As expected, Charter Communications formally announced its acquisition of Time Warner Cable and Bright House Networks in a deal worth, including debt, $78.7 billion.

The deal brings Dr. John Malone, a cable magnate during the 80s and 90s, back into the top echelon of cable providers. Malone orchestrated today’s deal as part of his plan to dramatically consolidate the American cable industry. Malone’s Liberty Broadband Corp. assisted in pushing the deal across the finish line with an extra $5 billion (supplied by three hedge funds) in Charter stock purchases.

The companies expect to win regulator approval and close the deal by the end of 2015.

“No one has ever had a better sense of the multichannel world than John [Malone],” Leo Hindery, a veteran cable-industry executive, told the Wall Street Journal. “Obviously he sees in Charter and Time Warner Cable a way to perpetuate a legacy that is unrivaled.”

But the man who may have made today’s deal ultimately possible was FCC chairman Tom Wheeler. Last week, he personally called cable executives at Charter and Time Warner Cable to reassure them the FCC was not against all cable mergers just because it rejected one involving Comcast and Time Warner Cable.

But Wheeler warned he would only approve deals that were in the public interest.

“In applying the public interest test, an absence of harm is not sufficient,” Mr. Wheeler said.

Consumer groups are wary.

“The cable platform is quickly becoming America’s local monopoly broadband infrastructure,” said Free Press Research Director S. Derek Turner. “Charter will have a tough time making a credible argument that consolidating local monopoly power on a nationwide basis will benefit consumers. Indeed, the issue of the cable industry’s power to harm online video competition, which is what ultimately sank Comcast’s consolidation plans, are very much at play in this deal.”

“Ultimately, this merger is yet another example of the poor incentives Wall Street’s quarterly-result mentality creates,” Turner added. “Charter would rather take on an enormous amount of debt to pay a premium for Time Warner Cable than build fiber infrastructure, improve service for its existing customers or bring competition into new communities.”

[flv]http://www.phillipdampier.com/video/Bloomberg Inside the Charter Plan to Buy Time Warner Cable 5-26-15.flv[/flv]

A panel of Wall Street analysts discusses the chances for Charter’s plan to buy Time Warner Cable and Bright House Networks. Some analysts continue to frame regulator approval over video programming costs, while others argue broadband is the key issue the FCC and Justice Department will consider when reviewing the merger. From Bloomberg TV. (5:36)

A heavily indebted Charter Communications will not own the combined entity free and clear. At the close of the deal, Time Warner Cable shareholders will own up to 44% of the new company, Liberty Broadband up to 20%, Advance/Newhouse (Bright House) up to 14%. Charter itself will own just 22%, but will be able to leverage voting control over the entity with the help of Malone’s Liberty, which will get almost 25% of the voting power. That will give Charter just enough of a combined edge to control the destiny of “New Charter.”

As with the aborted deal with Comcast, lucrative golden parachutes are expected for Time Warner’s top executives who will be departing if the deal wins approval. In their place will be Charter Communications CEO Thomas Rutledge and a board compromised of 13 directors (including Rutledge himself). Seven directors will be appointed by independent directors serving on Charter’s board, two designated by Advance/Newhouse and three from Liberty Broadband, again giving Rutledge and Malone effective control.

Current Time Warner Cable and Bright House Networks customers will see major changes if Charter follows through on its commitment to bring Charter’s way of doing business to both operators.

No More Analog Television

Charter told investors at today’s merger announcement it will accelerate the removal of all analog television signals on TWC and Bright House cable TV lineups to free capacity for faster Internet products, more HD channels, and “other advanced products.”

Time Warner Cable CEO Rob Marcus told investors earlier this month TWC was already well-positioned with excess spectrum from moving lesser-watched analog channels to digital service and using “Switched Digital Video,” a technology that conserves bandwidth by only sending certain cable channels into neighborhoods where customers are actively watching them. This allowed Time Warner Cable customers to avoid renting a cable box for lesser-watched, cable-connected televisions in the home.

Charter’s plan requires a cable box on every connected television, at an added cost. The standard lease rate for the digital decoder box is $6.99 per month, and those customers on the lowest basic tier will likely receive at least two devices for up to two years for free, or five years for customers on Medicaid. Customers who subscribe to higher tiers of service or premium channels may receive only one device for free for one year before the monthly lease rate applies. For a home with an average of three connected televisions, this will eventually cost an extra $21 a month. DVR boxes cost considerably more.

