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When Fiber Competition Arrives, Time Warner Cable Slashes Prices As Customers Call to Cancel

Phillip Dampier February 7, 2015 Broadband Speed, Competition, Consumer News, Greenlight Networks (NY) 10 Comments

david-and-goliathThe day had finally arrived. After months watching construction crews work their way towards the house she and her boyfriend rent in Rochester, N.Y., Brenda Ververs called Time Warner Cable to cancel service. She thought it would take five minutes to dispense with a barely-tolerated relationship she has maintained with the cable company for nearly 20 years. Instead, she got a retention offer too good to dismiss out of hand.

Greenlight Networks, an East Rochester-based fiber overbuilder has been slowly expanding its footprint into a handful of neighborhoods in Rochester and its suburbs, providing 100/20Mbps service for $50 or 1,000/100Mbps for $250 a month. But only a fraction of area residents have heard of the company and even fewer qualify to sign up for their service.

“When the neighbors first saw their construction crews and we found out it was a company called Greenlight, we thought they were there to install red light traffic enforcement cameras,” Ververs said.

Greenlight uses a similar approach to Google Fiber, informally recruiting “fiberhoods” of potential customers. Once enough interest is shown, the company schedules fiber construction in the neighborhood.

But the process remains largely a mystery to many, because unlike Google, Greenlight does not update its website with neighborhood rankings or a detailed service map.

Time Warner Cable, Greenlight’s chief competitor, is well-aware of its fiber competition but considers it too minor to warrant any attention, at least until customers like Ververs call to cancel service.

Time Warner Cable’s national customer retention centers often confuse Greenlight Networks in Rochester, N.Y. with Greenlight, the larger municipally owned fiber to the home network in Wilson, N.C.

“They thought I was moving to North Carolina and was canceling service to start a new account down there, but they finally found Rochester’s Greenlight Networks in their system and went into a script about how Time Warner Cable was an established company and Greenlight was basically a fly-by-night operation that could fail any day,” said Ververs.

Other customers have told Stop the Cap! Time Warner alternates between recognizing Greenlight as a legitimate competitor worth their respect and one that cannot be trusted with your business. But the customer retention effort eventually ends up in the same place — offering customers drastic rate cuts to stay with the cable company.

Not what competition fans want to see: Greenlight's "Expansion Plans" web page is blank.

Not what competition fans want to see: Greenlight’s “Expansion Plans” web page is blank.

“They asked me why I would consider switching to Greenlight for $50 for 100Mbps broadband-only service when for $69 they will give me 50/5Mbps service, cable television, and phone service for two years,” Ververs said. “They emphasized it was less than $20 more for all three services from Time Warner vs. $50 for Internet-only service from Greenlight. They even promised a free upgrade to 100Mbps when it arrives in Rochester sometime this year.”

Some departing customers are also being offered modem fee waivers and free extras, like premium movie channels and expanded international free long distance calling.

Greenlight does not charge modem or franchise fees or hidden surcharges like regulatory recovery fees.

Behind the scenes, Time Warner Cable is also making an effort to lock up the most likely places a fiber overbuilder would want to expand service – multi-dwelling units that are less expensive to wire than single family homes.

Cable operators aggressively recruit apartment managers and neighborhood associations to sign contracts that include discounted service for every home, apartment or condo in a complex, usually offered as “included in the rent or neighborhood association fee.” Many contracts of this type give the cable company exclusive access to existing wiring, discouraging would-be competitors by requiring them to pay considerably higher construction costs to independently wire multi-dwelling units.

Readers also tell us Time Warner is offering departing customers the service improvement many wish they had all along, including a commitment to check and rewire customer homes for free if service quality is among the reasons a customer plans to cancel service. Some customers are also offered specialized customer service contact numbers normally available only to premium-class Signature Home customers. Still others are being given substantial bill credits or rebates if they agree to stay with the cable company.

Ververs hates Time Warner Cable service and the constant rate increases, but the $69 retention offer, apparently only available to customers in competitive areas, has kept them from making a final decision to switch to Greenlight.

