Telecom companies are cutting investment in their networks despite promises by Republican members of the FCC that repeal of net neutrality would inspire increased investment.

Charter, Comcast, AT&T, and Verizon have surprised Wall Street with dramatic cutbacks in spending and investment in their networks, with one provider admitting improving profit margins are now a bigger priority.

As a result, Wall Street analysts are revising down capital expenditure (Capex) estimates in reports to their investor clients.

“Comcast and Charter missed [third quarter] expectations for Capex and guided 2019 lower than previously planned,” reported Nomura in a note to investors. “We have lowered our combined 2019 Capex forecast for Comcast and Charter from $14.6 billion to $14.2 billion.”

AT&T’s drop in network spending was the most dramatic among the country’s top telecom companies. AT&T has declared an end to fiber broadband expansion and slashed spending forecasts from the $23 billion the company spent this year to as little as $20 billion next year, despite claiming it would dramatically expand its 5G service to over two dozen cities over the next 12 months.

In a recent conference call with investors, AT&T CEO Randall Stephenson said “now it’s time to reap the rewards of what we’ve been doing [and] begin to reward to shareholders these investments that we’ve been making over the last few years.”

Over the next three years, AT&T will pay shareholders $45 billion in dividends and spend $30 billion on buying back shares of AT&T stock to retire debt racked up buying Time Warner (Entertainment). In fact, AT&T will devote 50-75% of its free cash flow exclusively on retiring shares of AT&T stock, which is expected to benefit shareholders.

Verizon reported spending $4.4 billion in the third quarter on network upgrades, approximately $100 million less than expected. That is a concern because Verizon is trying to expand its costly 5G network, but is not devoting the investment dollars required to make such an upgrade happen without cutting investments elsewhere in the company. Verizon has told Wall Street analysts to expect stable Capex spending of $17-18 billion annually for 2019-2021. That will either mean Verizon’s 5G expansion will be modest or the phone company will have to slash investments in other areas, such as wireline, fiber to the home, or business services.

Many analysts expect 5G will be a top spending priority for AT&T and Verizon over the next several years, leaving little room in budgets for upkeep of the company’s legacy landline networks or its other products. Charter and Comcast have effectively stopped spending on large upgrade projects, also as part of improved profit-taking.

The spending realities are in direct conflict with the promises made by Republican members of the FCC. Trump-picked FCC Chairman Ajit Pai repeatedly claimed that banishing net neutrality would lead to significant increases in investment by the nation’s top telecom companies. In fact, the opposite has happened.

The satellite and app-based radio service SiriusXM has announced a broad-based rate increase for its customers that will take effect Nov. 13, 2019. Most customers will see a rate hike of $1 per month.

The company made the announcement with little fanfare, announcing the rate changes in private e-mails sent to customers.

Sirius and XM Radio used to be separate, competing satellite radio services. But in the waning days of the George W. Bush Administration, regulators approved a merger between the two entities after a 57-week review process, establishing a satellite radio monopoly.

The Bush Justice Department approved the Sirius and XM Radio merger on March 24, 2008, after being persuaded that satellite radio faced significant competition from traditional AM and FM radio, online streaming services, and the growing use of MP3 players. The FCC under Chairman Kevin Martin followed with a 3-2 approval on a party-line vote favoring the Republican commissioners. Martin said the internet delivered all the competition a combined SiriusXM could handle.

“The merger is in the public interest and will provide consumers with greater flexibility and choices,” Martin said of the merger at the time.

Martin’s predictions turned out to be largely untrue, as the combined company quickly merged into a single satellite radio service, began a series of rate increases, and faced the wrath of state attorneys general for its poor customer service and difficulty processing subscriber cancellations. For years as competing providers, Sirius and XM charged $12.99 a month, with substantial discounts for customers agreeing to multiple-month subscriptions. Lifetime subscriptions were also available. As of November 11th, the most popular subscription options — XM Select will cost $16.99/mo and XM All Access will cost $21.99/mo.

