John Malone’s cable systems in Europe share little in common with what Americans get from their local cable company. In Switzerland, Liberty-owned UPC Cablecom charges $95 a month for 250/15Mbps service — a speed Charter Communications customers cannot buy at any price. Liberty is Charter’s biggest investor/partner. Later this month, Swiss cable customers will be able to buy 500Mbps from UPC. When implemented, that is expected to push Switzerland’s broadband speed rankings into the global top-10. Currently Switzerland is rated #11. The United States is #28 and Canada is ranked #34.

UPC’s primary competitor  — telephone company Swisscom — is aggressively upgrading its facilities with its eye on offering G.fast, the latest version of DSL capable of delivering up to 500Mbps across 200-300 meters of old copper phone wiring, making it suitable for fiber to the neighborhood deployments similar to AT&T U-verse or Bell’s Fibe. Swisscom is also expanding fiber to the home service on a more limited basis, offering customers 1,000/1,000Mbps service on that network.

Tveter

Why all the upgrades? Competition in the Swiss broadband marketplace.

If Swisscom can offer gigabit broadband speeds, then so can UPC Cablecom, claims its CEO Eric Tveter.

“We can offer every customer across the country the same speeds,” Tveter told the Schweiz am Sonntag newspaper. “At the end of June, we will introduce new Internet speeds of 500Mbps. Demand for [fiber’s] symmetrical speeds is still very low among residential customers, but if demand increases we will offer them.”

Customers looking for gigabit speed would likely have to sign up as a commercial customer of UPC for now. But the company is preparing to introduce DOCSIS 3.1 which will allow the existing cable network to easily deliver gigabit speeds to residential customers. In fact, Tveter is looking at introducing 10Gbps speeds in Switzerland in the coming years.

Tveter aggressively criticized some of his biggest competitors for using marketing-speak to promote “new” products UPC already offers.

Some providers have promoted “cloud-based” on-demand access to video that Tveter says has been available from the cable company for several years.

This year, UPC Swisscom has been reassuring customers it does not allow America’s National Security Agency to spy on its customers and has taken measures to keep Chinese intelligence agents and hackers out of its network. The Swiss courts have made it clear they want nothing to do with NSA spying and permit operators to take any and all steps to keep unauthorized American and Chinese agencies from penetrating Swiss telecommunications.

Tveter points out all Swiss networks use equipment manufactured by U.S. and Chinese companies, but there are no indications either government has forced manufacturers to give back-door access to that equipment for surveillance or espionage purposes.

UPC Cablecom also voluntarily adheres to Net Neutrality principles for its Swiss customers.

[flv]http://www.phillipdampier.com/video/Swisscom fibre optic network 2014.mp4[/flv]

Swisscom shows the advantages of its fiber to the home network. (1:54)

Today’s offer by Altice SA to spent $11 billion to acquire France’s Bouygues Telecom and combine it with Altice-owned Numericable-SFR to create France’s largest wireless operator is not playing well in some quarters of the French government.

Patrick Drahi’s announcement he was borrowing the money to finance the deal worried France’s economy minister Emmanuel Macron, who felt Drahi’s leverage game in the mergers and acquisitions business came with a massive debt load that could have major implications on French taxpayers.

“I don’t want to create a too-big-to-fail player with such a leverage and it’s my role to … deliver such a message,” Macron said. ”If the biggest telecom operator blows up, guess what, who will pay for that? The government, which means the citizens.”

Macron is partly referring to the upcoming French wireless spectrum auction that will make more wireless frequencies available to the wireless industry. The proceeds will be paid to the French government and a default by Altice could have major implications.

Macron

Macron, himself a one-time investment banker at the Rothschild Group, said he was not fooled for a moment by Drahi’s claims the merger would benefit French consumers, especially at the overvalued price Drahi was willing to pay. Macron estimates Drahi has offered almost double the total market value of Bouygues Telecom, a conglomerate that also includes road construction and maintenance, commercial construction and television businesses — all elements Drahi would likely discard after the merger.

“All the synergies which could justify such a price are in fact about killing jobs,” Mr. Macron said. “At the end of the day, is it good for the economy? The answer is ‘no’.”

The merger deal is probably not good news for consumers either. France’s ongoing wireless price war among the four current competitors has reduced the cost of wireless service to as little as $3 a month since low-cost player Iliad broke into the French mobile market three years ago.