No More Modem Lease Fee, But Only Two Choices for Internet Service

The good news is Charter does not apply any modem lease fees and there is a good chance if you already purchased your own modem, Charter will continue to let you use it. The bad news is that if you were used to sticking with a lower-speed broadband tier to save money, those days are likely coming to an end. Charter’s “simplified” menu of broadband options cuts Time Warner’s six choices and Bright House’s five options to just two:

• 60/4Mbps for Spectrum Internet ($59.99)
• 100/5Mbps for Internet Ultra ($109.99)

This is likely to be a red flag for regulators concerned about broadband affordability. Although it is likely Charter may offer concessions by grandfathering existing Time Warner Cable and Bright House customers under their current plans, Charter has nothing comparable to Time Warner’s “Everyday Low Price Internet” for $14.99 a month or a 6Mbps Basic broadband alternative far less expensive than Charter’s entry-level Internet tier. Bright House customers are not likely to experience something similar. The entry-level 15Mbps broadband-only plan is $65 a month without a promotion, according to Bright House.

Charter is rumored to be testing speed boosts for those two tiers for deployment in areas where they face fiber competitors. The first phase would raise Spectrum speeds to 100/25Mbps and Ultra to 300/50Mbps with plans to further increase speeds when DOCSIS 3.1 arrives — likely to 300/50Mbps for Spectrum and 500/300 for Ultra, at least where Google Fiber, U-verse with GigaPower, and Verizon FiOS offers competition.

Recently, Charter has followed Time Warner Cable’s marketing script and is actively promoting the fact the company has no data caps on broadband service, but Charter had a history of loosely enforced “soft caps” for several years in the recent past, so we’re not convinced data caps are gone for good at Charter.

Pricing & Service

Charter enjoys a higher rate of revenue per customer than either Time Warner or Bright House, which is a sign customers are paying more. It is likely Charter’s reduced menu of choices is responsible for this. Although customers do get a better advertised level of service, they are paying a higher price for it, with no downgrade options. Ancillary equipment rental fees for television set-top boxes are also a likely culprit.

Charter also tells investors its merger with Time Warner and Bright House will bring “manageable promotional rate step-ups and rate discipline” to both companies. That means Charter will likely be less generous offering promotions to new and existing customers. Like Time Warner and Bright House, Charter will gradually raise rates on customers coming off a promotion until they eventually reset a customer’s rates to the regular price. But while Time Warner, in particular, was receptive to putting complaining customers back on aggressively priced promotions after an old promotion ended, Charter is not.

Charter customers tell us the company’s customer service department is notoriously inconsistent and promotional rates and offers can vary wildly. For some, Charter only got aggressive on price after they turned in their cable equipment and closed their accounts.

As far as service is concerned, CEO Thomas Rutledge has managed significant improvements while at Charter. What used to rival Mediacom in Consumer Reports’ annual ranking of the worst cable companies in America is now ranked number nine (Bright House took fourth place, Time Warner Cable: 12th).

But the presence of Malone in this deal, even peripherally, is a major concern. Malone-run cable companies are notorious for massive rate increases and poor customer service. Sen. Al Gore routinely called his leadership style of Tele-Communications, Inc. (TCI), since sold to Comcast, the Darth Vader of a cable Cosa Nostra and Sen. Daniel Inouye from Hawaii once remarked in a Senate oversight hearing that Malone’s executives were a “bunch of thugs.”

[flv]http://www.phillipdampier.com/video/Bloomberg Charter CEO Comfortable With Price Paid for Time Warner 5-26-15.flv[/flv]

Watch Charter Communications CEO Thomas Rutledge stumble his way through an answer to a simple question: What are the public benefits of your merger with Time Warner Cable that the deal with Comcast didn’t offer? Did you like his answer? (5:28)

Verizon Communications this morning announced it will buy AOL, Inc., in a $4.4 billion cash deal that will provide Verizon with powerful mobile video and advertising platforms.

