Time to cut the cable TV bill down to size.

Cord-cutting, the often denied and downplayed practice of canceling cable television service, is becoming trendy in the United States, with up to two million customers likely to turn their backs on pay TV in 2015.

The Financial Times reports about 566,000 customers have canceled cable television between April and June on this year. The subscriber losses are occurring at most cable operators except for Verizon, which picked up a few new customers during the last quarter.

That translates into 6,200 customers a day dropping service, despite aggressive efforts by providers to rescue their business. For at least 10 years, cable television prices have risen at nearly twice the rate of inflation, helping give the industry a public black eye. But with few alternatives until recently, consumers bared their teeth but paid the bill. With the advent of online video services and digital over the air television, that is finally changing.

Today, customers in or near large cities can watch an average of 12-24 over the air stations and digital “sub-channels” for free. Add a Netflix and Hulu subscription and customers can watch “on-demand” shows as well.

Some cable companies have resisted dramatic rate increases realizing they will continue to bleed customers with every rate hike notice. But many others have resorted to tricks like adding surcharges at the bottom of the bill. Many cable companies today include sports programming and broadband TV surcharges of $1-4 each, hoping customers will blame someone else for their higher bill. Most surcharges are not covered by customer retention or new customer discounts, either, and those fees are rising.

Time Warner Cable added a $2.75 sports surcharge on many customer bills in addition to the Broadcast TV surcharge. Most providers charge between $2-6. Within three years, customers can expect to see surcharges hiked to the $8 range.

As the cord cutting numbers add up, broadcast executives may still be in denial, but Wall Street isn’t. Traders did some cutting of their own, slashing $50 billion off the value of media stocks after major entertainment companies reported declining ad revenues and expected poorer financial results in the future.

August 19, 2015

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Case Number: 14-C-0370

Dear Ms. Burgess,

After years of allowing the telecommunications industry in New York to operate with little or no oversight, the need for an extensive and comprehensive review of the impact of New York’s regulatory policies has never been greater.

Let us remind the Commission of the status quo:

• As Verizon winds down its FiOS initiative, other states are getting cutting-edge services like Google Fiber, AT&T U-verse with GigaPower, CenturyLink Prism, and other gigabit-speed broadband service competition. In contrast, the largest telecommunications companies in New York have stalled offering better service to New Yorkers.
• Time Warner Cable has left all of upstate New York with no better than 50/5Mbps broadband – a top speed that has not risen in at least five years.
• Frontier Communications has announced fiber upgrades in service areas it is acquiring while its largest New York service area – Rochester, languishes with copper-based ADSL service that often delivers no better than 3-6Mbps, well below the FCC’s minimum 25Mbps definition of broadband.
• Verizon Communications, the state’s largest telephone company, is accused of reneging on its FiOS commitments in New York City and has left upstate New York cities with nothing better than DSL service, giving Time Warner Cable a monopoly on 25+Mbps broadband in most areas. It has also talked openly of selling off its rural landline network or scrapping it altogether, potentially forcing customers to an inferior wireless landline replacement it calls Voice Link.

As the Commission is also well aware, there are a number of recent high-profile issues relating to telecommunications matters that have a direct impact on consumers and businesses in this state – some that are currently before the Commission for review. Largest among them is another acquisition involving Time Warner Cable, this time from Charter Communications. That single issue alone will impact the majority of broadband consumers in New York because Time Warner Cable is the state’s dominant Internet Service Provider for high speed Internet services, especially upstate.

These issues are of monumental importance to the comprehensive examination and study of the telecommunications industry in New York promised by Chairwoman Audrey Zibelman. The Charter-Time Warner Cable merger alone has the potential of affecting millions of New York residents for years to come.

Although this study was first announced to Speaker Sheldon Silver, the Honorable Jeffrey Klein, and the Honorable Dean Skelos in a letter on March 28, 2014, followed up by a notification that Chairwoman Zibelman intended to commence the study within 45 days of her letter of May 13, 2014, the first public notice seeking comments from stakeholders and consumers was issued more than a year later on June 23, 2015 (less than two months ago), with comments due by August 24, 2015.

With respect, providing a 60-day comment window in the middle of summer along with a handful of public hearings scattered across the state with as little as three weeks’ advance notice is wholly inadequate for a broad study of this importance. The Commission’s ambitious schedule to contemplate the state of telecommunications across all of New York State will likely be shorter than the review of the 2014-2015 Comcast-Time Warner Cable merger transaction which started May 15, 2014 and ended April 30, 2015.

We have heard from New York residents upset about how the Commission is handling its review. One complained to us the Commission had more than a year to prepare for its study while giving New York residents short notice to attend poorly advertised public hearings in a distant city, and two months at most to share their feelings with the Commission in writing. One woman described having to find a hearing that was, at best, 60 miles away and located at a city hall unfamiliar to those not local to the area, where suitable parking was inconvenient and difficult as she attempted a lengthy walk to the hearing location at the age of 69.

