Arris SB8200 DOCSIS 3.1 modem

You know cable operators are getting serious about DOCSIS 3.1 when they open their checkbooks and buy millions of new cable modems capable of supporting the next-generation cable broadband standard.

Arris, one of the country’s biggest cable equipment manufacturers, reports it expects to ship at least two million DOCSIS 3.1 modems this year, a number analyst firm SNL Kagan says is conservative. They predict the number will be closer to three million.

Arris told its investors in the company’s first-quarter earnings conference call that the company is doing extremely well, with sales reaching $1.48 billion this quarter, and expected to be up another $1.69 billion by the summer.

Most of Arris’ modems are likely to end up at Comcast, where the cable operator plans to aggressively introduce DOCSIS 3.1 starting this year. Cox, Mediacom, and RCN are also expected to be big buyers of DOCSIS 3.1 technology this year. The one notable exception is Charter Communications, which remains preoccupied integrating Time Warner Cable and Bright House Networks into its existing operations and still has a large number of legacy Time Warner Cable systems left to upgrade to all-digital service — a process that is likely to continue for the next few years. Charter is not expected to move aggressively towards DOCSIS 3.1 until 2018 or 2019. Cablevision is also sitting out DOCSIS 3.1. Altice plans to scrap Cablevision’s existing hybrid fiber-coax network and move to fiber-to-the-home technology for its customers.

DOCSIS 3.1 will allow operators to more easily introduce gigabit download speeds and offer additional bandwidth efficiency. Arris’ first DOCSIS 3.1 modem is the SB8200, available now for $199.99 on Amazon.

The long anticipated wait for Hulu’s live streaming cable-TV replacement is over with today’s soft launch of Hulu with Live TV, offering 50 cable networks and local affiliates of ABC, CBS, NBC, and FOX in select larger cities.

“Hulu can now be a viewer’s primary source of television,” said Hulu CEO Mike Hopkins. “It’s a natural extension of our business, and an exciting new chapter for Hulu.”

The new service will bundle Hulu’s live/linear TV service with its well-known on-demand package of movies and television shows. The service represents a direct challenge to cable television subscriptions and for Hulu’s owners — Disney, 21st Century Fox, Comcast’s NBCUniversal and Time Warner, Inc., is the first major industry effort to keep subscription fees closer to home, and cuts out the cable middleman.

The lineup includes many, but not all, popular cable networks. There are very significant gaps — notably Viacom networks Hulu says it has no plans to add (Nickelodeon, Comedy Central, MTV). Also missing: AMC, Discovery Networks, HBO/Cinemax and Starz. Showtime is available for $8.99 a month.

The lineup:

Fox
Fox Local Station (New York, Los Angeles, San Francisco, Philadelphia and Chicago)
Big Ten Network
Fox Business Network
Fox News Channel
Fox regional sports networks
Fox Sports 1
Fox Sports 2
FX
FXX
FXM
National Geographic Channel
National Geographic Wild

Disney
ABC Local Station (New York, Los Angeles, San Francisco, Philadelphia and Chicago)
ESPN
ESPN2
ESPNU
ESPNEWS
ESPN-SEC Network
Freeform
Disney Channel
Disney XD
Disney Junior

Comcast/NBCUniversal
NBC Local Station (New York, Los Angeles, San Francisco, Philadelphia and Chicago)
Telemundo Local Station (New York, Los Angeles, San Francisco, Philadelphia and Chicago)
Comcast RSNs
NECN
USA Network
Bravo
E!
Syfy
MSNBC
CNBC
NBCSN
Golf Channel
Chiller
Oxygen Network
Sprout

A+E Networks
A&E
History
Lifetime
Viceland
Lifetime Movie Network (LMN)
FYI

Scripps Networks Interactive
Food Network
HGTV
Travel Channel

Turner Broadcasting
CNN
HLN
CNN International
TBS
TNT
TruTV
TCM
Turner Classic Movies
Cartoon Network & Adult Swim
Boomerang

CBS
CBS Local Station (New York, Los Angeles, San Francisco, Philadelphia and Chicago)
CBS Sports Network
POP
Showtime ($8.99 per month extra)

(Broadcast stations may be available in certain other cities, but not all network affiliates are included.)

