Supporting Comcast’s merger agenda

A conservative think tank with ties to corporate money and the American Legislative Exchange Council says the FCC should not reject the Comcast and Time Warner Cable merger for emotional, “big is bad” sloganeering.

Seth Cooper, a former director of the ALEC Telecommunications and Information Technology Task Force and current Amicus Counsel for the corporate group made his comments about the merger under the moniker of the Free State Foundation.

The FCC’s due diligence in that examination of the deal, Cooper says, must “disregard pleas for it to reject Comcast/TWC out of hand, based on appeals to emotional incredulity or ‘big is bad’ sloganeering; Stand firm against calls that, under the guise of protecting consumers, the agency impose conditions in order to protect market rivals…; reject dragging out its review process…; and avoid the imposition of any conditions on the merger unrelated to demonstrable concerns over market power and anticompetitive conduct.”

Cooper parrots Comcast’s press releases promoting the multi-billion dollar merger, claiming it will lead to a faster transition to digital cable, faster Internet speeds via DOCSIS 3.1, and expanded wireless backhaul services.

Unfortunately for Cooper, the facts are not on his side.

As part of Time Warner Cable’s Maxx initiative, the march to digital cable in unmistakable at Time Warner. TWC Maxx-upgraded cities now get faster speeds at a lower cost than what Comcast offers, and no data caps. Both cable companies are already in the wireless backhaul market, installing fiber to cell towers to support 4G LTE broadband. But LTE-enabled towers are highly likely to already have fiber connections, limiting future growth. A merger between the two cable companies won’t dramatically change that market reality.

AT&T’s claim it wants to expand gigabit fiber to the home service to as many as 100 cities nationwide requires closer inspection on news this week it has slashed spending on its wireline business.

Investors knocked AT&T’s share price today as they learned earnings from AT&T’s wired networks will be lower than expected.

TheStreet reported this morning the spending cuts are so significant, they are creating a financial risk for a number of AT&T’s major vendors.

Research firm Jefferies issued a research note warning that AT&T’s spending cuts began last month and seem to be ongoing. As a result the companies that have the most exposure to AT&T’s wireline business are at increased financial risk. Those suppliers include optical fiber equipment manufacturer Alcatel-Lucent, as well as Ciena, Juniper, ADTRAN, Finisar, and JDS Uniphase. As a result, all but Finisar saw their share prices drop significantly in morning trading.

Earlier today, AT&T reported it was ahead of schedule to complete its Project VIP expansion of its 4G LTE wireless and U-verse networks. As U-verse expansion nears an end, vendor orders may be in decline. Wall Street analysts see no evidence AT&T is preparing to spend much on any other expansion efforts, including fiber to the home service.

As Broadband Reports’ notes, without significant capital to invest in fiber upgrades, they are not going to happen.

These cuts make it hard to take the company’s claims of meaningful 1 Gbps fiber expansion seriously as there’s simply no budget cordoned off for such a project (“Project VIP” funds are already in use on other efforts). While AT&T has the press believing they’re deploying 1 Gbps to “up to 100 cities,” AT&T’s shrinking CAPEX tells a different story entirely.

Fiber to the home service is more costly than AT&T U-verse’s fiber to the neighborhood service because it requires a fiber cable be brought directly to each home or business — a more costly endeavor that requires careful cable burial or overhead drop line replacement, as well as the possibility of in-home wiring adjustments. Considering the billions spent on U-verse expansion to date, at least as much will be required to upgrade to fiber to the home service and there are no signs AT&T is ready to invest in anything beyond press releases.

CenturyLink does not believe it will face much of a competitive threat from AT&T and Verizon’s plans to decommission rural landline service in favor of fixed wireless broadband because the two companies’ offers are too expensive, overly usage-capped and too slow.

Both AT&T and Verizon have proposed mothballing traditional landline service in rural areas because both companies claim wireline financial returns are too low and ongoing maintenance costs are too high. In its place, both companies are developing rural fixed wireless solutions for voice and broadband service that will rely on 4G LTE networks.

CenturyLink does not traditionally compete against either AT&T or Verizon because their landline service areas do not overlap. But as both AT&T and Verizon Wireless continue to emphasize their nationwide wireless networks, independent phone companies are likely to face increased competition from wireless phone and broadband services.

CenturyLink isn’t worried.

“About two-thirds of our customers can get access to 10Mbps or higher [from us and] that continues to increase year by year,” CenturyLink chief financial officer Stewart Ewing told attendees at Bank of America Merrill Lynch’s 2014 Global Telecom & Media Conference. “Our belief is that with the increasing demands customers have for bandwidth — the Netflix bandwidth requirement — just the increasing amount of video that customers are watching and downloading over their Internet pipes, we believe will drive customers to using a provider that basically has a wire in their home because we believe you will get generally higher bandwidth and a much better experience at lower cost.”

