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Conservative Business Group Sues to Toss Pro-Consumer Time Warner/Charter Merger Conditions

A corporate-funded business advocacy group backed by the telecom industry and the Koch Brothers is pursuing a lawsuit asking the D.C. Court of Appeals to toss pro-consumer deal conditions imposed by the Federal Communications Commission in return for granting its 2016 approval of the acquisition of Time Warner Cable and Bright House Networks by Charter Communications.

The Competitive Enterprise Institute filed an initial petition with the FCC asking the agency to rescind its own deal conditions shortly after the merger was completed. CEI argued the agency imposed “harmful merger conditions on Charter that had nothing to do with the merger itself,” and that the FCC did not have the authority to put corporate merger deal conditions in place.

CEI specifically targeted its objections to the FCC’s seven-year ban on Charter Spectrum data caps and consumption billing, arguing the ban raised broadband pricing for all Spectrum customers and prevented the cable company from offering discounts to low usage customers. It also claimed that Charter had to increase pricing for all customers because the FCC required Spectrum to raise broadband speeds, introduce a discounted internet program for low-income customers, and expand service to at least two million new households not presently served by Spectrum.

The FCC ultimately rejected CEI’s petition in 2018, claiming the group had no standing to challenge the merger transaction or deal conditions. The group called the FCC’s decision wrong, claiming consumers will “have to foot the bill for an overreaching federal agency” and that “the FCC has no authority to micromanage the internet at the public’s expense.”

This week, it filed an opening brief appealing the FCC’s decision to the D.C. Court of Appeals, which oversees the legality of the FCC’s regulatory decisions.

The 101-page filing maintains the FCC overreached by imposing any deal conditions on the 2016 multi-billion dollar merger deal, especially those that might require the merged company to spend money to improve service to customers. CEI argued such conditions were “arbitrary and capricious” and had no place as part of approving a business merger transaction.

The group submitted evidence from four individuals who attested to their belief that the deal conditions “probably contributed” to price increases after customers abandoned their legacy Bright House and Time Warner Cable plans in favor of Spectrum plans and pricing. The customers reported rate hikes ranging from $4 a month to $20 a month “for the same services,” but did not attach copies of their bills allowing a court to ascertain whether those rate increases involved cable television or broadband service or both.

No evidence was provided to prove CEI’s assertion that rate increases were directly tied to merger conditions other than a declaration from Robert W. Crandall, an economist and nonresident senior fellow at the Technology Policy Institute in Washington, D.C. Crandall argued any deal conditions requiring a cable company to spend money to expand, improve, or discount services would likely impact subscriber rates.

No disclosure was made regarding any fees paid to Crandall to conduct research on behalf of CEI. The Technology Policy Institute is financially backed almost entirely by the Koch Brothers and corporate interests including AT&T, Charter Communications, Comcast, and Verizon.

CEI’s legal brief depends on assertions made by then-minority Republican members of the FCC, notably then-Commissioners Ajit Pai and Michael O’Rielly, who objected to the FCC’s merger conditions. CEI ignored the views of the then-Democratic majority on the Commission, who voted to approve the merger with deal conditions. Then Chairman Thomas Wheeler and Commissioners Mignon Clyburn and Jessica Rosenworcel were not mentioned anywhere in CEI’s brief. Today the Commission has a Republican majority, with Pai now serving as chairman.

The FCC in 2016 (from left to right): Commissioners Ajit Pai, Mignon Clyburn, Chairman Tom Wheeler, and Commissioners Jessica Rosenworcel and Michael O’Rielly

CEI’s argument follows a similar pattern to arguments made against net neutrality — namely, the FCC has no authority to regulate broadband services or the pricing and policies of the companies providing it. Charter Communications has occasionally argued the same point with the New York State Public Service Commission, which imposed deal conditions of its own in return for approval of the merger.