Hulu with Live TV is available on Microsoft’s Xbox One, Apple TV (fourth generation), iOS and Android mobile devices, and Google’s Chromecast. Future support for Roku, Amazon’s Fire TV and Fire TV Stick and Samsung Smart TVs will come later. Oddly, desktop viewing on a Mac or PC is not currently supported.

The new service joins an increasingly crowded marketplace of online cable television replacements, including Dish’s pioneering Sling TV, Sony’s game console-platform PlayStation Vue, AT&T’s DirecTV Now, and YouTube TV — the newest before today.

Hulu’s most formidable competitor in the streaming TV space will likely be AT&T’s DirecTV Now service, which offers a broader range of networks and has become popular for its promotional equipment offers. Hulu plans to counter AT&T with a marketing effort that highlights its existing on-demand service of more than 3,000 TV shows and movies is included with every subscription.

Hulu also comes bundled with its own limited cloud DVR storage service, which will record up to 50 hours of programming. But similar to Google’s YouTube TV, customers will not be able to skip the commercials that are included in the shows they record. In fact, advertisers will be able to dynamically change their advertising spots in recorded shows as long as the customer keeps them in their personal recordings library. Customers will need to upgrade to “Premium DVR” service ($14.99) to enable fast-forwarding through ads. The premium DVR add-on also includes 200 hours of storage, unlimited simultaneous recordings, and the ability to watch recorded shows outside of the home.

Customers signed up to the base package will be able to create up to six individual profiles for the household, which allows each user to track and “favorite” TV shows and movies they enjoy the most. The service will provide recommended shows based on each person’s viewing habits. The feature also allows each family member to choose their favorite sports teams and Hulu will automatically record any available game that includes a favorite team.

Base subscribers get up to two simultaneous streams of live and recorded content. An “Unlimited Screens” add-on ($14.99) removes the limit and allows unlimited home streams and up to three concurrent streams outside of the home. Customers who want both Premium DVR and Unlimited Screens can bundle both features together for $20 a month — a $10 savings.

An introduction to Hulu’s new interface and live TV option. (1:55)

Buh, bye Charter!

Despite happy talk from Charter Communications about a “new day” with Spectrum packages and pricing, some former Time Warner Cable customers are voting with their feet and canceling service when their promotional pricing packages end and rates have nowhere to go but up.

More than 100,000 video customers left Charter during the first quarter of 2017, the majority former TWC customers facing repricing and package changes as their bundle pricing and promotions expired. At that point, rates spike dramatically and customers have to choose a Spectrum package many don’t like or leave.

With only 17% of Time Warner Cable and Bright House Networks customers nationwide having switched to Spectrum plans and pricing, Charter has a long way to go and a lot of customers to lose because of the company’s unwillingness to negotiate.

“As we’ve implemented consistent retention policies nationwide, we’re managing through higher churn at TWC in the short term,” noted Charter’s chief financial officer Christopher Winfrey. “As we migrate and replace the legacy base through a disciplined approach, legacy TWC churn will improve.”

In plain English, Charter has dramatically curtailed promotional customer retention offers and has refused to negotiate with customers that have been on promotional packages for years. Hardest hit are Time Warner Cable customers, and Charter is willing to let them walk instead of extending lower prices.

“The TWC churn, somebody was given a $10 unlimited video basic package, where can you move them?” asked Winfrey. “And they have an exploding offer. It was promotional offer. Where can you move them that’s a satisfactory place relative to what they were given before.”

This Dexter, Mich. Charter customer delivers a “thumbs-down” to the company’s “terrible service.”

CEO Thomas Rutledge has been harshly critical of Time Warner Cable’s penchant to reach for promotional pricing to keep customers happy. He has instituted “discipline” to get customers away from the idea they can get a lower cable bill just by asking. Rutledge understands most of his customers don’t have a great alternative and are effectively captive to limited competitive options. For Rutledge, by taking away discounted options, customers can be retrained to accept higher prices as a fact of life.

So far, many former Time Warner Cable customers are not willing to be led to a higher bill and as their legacy promotions expire, families are having conversations about dropping service(s) as a result of price and Charter’s intransigence about lowering it.