“Greenlight doesn’t offer a video or telephone package — just broadband, and we cannot ignore the fact we used to pay Time Warner $160 and can now get three services and free HBO for almost $100 less than we were paying, less than $20 a month more than we would pay Greenlight, and Time Warner plans to match Greenlight’s 100Mbps speeds this year,” said Ververs.

Downtown Rochester, N.Y.

Downtown Rochester, N.Y.

But broadband-only customers are less impressed with Time Warner’s retention efforts in a community than has yet to see cable broadband speeds increase beyond 50Mbps.

Stop the Cap! reader Joseph Corriea writes his friend just signed up for Greenlight in the Highland Park area of Rochester and Time Warner immediately countered with an offer of Extreme Internet (30/5Mbps) for $39 a month. The deal breaker may have been the modem fee Time Warner didn’t offer to waive. Corriea’s friend left Time Warner for Greenlight and is happy with their flat $50 a month bill with no hidden gotcha fees.

Corriea wonders exactly how much bandwidth Time Warner Cable is withholding from barely competitive markets like Rochester.

The answer is plenty. Frontier Communications continues to lose an already meager broadband market share in areas of western New York wired for cable. The majority of its DSL customers only qualify for slowband speeds of 12Mbps or less and although the company recently claimed to have spent $9 million on upgrades in the area, many wonder where the money went.

“Frontier is a joke, they have always been a joke, and the only people doing business with them don’t know any better,” said Riga resident David Sobcek. “DSL is a dinosaur and although they claim faster speeds are available, it is very hit or miss to qualify for them and when the weather is bad, it’s a miss even if you did qualify. They locked my speed at a fraction of what they were selling and gave me nothing but excuses. Time Warner Cable has a monopoly for 99% of this area.”

Western New York is not on Time Warner Cable’s Maxx upgrade list for 2015, which boosts speeds up to 300Mbps. Google has intentionally avoided fiber projects in the northeastern United States because Verizon (and its limited deployment of FiOS fiber) dominates the region, and Frontier Communications has no plans to upgrade cities like Rochester to fiber to the neighborhood service similar to AT&T U-verse.

For the foreseeable future, that leaves Rochester with David vs. Goliath competition – a multi-billion dollar cable company vs. a fiber upstart. But with Time Warner Cable carrying more customer dissatisfaction baggage than American Airlines, nobody should count Greenlight Networks out, especially when the biggest complaint about Greenlight is why it is taking so long to expand their service area.

Time Warner Cable Launches Maxx Upgrades in Dallas Metroplex; Launching Metrowide Wi-Fi for Its Customers

Phillip Dampier February 5, 2015 Broadband Speed, Competition, Consumer News, Wireless Broadband 2 Comments

twc maxxTime Warner Cable customers in the Dallas Metroplex will soon see broadband speeds rise as high as 300Mbps as the company’s Maxx upgrade project arrives, bringing along a metropolitan-wide Wi-Fi network available at no charge to Time Warner Cable broadband customers.

The first noticeable presence of the Wi-Fi expansion will be found at area businesses as Time Warner recruits commercial broadband customers to host its hotspots. As spring arrives, the company will accelerate the installation of Wi-Fi antennas around the metropolitan region.

Home Maxx upgrades will deliver dramatically faster broadband speeds at no extra charge:

  • Standard 15Mbps service rises to 50/5Mbps;
  • Turbo is boosted from 20Mbps to 100/10Mbps;
  • Extreme increases from 30/5 to 200/20Mbps;
  • Ultimate, formerly 50/5 is increased to 300/20Mbps.

Existing customers will also be able to swap out their existing DVR boxes for a new Arris Enhanced DVR offering six tuners and a 1TB internal drive.

Because the conversion will drop analog channels, Time Warner Cable is offering free Digital Transport Adapters through April 21, 2016, as long as customers order the boxes by Aug 19. Many Time Warner Cable customers may end up avoiding charges for the DTA equipment even after that. Several packages from Time Warner waive the DTA fees.

The official list of metro Dallas locations getting the Maxx upgrade includes:

Addison, Allen, Arlington, Bedford, Carrollton, Cedar Hill, Cockrell Hill, Colleyville, Commerce, Coppell, Dallas, DeSoto, Double Oak, Euless, Farmers Branch, Farmersville, Flower Mound, Frisco, Garland, Grand Prairie, Grapevine, Greenville, Highland Village, Hutchins, Irving, Kennedale, Lancaster, Lewisville, McKinney, Mesquite, Murphy, Pantego, Plano, Princeton, Richardson, Rockwall, Rowlett, Sachse, St. Paul, Sunnyvale, The Colony and Wylie.