Originally known for its ubiquitous dial-up Internet access, AOL today is better described as a content and advertising aggregator — putting online video in front of viewers bolstered by AOL’s powerful advertising technology that can match a targeted advertising message to a specific viewer in milliseconds.

AOL’s portfolio also includes the well-known Engadget, TechCrunch and Huffington Post websites, which many analysts expect will not be part of the deal, quickly spun off to a new owner(s) to avoid any political headaches over Verizon’s control of the well-known content sites, some including coverage critical of Verizon.

All signs point to the AOL acquisition as more evidence Verizon management is shifting priorities to its mobile business, Verizon Wireless. In 2014, Verizon acquired the assets of Intel Media, which was planning an Internet TV service called OnCue. Verizon’s acquisition will help it develop an alternative television platform and many analysts expect it will primarily reach Verizon Wireless customers.

Complimenting online video with AOL’s ad placement and insertion platform will likely be the best chance Verizon has to monetize that video content.

“Certainly the subscription business and the content businesses are very noteworthy,” confirmed Verizon’s president of operations, John Stratton. “For us, the principal interest was around the ad tech platform.”

[flv]http://www.phillipdampier.com/video/Bloomberg Why Verizon Coveted AOLs Ad Technology and Mobile Video 5-12-15.flv[/flv]

Bloomberg says Verizon’s real interest in AOL is their online advertising platform, which can bolster Verizon Wireless’ mobile video service. (2:39)

Verizon’s $4 billion investment in AOL did not go into expanding its fiber optic platform FiOS.

Verizon Wireless Multicast

“For the price it’s paying for AOL, Verizon could deploy its FiOS broadband service across the rest of its service area, bringing much-needed services and competition to communities like Baltimore, Boston and Buffalo,” said Free Press research director S. Derek Turner. “Instead, the company is spending a fortune to wade into the advertising and content-production markets. In terms of the latter, Verizon has already shown a willingness to block content and skew news coverage.”

As Stop the Cap! reported last week, that isn’t a surprise to some utility companies that believe all signs point to Verizon’s growing disinterest in its wireline division. Florida Power & Light expects Verizon will become a wireless only company within the next 10 years.

While AT&T explores expanding its wireless service internationally and seeks approval for its acquisition of satellite service DirecTV, Verizon Wireless is moving to monetize increased customer usage of its network with the forthcoming introduction of a video service this summer. The product would offer a mix of ad-supported and paid short video content and may offer live multicast programming that can reach a larger audience without disrupting network capacity.

Increased viewing of high bandwidth video will force Verizon customers to continually upgrade data plans, further monetizing Verizon’s wireless business. AOL’s ad insertion technology will allow Verizon to earn advertising income from viewers, creating a dual revenue stream.

Verizon can also sell advertisers information about its massive customer base of wired and wireless customers, including their browsing habits and demographic profile to deliver “data-driven marketing and addressable advertising.”

[flv]http://www.phillipdampier.com/video/Bloomberg Verizon-AOL Deal 1999 All Over Again 5-12-15.flv[/flv]

Bloomberg News puts together several of Verizon’s puzzling recent acquisitions, which point to a shift of Verizon’s business towards its mobile and content platforms. (5:42)

With billions of dollars in new revenue and royalties to be made, Qualcomm and some members of the wireless industry are pushing regulators to quickly approve a new version of LTE wireless technology that will share many of the same frequencies used by home and business Wi-Fi networks, creating the potential for speed-killing interference.

Wireless operators believe LTE-Unlicensed (LTE-U) could be used to offload much of the growing wireless data traffic off traditional 4G LTE wireless data networks. With the cost of securing more wireless spectrum from regulators growing, LTE-U technology would allow operators like AT&T, Verizon, Sprint and T-Mobile to use the U-NII-1 (5150-5250MHz) and U-NII-3 (5725-5850MHz) unlicensed bands currently used for Wi-Fi to deliver high-speed wireless broadband traffic to their customers.

Qualcomm and Ericsson, behind the newest iteration of LTE, have a vested interest promoting it as the ideal choice for metrocell, indoor enterprise, and residential small cell applications. Every manufacturer incorporating LTE-U technology into everything from carrier-owned microcells to smartphones will owe royalty payments to both companies. With billions at stake, Qualcomm is doing everything possible to tamp down fears LTE-U signals will create harmful interference to Wi-Fi signals.