Several of our members also complained there are more suitable public-friendly venues beyond paid parking downtown city administration buildings or deserted campuses in the middle of summer break. Many asked why the Commission does not seem to have a social media presence or sponsor live video streaming of hearings where residents can participate by phone or online and avoid inconvenient travel to a distant city. Perhaps the Commission could be enlightened to see how New York’s telecommunications companies actually perform during such a hearing.

While we think it is very useful for the Commission to have direct input from the public, we are uncertain about how the Commission intends to manage those comments. We were disappointed to find no public outline of what the Commission intended to include in its evaluation of a topic as broad as “the state of telecommunications in New York.”

Too often, providers downplay service complaints from consumers as “anecdotal evidence” or “isolated incidents.” But if the Commission sought specific input on a topic such as the availability of FiOS in Manhattan, consumers can provide useful input on the exact location(s) where service was requested but not provided.

If the Commission received information from an incumbent provider claiming it was providing broadband service to low income residents, consumers could share on-point experiences as to whether those claims were true, true with conditions the Commission might not be aware of (paperwork requirements, onerous terms, etc.) or false.

If the Commission sought input on rural broadband, providers might point to a broadband availability map that suggests there is robust competition and customer choice. But the Commission could learn from residents asked to share their direct experiences that the map was inaccurate or outdated, including providers that only service commercial customers, or those that cannot provide service that qualifies as “broadband” by the Federal Communications Commission.

A full and open investigation is essential to finding the truth about telecommunications in New York. The Commission needs to understand whether problems are unique to one customer in one part of the state or common among a million people statewide. We urge the Commission to rethink its current approach.

New Yorkers deserve public fact-finding hearings inviting input on the specific issues the Commission is exploring. New Yorkers need longer comment windows, more notice of public hearings, and a generous extension of the current deadline(s) to allow comments to be received for at least 60 additional days.

Most critically, we need hearings bringing the public and stakeholders together to offer sometimes-adversarial testimony to build a factual, evidence-based record on which the Commission can credibly defend its oversight of the telecommunications services that are a critical part of every New Yorker’s life.

The Commission’s policies going forward may have a profound effect on making sure an elderly couple in the Adirondacks can keep a functioning landline, if affordable Internet will be available to an economically-distressed single working mother in the Bronx, or if upstate New York can compete in the new digital economy with gigabit fiber broadband to support small businesses like those run by former employees of downsized companies like Eastman Kodak and Xerox in Rochester.

Yours very truly,

Phillip M. Dampier
Director

The cost of residential broadband service around the world dropped an average of 9%, but not in the United States and Canada where providers are effectively raising prices while justifying the added cost with occasional speed boosts.

Point Topic, which tracks residential and business broadband pricing found prices are affected the most when competition increases and incumbent providers are forced to respond with lower prices and/or better service.

Point Topic’s chart shows North Americans pay a significant price for service, but receive some of the worst broadband performance in return when compared against better value for money providers in Central Asia, Eastern Europe, Western Europe, and the Asia-Pacific region. (Chart: Point Topic)

By far the poorest value broadband tracked by Point Topic is traditional DSL from the telephone companies. Speeds have barely budged in many areas while prices wildly fluctuate depending on whether fiber or cable broadband providers are competing for the same customers. The research firm found DSL to be the worst choice for consumers — combing the lowest speeds and the highest per megabit cost among wired providers.

The price of residential DSL is also going up — it was just under $10 per Mbps in the second quarter, an increase from nearly $9 per Mbps the phone companies charged late last year.

DSL is a dreadful value. (Chart: Point Topic)

Cable operators facing fiber competition have been forced to improve speeds but are still managing to raise prices. Globally, the average price of cable and fiber broadband based on speed alone is $1 per Mbps, down from $3 per Mbps in the second quarter of 2010. But North Americans are paying more for the service through annual rate increases and ancillary modem rental fees.

The reason North Americans are paying more for broadband service is because providers are attempting to make up for lost television revenue.

The New York Post noted most broadband bills are now up to between $50 and $70 a month for standalone service.

James Dolan, CEO of Cablevision, explained how broadband pricing has evolved in the cable industry.

“We’re going to see a re-stratification of the cable business .… One thing we see is significant uses of data, increasing exponentially,” Dolan told investors late last year. “We think that’s where the growth is going to come from.”

Dan Cryan, research director for digital at IHS, told the newspaper that revenue from U.S. broadband providers in 2014 topped $49 billion, up from $42.1 billion in 2012.

Cable companies collected an average of $4.75 per month more from broadband customers in 2014 over what they paid in 2012.

“Broadband is strategically more important than the number of subscribers indicates because it has the potential to be higher margin,” Cryan said.