Charter has consistently reserved the right to object to deal conditions requiring it to build out service to rural areas, as well as any deal conditions that go beyond the authority of state regulators to oversee broadband service. In Charter’s view, state regulators have no such authority. In the state’s view, the PSC has the right to consider a myriad of factors because its regulatory mandate  requires approving or rejecting a merger based on the public interest. Its 2016 merger order found the transaction was not in the public interest unless the parties agreed to certain deal conditions, which closely resembled those required by the FCC. When Charter allegedly failed to meet the conditions it agreed to, the New York regulator could not directly compel Charter Spectrum into compliance, but it could and did decertify the merger itself.

Should the D.C. Court of Appeals find in favor of CEI, the deal conditions imposed by the FCC would be revoked, although Charter could continue to honor those conditions voluntarily. Separate legal cases would have to be brought in state courts to invalidate deal conditions imposed by state regulators.

AT&T Drops Data Caps for Free if You Subscribe to DirecTV Now

Phillip Dampier December 19, 2018 AT&T, Competition, Consumer News, Data Caps, Net Neutrality 2 Comments

AT&T customers are telling Stop the Cap! the company is emailing their broadband customers to alert them they now qualify for unlimited internet access because they also happen to subscribe to DirecTV Now, AT&T’s streaming service targeting cord cutters.

“Good news about your internet service! Because you also added DIRECTV NOW℠ to your internet service, we’re giving you unlimited home internet data at no additional cost.”

AT&T normally charges customers an extra $30 a month to remove their 1,000 GB data cap.

The move has some net neutrality implications, because AT&T is favoring its own streaming service over the competition, which includes Sling TV, Hulu TV, PlayStation Vue, and other similar services. If a customer subscribes to Hulu TV, the 1 TB cap remains in force. If they switch to DirecTV Now, the cap is gone completely.

AT&T has undoubtedly heard from customers concerned about streaming video chewing up their data allowance. With AT&T’s DirecTV on the verge of launching a streaming equivalent of its satellite TV service, data caps are probably bad for business and could deter customers from switching.

It is yet the latest evidence that data caps are more about marketing and revenue than technical necessity.

Updated 1:15pm EST 12/20: Hat tip to Karl Bode, who got AT&T’s official confirmation the unlimited internet offer that formerly applied to DirecTV satellite customers has now quietly been extended to DirecTV Now streaming customers as well. We are still looking for a screen cap of anyone who received an e-mail from AT&T about unlimited service for streaming customers. If you have one, drop me a line at phil (at) stopthecap.com

AT&T Launches 5G Service at the “Go Away” Price of $499 + $70/Mo with a 15 GB Cap

AT&T this morning switched on its 5G wireless mobile network in 12 cities around the country, making it the first U.S. provider to launch portable 5G service for wireless devices.

Like Verizon, AT&T is in no hurry to sign up new customers for 5G service. Instead, it will only be available “in dense urban areas” for a handful of businesses and consumers invited to sample the service for free over the next 90 days.

“This is the first taste of the mobile 5G era,” said Andre Fuetsch, president, AT&T Labs and chief technology officer. “Being first, you can expect us to evolve very quickly. It’s early on the 5G journey and we’re ready to learn fast and continually iterate in the months ahead.”

Because cell phones equipped with 5G are not yet widely available, AT&T will sell its 5G service with a NETGEAR® Nighthawk 5G Mobile Hotspot device that will go on sale in the spring for $499. AT&T also intends to extract more money from wireless customers for its premium 5G experience. When service debuts, a 5G compatible data plan will start at $70 a month, including a 15GB data cap.

AT&T is not saying how fast its 5G network will actually be, only predicting it will be slower than the theoretical maximum speed of 1.2 Gbps, assuming nobody was using it. At an investor conference in early December, witnesses reported speed tests were averaging closer to 140 Mbps, which falls far short of the 5G Gigabit Hype the tech media has been breathlessly reporting.

AT&T’s launch switched on 5G service from selected city cell towers serving Atlanta, Charlotte, N.C., Dallas, Houston, Indianapolis, Jacksonville, Fla., Louisville, Ky., Oklahoma City, New Orleans, Raleigh, N.C., San Antonio, and Waco, Tex.. Over the next six months, AT&T plans to switch on 5G-equipped towers in Las Vegas, Los Angeles, Nashville, Orlando, San Diego, San Francisco, and San Jose.