Virtually every French telecom analyst predicted the merger would be the beginning of the end of France’s cheap wireless service. Investors cheered the news, predicting higher priced wireless service would boost the value of their stock and increase profitability, while reducing costs. The deal’s defenders said ending the price war would attract necessary investments to upgrade French wireless networks and limit the impact of a bidding war for new wireless spectrum.

Drahi’s style of indebting Altice while slashing expenses at acquired companies has earned him suspicion from French officials.

Drahi’s style of doing business again raised concerns among several members of the French government. Drahi is notorious for severely slashing expenses at the companies he acquires, usually firing large numbers of middle managers and “redundant employees” and alienating those that remain.

But vendors complain they are treated even worse than Drahi’s employees. Electricity has been cut at Drahi-owned facilities for non-payment, employees have been expected to bring their own toilet paper to the office, and copying machines have been known to run out of toner and paper after office supply firms went unpaid for months.

After his $23 billion acquisition of SFR, the country’s second largest mobile operator, Drahi ordered SFR to stop paying suppliers’ outstanding invoices until vendors and suppliers agreed to massive discounts of as much as 80% on current and future invoices. A government mediator was forced to intervene.

Macron doubts Drahi has the interest or the financial resources to invest in Bouygues’ telecom business. Drahi has already indebted Altice with a spending spree of more than $40 billion over the last year acquiring Suddenlink Communications, SFR, and Portugal Telecom.

Drahi’s acquisition machine is fueled by “cheap debt” available from investment bankers looking for deals to meet investors’ demands for better yields from corporate bonds. Safer investments have faltered as interest rates have fallen into negative territory in parts of Europe.

French lawmakers, particularly those aligned with France’s labor unions, accuse Drahi of acting like a bulimic debtor and feared his splurge would eventually lead to a banker-forced purge and government bailout if he cannot meet his debt obligations in the future.

“If I stop my so-called bulimic development, I won’t have any debt five years from now. That’s idiotic, I won’t have any growth for five years,” Drahi curtly replied. “I think it’s better to continue to produce growth all while keeping a foot close to the brakes and looking in the rear-view mirror.”

Finance Minister Michel Sapin scoffed at the apparent recklessness of America’s J.P. Morgan and France’s BNP Paribas investment banks who readily agreed to offer financing for the deal, despite Drahi’s existing debt.

“We must be careful not to base an empire on the sands of debt,” he warned.

[flv]http://www.phillipdampier.com/video/Reuters French government hardens stance on Altice bid for Bouygues Telecom 6-22-15.flv[/flv]

Reuters reports Altice may be vastly overpaying for Bouygues Telecom and that has the French government concerned about creating a “too big to fail” telecom operator in France. (2:04)

If your YouTube, Netflix, or Amazon Video experience isn’t what it should be, your Internet Service Provider is likely to blame.

A consumer group today implicated several major Internet providers including Comcast, AT&T, Time Warner Cable and Verizon in an Internet slowdown scheme that prevented customers from getting the broadband performance they are paying for.

A study* of 300,000 Internet users conducted by Battleforthenet found evidence some of America’s largest providers are not adequately providing connectivity for Content Delivery Networks (CDNs) that supply high-capacity traffic coming from the Internet’s most popular websites.

Significant performance degradation was measured on the networks of the five largest American ISPs, which provide Internet connectivity for 75% of U.S. households.

“For too long, Internet access providers and their lobbyists have characterized Net Neutrality protections as a solution in search of a problem,” Tim Karr from Free Press told the Guardian newspaper, which had advance notice of the study. “Data compiled using the Internet Health Test show us otherwise – that there is widespread and systemic abuse across the network. The irony is that this trove of evidence is becoming public just as many in Congress are trying to strip away the open Internet protections that would prevent such bad behavior.”

The study revealed network performance issues that would typically be invisible to most broadband customers performing generic speed tests to measure their Internet speed. The Open Technology Institute’s M-Lab devised a more advanced speed test that would compare the performance of high traffic CDNs across several providers. CDNs were created to reduce the distance between a customer and the content provider and balance high traffic loads more evenly to reduce congestion. The shorter the distance a Netflix movie has to cross, for example, the less of a chance network problems will disrupt a customer’s viewing.