SiriusXM also now charges a range of fees customers may face:

• Activation Fee: For each radio on your account, SiriusXM may charge a fee to activate, reactivate, upgrade or modify your subscription package.
• U.S. Music Royalty Fee: Package pricing does not include the U.S. Music Royalty Fee, now 21.4% of the price of most audio packages which include music channels.
• Invoice Administration Fee: If you request to receive a paper invoice, SiriusXM will charge you an invoice administration fee on each paper invoice rendered, except where prohibited.
• Late Fee: If payment is not received in a timely manner, a late fee may apply.
• Returned Payment Fee: If any financial institution or credit card refuses to honor your payment, a fee may be charged.
• A La Carte Channel Change Fee: If you have an “A La Carte” Package, for each subsequent transaction to change your initial channel selections, you may be charged a fee.
• Transfer Fee: If you transfer a Subscription from one radio to another you may be charged a transfer fee.
• Cancellation Fee: Cancellation fees may be applied to Subscriptions activated in combination with a device purchased directly from SiriusXM.

SiriusXM customers can always get a much lower rate by threatening to cancel service. To cancel, call 1-866-635-2349 Monday through Friday 8:00 AM through 10:00 PM, ET, Saturday and Sunday 8:00 AM through 8:00 PM, ET. Tell the representative you are canceling because the service costs too much. You should be offered a retention rate of $30-35 for the next 5-6 months of service or around $60-100 a year (the lower end for Select, the higher end for All-Access). Just set a calendar reminder to repeat the cancellation threat a week or two before your retention rate is scheduled to expire and you can usually get that offer renewed. Note that the Music Royalty Fee will continue to be charged separately. A credit card is often required to get retention pricing, and service will automatically rebill at the prevailing rate after the promotional rate expires.

November 13, 2019 SiriusXM Subscription Rate Change

When will the subscription rates change? 

For packages that are impacted by the rate adjustment, the new subscription rates will be effective November 13, 2019. The new rates will apply to subscription purchases made on and after that date, or renewals of existing subscriptions that are processed on and after that date.

Which packages will be impacted by the rate change on November 13, 2019?

The standard monthly rates for Select, Select Family Friendly, All Access, All Access Family Friendly, Premier, Premier Family Friendly packages will increase. The standard monthly rates for A La Carte, A La Carte + Howard, A La Carte + Sports, A La Carte + Howard + Sports, and A La Carte Gold packages will increase.

The standard monthly rates for additional radios that are eligible for the Family Discount for these same packages will also increase.

By how much will the rates change?

The standard monthly rates for Select, Select Family Friendly, All Access, All Access Family Friendly, Premier, Premier Family Friendly packages, and A La Carte packages for a primary radio will increase by $1 per month. The standard rates for additional radios that are eligible for the Family Discount will also increase by $1 per month.

Which packages or plans are not impacted by the November 13, 2019 rate change?

The standard rate adjustment does not apply to the following packages: SiriusXM Premier Streaming, SiriusXM Essential Streaming, Mostly Music, News, Sports & Talk, Basic, Basic Plus, Español, Español Plus, MiRGE All-in-One, Traffic, and Travel Link, as well as Aviation weather packages.

My current subscription plan does not renew until November 13, 2019 or later. When will I be billed at the new rates?

You will be billed the new rate the next time your plan renews on and after November 13, 2019.

I have a plan for the Lifetime of my radio. Does the rate adjustment on November 13, 2019 impact the Lifetime plan?

No. Lifetime plans are not impacted by the rate adjustment.

Will the rate adjustment affect my trial subscription?

No. Trial subscriptions are not impacted by the rate adjustment.

I’m still on a trial subscription but I’ve already ordered a new subscription that will start when my trial subscription ends. Will you charge me the new rate?

If you have already purchased a Select, Select Family Friendly, All Access, All Access Family Friendly, Premier, Premier Family Friendly, or A La Carte package in a plan that will start when your trial ends (or if you purchase it before November 13, 2019), you will be charged the current rates for your first billing period, even if your trial does not end until after November 13, 2019. Then, whenever your plan bills again, you will be charged the new rates (or the rates in effect at that time) for those packages.