[flv]http://www.phillipdampier.com/video/CES2015 Qualcomm Demonstrates LTE-U 1-2015.mp4[/flv]

At the Consumer Electronics Show in Las Vegas held in January, a Qualcomm representative went as far as suggesting LTE-U will improve home Wi-Fi service. (5:42)

RCRWireless News:

[Qualcomm] set up a screened room with eight pairs of access points occupying the same channel and added Wi-Fi access-point terminals in one room and LTE-U terminals in another. The results show the average throughput of 3.3Mbps with Wi-Fi alone more than doubled to 6.7Mbps when the LTE-U access point was introduced.

In another test to show that LTE-U is a better neighbor to Wi-Fi than Wi-Fi itself, they took eight Wi-Fi nodes and replaced four of them with LTE-U nodes, the result of which showed a 1.9Mbps increase in average Wi-Fi throughput. In almost every test, the LTE-U enhanced network outperformed traditional Wi-Fi.

Burstein

Industry observer Dave Burstein is concerned advocates of LTE-U are trying to rush approval of the technology without verifying Qualcomm’s non-interference claims.

“The telcos are considering 40 and 80MHz channels that could easily swallow half of more of the Wi-Fi spectrum,” Burstein writes in response to an EE Times article about the technology. “If Wi-Fi is important, that’s a mistake to allow. Advocates are trying to rush it through even though there is not a single independent test or field trial.”

Qualcomm dismisses the interference complaints pointing to its own research showing the two standards can co-exist adequately. But multi-billion dollar wireless companies with nationwide Wi-Fi networks at stake are far less confident. In fact, LTE-U has already divided the two largest wireless carriers in the United States. Verizon Wireless is an original proponent of LTE-U while AT&T has expressed “concern,” a polite way of saying it isn’t happy. What separates AT&T and Verizon Wireless? AT&T has invested in a nationwide network of more than 34,000 Wi-Fi hotspots. Verizon offers just over 5,000, most for FiOS customers or those in especially high traffic venues.

A Stanford University professor with no ties to Qualcomm or the wireless industry privately shared his belief allowing 5GHz Wi-Fi signals to commingle with LTE-U is going to cause problems.

The development of “Wild West” Wi-Fi has always tracked differently than the licensed cellular/wireless business. Over more than a decade, evolving Wi-Fi standards have come to expect interference from other nearby Wi-Fi signals. In a densely packed city, more than two dozen Wi-Fi signals can easily be found all competing for their own space across the old 2.4GHz and newer 5GHz unlicensed bands.

Wi-Fi proponents credit its robustness to its “politeness protocol.” Before a wireless router or home hotspot fires up its Wi-Fi signal, it performs several tests to check for other users and constantly adjusts performance by backing off when it discovers interference from other signals. That is why a user can receive strong Wi-Fi signals but still endure reduced performance, as the hotspot accommodates nearby hotspots and other traffic.

It works reasonably well, according to Rupert Baines, a consultant at Real Wireless.

“But [Wi-Fi signals] are delicate, and they rely on implicit assumptions that there aren’t other things there (or aren’t too many),” Baines told EE Times. “In effect, they behave as though the unlicensed band were not technology neutral but were Wi-Fi only.”

The intrusion of LTE-U changes everything.

[flv]http://www.phillipdampier.com/video/Wireless Week Tuesdays with Roger LTE-Us Gain is Wi-Fis Loss 3-24-15.flv[/flv]

On the March 24, 2015 episode of Tuesdays with Roger, Recon Analytics’ founder Roger Entner talks with Wireless Week about the questions raised as major carriers, including T-Mobile and Verizon Wireless, plan to launch LTE into unlicensed territory. Concerns abound, particularly for consumers and companies who rely on Wi-Fi and don’t want licensed use in unlicensed bands to interrupt that service. (7:31)

Change in and of itself is not necessarily a bad thing, especially if LTE-U is superior to Wi-Fi, and some proponents suggest it is. Jag Bolaria, an analyst at The Linley Group, argues LTE better manages data/call handoff better than Wi-Fi access points can. LTE is also a more efficient spectrum user than Wi-Fi.