If technicians controlled the Internet, the story would end there. But it turns out money has gotten between Internet engineers with intentions of moving traffic as efficiently as possible and the executives who want to be paid something extra to carry the traffic their customers want.

That may explain why Comcast can deliver 21.4Mbps median download speeds for traffic distributed by a CDN Tier1 IP network called GTT to customers in Atlanta, while AT&T only managed to squeeze through around 200kbps — one-fifth of 1Mbps. It turns out AT&T’s connection with GTT may be maxed out and AT&T will not upgrade capacity to a network that sends AT&T customers more than twice the traffic it receives from them without direct compensation from GTT.

Internet traffic jam, at least for AT&T customers in Atlanta trying to reach content delivered by GTT.

An AT&T U-verse customer in Atlanta would probably not attribute the poor performance depicted in M-Lab’s performance test directly to AT&T because Internet responsiveness for other websites would likely appear normal. Customers might blame the originating website instead. But M-Lab’s performance results shows the trouble is limited to AT&T, not other providers like Comcast.

AT&T: Slow down, you move too fast.

The issues of performance and peering agreements that provide enough capacity to meet demand are close cousins of Net Neutrality, which is supposed to prevent content producers from being forced to pay for assurances their traffic will reach end users. But that seems to be exactly what AT&T is asking for from GTT.

“It would be unprecedented and unjustified to force AT&T to provide free backbone services to other backbone carriers and edge providers, as Cogent et al seek,” AT&T wrote in response to a request from several CDNs to disallow AT&T’s merger with DirecTV. “Nor is there any basis for requiring AT&T to augment network capacity for free and without any limits. Opponents’ proposals would shift the costs of their services onto all AT&T subscribers, many of whom do not use Opponents’ services, and would harm consumers.”

* – When a copy of the study becomes publicly available, we will supply a link to it.

Correction: It is more accurate to describe GTT as a “Tier1 IP network” which supplies services to CDN’s, among others. More detail on what GTT does can be found here.

In the last three years, several Wall Street analysts have called on cable and telephone companies to raise the price of broadband service to make up for declining profits selling cable TV. As shareholders pressure executives to keep profits high and costs low, dramatic price changes may be coming for broadband and television service that will boost profits and likely eliminate one of their biggest potential competitors — Sling TV.

For more than 20 years, the most expensive part of the cable package has been television service. Cable One CEO Thomas Might acknowledged that in 2005, despite growing revenue from broadband, cable television still provided most the profits. That year, 64% of Cable One’s profits came from video. Three years from now, only 30% will come from selling cable TV.

While broadband prices remained generally stable from the late 1990’s into the early 2000’s, cable companies were still raising cable television prices once, sometimes twice annually to support very healthy profit margins on a service found in most American homes no matter its cost. Despite customer complaints about rate hikes, as long as they stayed connected, few providers cared to listen. With little competition, pricing power was tightly held in the industry’s hands. The only significant challenge to that power came from programmers demanding (and consistently winning) a bigger share of cable’s profit pie.

The retransmission consent wars had begun. Local broadcast stations, popular cable networks, and even the major networks all had hands out for increased subscriber fees.

Rogers

In the past, cable companies simply passed those costs along, blaming “increased programming costs” in rate hike notifications without mentioning the amount was also designed to keep their healthy margins intact. Only the arrival of The Great Recession changed that. New housing numbers headed downwards as children delayed leaving to rent their own apartment or buy a house. Many income-challenged families decided their budgets no longer allowed for the luxury of cable television and TV service was dropped. Even companies that managed to hang on to subscribers recognized there was now a limit on the amount customers would tolerate and the pace of cable TV rate hikes has slowed.

For a company like Cable One, the impact of de facto profit-sharing on cable television service was easy to see. Ten years ago, only about $30 of a $70 video subscription was handed over to programmers. This year, a record $45.85 of each $81 cable TV subscription is paid to programmers. The $35.50 or so remaining does not count as profit. Cable One reported only $10.61 was left after indirect costs per customer were managed, and after paying for system upgrades and other expenses, it got to keep just $0.96 a month in profit.

To combat the attack on the traditional video subscription model, Cable One raised prices in lesser amounts and began playing hardball with programmers. It permanently dropped Viacom-owned cable networks to show programmers it meant business. Subscribers were livid. More than 103,000 of Cable One’s customers across the country canceled TV service, leaving the cable company with just over 421,000 video customers nationwide.