Dallas faces imminent competition from AT&T U-verse upgrades.

Frontier’s Acquisition of Verizon Landline/FiOS Properties in Calif., Tex., and Fla. Called “Insane”

Phillip Dampier February 5, 2015 Competition, Consumer News, Frontier, Net Neutrality, Public Policy & Gov't, Rural Broadband, Verizon 3 Comments

Frontier Communications today announced a $10.54 billion all-cash acquisition of Verizon’s wired networks, including landline and FiOS properties, in the states of Florida, California, and Texas.

Frontier will acquire Verizon’s wireline operations that offer services to residential, commercial and wholesale customers numbering 3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS video connections. The acquired territory is 54 percent served by FiOS fiber to the home service.

frontier expanded improvement

“This transaction marks a natural evolution for our company and leverages our proven skills and established track record from previous integrations,” said Maggie Wilderotter, Frontier Communications chairman and chief executive officer. “These properties are a great fit for Frontier and will strengthen our presence in competitive suburban markets and accelerate our recent market share gains. We look forward to realizing the benefits this transaction will bring to our shareholders, customers and employees.”

Dan McCarthy, Frontier’s president and chief operating officer, commented, “This transaction is an exciting opportunity for Frontier. We are well-positioned to maximize value for our shareholders and create a great experience for new customers. We have four FiOS markets today from our 2010 transaction with Verizon, and a high level of familiarity with the systems underlying these properties. We plan to flash-cut convert these properties to Frontier’s systems as we did in states including West Virginia and Connecticut.”

frontierBut Frontier’s “flash cut” conversions in West Virginia and Connecticut led to months of serious service and billing problems leading to two state-level investigations into Frontier’s performance. Problems are still ongoing in parts of Connecticut several months after Frontier transferred Connecticut territories from AT&T. Customers in West Virginia continue to criticize Frontier Communications for its underwhelming broadband performance.

Saibus Research, a Wall Street analyst, said they were “stunned” Frontier was repeating the same mistake it made back in 2010 when it acquired other former GTE service areas from Verizon.

“We remembered that its $8.7 billion wireline purchase in 2010 did not work out so well for it,” wrote the analyst. “When we consider that Frontier’s share price declined by nearly 60% from 2010-2012 after the deal closed before recovering those losses since 2012, we were shocked that Frontier’s share price increased by 10.6% in response to its announcement that it was buying assets from Verizon. Frontier’s pro forma revenue has declined by 30% since 2009, its residential consumer base declined by 33%, its operating income declined by 34% and its dividend declined by 60% since then.”

“Albert Einstein said that insanity is doing the same thing over again and expecting a different result and we think that Frontier’s CEO Maggie Wilderotter has come down with a serious case of insanity for her willingness to buy whatever Verizon is selling,” said Saibus Research. “As such, we think income-oriented telecom investors should consider accumulating shares of Verizon, and selling or shorting Frontier.”

Frontier will accumulate billions in new debt to fund the transaction, bad news for legacy Frontier customers still served by the company’s copper wire networks. Frontier hoped to realize $500 million in cost reductions from its 2010 acquisition of Verizon territories in the Pacific Northwest, West Virginia, and several midwestern states. Instead of savings, it ended up spending millions to rehabilitate deteriorating landlines Verizon underinvested in for years. The new unsecured debt load will likely cut into available funds to upgrade older networks, particularly in the northeast and inside New York, Ohio and Pennsylvania.

Frontier will get marginal improvements in programming costs from the greater volume discounts its larger customer base qualifies to receive. But outside of Connecticut (Frontier U-verse) and Washington, Oregon, Indiana and South Carolina (Frontier FiOS), the rest of Frontier’s customers will continue to be offered Dish Network satellite service and various flavors of DSL.

If approved by regulators, the transaction will be finalized in 2016.

