often flat rate telephone bill in 1995 was $19.98 a month. In 2014, it was $73 a month. In 2015, it was $90 a month. Those dramatically rising prices in the last few years are mostly as a result of the increased cost of data plans providers charge to clean up on customers’ growing data usage.

Both Comcast and AT&T are dedicated to a campaign of getting customers to forget about flat rate, unlimited service at a reasonable cost. Even as both companies raise usage caps, they continue to raise prices as well, even as their costs to provide the service continue to drop. Both companies hope to eventually create the kind of profitable windfall with wired services that wireless providers like AT&T and Verizon Wireless have enjoyed for years since they abandoned unlimited flat rate plans. Without significant new competition, the effective duopoly most Americans have for telecommunications services offers the opportunity to create a new, more costly (and false) paradigm for telecom services, based on three completely false claims:

• data costs are expensive,
• usage must be monetized, and
• without a bigger return on investment, investors will not finance the next generation of telecom upgrades.

But as the evidence clearly shows, profits from selling high-speed internet access are only growing, even as costs are falling. Much of the drag on profits come from increasing costs related to licensing television content. Voice over IP telephone service is almost an afterthought for most cable and phone companies, often thrown in for $10-20 a month.

AT&T’s transition puts all the attention and its quest for fatter profits on its broadband service. That’s a bad deal for AT&T customers no matter what the company calls its “next generation” network.

Altice USA today unveiled faster broadband service for Cablevision customers in the Tri-State Area of New York, New Jersey, and Connecticut. You can now subscribe to faster service plans topping out at 300Mbps for residential customers and 350Mbps for commercial accounts.

Altice was required to boost internet speeds in New York State as part of winning approval for the buyout of Cablevision from the state’s Department of Public Service (formerly the Public Service Commission). But customers in New Jersey and Connecticut will also benefit.

New Internet Services
(bundling TV and phone service can reduce these prices and customers may need to call 1-888-298-9771 to change service if grandfathered on older plans):

Prior to the upgrade, the fastest speed most customers could get from Cablevision was 101Mbps. Based on pricing, the best value for money is the 200Mbps plan if you are looking for faster service. A $55 charge monthly charge for 300Mbps is $35 more than the logical rate step between lower speed tiers. Standalone customers would effectively pay $114.95 a month for 300Mbps vs. $79.95 for 200Mbps.

Altice has achieved the internet speed requirement imposed by New York regulators more than a year ahead of schedule. The same cannot be said for Charter Communications, which has canceled Time Warner Cable Maxx upgrades that were already underway in former Time Warner service areas. Customers may have to wait until 2019 in New York (later elsewhere) for Charter to upgrade all of its service areas to support 300Mbps. Altice’s other owned-and-operated cable operator – Suddenlink Communications, is also still laboring to boost broadband speeds and has left usage caps and usage billing in place for its customers in mostly smaller cities across the United States.

For the first time, the average American now pays over $100 a month just to watch television.

Leichtman Research Group, which has measured cable television rates annually for years, just released a report finding the average amount paid for cable television is now $103.10 a month. That’s an increase of about 4% over last year, the lowest annual increase in five years. But it’s still a 39% increase from 2011-2015, which is nearly eight times the rate of inflation.

As rates rise, customers are increasingly cutting cable’s cord for good. More than 800,000 Americans said goodbye to cable TV in the second quarter of this year alone, according to cable industry researcher SNL Kagan. eMarketer says the biggest reason customers are leaving is obvious: higher bills.

“About 82% of households that use a TV currently subscribe to a pay-TV service. This is down from where it was five years ago, and similar to the penetration level eleven years ago,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “The rates of those exiting the category, or intending to leave, are actually similar to recent years. The decline in penetration is also due to a lack of those who are coming into the category, and the industry not keeping pace with movers and related rental housing growth.”

Customers are no longer fooled by promotional rates that offer cable TV for $30-50 a month, usually expiring after one year. Once their first bill arrives, they are unhappy to discover growing mandatory equipment fees and bill padding charges for sports programming, local stations, fake official-sounding surcharges like “regulatory recovery fees,” and more.

“Once the XFINITY bill arrives, my $60 television promotion is $104 after the $5 fee for local stations, $3 for sports, additional outlet charges, equipment rental fees, and taxes/surcharges,” said Comcast customer Dan Ho from central California. “You almost have to take the internet and phone service just to feel like you are getting anything of value for your money, because the bundle price seems like a better deal.”

The cable industry argues cord-cutting won’t save consumers much money, but as Fortune magazine reports, those arguments are traditionally based on temporary rates that never tell the whole story,

“Too often, the comparisons quote a low, promotional, or entry-level price for the cost of a cable TV package instead of looking at the real prices people actually pay,” wrote Fortune author Aaron Pressman. “Left out of the superficial analysis all too often are set-top box fees, regional sports network fees, fees dressed up as faux taxes, and actual taxes.”

Fortune adds every year is a new record high for cable television bills.

Leichtman Research reports that once consumers cut the cord, an increasing number never look back, while those still subscribed to cable are often earching for a better deal:

• Overall, about 3% of TV households last subscribed to a cable/pay-TV service 1-3 years ago, about 6% subscribed over 3 years ago, and about 6% never subscribed to a pay-TV service;
• 7% of current cable subscribers did not subscribe to a TV service for more than a month at some time over the past two years;
• 25% of those who moved in the past year do not currently subscribe to a cable TV service — a higher level than in previous years;
• 12% of cable subscribers are likely to switch from their provider in the next six months — similar to 11% in 2015, and 12% in 2014;
• 6% of pay-TV subscribers are likely to disconnect from their provider and not subscribe to any TV service in the next six months — similar to 7% in 2015, and 7% in 2014.

The average American broadband-equipped household now uses 190GB a month, more than 95% of which is online video, according to a new report from iGR Research.

The detailed 125-page study of broadband speeds and usage, priced at $1,950, included some surprising changes in usage patterns.

In the past, as consumers upgraded their broadband plan to get faster speeds, their corresponding usage also increased. But iGR Research found that trend is no longer true as speed increases accelerate.

Iain Gillott, president of iGR Research, noted households with higher-speed connections don’t necessarily consume more data than those with lower-speed connections. Once broadband speeds achieve a rate fast enough to support high quality online video, further speed increases don’t always result in substantially higher consumption.

Gillott pointed out his own family recently upgraded to a 200Mbps connection and found little change in their monthly usage. That could be a problem for internet providers that cap customer usage while blaming increased demand.

“If we download a movie, it used to take 20 minutes to get HD. Now it takes three,” Gillott told Telecompetitor. “But it doesn’t mean we use any more data; it’s just that it took longer.”

Gillott noted customers upgrading from a slow speed DSL connection are another matter. Because DSL may only be able to support one or two concurrent video streams, many customers intentionally limited their simultaneous use of the internet to maintain usability. But once speeds increase to manage online video demands, usage often increases.

The report, U.S. Home Broadband and Wi-Fi Usage Forecast, 2015-2020, does forecast advancements in online video are likely to drive usage substantially higher than the current broadband allowances offered by many providers. The growth in 4K video alone could spike usage to as much as 500GB a month.

“What drives usage is more high-definition [content],” commented Gillott. “It doubles the amount of data used.”

Online video is driving almost all the usage growth in the United States. Gillott points to a cultural change in how television programming is being viewed in the United States. In short, fewer people are sharing time together watching the same show. Today, many people watch their own shows on their own devices.

“TV has become a personal activity,” said Gillott. “If you have four people in a household now, that means four times the data going in.”