Last week, South Korea’s LG U+ demonstrated LTE-U was capable of 600Mbps speed, eight times faster than traditional LTE. But to accomplish that level of speed, LG U+ had to occupy 60MHz of bandwidth in the 5.8GHz band and allocate an extra 20MHz from its traditional LTE service. The company plans to further expand its use of South Korea’s 5.8GHz unlicensed band by occupying 80MHz of it to further boost speeds to 750Mbps. But the company did not say how the tests affected others sharing the same frequencies.

If LTE-U is superior, then why not gradually move every user towards the technology and away from Wi-Fi?

Aptilo Networks AB CEO Torbjorn Ward answers LTE-U is a solution in search of a problem.

“I think LTE on unlicensed sounds like a good idea if it wasn’t for the fact that there are four billion devices on Wi-Fi out there,” he told Light Reading, noting that 802.11ac can already run at 100Mbps, so there’s little need for the LTE boost. “I think when it comes to unlicensed, you can do a longer range with LTE, but I don’t see the full benefit.”

That does not seem to matter to LTE-U’s developers or cell phone companies that lack robust Wi-Fi networks of their own.

In the original Qualcomm/Ericsson proposal, both companies promote the fact they could launch LTE-U in the unlicensed Wi-Fi bands “as-is.” That is a big problem for AT&T and other Wi-Fi users because LTE-U evidently employs few, if any protection protocols in its initial specifications for other traffic. Verizon Wireless is reportedly lobbying against the development of interference protection protocols and has publicly asserted its interest in deploying LTE-U regardless of other users.

“In [the] USA, there are no requirements for unlicensed deployment that require changes to LTE air interface,” Verizon stated in its proposal: “New Band for LTE deployment as Supplemental Downlink in unlicensed 5.8GHz in USA.”

LTE-Unlicensed has been characterized as “rude” for not avoiding interference to other users.

Clint W. Brown, business development director of mobility wireless connectivity at Broadcom, and a vice-chairman of the Wi-Fi Alliance counters it is premature to approve LTE-U in the unlicensed Wi-Fi band without more testing and information about its interference protocols.

“We’ve heard about the tests they’ve done, but it’s not factual,” Brown told EE Times. We haven’t seen the data and we don’t know how the tests were set up. First, I’d like to see if [LTE-U] can detect low-level signals. Second, I want to make sure it features a ‘Listen before Talk’ decision process so that LTE-U will wait for an opening rather than barging into the conversation already taking place in the unlicensed spectrum. Third, there should be a back-off mechanism, when it sees a collision. “We aren’t aware of any publicly available documents explicitly stating those attributes.”

The Federal Communications Commission has also now taken an interest and issued a public notice asking stakeholders and consumers to share their thoughts on LTE-U and a companion technology known as Licensed Assisted Access (LAA) that would hand off data sessions between a wireless carrier’s traditional 4G LTE network and LTE-U.

The makes the discussion political as well as technical. The FCC traditionally permits industry groups to define standards, but Republican Commissioner Mike O’Rielly now worries the FCC might butt into that process.

“The decision to jump into this space rather casually causes me great concern,” O’Rielly said. “In particular, any step that could insert the commission into the standards work for LTE-U comes with great risk. I will be vigilant in ensuring that the commission’s involvement does not result in taking sides with various stakeholders, hindering technological innovation, or having any say about what technologies should or should not be deployed.”

For the moment, O’Rielly’s concerns about the FCC are premature as long as a division exists over LTE-U among many of the industry players:

• Companies FOR LTE-U: Verizon, China Mobile, Qualcomm, Ericsson, NTT DoCoMo, T-Mobile USA, Deutsche Telekom, TeliaSonera, and China Unicom.  Equipment manufacturers also in support: Nokia, NSN, Alcatel-Lucent, LG, Huawei, ZTE, Hitachi, Panasonic, and others;
• Companies AGAINST LTE-U (as now defined): Orange, Telefónica, Vodafone, AT&T, Sprint, SouthernLINC, US Cellular, DISH and a handful of vendors.