Wall Street Turning Against Comcast-Time Warner Merger: “We Believe It Will Be Blocked”

Phillip Dampier February 4, 2015 Broadband Speed, Comcast/Xfinity, Competition, Consumer News, Data Caps, Net Neutrality, Public Policy & Gov't 1 Comment
Greenfield

Greenfield

An important Wall Street analyst has publicly written what many have thought offline for the past six months — the chances of regulators approving a merger of Comcast and Time Warner Cable are growing less and less each day that passes.

Rich Greenfield from BTIG Research has grown increasingly pessimistic about the odds of Comcast winning approval of its effort to buy Time Warner Cable.

Despite the unified view from the executive suites of both cable companies that the merger is a done-deal just waiting for pro forma paperwork to get handled by the FCC and Department of Justice, Greenfield has seen enough evidence to declare “the tide has turned against the cable monopoly in the past 12 months,” and now places the odds of a merger approval at 30 percent or less.

“Since we realized the inevitability of Title II regulation of broadband in December 2014, we have grown increasingly concerned that Comcast and Time Warner Cable will not be allowed to merge,” Greenfield wrote.

The claim from both cable companies that since Comcast and Time Warner Cable do not directly compete with each other, there in no basis on which the government could block the transaction, may become a moot point.

There are three factors that Greenfield believes will likely deliver a death-blow to the deal:

  • Monopsony Power
  • Broadband Market Share & Control
  • Aftershocks from the Net Neutrality Debate

btigMonopsony power is wielded when one very large buyer of a product or service becomes so important to the seller, it can dictate its own terms and win deals that no other competitor can secure for itself.

Comcast is already the nation’s largest cable operator. Time Warner Cable is second largest. One would have to combine most of the rest of the nation’s cable companies to create a force equally important to cable programming networks.

As Stop the Cap! testified last summer before the Public Service Commission in New York, allowing a merger of Comcast and Time Warner Cable would secure the combined cable company volume discounts on cable programming that no other competitor could negotiate for itself. That would deter competition by preventing start-ups from entering the cable television marketplace because they would be at a severe disadvantage with higher wholesale programming expenses that would probably make their retail prices uncompetitive.

Even worse, large national cable programming distributors could dictate terms on what kinds of programming was available.

comcastbuy_400_241The FCC recognized the danger of monopsony market power and in the 1990s set a 30% maximum market share limit on the number of video customers one company could control nationally. That number was set slightly above the national market share held by the largest cable company at the time — first known as TCI, then AT&T Broadband, and today Comcast. Comcast sued the FCC claiming the cap was unconstitutional and won twice – first in 2001 when a federal court dismissed the rule as arbitrary and again in 2009 when it threw out the FCC’s revised effort.

Comcast itself recognized the 30% cap as an important bellwether for regulators watching the concentration of market power through mergers and acquisitions. When it agreed to buy Time Warner Cable, it volunteered to spin-off enough customers of the combined company to stay under the 30% (now voluntary) cap.

Greenfield argues the importance of concentration in the video programming marketplace has been overtaken by concerns about broadband.

“While Comcast tried to steer the government to evaluate the Time Warner deal on the old paradigm of video subscriber share, it is increasingly clear that DOJ and FCC approval/denial will come down to how they view the competitive landscape of broadband and whether greater broadband market share serves the public interest,” Greenfield wrote.

comcast whoppersIf the Comcast merger deal ultimately fails, the company may have only itself to blame.

Last year Comcast faced intense scrutiny over its interconnection agreements with companies that handle traffic for large content producers like Netflix. Comcast customers faced a deterioration in Netflix streaming quality after Comcast refused to upgrade certain connections to keep up with growing demand. Netflix was eventually forced to establish a direct paid connection agreement with the cable operator, despite the fact Netflix offers cable operators free equipment and connections for just that purpose.

That event poured gasoline on the smoldering debate over Net Neutrality and helped fuel support for a strong Open Internet policy that would give the FCC authority to check connection agreements and ban paid online fast lanes.

Seeing how Comcast affected broadband service for millions of subscribers across dozens of states could shift the debate away from any local impacts of the merger and refocus it on how many broadband customers across the country a single company should manage.

Comcast will control 50% or more of the national broadband market when applying the FCC’s newly defined definition of broadband: 25/3Mbps.