First quarter results show the first, and widely expected victim of Charter’s “repricing” is Time Warner Cable’s home phone product, which has been offered in bundles for $9.99 a month over at least the last four years. Charter discontinued Time Warner Cable’s popular international calling feature which offered free calling to the European Union, parts of Latin America and Asia. It also raised the promotional price to $19.99 a month, and now limits free long distance calling to the U.S., Canada, Mexico, Puerto Rico, Guam, U.S. Virgin Islands, and the Northern Marianas.

As customers transition to Spectrum plans, they are leaving their voice lines largely behind as a result. During the first quarter of 2017, Charter only picked up 37,000 new Spectrum phone customers signing up for a Spectrum package versus 213,000 last year. Price was the only factor mentioned for the decline.

Decisions about cord-cutting are also being made at many former Time Warner Cable and Bright House Networks homes when Spectrum’s new cable television offer is presented to customers. Cindy Sims of Apopka, Fla., summed it up this way: “They are raising prices and doing nothing different.”

Customers with limited budgets or fixed incomes are being priced out of Spectrum.

Sims is former Bright House Networks customer who saw her bill jump from $150 to $175 a month after Charter Communications took over. Since she is a “new customer” of Charter Communications, she hoped to get an introductory offer from the company but Charter no longer considers its acquired customers “new customers,” so she was forced into Spectrum’s regular pricing, which is higher than what she paid before. She is not alone. Charter executives admit customer cancellation/retention call center contacts from former Time Warner Cable customers are 50-60% higher than those of legacy Charter customers that have been with the company for several years.

The last straw for many is the fact customers often find they have to upgrade to the most expensive TV package to keep the channels they had before.

“They are kicking the old customers in the butt,” she added, noting that some Charter representatives handling customers threatening to leave have gotten downright nasty and rude on the phone.

Given no good alternative, some customers decide the time is right to cut cable-TV for good, and TWC’s video net loss was 129,000 worse than last year. The company claims over 90% of the losses were from budget-priced, limited-basic TV disconnects. Charter prefers to sell customers large bundles of channels for considerably more, while Time Warner Cable offered local channels and a small selection of cable networks for as little as $10 a month to certain internet-only customers.

The customer losses are expected to continue for up to a year as the other 83% of customers still on a legacy Time Warner Cable or Bright House Networks package see their prices jump as promotions end. For now, Charter won’t force customers to move to a Spectrum package, but by refusing to negotiate lower prices for legacy packages, the rate increases that happen after regular rates return are enough to push many customers to make a decision to switch or cancel service.

How much of a rate jump? Consider one Time Warner Cable triple-play package with Whole House DVR service, phone and 50/5Mbps internet access reset from $129 a month to $180 after the year-long promotion expired. A comparable package from Spectrum is still $30-40 higher than what Time Warner Cable used to charge.

The impact of the transition to Charter’s Spectrum plans and pricing is also dragging down growth of its internet service. Customers signed up for less expensive and slower tiers with Time Warner Cable are being priced out of the market by Charter’s single-advertised offer – 60 or 100Mbps for approximately $65 a month ($45 for new customers), depending on the area. Higher speed tiers are available if customers call in, if only to give them the bad news a $199 upgrade fee typically also applies.

As a result, residential internet growth among customers signing up for a Spectrum plan was 428,000 during the quarter versus 520,000 last year.

Despite the concerning numbers, Rutledge declared victory and claimed Charter would continue full-speed ahead.

“As we near the first anniversary of the close of our transformative transactions in May of last year, the execution of our integration and operating plan remains on track,” Rutledge said in a statement. “We have now launched our Spectrum pricing and packaging to nearly all of the homes we pass in our new footprint. We are already seeing the benefits of our customer-focused strategy in those markets, including greater connect volumes and the sales of higher quality products, all of which will lead to higher customer satisfaction, lower churn, and faster customer and financial growth in future quarters.”

Republican Gov. Paul LePage has picked a former telecom industry insider and lobbyist to serve the interests of public utility customers and consumers in Maine.

Barry Hobbins is known as an “old school” Democrat, and has been a part of Maine politics for 26 years — since 1972 — most recently as a top political fundraiser. Perceived as unlikely to rock many boats, he was appointed by the Republican governor to replace the current Public Advocate Tim Schneider, who worked on a solar energy bill the governor loathed and vetoed last year.