Burstein also uncovered evidence the wireless industry may be stacking the deck against increased competition and consumers. He found 11 of the world’s largest wireless companies (including AT&T, T-Mobile, and Sprint) quietly colluding on a proposal that would block anyone other than currently licensed LTE users from being able to use LTE-U on a standalone basis. The opaquely-titled proposal, “Precluding standalone access of LTE on unlicensed carriers,” is at least frank about its reasoning: “Standalone deployment in unlicensed spectrum implies drastically different business models from nowadays and might impact the value chain.”

In other words, if consumers are able to get savings from LTE-U using a new generation of non-traditional providers like Republic Wireless or Cablevision’s Freewheel that do not depend primarily on cellular networks, it could cost those 11 traditional wireless companies billions in lost revenue. To stop that, the companies propose requiring a special LAA “guard signal” to stop standalone access of LTE-U. Since only licensed cell phone companies have access to those frequencies, it automatically locks out new upstarts that lack mobile spectrum of their own.

Sneaky insertions like that may be exactly why the Obama Administration’s FCC is being more activist about monitoring the wireless industry, potentially cutting off anti-competitive proposals before they can become adopted as part of a formal technical standard.

[flv]http://www.phillipdampier.com/video/Fairness to Wi-Fi and LTE unlicensed 5-8-2015.mp4[/flv]

RCRWireless News gets deep into the development of LTE-Unlicensed and how it will impact cellular infrastructure, Wi-Fi and small cells. (25:39)

A Pennsylvania couple overcharged over $600 for a cable box they returned more than five years ago got nowhere repeatedly calling Comcast customer service about a refund and only got a response from the cable company when they took their story to a local Philadelphia TV station’s troubleshooter.

Comcast’s response? “We will issue an even $600 credit” -if- the Lehman family agreed to sign a Non-Disclosure Agreement promising to keep the refund a secret and stay off the evening news.

“I think they are horrible to their customers,” Carol Lehman told WPVI-6’s Action News Troubleshooters in Philadelphia, Comcast’s corporate hometown. “I am not happy about it, that’s over $600.”

Isolated case? Think again. Tim Hershey in Sicklerville, N.J., told WPVI he was charged for more than five years for a returned cable box himself.

The Cameron family added Comcast charged them for an extra month of service after the company said they did not turn in their cable box either.

“The problem is their customer service needs to be fixed – I mean there’s something radically wrong,” said Sienna Cameron.

All three families spent years pursuing refunds from Comcast to no avail.

“Dealing with them is like banging your head against the wall – you get nowhere,” said John Lehman.

“Over and over – every time I’d have to go through the whole thing,” said Ronald Cameron.

Comcast’s demand the Lehman family sign an agreement to keep their mouths shut before getting a refund was left in a voicemail message, promptly replayed for viewers on the evening news, leading to an embarrassed response from Comcast that new and improved customer service was on the way.

“We have apologized to our customers and these issues have since been resolved to their satisfaction,” a Comcast spokesperson told the station. “This week, Comcast announced plans to significantly improve the customer experience, and those efforts will go a long way to prevent the experiences these customers went through last year.”

WPVI’s consumer reporter remains skeptical.

“Keep your receipt,” said Nydia Han, noting the station receives more complaints about Comcast than any other company.

For broadband in western Massachusetts, the vote is nothing less than a referendum on moving forward or getting left behind indefinitely.

Wired West’s co-op of communities in western Massachusetts.

Hussain Hamdan of Hawley, has launched a one-man war on public broadband, actively seeking signatures on a petition to pull his community of 347 out of the project, claiming it is too costly. Hamdan argues wireless broadband is a more suitable solution for the town. His petition, signed by at least 36 residents, wants no part of the WiredWest initiative, but he’d go further. Hamdan proposes to outlaw municipal utility services altogether, forbid selectmen or other town boards from appropriating a single penny for any WiredWest project, prohibit spending on postage for any mailings discussing public broadband, and even making sure town officials attending a function on municipal broadband are not reimbursed for their mileage expenses. Coincidentally, another Hamdan petition seeks the right to recall elected officials, ensuring any ousted politician cannot be re-elected to office for at least three years. (Hamdan denies his recall election proposal targets any town official specifically.)