Examples:

If you chose a monthly billing plan to follow your trial, the first month will not be impacted by the adjustment. The new rates will apply to the second and subsequent months of your plan.
If you chose a quarterly billing plan to follow your trial, the first three months of your service will be at the current rates. You will not be billed at the new rate until your plan bills again (after the first three months).

Will the subscription rates for my ‘infotainment’ services from SiriusXM, such as traffic, Travel Link, Aviation, or Marine weather change on November 13, 2019?

The rates for traffic, Travel Link, and Aviation services will not change on November 13, 2019. The rates for Marine packages will change on November 13, 2019.

If I subscribe to one of the packages impacted by the rate adjustment, will you notify me before my subscription rate changes?

Yes, if we have valid contact information on your account, we sent or will send a notification to you by mail or email, before your plan bills or renews. This might be a good time to visit the Online Account Center to make sure your contact information is correct. If you have never before visited your online account, you will need to go through a short registration process before you can access your account.

When will the subscription rates for Marine weather change?

The new subscription rates will be effective November 13, 2019 for packages impacted by the rate adjustment. The new rates will apply to subscription purchases made on and after that date, or renewals of existing subscriptions that are processed on and after that date.

Which Marine weather packages will be impacted by the rate change on November 13, 2019?

The standard monthly subscription rates for all SiriusXM (Inland, Coastal, and Offshore), XM (Skywatch, Fisherman, Sailor, Master Mariner) and Sirius (Inland, Mariner, Charter) will increase.

How much will the rates change?

Effective November 13, 2019:

• The standard rate for SiriusXM Marine Inland and Sirius Inland subscription packages will increase by $2 per month.
• The standard rate for SiriusXM Marine Coastal and Offshore, XM Skywatch, Fisherman, and Sailor, and Sirius Marine and Charter subscription packages will increase by $5 per month.
• The standard rate for XM Marine Master Mariner subscription packages will increase by $10 per month.
• The standard rate for Sirius Marine Voyager subscription with Select, All Access, and Premier packages will increase by $1 per month.

My current Marine weather subscription plan does not renew until November 13, 2019 or later. When will I be billed at the new rates?

You will be billed the new rate the next time your plan renews on and after November 13, 2019.

Sen. Joe Manchin (D-W.V.) wants every West Virginian to test their internet speed and send his office the results to ferret out deceptive service maps and uncover more information about the state’s ongoing broadband problems.

“We’re urging everyone to do these speed tests,” Manchin told residents in Lewis County last Sunday. “We need to know, and people need to be involved in West Virginia, if they ever want to have broadband, high-speed internet and cell service. This is what we’re fighting for.”

Manchin is on a mission to debunk FCC Chairman Ajit Pai’s claims that rural broadband has grown under Pai’s leadership. Manchin believes the FCC’s broadband coverage maps are wildly inaccurate, advertised speeds are not met, and many rural residents in the state are left without internet access.

The senator intends to send the speed test results to Pai’s office, and he wants consumers to use the FCC’s own free speed test app (for Android and iOS) to “cover [Pai]” with piles of speed test results shining a light on the problem.

“There’s an FCC app that you can download on your phone,” Wes Kungel, legislative director for Manchin’s office told WVNews. “If you download that, you can hit a little button and it will tell you your speeds. If you email or mail that to our office, we will put it in a letter and send it personally to Chairmen Pai.”

Sen. Manchin

The ongoing problem with faulty broadband service maps have allowed a select group of telecom companies (many responsible for the data used by those maps) to receive federal funding to expand their own broadband businesses while preventing others from getting funding claiming the new providers would receive government funding to overlap their existing service areas.

“This is really where it all started,” he said. “[People] contacted us a few years back and basically they weren’t getting the coverage. They could not get coverage because [the FCC] said the maps showed that there was already coverage here. So we came out and did the speed tests.”

Manchin argues that West Virginia is among the most broadband-challenged states and inaccurate maps will result in the state not getting its fair share of the estimated $20 billion the FCC plans to distribute in rural America to improve broadband service.