(Chart: Point Topic)

Abbes Nacef was not very happy when he opened his web browser a few days ago to see a message inserted at the top of his screen.

“Your Internet service has reached the maximum limit of allowable overage charges. If you wish to continue service, please contact our business office to discuss your account.”

Nacef, who lives in Monastir, a Tunisian city best known for its tourism, was surprised because it was the first sign his Internet account had gone over the limit.

“While you can get uncapped DSL in Tunisia, it is not very good service and in my area it is not offered,” Nacef told Stop the Cap!. “Most in our neighborhood rely on a wireless ISP service which is less costly than 3G or 4G mobile service, but is capped and charges roughly $25 for each extra gigabyte allotment.”

Nacef’s call to his provider was not pleasant. He had already accumulated almost $180 in charges for the month of August, most in overlimit fees. The culprit was quickly identified — Microsoft Windows 10, which took several attempts to reach Nacef’s computer over a challenging Internet connection. But Nacef also learned his computer was repeatedly requesting updates from Microsoft, including three software patches that would not complete and were sent over and over for almost two weeks.

“It was the fifth call my ISP had received about this problem, and they were very annoyed also because Microsoft Windows 10 assumes you will use their Edge browser which defeats the early warning messages from my ISP that usage limits are approaching,” Nacef said. “When I switched back to my old browser the bad news was there, but it was too late.”

His ISP has agreed to cut the charges in half and has warned all of its customers if they want Windows 10, the ISP will offer them a copy on a returnable USB memory device for free.

Nacef thinks the huge multiple download attempts to receive Windows 10 itself was responsible for most of the extra usage, but he is wary about the frequent software updates and the fact they are shared with other users by default.

That is what may have tripped up Rob DuGrenier who paid an exorbitant $150 this month for 1.5Mbps Internet service just to get a 75GB usage allowance for his immediate family in far northern Québec. The alternative was an overlimit fee of $20 for each 5GB allotment of usage over the usual 30GB allowance granted to “Power” users.

“Internet is not an option for our family for medical reasons, but this hurts,” DuGrenier writes. “It is definitely Windows 10 and there is something wrong with it because our ISP reports we are sending a lot more data than we are receiving, and there are no viruses or malware on the computers.”

Internet access is northern Québec is slow and costly.

His ISP now suspects Microsoft is using his connection to distribute software updates to a number of other users across northern Canada. When DuGrenier’s family disabled the option that opted them in to distributing Microsoft updates to other customers, upstream traffic dropped 98%.

“Were we sending Windows 10 itself all over northern Quebec and Nunavut? We just don’t know and Microsoft has not responded,” DuGrenier reports. “They have billions, I do not. They should be paying my Internet bill this month.”

The worst of the reported problems of bill shock are occurring in remote areas where Internet service can be a mixture of wired and wireless connections that are often slow and usually usage-limited. Windows 10 was designed to reduce bandwidth demand on wireless connections, assuming they would be metered. But how Microsoft detects which networks are wireless and metered and which may only partly be so is apparently a work in progress.

This morning, the Sydney Morning Herald reports at least one customer on a Pacific island was slammed with a catastrophically high Internet bill. Maureen Hilyard in the Cook Islands owes her ISP $390 this month, all because of automatic updates from Microsoft for Windows 10.

“In this context, where Internet access is both painfully slow and seriously expensive, these forced updates are almost literally forcing people off the Internet and are resulting in massive excess data charges,” EFA executive officer Jon Lawrence told the newspaper.

The Cook Islands

Hilyard is a customer of Bluesky, primarily a satellite Internet Service Provider that dominates the Cook Islands, which have no other options for Internet access. A basic account costs $31.50 a month, but that provides just 3.5GB of data for the entire month. Automatic overlimit charges of $0.03 per megabyte accrue after the allowance is used up.

The most likely victims of Windows-induced bill shock subscribe to usage-limited wireless or satellite Internet services. While many providers throttle the speeds of customers who reach the usage limit, others charge penalty rates. Microsoft has no way to know which is true. Instead, the company claims it looks for evidence of a wireless connection before performing updates and when it finds one, it assumes it to be metered. But wired connections stay firmly in the unmetered category, whether they are usage-capped or not. Customers are invited to choose by digging through confusing settings menus.

Even more problematic is the built-in peer-to-peer technology that gives Microsoft’s servers a break and uses your Internet connection to share the latest Windows software updates with other Windows users across town and beyond. Microsoft has offered no provision to track this usage, but users can opt out with this advice from the Sydney Morning Herald:

Users can tweak their Windows 10 system settings by enabling a “metered connection” by searching for “Change Wi-Fi settings” in the start menu, clicking on “Advanced Options” and enabling “Metered connection.” This lets Windows 10 know the Wi-Fi connection you’re on is capped, so instead of forcing a software update onto your PC or tablet, it will notify you first. You can then choose to delay the upgrade until you are on an uncapped connection, or until you’ve rolled over into a fresh month of data.