Despite all this, Hamdan claims he is for bringing high-speed Internet access to town, just not through WiredWest. Unfortunately for the 300+ other residents of Hawley that did not sign the petition, Hamdan’s enthusiasm for alternative service has not been matched by a single interested provider seeking to fill Hawley’s broadband chasm.

Because Mr. Hamdan didn’t do his homework, we have, and here are the “alternatives” Hawley residents can actually consider:

Convincing Time Warner Cable to Come to Town

Assuming Time Warner Cable was somehow persuaded to offer service, as they already do in parts of western Massachusetts, they will expect considerable compensation to extend their cable network to a community that fails to meet their Return on Investment requirements. It will be an uphill battle. Next door in upstate New York, Time Warner Cable needed $5.3 million in taxpayer incentives just to expand service to, at most, 5,320 homes or businesses around the state that were already close to existing Time Warner service areas, but had no access to cable before. Conclusion: Time Warner Cable already serves the areas they feel comfortable serving.

Mark Williams, who lives in Lee – Berkshire County, wanted Time Warner Cable service at his home. Lee has franchised Time Warner Cable to provide service throughout the community, so Williams didn’t think twice about ordering service. When the company arrived, it found his driveway was 100 feet too long.

Time Warner has a formula that determines who will pay to install necessary infrastructure. If a certain number of properties are located within a specific radius, they cover the costs. If a community isn’t presently served, if residents live too far apart, or have an unusual property, Time Warner expects the town or resident to cover part of their costs. In Williams’ case, $12,000 was initially quoted to wire his home back in 2010. Because Time Warner had already committed to provide service in the area, the bad publicity that resulted from that installation fee forced Time Warner to back down. But in unserved communities, the costs spiral even higher. Residents on the fringe of a cable coverage area are routinely quoted, $15,000, $20,000, even $35,000 just to get a cable line extended to a single home from a nearby street. We’re not sure how far away Hawley is from the nearest Time Warner Cable service area, but it is a safe bet the company would need enormous taxpayer-funded incentives from local residents to extend universal cable service in the community.

If both Time Warner and WiredWest were providing service side-by-side in Hawley today, residents would pay Time Warner Cable $911/yr for 20Mbps Turbo Internet broadband, including the $8/mo modem lease fee or $588/yr to WiredWest for 25Mbps broadband. WiredWest would save residents $323 a year — and help pay off its infrastructure costs while keeping the money in the community.

Assuming Time Warner Cable is never going to be an option, which we think is likely, the wireless alternatives suggested by Hamdan largely do not exist at this time, are unfeasible, or no longer meet the FCC’s minimum definition of broadband.

White Space Broadband: Can It Work in Western Mass.?

First, let’s consider “white space” broadband – high-speed wireless Internet access delivered over unused TV channels. At the moment, this service is still in the experimental stages in most areas, but as Stop the Cap! previously reported, it has promise for rural communities. Unfortunately, despite Hawley’s small size and rural location, the current database of available free channels to offer white space Internet access in the area is discouraging, based on the address of the community’s town office on Pudding Hollow Drive. There are just six open channels because of an abundance of TV signals in Connecticut, Vermont, Massachusetts, and New York that get precedence. Of these six, there are just four optimal choices – UHF channels 14-17. In our previous story highlighting Thurman, N.Y.’s white space project, there are 17 open channels in that area, none on VHF or reserved for radio astronomy. Feel free to use the database to see how many open channels are available in your local area.

Not much room at the inn. White space broadband will be a challenge in signal-dense northeastern states.

But the news may be even worse. The FCC is currently preparing to “repack” the UHF dial around the country by consolidating existing stations on a smaller number of channels. The freed up bandwidth will be auctioned off to cell phone companies to boost their networks. This month, we learned the wireless industry’s largest lobbying group is pushing hard to force other users to vacate “their” spectrum the moment they begin testing on those frequencies. Interference concerns and the dense number of TV signals already operating in the northeastern U.S. means it is very likely communities like Hawley will have even less opportunity to explore white space broadband as an option.

What About Wireless ISPs?

Second, there are traditional Wireless ISPs (WISPs) which do a reasonably good job reaching very sparsely populated areas, as long as customers are willing to sacrifice speed and pay higher costs.