Ewing

CenturyLink customers consume an average of slightly less than 50GB of Internet usage per month, and that number is growing. Ewing said that CenturyLink has long believed that as bandwidth demand increases, wireless becomes less and less capable of providing a good customer experience.

“At this point, we don’t really have any concerns because people on the margin — the folks that don’t use much bandwidth — probably use a wireless connection today to download,” Ewing said. “But as the bandwidth demands grow, the wireless connection becomes more and more expensive and that could tend to drive people our way. So as long as we have 10Mbps or better to the customers, we don’t really think there is that much exposure.”

CenturyLink does not measure the difference in Internet usage between urban and rural residential customers, but the company suspects rural customers might naturally use more because alternative outlets are fewer in number outside of urban America.

“Folks in rural areas might actually can use Internet more for buying things that they can’t source [easily], but it’s hard to really count,” said Ewing. “I think our customers in the rural areas probably are not that much different from folks in urban areas.”

Prism is CenturyLink’s fiber to the neighborhood service, similar to AT&T U-verse. It is getting only a modest expansion in 2014.

CenturyLink’s largest competitor remains Comcast, which co-exists in about 40% of CenturyLink’s markets. The merger with Time Warner Cable won’t have much impact on CenturyLink, increasing Comcast’s footprint in CenturyLink territory by only about only 6-7%. CenturyLink believes most of any new competition will come in the small business market segment. Comcast’s residential pricing is unlikely to attract current CenturyLink customers in Time Warner Cable territory to consider a switch to Comcast if the merger is approved.

Ewing also shared his thinking about several other CenturyLink initiatives that customers might see sometime this year:

• Don’t expect CenturyLink to expand Wi-Fi hotspot networks. The company found they are difficult to monetize and is unlikely to expand them further;
• Any change in the FCC’s definition of minimum broadband speed to qualify for federal broadband expansion funds would slow rural broadband expansion. Ewing admitted a 10Mbps speed minimum is considerably more difficult to achieve over DSL than a 4 or 6Mbps minimum;
• Don’t expect any more merger/acquisition activity from CenturyLink in the Competitive Local Exchange Carrier business. CenturyLink shows no sign of pursuing Frontier, Windstream, FairPoint, or other independent phone companies. It is focused on expanding business services, where 60% of CenturyLink’s revenue now comes;
• CenturyLink fiber expansion will primarily be focused on reaching business offices and commercial customers in 2014;
• CenturyLink will only modestly expand PrismTV, its fiber-to-the-neighborhood service, to an additional 300,000 homes this year. The company now offers the service to two million of its customers, with 200,000 signed up nationwide. Last year, CenturyLink expanded PrismTV availability to 800,000 homes.

Phillip “How far will $20 get me in your office?” Dampier

Congress is famous for obfuscation when it comes to introducing legislation that promises one thing and delivers something quite different. Take the 2003 “Clear Skies Initiative,” which would have allowed the energy industry to increase polluting emissions, or “The Disclosure of Hydraulic Fracturing Fluid Composition Act,” which allows frackers to keep secret the ingredients of millions of gallons of chemicals pumped into the ground to displace natural gas, and potentially your potable drinking water.

So it shouldn’t be much of a surprise that Rep. Bob Latta (R-Ohio) wants to “protect” the open and free Internet by introducing a new bill that opens and frees the telecom companies that steadfastly support his campaign coffers to install paid Internet toll booths. Like many pieces of legislation coming from some House Republicans these days, “freedom” only extends to corporate interests, not to you or I (unless we want to start a corporation of our own.)

Reclassifying broadband as a telecommunications service under Title II of the Communications Act is the Holy Grail for Net Neutrality supporters. It offers clear oversight authority that would make future lawsuits from Comcast, Verizon and other telecom companies untenable. Earlier court decisions have laid a foundation for broadband oversight under Title II, but the FCC itself must take advantage of that opportunity, and so far it has not.

Congressman Latta has introduced legislation to make sure the FCC can never take that step. His bill would specifically prohibit the FCC from reclassifying broadband Internet access as anything beyond an unregulated “information service.”

According to Latta, only with his legislation can America be assured the Internet will stay “open and free.” — “Open and free” for the picking by companies who dream of new revenue monetizing Internet traffic. Not satisfied charging some of the world’s highest prices for Internet access, many of the largest cable and phone companies in the country now want the right to “double-dip” — charging consumers to reach Internet content and content producers for delivering it. It would be like paying postage to mail a letter and having it arrive postage due or letting the phone company charge both the caller and the person called for a long distance telephone call.