At the same time the governor is suing the state’s Attorney General for refusing to toe his line on the political positions of his administration, LePage insists Hobbins will serve only the interests of public utility customers and not those held by special interests. The Public Advocate is the public’s representative before the Maine Public Utilities Commission, federal regulators and the state legislature.

“That’s what the public advocate job is: to represent the ratepayer, not to represent a special interest,” LePage told reporters at a recent press conference.

Hobbins

But consumer advocates note Hobbins has already represented several special interests, most notably AT&T, where he served as a lobbyist after temporarily leaving the legislature in 1990. Hobbins is also no stranger to taking lavish gifts from the state’s largest telecom companies, including Time Warner Cable (now Charter Communications). In 2013 and 2015, Hobbins was paid $5,300 and $8,257 respectively to attend industry-sponsored events the cable company called their “winter policy conferences.”

In 2015, Stop the Cap! reported on one of these conferences held at the cushy Cape Elizabeth seaside resort Inn by the Sea, where room rates routinely hit the $500 a night mark. Hobbins was in attendance with about a dozen other legislators, enjoying the complimentary menu which included light noshing options like a herb marinated skirt steak with roasted mushrooms, chimichurri, piquillo aioli, and herbed hand cut steak fries that would cost you or I at least $26, drinks not included.

Hobbins also stayed to enjoy a full menu of lobbyist hobnobbing and “educational” attacks on community broadband, opposition to government oversight of broadband, and efforts to ensure state laws continued to favor incumbent providers:

“Welcome to Inn by the Sea, where relaxed coastal luxury comes naturally.”

• Moderator (Session 1): Jadz Janucik, National Cable & Telecommunication Association – The NCTA is the nation’s largest cable industry lobbying group;
• Dave Thomas, Sheppard Mullin Richter & Hampton LLP: A corporate attorney representing cable companies, particularly when they face competitive threats;
• Lisa Schoenthaler, National Cable & Telecommunication Association;
• Moderator (Session 2): Charlie Williams, Time Warner Cable;
• Charles Davidson and Michael Santorelli from the Advanced Communications Law and Policy Institute at New York Law School. Both have received direct compensation from Time Warner Cable for their  “research” reports and are very active and frequent defenders of Time Warner Cable’s public policy agenda;
• Joe Gillan, Gillan Associates – an economist working under paid contract with the cable industry;
• Moderator (Session 3): Tom Federle, Federle Law: Chief lobbyist for Time Warner Cable in Maine for over seven years;
• Robin Casey, Enockever LLP: Casey is one of the nation’s pre-eminent cable industry lawyers, called by the Texas Cable Association “the authority on the telecom industry;”
• Mary Ellen Fitzgerald, Critical Insights: A Maine pollster hired by Time Warner Cable to carry out the company’s carefully worded survey on broadband issues;
• Moderator (Session 5): Melinda Poore, senior vice president of governmental relations, Time Warner Cable Maine.

Hobbins claimed his extensive involvement in the telecommunications industry never influenced his legislative work and won’t if he becomes public advocate. But Hobbins has kept extremely close ties with his friends in the cable industry. Tom Federle, Time Warner Cable’s former chief lobbyist also served as former treasurer of a political action committee directly controlled by Hobbins, one that raised more than $30,000 for Maine politicians from Time Warner Cable, AT&T, an industry association, and Federle’s own law firm. That fundraising committee coincidentally disbanded.

Federle promotes his close ties to legislators like Hobbins on his website:

Since 2000, Tom has been an extremely effective advocate and lobbyist for clients before the Maine Legislature. Tom has represented some of Maine’s largest businesses and associations in advancing sound public policy positions. Tom’s work experience both in the private sector and at the highest levels of state government provides him with invaluable perspective and real know-how. Tom puts this to work for his clients to influence the outcome of legislation that impacts his client’s objectives. Tom’s balanced demeanor and tenacity combine to make him a particularly effective advocate before the Maine legislature.

Federle

In recent testimony, Federle used his position and influence to blast efforts to improve community-owned broadband services in Maine, telling the legislature: “There are countless examples of government getting into the business of providing broadband, with taxpayers footing the bill, only to end in failure with mountains of debt.”