AT&T’s 5G service will use traditional cellular frequency bands, and will effectively look like an incremental upgrade from 4G LTE. In real world performance terms, expect noticeably faster wireless speeds, but nothing close to what Verizon is offering with its fixed wireless 5G network, which relies on millimeter wave frequencies to deliver much faster service. AT&T’s 5G is portable, Verizon’s is not (for now). AT&T executives have been repeatedly skeptical about offering fixed wireless 5G.

AT&T hypes its forthcoming 5G network into the stratosphere. (1:44)

Cable One Changing Name to Sparklight in the Summer of 2019 to Refocus on Broadband

Phillip Dampier December 12, 2018 Broadband Speed, Cable One, Consumer News, Data Caps 3 Comments

Cable One will rebrand itself Sparklight starting in the summer of 2019, reflecting a refocus on selling broadband service.

“We are very excited for this evolution to our new brand and the next chapter in our story,” Cable One CEO Julie Laulis said in a statement. “Over the past several years we have evolved and our new brand will better convey who we are and what we stand for – a company committed to providing our communities with connectivity that enriches their world.”

The corporate name will remain Cable One, but like Charter’s Spectrum or Comcast’s XFINITY, customers will primarily know the company under its new brand.

Cable One provides service in these areas.

Cable One has just over 800,000 customers in 21 states nationwide, primarily in the South. The company’s decision to hold the line on the wholesale cost of its cable television package resulted in the company dropping Viacom-owned cable networks, which caused a significant number of customers to cancel service. Today, nearly 60% of its customers are broadband-only.

The cable company has also been criticized for dramatically raising the price of its internet service and for its regime of data caps, which limits most of its customers to 300 GB of usage a month. Customers who exceed their usage allowance three times during a calendar year “may be required to upgrade to an appropriate plan for data usage.”

Cable One currently offers four broadband options:

  • Starter Plan (100/3 Mbps) $55/mo with up to 300 GB of usage
  • Family Plan (150/5 Mbps) $80/mo with up to 600 GB of usage
  • Streamer and Gamer Plan (200/10 Mbps) $105/mo with up to 900 GB of usage
  • GigaONE (1000/50 Mbps) $175/mo with up to 1,500 GB of usage

Under the rebrand, the company will “streamline” its residential broadband options and pricing, which will likely push customers towards a more expensive, higher-speed tier. Sparklight will also offer unlimited data on any of its revamped tiers for an additional monthly fee. Both measures are likely to boost revenue, and customer bills.

“As consumer data consumption continues to increase, multi-device households become the norm, and businesses expect a broad suite of services, Sparklight will continue to evolve with our customers by offering innovative options to fit their needs, while providing helpful, proactive and personal local service,” Laulis said.

Census Bureau Reports Internet Penetration Lowest in Urban Poor and Rural Areas

There are stark contrasts in internet subscription rates depending on where you live and how much money you make, according to newly released findings from the U.S. Census Bureau.

As the cost of internet access continues to rise, affordability is increasingly a problem for poor Americans. In rural areas, a lack of broadband availability is also holding down subscription rates.

Telfair County, Ga. has the dubious distinction of being America’s worst connected county, with just 25% of households signed up for internet access. The most connected communities are found in suburban areas surrounding major cities along the Pacific Coast and northeastern U.S. More than 90% of households also have internet access in suburban areas outside of the District of Columbia, Atlanta, and Denver.

Urban Poor Americans Can’t Afford Increasingly Expensive Service Plans; Many Turn to Smartphones Instead

Although internet subscription rates are sky-high in wealthier suburban areas, poor inner city neighborhoods score poorly for internet subscriptions. In the Chicago metropolitan area, 77% of Cook County households subscribe to the internet. In downtown Los Angeles, just 80% are signed up. In D.C., only 78% subscribe.

