The New York State Public Service Commission today notified Charter Communications its merger application with Time Warner Cable will require a “more detailed review of the petition,” which means a final decision is unlikely before the end of this year or more likely 2016:

We have received the petition of Time Warner Cable Inc. and Charter Communications, Inc. dated July 2, 2015 seeking authority, pursuant to Public Service Law Sections 100, 101, and 222, to transfer a controlling interest in certain Time Warner Cable telephone systems, cable systems, franchises and assets to Charter and to issue debt. On July 10, 2015, a Supplement was received seeking further approval under PSL § 99(2) for a transfer of Time Warner Cable’s telephone franchises.

According to Sections 99 and 100 of the Public Service Law, such an application is deemed approved after ninety (90) days of filing unless the Commission or its designee notifies the petitioner in writing, within the time period, that the public interest requires the Commission’s review and its written order.

[…] A preliminary review indicates that the public interest requires a more detailed review of the petition. Therefore, pursuant to Public Service Law Sections 99,100, and 101 we are informing you that the Commission will review your petition and will issue a written response in this proceeding.

The PSC has set a deadline for comments on the merger of Sept. 16 with reply comments due two weeks after that. But on-the-record regional forums will also be held across the state to gather more comments from consumers and stakeholders. Locations of the forums have not yet been announced.

As with Comcast’s merger proposal, a significant review period is expected as the merger of Charter Communications and Time Warner Cable will have profound implications on the entire state. Outside of Long Island and a few boroughs in New York City, Time Warner Cable is by far the most dominant provider serving every major population center in New York.

Two letters have already been added to the record about the merger.

The Rochester Business Alliance filed this letter in “strong support” of the proposed deal, quoting almost entirely from press releases and merger advocacy documents issued by Charter Communications. Time Warner Cable is a “partner member” of the group, better known as the Regional Chamber of Commerce.

“The Rochester Business Alliance advocates for an environment that will promote the success of its members and the local economy,” the group writes on its website. “We help our member companies and their employees stay connected to the issues as well as to the people who can make a difference.”

Michael Kaplan is the first consumer to weigh in on the merger, and he is opposed.

“Just like the Comcast we now have to write to you to ask that you reject this merger,” Kaplan writes. “The only people who benefit from this are the three or four people who will get very rich from it. The rest of the people you are supposed to be protecting? We get much higher cable/Internet rates because they are taking on so much debt that it’s obvious they will have to raise rates significantly. How does this help New York State?”

Kaplan also doesn’t believe Charter’s promise not to usage cap its broadband customers because the commitment expires after three years:

They also promised not to cap or throttle broadband users for three years. Is that a joke?

Time Warner has (due to public backlash) never capped or throttled their Internet. They have not placed data caps on their service which everyone knows is a cash grab.

If you are politically forced into doing this than at the very least Charter MUST keep the current arrangement Time Warner Cable has forever. FOREVER. No data caps, no overage fees, no throttling. Never.

Robert Marcus stands to make over 90 million dollars from the sale of Time Warner. Since his inception as CEO his mission has been to sell the company so he can cash out. He should improve service, equipment, work for us.

We the people are getting sick and tired of it and we are especially of a CEO who is only thinking of his end. What he will personally make. He doesn’t care on how every single person in NY State will get screwed.

CRTC chairman Jean-Pierre Blais

Independent Internet Service Providers are hailing a decision by telecommunications regulators that will force big phone and cable companies to open their fiber optic networks to competitors, suggesting Canadian consumers will benefit from lower prices, fewer usage caps, and higher-speed Internet.

The Canadian Radio-television and Telecommunications Commission on Wednesday ordered companies like Bell/BCE, Telus, Rogers, Shaw, and others to sell wholesale access to their growing fiber optic networks, despite industry protests giving that access would harm future investment in fiber technology just as it is on the cusp of spreading across the country.

“We’re an evidence-based body, so we heard all of the positions of the various parties and we balanced those off through what we heard in our deliberations afterwards,” said CRTC chairman Jean-Pierre Blais. “In this particular case, we are concerned about the future of broadband in the country so we have to make sure we have a sustainable and competitive marketplace. It’s a wholesale decision that says Canadians can expect a better competitive marketplace because we are going to require incumbent cable and telephone companies to make their high-speed facilities available to competitors.”