BlazeWIFI advertises service in the rural community of Warwick, Mass (zip code: 01378). But it is anything but a bargain. The least expensive plan is $99.99 a month and that offers the dismally slow speed of 1.5Mbps for downloading and only 512kbps for uploading. It also includes a data cap of 25GB a month. That is slowband and a last resort. It’s more expensive, it’s slower, and it is usage-capped.

Some WISPs offer faster service, but few are equipped to handle the FCC’s definition of 25Mbps as the minimum speed to qualify as broadband. In short, this technology may eventually be replaced by white space broadband where speeds and capacity are higher, as long as suitable unused channel space exists.

What About Wireless Home Internet Plans from AT&T, Verizon Wireless?

Third, there are wireless broadband solutions from the cell phone providers. Only Hawley residents can decide for themselves whether AT&T and Verizon Wireless deliver robust reception inside the community. If they do, both companies offer wireless home Internet service.

The base charge for AT&T’s plan is $20 for unlimited nationwide phone calling + $60/mo for a 10GB Wireless Home Internet Plan. There is a 2-yr contract and a $150 early termination fee. Since the average household now uses between 15-50GB of Internet service per month (lower end for retired couples, 35GB median usage for AT&T DSL customers, but even more for young or large families), you have to upgrade the plan right from the start. A more suitable 20GB plan is $90/month. A 30GB plan runs $120 a month. The overlimit fee is $10/GB if you run over your plan’s limit. You will also be billed “taxes & federal & state universal service charges, Reg. Cost Recovery Charge (up to $1.25), gross receipts surcharge, Admin. Fee & other gov’t assessments which are not gov’t req’d charges.” Verizon’s plan is similar.

You must have robust cell coverage for this service to work and be ready for speeds of 5-20Mbps, getting slower as more customers join a cell tower. The lowest rate available runs about $90 a month after taxes and fees are calculated and you need to switch it off when you approach 10GB of usage to avoid additional fees.

What is the Best Option?

No broadband? No sale.

As we have seen across the United States, communities offered the possibility of fiber optic Internet are embracing it, some even begging for the technology. There is simply no better future-proof, high-capacity broadband technology available. But installing it has been costly – a fact every provider has dealt with. Most rural providers treat fiber optic technology as an investment in the future because it has very low maintenance costs, is infinitely upgradable, and can offer a foundation on which current and future high-bandwidth online projects can expand.

The fact is, western Massachusetts has been left behind by Comcast and Time Warner Cable, as well as Verizon. Nobody in the private sector is coming to the rescue. Verizon has stopped expanding its FiOS fiber network and all signs point to its growing interest in exiting the landline and wired broadband business altogether in favor of its higher profit Verizon Wireless. Cable operators strictly adhere to a Return on Investment formula and will not expand service areas without major taxpayer support.

In communities in more conservative states like Tennessee and North Carolina, the obvious choice was for local governments and municipal power companies to provide the service other providers won’t. Despite the industry funded scare stories, projects like EPB Fiber in Chattanooga and GreenLight in Wilson, N.C., are doing just fine and attract new businesses and jobs into both regions. They offer far superior service to what the local cable and phone company offer in those areas.

It is unfortunate rural residents have to effectively pay more to get a service urban areas already have, but to go without would be disastrous for school-age children, local entrepreneurs, agribusiness workers, and tele-medicine.

Mr. Hamdan argues Hawley cannot afford WiredWest. But if one looks deeper at the alternatives, it becomes clear Hawley can’t afford not to be a part of a service that is likely to be ubiquitous across the region. Even those not interested in the Internet can ask any realtor how important Internet access is to a homebuyer that considers inadequate broadband a deal-breaker. That could cost much more than the $350/yr Mr. Hamdan theoretically suggests WiredWest will cost Hawley.

Mr. Hamdan offers no real answers for his community about alternatives that are available, affordable, and capable of providing the kind of service WiredWest is proposing. Voters should carefully consider the economic impact of leaving their community in a broadband backwater as the rest of the region advances towards fiber optic broadband. That is the cost that is too high to pay.

[flv]http://www.phillipdampier.com/video/Wired West Western Mass broadband woes 1-15.mp4[/flv]

Wired West project coordinators didn’t have to go far to hear broadband horror stories in western Massachusetts, which has some of the worst Internet access in the world. (17:51)