In Philadelphia, there were some neighborhoods with just 25% of residents getting internet service. In the Tioga-Nicetown neighborhood, only 37.1% of households had internet service. Persistent poverty, crime, unemployment, and low-income in poorer parts of the inner city have conspired to make it very difficult for residents to afford internet access at prices often over $50 a month.

Increasingly, poor urban residents are turning to their smartphones as their sole source of internet. In the Philadelphia neighborhood of Fairhill, where internet subscriptions are below 38%, 12% of homes report smartphones are the only way they connect to the internet.

Pew Research Center senior researcher Monica Anderson told The Inquirer that 31 percent of Americans who earn less than $30,000 a year now rely only on smart phones for internet access, a percentage that has doubled since 2013.

“We are seeing smartphones help more people get online,” she told the newspaper, adding that data caps and data plan costs lead people to cancel or suspend services.

Rural and Native Americans Suffer Without Service, If They Can Afford It

Some of the worst scoring counties where internet subscription rates were lower than average are located in rural areas across the upper Plains, the Southwest and South. The desert states of Arizona and New Mexico, south Texas, the lower Mississippi through Southern Alabama and some areas of the Piedmont of Georgia, the Carolinas and Southern Virginia were notable for containing many counties with low broadband internet subscription rates, although there were exceptions throughout.

Only 67% of Native Americans have signed up for internet access, compared with 82 percent for non-Native Americans. Native Americans living on American Indian land had a subscription rate of 53 percent.

Thirteen percent of the counties achieving better than an 80% subscription rate were located in “mostly rural” or “completely rural” counties, often getting telecommunications services from a local co-op or municipal utility. Assuming a rural customer can buy internet access, the next impediment is often cost.

In “mostly urban” counties with median household incomes of $50,000 and over, the average broadband internet subscription rate was roughly 80 percent, while in “completely rural” counties with the similar median incomes, the average broadband internet subscription rate was only 71 percent.

“Mostly urban” counties with median household incomes below $50,000, however, only reported average broadband internet subscription rates of 70 percent while “completely rural” counties with similar median incomes had average broadband internet subscription rates of just 62 percent.

This contrast showed up most dramatically in the South. Of the 21 counties with populations of at least 10,000 and broadband internet subscription rates at or above 90 percent, 12 were in the South, four were in the Midwest, four in the West, and one in the Northeast. Conversely, of the 24 counties with broadband internet subscription rates at or below 45 percent and populations of at least 10,000, 21 were in the South, two were in the West, and one was in the Midwest.

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  • Bill Callahan: Windstream has our house in rural Ashtabula County, OH on its list of addresses that were upgraded (in 2016) with its $175 million in CAF II subsidies...
  • EJ: Charter we appreciate your concern in this manner. We value your complaint and will review it. If need be we send this to arbitration to review the co...
  • Dylan: You could use their router which is an extra $5 a month (a great router usually) or I would recommend looking around either on Amazon or somewhere for...
  • Sean: It is hard to imagine a company with worse customer service than Directv.....as a caretaker for someone who has an account with them and has been a c...
  • Patrick: Thanks, Dylan. What kind of router do you use with that?...
  • Mel Toadvine: Your articles are correct. Nobody can advertise an antenna that will pick up cable and satellite channels because it is absolutely impossible. These a...
  • Dylan:  It’s $66 a month after all promotions are over with; flat rate, no taxes. Here is the rate card for all pricing and billing information. https://www...
  • Patrick: I am in Rochester NY. Does anyone know the cost of Spectrum 100mbps Internet service (no bundle, just internet) including taxes, after the first year...
  • Dylan: More hogwash once again. We all know data caps and usage based billing helps no one and does not “lower” bills for lower usage customers. That’s not h...
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  • Bruce ranciglio: Can I pick any 10 channels plus locals.espn fox sports midwest nbc/sports and MLB channels and fox news with the spectrum streaming service, plus oth...
  • Wayne Martin: The New York State Public Service Commission should drop "Public" from their title as they are certainly not serving us. You can see all the communica...

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