[flv]http://www.phillipdampier.com/video/BNN Breaking News CRTC Decision Fiber 7-22-15.flv[/flv]

BNN broke into regular programming with this Special Report on the CRTC decision that will grant independent ISPs access to large telecom companies’ fiber optic networks. (3:13)

Large phone companies, including Bell, warned regulators in a hearing last fall that forcing them to open their networks to third parties would deter investment in fiber expansion. Canadian telecom companies now provide about three million homes with either fiber to the home or fiber to the neighborhood service. Blais, along with representatives of independent ISPs have rejected Bell’s arguments, arguing competition from cable operators was forcing telephone companies to upgrade their networks regardless of the wholesale access debate.

“Our view is the incumbent telcos have a market reason to invest in improving their plant through the investment in fiber,” Blais said. “That’s what Canadians expect and because of market conditions they have to do that investment. So we’re quite confident that’s going to happen.”

Canadian telecommunications companies have done well selling Internet and television services in a highly concentrated telecommunications and media marketplace. For example, BCE, the parent company of Bell Canada, Bell Media, and Bell TV owns a wireless carrier, a satellite TV provider, the CTV television network and many of its local affiliates, dozens of radio stations, more than two dozen cable networks, a landline telephone company, an Internet Service Provider, and ownership interests in sports teams like the Montreal Canadiens as well as a part interest in The Globe and Mail, Canada’s unofficial newspaper of record.

Companies like Rogers, Shaw, Vidéotron, Telus, and Bell have dominated the market for Internet access. But regulators began requiring these companies to sell access to their networks on a wholesale basis to smaller competitors to foster additional retail competition. Today, there are over 500 independent ISPs selling service in Canada, including well-known companies like TekSavvy, Primus, and Distributel. In the past few years, Internet enthusiasts have flocked to these alternative providers to escape a regime of usage caps and usage-based billing of Internet service common among most incumbent cable and phone companies. Competition from the independents, which offer more generous usage allowances or sell unlimited access, has forced some phone and cable companies to offer cap-free Internet service as well.

[flv]http://www.phillipdampier.com/video/BNN CRTC Decision Interview with Jean Pierre Blais 7-22-15.flv[/flv]

BNN interviewed CRTC chairman Jean-Pierre Blais about the commission’s decision to open up wholesale access to Canada’s fiber optic networks. (5:26)

Despite the competition, the majority of Canadians still do business with BCE, Rogers Communications, Quebecor (Vidéotron), Shaw Communications, or Telus, that collectively captured 75 percent of telecom revenue in 2013.

Although competitors have been able to purchase wholesale access to cable broadband and DSL service, nothing in the CRTC rules required big cable and phone companies to sell access to next generation fiber networks. That gap threatened the viability of independent ISPs, left with offering customers access to older cable/copper technology only. This week’s CRTC decision is the first step to grant access to fiber networks as well, although some ISPs are cautious about the impact of the decision until the CRTC provides pricing guidance.

“The commission took a great step today in favor of competition,” Matt Stein, CEO of Distributel Communications Ltd., told The Globe and Mail. “In giving us access to fiber to the premise, they have ensured that as speeds and demands increase, we’re going to continue to be able to provide service that customers want. It’s definitely going to be some time before these products make it to market. There’s going to be the costing and the implementation, and reasonably it could be a year or even longer before the products are actually out the door. But the heavy lifting? Today that was done.”

Bram Abramson, chief legal and regulatory officer for TekSavvy Solutions Inc., added some caution.

Distributel, an independent ISP, made a name for itself offering usage-cap free Internet access to Canadians.

“The devil really is in the details on this,” Abramson told the newspaper. “That’s why I say we like the direction, because there are a million ways in which this could become unworkable if implemented wrong. For example, what rates are we going to pay? We won’t know until those tariffs are done and settled.”

Other so-called “wireline incumbents” like Manitoba Telecom and SaskTel will also be required to make their fiber optic networks available to competitors.

Last fall, Bell warned the CRTC of the consequences of letting TekSavvy, Distributel, and others resell access to their fiber networks.

“We are not suggesting that mandated access will immediately grind investment to a halt in every location in Canada, but it is a question of balance and it will have an impact,” Mirko Bibic, chief legal and regulatory officer for BCE/Bell told CRTC commissioners at a hearing.

Bibic cautioned if the CRTC granted competitive access it could affect how the company allocated its capital investments and could lead it to shift spending to other areas instead.

“What we’re saying is a mandated access rule will affect the pace of deployment and the breadth of deployment,” Bibic said.

Bibic

Specifically, Bibic claimed Bell may call it quits on fiber expansion beyond the fiber-to-the-neighborhood service Bell sells under the Fibe brand in 80% of its service area in Ontario and Quebec. Bell had envisioned upgrading the network to straight fiber-to-the-home service, eliminating the rest of the legacy copper still in its network. But perhaps not anymore.