“The legislation comes after the FCC released a proposal to reclassify broadband Internet access under Title II as a telecommunications service rather than an information service,” says a press release from Latta’s office.

Would I lie to you? Rep. Bob Latta (R-Ohio)

That is patently false. In fact, FCC chairman Thomas Wheeler has twisted himself into a human pretzel with clever language and a clear determination not to reclassify broadband under Title II. Wheeler prefers sticking to the rickety Section 706 faux-authority for Net Neutrality — the same section that keeps handing FCC lawyers loss after loss in federal court. After Wheeler announced his intention to propose allowing Internet companies to build paid fast lanes for Internet traffic, the resulting backlash from content companies and the public made him grudgingly offer a “discussion” about utilizing Title II.

That kind of “discussion” will be familiar to every 16-year old teenage girl who is told “we’ll talk about it” after asking mom and dad if she can take her new 22-year old boyfriend on vacation and stay in their own hotel room.

Ironically, detractors like Latta are the ones that usually accuse Net Neutrality of solving a problem that doesn’t exist. But that didn’t stop Congressman Latta from introducing legislation to stop the current ex-telecom lobbyist chairman of the FCC from going all Elizabeth Warren on us, suddenly imposing draconian pro-consumer regulations against those job creators at the cable companies Wheeler used to represent. But on the bright side, when Wheeler doesn’t do what Latta’s bill wouldn’t let him do, Latta can still declare victory against “big government.” If you live in Latta’s district, you can read all about it in the forthcoming government-subsidized, no-postage-needed “newsletter” he and other members of Congress will pelt your mailbox with right before election time.

“In light of the FCC initiating yet another attempt to regulate the Internet, upending long-standing precedent and imposing monopoly-era telephone rules and obligations on the 21^st Century broadband marketplace, Congress must take action to put an end to this misguided regulatory proposal,” said Latta. “The Internet has remained open and continues to be a powerful engine fueling private enterprise, economic growth and innovation absent government interference and obstruction. My legislation will provide all participants in the Internet ecosystem the certainty they need to continue investing in broadband networks and services that have been fundamental for job creation, productivity and consumer choice.”

Consumers not included. Maybe he just forgot.

“At a time when the Internet economy is thriving and driving robust productivity and economic growth, it is reckless to suggest, let alone adopt, policies that threaten its success. Reclassification would heap 80 years of regulatory baggage on broadband providers, restricting their flexibility to innovate and placing them at the mercy of a government agency. These businesses thrive on dynamism and the ability to evolve quickly to shifting market and consumer forces. Subjecting them to bureaucratic red tape won’t promote innovation, consumer welfare or the economy, and I encourage my House colleagues to support this legislation, so we can foster continued innovation and investment within the broadband marketplace.”

Guess not. The Internet should only be about business in Latta’s mind. Consumers that support Net Neutrality are nothing more than parasites sucking away valuable potential profits from the dynamic, flexible and innovative world of traffic shaping, usage caps, and double-dipping.

Latta isn’t interested that your provider is turning your weekend Netflix binge into an exercise of maddening rebuffering futility as your cable/phone company waits for protection racket proceeds a paid peering agreement with Netflix. That is because he doesn’t represent you. He represents AT&T, Time Warner Cable, Comcast, and CenturyLink.

Latta can afford to travel through the Internet toll booth when one considers who his top contributors keeping his campaign flush with cash are:

• More than $32,000 in contributions from AT&T and its executives;
• $29,500 from Tom Wheeler’s old haunt — the National Cable & Telecommunications Association (Big Cable lobby);
• $15,000 from the American Cable Association (Small Cable lobby);
• $21,000 from Time Warner Cable and its executives;
• $16,000 from Verizon and its executives;
• $11,400 from CenturyLink;
• $11,000 from Comcast (they are ditching Ohio customers to Charter after merging with Time Warner Cable so why throw good money after bad).

Latta’s close friendship with Big Telecom is so obvious, it has made co-sponsoring his fact-free bill about as popular as Justin Bieber at an NAACP convention. Even his like-minded Congressional colleagues are staying away. But his industry friends sure appreciate his efforts on their behalf.

One wonders why his constituents return him to office when he would be obviously much more comfortable in his next job — lobbying for AT&T or Comcast. Before our Internet connections slow, let’s hope his constituents hasten a much-needed turbo-speed departure for the congressman, already a shadow employee of AT&T.

227194356 05 28 14 LATTA Broadband Bill (Text)
 

Toy Alarm: No peace of mind here.