Some on Wall Street believe conducting a war to preserve video profits need not be fought.

U.S. broadband providers already deliver some of the world’s most expensive Internet access.

Analysts told cable companies that the era of fat profits selling bloated TV packages is over, but the days of selling overpriced broadband service to customers that will not cancel regardless of the price are just beginning.

Cablevision CEO James Dolan admitted the real money was already in broadband, telling investors Cablevision’s broadband profit margins now exceed its video margins by at least seven to one.

The time to raise broadband prices even higher has apparently arrived.

“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment),” wrote New Street Research’s Jonathan Chaplin in a recent note to investors. The Wall Street firm sells its advice to telecom companies. “The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business. Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

If you are already a triple play cable television, broadband, and phone customer, you may not notice much change if this comes to pass, at least not at first. To combat cord-cutting and other threats to video revenue, some advisers are calling on cable companies like Comcast, Time Warner Cable and Charter to re-price the components of their package. Under one scenario, the cost of cable television would be cut up to $30 a month while the price of Internet access would increase by $30 or more a month above current prices. Only customers who subscribe to one service or the other, but not both, would see a major change. A cable TV-only subscriber would happily welcome a $50 monthly bill. A broadband-only customer charged $80, 90, or even 100 for basic broadband service would not.

Neither would Sling CEO Roger Lynch, who has a package of 23 cable channels to sell broadband-only customers for $20 a month.

“They have their dominant — in many cases monopolies — in their market for broadband, especially high-speed broadband,” Sling CEO Roger Lynch told Business Insider in an interview, adding that some cable companies already make it cheaper for people to subscribe to TV and broadband from a cable company than just subscribe to broadband.

A typical Sling customers would be confronted with paying up to $100 a month just for broadband service before paying Sling its $20 a month. Coincidentally, that customer’s broadband provider is likely already selling cable TV and will target promotions at Sling’s customers offering ten times the number of channels for as little as a few dollars more a month on top of what they currently pay for Internet access.

Such a pricing change would damage, if not destroy, Sling TV’s business model. Lynch is convinced providers are seriously contemplating it to use “their dominant position to try to thwart over the top services.”

At least 75% of the country would be held captive by any cable re-pricing tactic, because those Americans have just one choice in providers capable of meeting the FCC’s minimum definition of broadband.

Even more worrying, FCC chairman Thomas Wheeler may be responsible for leading the industry to the re-pricing road map by repeatedly reassuring providers the FCC will have nothing to do with price regulation, which opens the door to broadband pricing abuses that cannot be easily countered by market forces.

Lynch has called on the FCC to “protect consumers” and “make sure there’s innovation and competition in video.”

Unfortunately, Wheeler may have something else to prove to his critics who argued Net Neutrality and Title II oversight of broadband would lead to rampant price regulation. Wheeler has hinted repeatedly he is waiting to prove what he says — an allusion to hoping for a formal rate complaint to arrive at the FCC just so he can shoot it down.

Comcast must reveal the identity of its broadband subscriber who left an anonymous comment on the Freeport Journal Standard’s website that suggested a political candidate was a child molester.

The Illinois Supreme Court affirmed a local court ruling that compels Comcast to name the writer known as “Fuboy” and share that information with Bill Hadley, who ran for a seat on the Stephenson County board in 2011.

In response to a story about Hadley, “Fuboy” anonymously attacked the candidate in a comment attached to the story:

“Hadley is a Sandusky waiting to be exposed,” the commenter wrote. “Check out the view he has of Empire (Elementary School) from his front door.”

Sandusky is an apparent reference to former Penn State coach Jerry Sandusky, convicted of child sexual abuse in 2012.

Hadley spent three and a half years and more than $30,000 pursuing the identity of the commenter. Hadley is a retired Illinois corrections officer and chairman of the county board.

“It’ll be a huge victory for me, but it has practically broke me financially,” Hadley told the Associated Press.

At the heart of the case is whether a person is allowed to make potentially libelous comments anonymously on an online forum. Multiple court rulings in Illinois suggest there is no guarantee of privacy if those comments defame another.

“There are folks who go through life thinking that the Internet provides permanent anonymous protection. This case makes clear that that’s not true,” said Don Craven, an attorney for the Illinois Press Association.