“There’s no state that needs it more than rural West Virginia,” Manchin added. “A ‘urban’ community is 50,000 (people) or more. We don’t have one city in West Virginia with 50,000 so we have nothing to compare it to. We are all rural and we’re going to have to fight for every dollar that we can to get connected.”

West Virginians can submit their speed test results to Sen. Manchin’s office by following this link.

Many of the same civil rights groups that regularly advocate their support of giant corporate telecom mergers are back once again to show their support for the controversial T-Mobile/Sprint merger. But that support does not come for free.

A “Memorandum of Understanding” (MOU) that includes “philanthropy and community investment” that does not exclude direct financial contributions from the two wireless companies to these civil rights groups is a major part of a new “understanding” announced today between several organizations founded to represent minority interests and T-Mobile and Sprint that the wireless companies hope will deliver an imprimatur for the troubled merger deal with regulators and politicians.

The key items in the MOU:

1. Standing up a national diversity and inclusion council comprised of non-employees from diverse groups, including each of the multicultural leadership organizations that are party to the MOU, and other highly esteemed community leaders to facilitate open communication over the development, monitoring, and evaluation of diversity initiatives and to provide advice to the New T-Mobile senior executives.

2. With the help and input of the council, developing and implementing a Diversity Strategic Plan addressing each of the key elements of the MOU and reflecting best practices in the industry.

3. Increasing the diversity of its leadership and workforce at all levels including its Board governance, to reflect the diversity of the communities in which it operates.

4. Making a targeted effort to increase partnerships, business, and procurement activities with diverse business enterprises in a range of categories such as financial and banking services, advertising, legal services and asset sales. New T-Mobile aims to become a member of the Billion Dollar Roundtable by 2025.

5. Expanding wireless offerings to low-income citizens, underserved minority populations and insular and rural areas, and to organizations serving these underserved communities [including] a significant philanthropic investment for institutions serving disadvantaged or underrepresented communities to support tech entrepreneurship and to bridge the gap in literacy.

The groups, most familiar to Stop the Cap! readers that have followed civil rights groups engaged in pay for play advocacy, include:

• National Urban League: A notorious friend of big cable and phone companies, the Urban League is a regular supporter of telecom mergers and opposes net neutrality.
• The League of United Latin American Citizens (LULAC): Brazenly photographs its executive leadership accepting big checks from AT&T and other telecom companies.
• National Action Network: Rev. Al Sharpton’s group loves to support telecom mergers and acquisitions and lobbies to block consumer protection regulation.
• UnidosUS: Receives most of its funding from corporate interests.
• Asian Americans Advancing Justice | AAJC
• OCA – Asian Pacific American Advocates: One of Comcast’s special friends, OCA advocated against new consumer privacy rules two years ago claiming poor people want more intrusive ads.

In a joint statement, the groups urged the FCC to approve the T-Mobile/Sprint merger “so the combined New T-Mobile can definitively launch these enhanced diversity efforts and expansion of service to all communities included in the MOU.”

“T-Mobile is honored to partner with these visionary organizations to create an action plan of this magnitude that includes commitments to diversity and inclusion that are bolder than ever before,” John Legere, CEO of T-Mobile and CEO of New T-Mobile, said in a statement. “With this MOU, we have doubled down on ensuring we represent the communities we serve today and will serve as the New T-Mobile in the future. We are excited for the New T-Mobile to become a reality so we can get to work on delivering these commitments.”

Except in most cases, these kinds of arrangements serve mostly as window dressing, gussying up otherwise nakedly anti-consumer merger deals under the guise of serving minority or disadvantaged interests. Money often quietly flows between the corporate and the non-profit side, usually in the form of donations. Some groups may also offer token advisory board positions to executives, which usually cements an ongoing advocacy relationship.

Members of these civil rights organizations have a right to be puzzled why such groups are spending significant time and resources engaged in corporate advocacy. The interests of two major corporations cementing a multi-billion dollar merger deal and civil rights groups trying to fight discrimination and improve the lives of their constituents are often tangential, if not in direct opposition to each other. Apparently the money that usually comes with these arrangements matters much more.