That rings antitrust and anticompetitive alarm bells for any regulator.

Greenfield notes that changing the definition of broadband will dramatically reshape market share. It will nearly eliminate DSL as a suitable competitor and leave Americans with a choice between cable broadband and Verizon FiOS, community owned fiber networks, Google, and a small part of AT&T’s U-verse footprint. If those competitors don’t exist in your community, you will have no choice at all.

cap comcastEven Comcast admits cable broadband enjoys a near-monopoly at 25/3Mbps speeds. controlling 89.7% of the market as of December 2013.

“If regulators take the ‘national’ approach to evaluating broadband competition, the FCC’s redefinition would appear to put the deal in even greater jeopardy,” Greenfield writes. “Beyond the market share of existing subscribers, the larger issue is availability.  Whether or not a current subscriber takes 25/3Mbps or better, the far more relevant question is if a consumer wanted that level of speed do they have a choice beyond their local cable operator?  As of year-end 2013, Comcast’s own filing illustrates that in 63% of their footprint post-Time Warner Cable, they were the only consumer choice for 25 Mbps broadband (we suspect even higher now).”

“With Comcast’s scale both before and especially after the Time Warner Cable transaction, they become ‘the only way’ for a majority of Americans to receive content/programming that requires a robust broadband connection,” Greenfield warned.

Even worse, to protect its video business, a super-sized Comcast will be tempted to introduce usage caps that will deliver a built-in advantage to its own services.

“Over time, the fear is that Comcast will favor its own IP-delivered video services versus third parties, similar to how it is able to offer Comcast IP-based video services as a ‘managed’ service that does not count against bandwidth caps, while third-party video services that look similar count against bandwidth caps,” he wrote. “The natural inclination will be for [Comcast] to protect their business (think usage based caps that only apply to outsiders, peering/interconnection fees, etc.)”

“With the overlay of the populist uprising driving government policy, it is hard to imagine how regulators could approve the Comcast Time Warner Cable transaction at this point,” Greenfield concludes. “Comcast continues to try to get the government to look to the past to get its deal approved.  But the framework is about not only what is current, but what the future will look like – especially in a rapidly changing broadband world.”

Source: Cox Preparing to Expand Gigabit Service in Phoenix/Omaha, Boost Budget Broadband Speeds

Phillip Dampier February 3, 2015 Broadband Speed, Competition, Consumer News, Cox, Data Caps Comments Off on Source: Cox Preparing to Expand Gigabit Service in Phoenix/Omaha, Boost Budget Broadband Speeds

COX_RES_RGBCox Communications is planning to expand its gigabit residential broadband service in Phoenix and Omaha and will be increasing the speeds of its cheapest Internet tiers to stay competitive with CenturyLink’s discounted DSL.

A source inside Cox told Broadband Reports the speed changes will begin later this month and will take about six weeks to reach all of Cox’s service areas across the country.

  • Starter Internet ($34.99 – 50GB usage cap), now offering 1Mbps/384kbps will increase to 5/1Mbps;
  • Essential Internet ($48.99 – 100GB usage cap), now 5/1Mbps will be increased to 15/2Mbps.

Cox also offers Internet Preferred ($66.99 – 250GB usage cap) offering 50/5Mbps and Internet Premier ($77.99 – 300GB usage cap) with 100/10Mbps. Some markets also offer Internet Ultimate ($99.95 – 400GB usage cap) with 150/20Mbps service.

The company’s gigabit plan, Gigablast, is being sold for $99 a month ($70 if bundled with cable television). It has a 1TB usage cap. For now, the service is delivered to a very limited number of homes (about 5,000) over special fiber connections serving primarily wealthy enclaves and new housing developments. The bulk of Cox’s gigabit service expansion this year is expected to cover about 150,000 homes where additional fiber service will be deployed. But most Cox customers will only see the fastest speeds made available in 2016 when DOCSIS 3.1 will allow Cox to use its existing coaxial cable infrastructure to deliver super fast speeds.

Cox customers who exceed their usage allowance are usually warned by letter and asked to upgrade to a higher tier of service. But Stop the Cap! readers who subscribe to Cox tell us the company usually backs off if you threaten to cancel service over the matter.

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