“If the commission forces the incumbent telephone operators to open access to fiber-to-the-home, BCE might not prioritize building that final leg in some communities,” Bibic warned. “The point is, with 80% of our territory covered […] we can hold and do really well with fiber-to-the-node for longer than we otherwise might.”

Nonsense, independent ISPs told the CRTC, pointing to the cable industry’s preparations to introduce DOCSIS 3.1 cable broadband and vastly increase broadband speeds well in excess of what a fiber-to-the-neighborhood network can offer.

“First of all, [telephone companies] have a natural incentive to build wherever there is a cable carrier, because otherwise the cable carrier will eat their lunch,” said Chris Tacit, counsel to the Canadian Network Operators Consortium, which represents the interests of independent ISPs. “There’s a reason that they’re sinking all that money into [fiber-to-the-home], it’s because they have to keep up. Now, I don’t believe for a minute that they are going to stop investing if they have to grant access.”

Regulators in the United States have traditionally sided with large telecommunications companies and have largely allowed phone and cable companies to keep access to their advanced broadband networks to themselves. Republicans have largely defended the industry position that regulation and forced open access would deter private investment and competitors should construct networks of their own. In some cases, they have. Google Fiber is now the most prominent overbuilder, but several dozen independent providers are also slowly wiring fiber optics in communities already served by cable and telephone company-provided broadband. Whether it is better to inspire new entrants to build their own networks or grant them access to existing ones is an ongoing political debate.

But the CRTC has not given independent ISPs a free ride. The commission announced it will begin moving towards “disaggregated” network availability for smaller ISPs, which will require them to invest in network equipment to connect with incumbent networks on a more local level, starting in Ontario and Quebec.

The CRTC under Blais’ leadership is gaining a reputation of being pro-consumer, a departure from the CRTC’s often-industry-friendly past. Blais has presided over rulings to regulate wholesale wireless roaming fees to lower consumer costs and forced pay television providers to unbundle their huge TV channel packages so consumers can get rid of scores of channels they don’t watch.

[flv]http://www.phillipdampier.com/video/The Globe and Mail Internet competitors welcome CRTC decision on broadband access 7-23-15.flv[/flv]

Canadian Press spoke with independent ISPs about their reaction to the wholesale access decision. (1:18)

Are you paying Windstream for 6Mbps DSL service and getting half that speed or less? Stop the Cap! doesn’t think it is fair to charge full price for half or less the speed you paid good money to receive. If Windstream shrugs its shoulders when you complain and tells you there is nothing they can do to improve your speed, it’s time to take 10 minutes to file a complaint with the Federal Communications Commission. That 10 minute investment may get you $120 in relief.

Complaints sent to the FCC are forwarded to Windstream’s executive relations team of customer service representatives, who have tried to placate customers with a monthly $10 discount off poor-performing DSL. Although your complaint will not get Windstream to pry open its safe and make immediate investments to correct your situation, it will keep the phone company’s fingers out of your wallet, collecting money it doesn’t deserve for a level of service it refuses to provide.

Windstream blames the Internet slowdowns on Internet traffic growth that other providers quietly manage with periodic upgrades. Windstream would not experience these congestion problems if it elected to spend some of the money it collects from customers on upgrades. As Stop the Cap! has reported before, in states like Georgia, Pennsylvania, South Carolina, New Mexico, Kentucky, Alabama, and beyond that does not seem to be happening as often as it should. Windstream appears to be waiting for a ratepayer bailout from Connect America Funds to pay for service upgrades it should be doing with its own money. Until they do, you are owed a discount and here is how to apply for one:

Filing a Complaint with the FCC Regarding Your Windstream DSL Service

1. Visit Windstream’s Speed Test website, select the server nearest you, and perform several speed tests, preferably over the course of a few days. Windows users can hit the F10 key on their keyboard to capture a screen image, use the paste command in any picture editor, and then crop and save the result as an image file. Paint.net is a good freeware program to use for this purpose. Mac users can follow these instructions. If this is too complicated, you can print a copy of the web page within your web browser.
2. Visit the FCC’s Consumer Help Center – Internet Complaint Form and complete the form online. You can upload and attach file(s) showing your speed test results at the bottom of the complaint form. Choose “speed” as your complaint category and let the FCC know you are paying x dollars for x Mbps DSL service from Windstream you are not getting. If you have previously complained about the speed and performance of your connection to Windstream directly, let the FCC know that as well, in addition to any response you received. The more details about your bad experience(s), the better. You can also suggest that as long as the problem continues, you want a discount for the poor performance of your Internet connection.
3. If you wish to mail or fax your complaint, download this complaint form and attach any printouts showing speed test results.