This workaround only applies to Wi-Fi connections, however, not Ethernet connections.

A second workaround actually comes in an update which Microsoft itself released. It’s a bit more fiddly though, as it involves manually uninstalling driver updates and then downloading a special troubleshooter app to prevent them from installing again automatically. The full instructions are available online.

What makes 300GB so special? It happens to represent the monthly usage allowance Comcast customers in several southern and western service areas receive after more than two years of “Data Usage Plan Trials.”

One of most asked questions posed to Comcast is why one of the nation’s largest and most profitable Internet Service Providers needs to impose usage caps at all, especially as the company has repeatedly raised broadband speeds for customers.

It took a parody Twitter account known as “Cable Cares” to get a cogent answer from Comcast’s vice president of Internet services, Jason Livingood: he doesn’t know.

Livingood admitted Comcast’s “data usage plans” a/k/a “usage caps” are a “business policy” far removed from his work as a Comcast engineer helping to keep Comcast’s broadband service up and running efficiently.

Stop the Cap! never doubted it for a moment.

Internet Service Providers have often claimed usage caps are a matter of “fairness” — first to control congestion on their broadband networks and later as a way to pay for needed upgrades. But neither has proved true.

Starting in 2008, Comcast imposed a 250GB usage cap on its broadband service and issued warnings to customers that rampaged past it, threatening to cut their service off if they did not curtail usage. Those contacted were told their heavy use could impact broadband service for other customers who used it much less.

Internet providers told the Government Accountability Office another story entirely, admitting congestion is not a problem for cable operators or phone companies at all.

“Some wireless ISPs told us they use usage based pricing to manage congestion,” the GAO reported in June 2014. But “wireline ISPs said that congestion is not currently a problem.”

As upgrades have exponentially increased network capacity, the story told to defend usage caps changed dramatically. The new claim is that usage-based pricing and caps can “generate more revenue for ISPs to fund network capacity upgrades as data use grows,” the GAO reported.

Except as the New York Times reported last year, the United States is hardly a broadband speed leader and the quality of service “has nothing to do with technology. Instead, it is an economic policy problem — the lack of competition in the broadband industry.”

Usage caps for one and all.

For now, Comcast isn’t commenting at all about the reasons for its usage cap trials. But a few years ago, Comcast VP David Cohen believed caps would be rolled out across Comcast’s entire nationwide service area anyway. 

Comcast executives have repeatedly told investors customers had accepted the usage cap trials and few have exceeded their usage allowances. But judging from Comcast’s customer support forums, the issue of usage caps and measurement rises near the top of complaints.

Comcast’s unregulated usage meter is a frequent target. What it registers is what Comcast uses to bill its customers.

“I have the ability to track my inbound and outbound data usage at my router.  Nothing in my house can talk to the Internet (the cable modem) without going through the router,” one customer wrote on Comcast’s support forum. “The traffic meter on the router is significantly less than the Xfinity Usage Meter.  As of right now, my router says my inbound/outbound usage since 7/1/2015 is 67.34GB, but the Xfinity Usage Meter says I am at 114GB.”

“At Comcast, the meter is right and the customer is wrong,” complains another customer.

“I am sick of calling customer service and being told that the Xfinity usage meter is right, but that there is absolutely no data that can be given to me to support that answer.  This is beyond ridiculous and I am beyond frustrated.  I have no options for recourse and am just supposed to accept that I am flying blind.”

Flying blind can be costly. One Comcast customer opened his broadband bill to discover $260 in charges conveniently automatically removed from his checking account after Comcast claimed he used almost 2TB of usage in a month.

“My wife and I browse emails, browse the Internet with Facebook and sometimes watch Youtube,” the customer wrote. “We don’t even have Netflix or any other streaming service here at the house.”

The customer complains Comcast refuses to refund or document the 2TB of usage. As long as Comcast “verifies” a customer’s modem handled that traffic, the customer is billed without recourse.

But customers do have some recourse: complaining to the Federal Communications Commission or the Better Business Bureau.

“I have seen other posts from customers with similar issues,” a Comcast customer noted. “It seems that they get help once they threaten to go to the FCC or the BBB.”

The FCC’s online complaint form often results in substantial billing credits and charge reversals for shocking cable bills. The FCC is gradually turning its attention to the issue of usage caps, perhaps proportionate to the number of consumer complaints about the issue.

The Better Business Bureau helps put customers in touch with executive level customer service agents empowered well beyond the usual offshore customer service center employees. It appears they did exactly that 35,281 times in the last three years — 14,052 in the last year alone. Most of those complaints were evidently resolved to the customer’s satisfaction.

• Click here to file a complaint with the Federal Communications Commission
• Click here to file a complaint with the Better Business Bureau