A Houston couple paid Comcast $30 a month over seven years for Comcast’s home security system they believed would help keep them safe. But the alarm system hadn’t worked right from the day Comcast’s technicians installed it, and the cable company’s final offer of compensation was a $20 service credit.

Understandably, the couple wasn’t happy paying for Comcast’s pretend peace of mind.

“I’m a loyal customer and my thing is I don’t mind paying for a service if you’re providing the service,” Lisa Leeson told KPRC-TV, “but they weren’t.”

Comcast’s Insecurity System finally revealed its true self one windy February day. The Leeson family had left to do some errands and just as they had done more than 2,500 times before over the past 80 months, they armed Comcast’s home security system from its control panel before heading out.

“We would set it,” explained Leeson. “It would make the little noise that it makes like it was activating.”

When they arrived home, the family was surprised to find their back door wide open. Fearing a break-in, they wondered why Comcast’s alarm wasn’t blaring, with notified authorities standing by to investigate.

Despite more than 26,000 burglaries in Houston every year, the Leeson family was lucky. A wind gust had blown the door open and their possessions were safe. The revelation the family was robbed anyway only came after calling Comcast to ask why their alarm never went off.

A representative promptly told the family it had monitored the status of the Leeson’s alarm 24/7 for the last seven years and it was offline for almost the entire time. Comcast knew about its non-security system since 2007, but never bothered to tell the family. A follow-up visit from a Comcast technician this month quickly revealed the alarm was installed improperly by the cable company.

“It was unable, even if wanted to, to actually call the police and or Comcast once it was activated,” explained Leeson.

So ultimately whose fault is it that Comcast’s home security system never worked? The company that improperly installed it and knew it wasn’t working for the duration of 80 monthly payments it faithfully collected for service never rendered, or the customer?

In the corporate world of Comcast, it’s absolutely the customer’s fault — exactly what both a customer service representative and a corporate spokesman told the Leeson family.

A Comcast customer service representative was only willing to offer a one-time $20 “inconvenience credit” and the corporate spokesman apologized but pointed to a line in Leeson’s alarm agreement where she agreed to “test her system on a regular basis.”

It simply wasn’t good enough to trust Comcast’s alarm control panel notifying the family the alarm was armed and security monitoring was enabled. She’d have to trigger the system, potentially annoying the neighbors and first responders to prove the system worked properly.

Houston police and fire officials beg to differ.

In an ongoing effort to reduce costly and unnecessary false alarms, the city has implemented alarm permit and penalty fees for wasting the time of emergency personnel.

A residential burglar alarm in the city of Houston requires an annual permit ranging in cost from $37-50. A fire alarm permit costs $80.29 the first year, $53.52 each year thereafter. Three false burglar alarm calls are allowed without a charge with a burglar alarm permit per year. The 4th and 5th false alarm call is chargeable at $50.00 each and the 6th and 7th call is chargeable at $75.00 each. Thereafter each false alarm call is chargeable at $100.00 each. Permits are subject to revocation after the 7th false call. Burglar alarm systems without a permit are chargeable at $107.05 per response and/or no response.

Hold-up/panic alarm systems are allowed one false call without charge with a hold-up/panic permit. Thereafter the 2nd call is chargeable at $128.45, the 3rd false call at $256.92 and the 4th false call is chargeable at $385.37. Thereafter the 5th false alarm and above are chargeable at $513.84 (each). Panic alarm systems without a permit are chargeable at $282.61 per response and/or no response.

False fire alarms carry penalties up to $385.37 per incident with a $115.61 collection fee.

After a local television station got involved in the dispute, Comcast softened their hard-line and refunded every penny Leeson paid for the home security system that had left the family vulnerable since the day Comcast incorrectly installed it.

But after what the Leeson family endured, other alarm system customers should check their contracts and make sure they verify their system is working properly. Don’t depend on the alarm provider to notify you.

Most modern alarm systems alert the monitoring company when activated. That company in turn notifies the police, fire department or ambulance. All three agencies recommend using a monitoring company to reduce the instances of false alarms. Older systems often used a built-in message tape recorded by the homeowner. When the alarm triggered, the system would phone 911 and play back the recorded message. Those systems are responsible for the largest percentage of false alarms.

Comcast says customers with its XFINITY alarm can test their systems using the My Account app on their smartphones. The Leeson family uses an older model Comcast security system that doesn’t work with the app.

[flv]http://www.phillipdampier.com/video/KPRC Houston Comcast Insecurity System 5-28-14.flv[/flv]

KPRC in Houston has words of wisdom for Comcast security system owners. Are you really protected? (2:07)