It will likely take at least 4-6 weeks for a response to reach you from the FCC, usually also containing a written response from Windstream. Some customers scheduled for significant upgrades this year may not get the same credit others not scheduled may receive. There are no guarantees Windstream will offer you any specific discount or credit for your service, especially if the problem can be corrected right away. But you won’t get a thing if you don’t ask.

Unless a broadband provider can deliver the same kind of profitability earned by U.S. cable operators, don’t expect significant private investment in broadband expansion even if the company can easily turn a profit.

That was the argument brought to a House hearing on funding broadband infrastructure expansion by Craig Moffett, a Wall Street analyst at Moffett Nathanson.

“Infrastructure deployment requires the expectation of a healthy return on capital,” Moffett told the House Communications and Technology Subcommittee in a hearing this afternoon. “That should be taken as a given, but all too often, in my experience, the issue of return on capital is either ignored or misunderstood in policy forums. It is not a matter of whether a business is or isn’t profitable, it is instead a matter of whether it is sufficiently profitable to warrant the high levels of capital investment required for the deployment of infrastructure.”

Moffett pointed to the massive profits earned by cable operators Comcast, Time Warner Cable, Charter and Cablevision, all of which earned returns well in excess of their cost of capital, ranging from 13-33 percent. Moffett argued Wall Street has come to expect those kinds of returns, and investors will take a hard look at companies deploying new expensive networks against those that have largely paid back much of the capital costs incurred when their networks were built decades ago.

Moffett continued to criticize the broadband expansion being undertaken by large incumbent telephone companies that he claims does not earn attractive returns for their wireline businesses, even as they have introduced new services like faster broadband and television.

“For example, a decade after first undertaking their FiOS fiber-to-the-home buildout to 18 million homes, Verizon has not yet come close to earning a return in excess of their cost of capital,” said Moffett. “In 2014 their aggregate wired telecommunications business earned a paltry 1.2% return, against a cost of capital of roughly 5%. For the non-financial types in the room, that’s the equivalent of borrowing money at 5% interest in order to earn interest of 1%. That’s a good way to go bankrupt.”

Moffett was also critical of AT&T’s planned expansion of gigabit fiber broadband.

“AT&T has committed to the FCC to make fiber available to a total of 11.7 million locations in their footprint in order to make their acquisition of DirecTV more palatable to policy-makers, but it is hard to be optimistic that they will do much better this time around,” Moffett argued.

Moffett believes competition is bad for the profitable broadband business.

Moffett

“The broader take-away here is that the returns to be had from overbuilding – that is, being the second or third broadband provider in a given market – are generally poor,” Moffett said. “Let that sink in for a moment. Stated simply, it means that market forces are unlikely to yield a competitive broadband market. Neither, by the way, does wireless appear to offer the promise of imminent competition for incumbent broadband providers. Wireless networks simply aren’t engineered for the kind of sustained throughput required for a wired-broadband-replacement service.”

As a result, investors prefer that the broadband marketplace remain a monopoly or duopoly to guarantee the kinds of healthy returns they have earned for years, especially from the cable stocks Moffett has always favored in reports to his clients. Additional competition drives prices down, reducing profits, which in turn discourages investors who have high expectations their money will make them a lot more money.

Moffett’s arguments are largely based on broadband being a for-profit private enterprise, not a public infrastructure effort. But it does explain why there is a willingness to compete in large cities where network construction costs are lower and rural communities remain relatively unserved. As with electrification 100 years ago, investor-owned utilities were willing to wire large communities while ignoring rural farms and communities. Only after electricity was deemed a necessary utility did alternative means of funding, including member-owned co-ops and community-owned utilities finish electrifying areas private capital ignored.

Moffett’s guide to better broadband is based entirely on profitability — delivering enough profits and other returns to attract investors that will look elsewhere if costs become too high. Community-owned broadband avoids this dilemma by advocating for break-even or modestly profitable networks that focus on service, not investor-attractive profits.

Several members of Congress commented Moffett’s vision of broadband was discouraging, even depressing, because it seemed to be locked in a for-profit, private sector model that had few answers to offer for communities left behind. Moffett even warned against oversight and regulation of incumbent cable and phone companies, claiming it would further drive away private investment.

But broadband customers, Moffett admitted, will still pay the price for investor expectations.

“As everyone understands, the cable video business is facing unprecedented pressure,” Moffett testified. “Cord cutting has been talked about for years but is finally starting to show up in a meaningful way in the numbers. And soaring programming costs are eating away at video profit margins. From a cable operator’s perspective, the video business and the broadband business are opposite sides of the same coin. It is, after all, all one infrastructure. Pressure on the video profit pool will therefore naturally trigger a pricing response in broadband, where cable operators will have greater pricing leverage.”