In April, Maine State Representative Nathan Wadsworth (R-Hiram) introduced a bill to revoke local authority over building internet networks needed by local businesses and residents. The one-time Maine state ALEC chair introduced HP 1040 (also cross filed as LD 1516) to attempt to block efforts to construct public broadband networks and protect incumbent providers. This, despite the fact Maine has ranked 49th out of 50 states in the quality and availability of broadband service.

“This effort joins a national trend of big cable and telephone companies, like Time Warner Cable and FairPoint, leaning heavily on state legislatures to protect themselves from competition,” says Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance. “Communities do not make these investments when they are well served. If big cable and telephone companies want to preserve market share, they should invest in better services rather than crony capitalist laws.”

Where Hobbins stands on the issue isn’t known.

The nomination will go before a legislative confirmation hearing May 9.

Sock Puppets: Ostensibly “independent” people quietly on the payroll of Big Telecom companies and advocating their positions.

A mass of guest editorials and opinion pieces appearing in the D.C. press praising FCC chairman Ajit Pai and his intention to get rid of Net Neutrality fail to disclose the millions of dollars the authors’ host organizations have received from the telecommunications industry.

Pai smugly announced in an April 26 speech that he wants to roll back Net Neutrality rules brought into effect under President Obama in 2015. Those rules guarantee that ISPs cannot discriminate against any online application or service or interfere with traffic for competitive reasons. Pai and other opponents of an open internet have called Net Neutrality ‘a solution in search of a problem.’ But since announcing an intention to mothball the rules, the telecom industry’s sock puppets have frantically penned opinion pieces that suggest the rules were a disaster that held back innovation and investment — a claim countered by the record of ISP investment since the rules took effect and statements from many Silicon Valley innovators that support the Net Neutrality rules now under threat.

Media Matters did extensive research on the individuals and groups behind the letters, and it will come to no surprise to Stop the Cap! readers that just about every piece originated from or on behalf of a group that received financial support from the same cable and phone companies that want Net Neutrality dead and buried:

(Searches were conducted via The Center for Public Integrity’s Nonprofit Network tool of available IRS filings.)

• Thomas M. Lenard, a senior fellow and president emeritus at the Technology Policy Institute, wrote an April 28 opinion piece for The Hill which praised Pai and defended ISPs against concerns over content blocking. Lenard’s group states that its supporters include AT&T, Charter, Comcast, and NCTA. The group received $1 million from NCTA from 2011-2014 and $22,500 from CTIA in 2011 and 2013.
• Institute for Policy Innovation (IPI) President Tom Giovanetti wrote an April 27 opinion piece for The Hill praising Pai for “eliminating harmful regulation” and commending his “commitment to undo the two-year-old mistake of regulating the internet under the old Title II.” IPI received $135,000 between 2010 and 2014 (the most recent years available) from MyWireless.org (now ACTwireless), a project of CTIA, and $110,000 from NCTA from 2011-2014.
• Digital Liberty Executive Director Katie McAuliffe wrote an April 27 piece for The Daily Caller praising Pai’s Net Neutrality remarks. Digital Liberty is a project of Americans for Tax Reform, which received $200,000 from NCTA from 2011-2014 and $115,000 from MyWireless.org from 2010-2014.
• Doug Brake, a senior telecommunications policy analyst at the Information Technology and Innovation Foundation (ITIF), wrote an April 27 opinion piece for The Hill praising Pai for “moving in the right direction” with his Net Neutrality plans. The ITIF has received $220,000 from NCTA from 2010 to 2014 and $235,000 from CTIA from 2010 to 2014.
• Brandon Arnold, the executive vice president at the National Taxpayers Union, wrote an April 26 Washington Examiner piece that criticized existing Net Neutrality rules as having “stymied innovation and reduced the deployment of new broadband services.” The National Taxpayers Union received $200,000 from CTIA from 2010-2014.
• Jonathon Paul Hauenschild, director of the American Legislative Exchange Council’s (ALEC) Task Force on Communications & Technology, wrote an April 28 piece for The Hill attacking the Obama administration’s Net Neutrality rules. ALEC has close ties to the telecom industry (among many other corporate interests) and received $85,000 from CTIA from 2010-2014 and $41,000 from NCTA in 2010 and 2011.

Media Matters previously documented that media outlets have promoted the anti-Net Neutrality Free State Foundation without noting it has received heavily financial backing from the telecommunications industry.