Gov. Newsom

California’s efforts to address the state’s ongoing rural broadband problems made little headway in 2019, as Democratic Gov. Gavin Newsom in the past week vetoed (or allowed to expire) the only two broadband measures surviving the treacherous journey through the California legislature.

Assembly Bill 1212 would have made rural broadband a priority for Caltrans — California’s Department of Transportation and the Department of Water Resources, including broadband on recommended lists of projects for funding consideration by two of the state’s largest pension investment funds: the California Public Employees Retirement System and the California State Teachers Retirement System. Current state law only allows pension boards to invest in in-state infrastructure projects that meet certain fiduciary responsibilities. By expanding investment projects to include telecommunications, funding from two major pension funds might have been unlocked and made available to future rural internet projects.

Assembly Bill 417, also known as the Agriculture and Rural Prosperity Act, included several measures targeting rural farming. Two passages in the bill would have included broadband expansion as a new priority for the California Department of Food and Agriculture (DFA):

Due to the central role of agriculture in rural California, it is necessary to achieve a detailed understanding of the economic value that agriculture brings to rural communities and to identify opportunities to improve agricultural productivity, including by increasing broadband access, advancing agricultural innovation, technology, and education, and supporting a well-trained, productive rural workforce, to benefit rural communities.

[…] Making recommendations to the secretary on actions to further the development of rural agricultural economies, including, but not limited to, increasing broadband access, providing technical, resource, and regulatory compliance assistance, advancing agricultural innovation and technology, establishing programs for education and workforce development, and evaluating recreation and tourism opportunities.

Several other proposed measures, including AB 1409 which would have created a fund for providing wireless hotspots for students and Wi-Fi service on school buses was killed last spring behind closed doors in the California Assembly’s Appropriations Committee. The annual attempt by AT&T and other telecom companies to write their own laws to deregulate themselves (this time AB 1366), was suddenly pulled from committee consideration by its author back in September.

That the two mild measures made it through the legislature to the governor’s desk was not surprising considering the sheer number of minor bills that pile up on Newsom’s desk. But for both to suffer quiet deaths through veto or expiration despite almost no public opposition speaks to the power of Sacramento insider politics.

Newsom’s explanation for killing AB 1212 was hardly compelling, as he explained he felt the measure was “unnecessary” because “existing law already encourages public retirement systems to invest in state infrastructure.” But that explanation ignores decades of state government bureaucracy, where agencies zealously guard their funding and protect their own existing project priorities to the hilt. AB 417 would have expanded the mission of the DFA, something the governor argued should only be done in the state budget and only within the specific context of the broader mission of the department, whatever that means. The head of the DFA was likely thrilled anyway.

Telecom consultant Steve Blum notes Caltrans and other state agencies were unlikely to ever consider rural broadband a funding priority, unless it was intended for their own use. Blum also believes the most likely suspects responsible for convincing the governor to kill both bills were the heads of the departments themselves.

“The simplest explanation for Newsom’s vetoes is that Caltrans, DWR and/or DFA staff asked him to do it, because those are jobs they don’t want to do,” Blum wrote on his blog. “That sort of opposition was why a Caltrans dig once policy bill was watered down in 2016.”

Blum believes the state’s largest phone companies will benefit the most from the outcome of the 2019 legislative session.

“Newsom’s vetoes bolster AT&T’s and Frontier’s rural monopoly business model, which redlines poorer and less densely populated communities and leaves them with low speed DSL service, if they’re lucky enough to get anything at all,” he wrote.

The loss of AB 1212 and 417 won’t change much for Californians waiting for rural broadband. Neither measure would have led to any immediate improvement in internet access in the less populated areas of the state. But the measures would have set a foundation to bring two more state agencies into the fight to tackle rural broadband issues.

Ultimately, just as in other states, a large amount of money will have to be found to wire those still without internet access. Governments and regulators can either make rural internet expansion a contingency of future merger deals or other business-government transactions or find suitable funding to subsidize the cost of internet expansion by for-profit companies, rural co-ops, or local governments willing to tackle the problem on the local level.