Moffett said the kinds of rate hikes consumers used to pay for cable television now increasingly transferred to broadband customers is nothing nefarious. To keep investors happy, the kind of returns once earned from cable television will now have be delivered on the backs of broadband customers if Congress expects cable companies to continue upgrading and expanding their networks.

“All else being equal, that will mean that even new builds of broadband will become increasingly economically challenged and therefore will become less and less likely,” said Moffett. “Or they will simply have to sharply raise broadband prices.”

Moffett’s comments do come with some baggage, however. His clients pay for his advice and Moffett has been a long-time supporter of cable industry stocks. He has been a strong and natural advocate for a cable industry that faces only token opposition. He has browbeaten executives to start broadband usage caps and usage-based billing to further boost broadband profits, slammed telephone company competition in the cable business as financially reckless and unwarranted, and dismissed Google Fiber as a project designed to help Google’s public policy aims more than earn the search giant profits from the broadband business.

But Moffett has also been wrong in the past, particularly with respect to cord-cutting which he used to downplay as an urban legend and on the ease cable companies would be able to acquire and merge with each other.

Beyond all that, Moffett and his clients have a proverbial dog in the fight. After years of pumping cable stocks, suggestions that more competition for the cable industry is a good thing would simply be bad for business.

On the outside looking in.

Windstream’s DSL service in parts of Inman, S.C. is so bad, the company has recommended some DSL customers consider signing up for a competitor’s satellite-based Internet service instead.

In a remarkable response to a complaint filed with the Federal Communications Commission by a Windstream customer, Mollie Chewning, an executive customer relations representative for Windstream, suggested no broadband upgrades were likely before 2016 and beyond a $10 monthly discount for a year, customers in Inman will just have to live with DSL speeds that are often less than 1Mbps or consider switching to satellite-delivered Internet from another company.

“Windstream acknowledges some Iman [sic], SC have been experiencing high-speed Internet issues,” Chewning wrote Sharon Bowers, the department division chief of the FCC’s Consumer Information Bureau. “This is a result of the tremendous growth in Internet usage over the past few years as well as the challenging economics of serving rural and remote areas with broadband. Unfortunately, our records indicate Mr. [redacted] service address will likely not benefit from any of our scheduled upgrades in 2015. It is possible some upgrades may be explored in 2016 could assist some customers in Inman via Connect America funding, but Windstream is still finalizing upgrade plans for next year.”

Speed test results

James Corley, the victim of Windstream’s poor-performing DSL, launched a blog to get Windstream moving on upgrades or entice area cable operator Charter Communications to wire his neighborhood for service.

Inman, S.C.

“I am a resident of a small subdivision […] and for nearly a decade, we have been forced to rely on Windstream Communications’ disgraceful DSL internet and telephone services,” Corley writes. “The company’s representatives have been promising us for years that we would be upgraded to faster speeds but the promised upgrades have repeatedly failed to materialize and even though I cannot say for sure where Windstream’s priorities lie, it certainly isn’t with their customers.”

Corley is not asking for much. He’s subscribed to a basic 3Mbps service plan. Windstream does not come close to delivering even those speeds, however, with speed test results showing performance ranging usually below 1Mbps all the way down to 40kbps — less than dial-up.

“Given existing high-speed Internet issues, Mr. [redacted] will receive a $10 discount, which will appear on his account monthly through July 2016,” Chewning wrote. “If Mr. [redacted] finds this information unacceptable, he may want to explore alternate service options such as Internet via satellite.”

Corley has elected to pursue Charter Communications instead. It can offer considerably faster speeds than Windstream or satellite providers at a much lower cost. But Charter has thus far refused to wire Corley’s neighborhood for free. Charter wants at least $7,000 to extend service to the subdivision, after which it will start construction and deliver service within 45 days. Charter has no problem spending $55 billion to acquire Time Warner Cable but is unwilling to spend $7,000 to attract most, if not all 16 residents on the customer’s street.

Windstream appears to be more interested waiting for telephone ratepayers across the country to subsidize incremental improvements in its slow speed DSL service through the Connect America Fund, which has a poor record subsidizing cable operators to bring far superior broadband service to customers like those in Inman.

Until the Windstream customer and his neighbors manage to scrape together $7,000, or Charter extends service at no charge in the name of good public relations, residents of Inman (and beyond) are stuck with Windstream broadband that does not come close to broadband.