Cable ONE today announced it has acquired family owned cable operator Fidelity Communications, in a $525.9 million cash deal.

Fidelity serves 134,000 residential and business customers in smaller communities in Arkansas, Louisiana, Missouri, Oklahoma, and Texas. Cable ONE showed interest in Fidelity because many of its small cable systems are not too far away from existing Cable ONE systems that also target smaller communities.

Fidelity systems typically sell broadband at speeds of 50 Mbps ($64.99) and 100 Mbps ($89.99).

Fidelity does not usage cap its customers, Cable ONE does.

Cable ONE has also been criticized for charging the highest price residential broadband service in the country.

Fidelity currently serves customers in:

Arkansas
Alexander
Bauxite
Beebe
Benton
Bryant
Cherokee Village
Hardy
Haskell
Hensley
Highland
Little Rock
Mabelvale
Mammoth Springs
Maumelle
North Little Rock
Pulaski
Shannon Hills

Louisiana
Erwinville
Glynn
Jarreau
Lakeland
Morganza
New Roads
Oscar
Rougon
Ventress

Missouri
Adrian
Buffalo
El Dorado Springs
Gerald
Harrisonville
Lebanon
Nevada
New Haven
Owensville
Rolla
Salem
Sullivan
Thayer
West Plains

Oklahoma
Lawton

Texas
Atlanta
Carthage
Hallsville
Jefferson
Marshall
Queen City

Cable One will rebrand itself Sparklight starting in the summer of 2019, reflecting a refocus on selling broadband service.

“We are very excited for this evolution to our new brand and the next chapter in our story,” Cable One CEO Julie Laulis said in a statement. “Over the past several years we have evolved and our new brand will better convey who we are and what we stand for – a company committed to providing our communities with connectivity that enriches their world.”

The corporate name will remain Cable One, but like Charter’s Spectrum or Comcast’s XFINITY, customers will primarily know the company under its new brand.

Cable One provides service in these areas.

Cable One has just over 800,000 customers in 21 states nationwide, primarily in the South. The company’s decision to hold the line on the wholesale cost of its cable television package resulted in the company dropping Viacom-owned cable networks, which caused a significant number of customers to cancel service. Today, nearly 60% of its customers are broadband-only.

The cable company has also been criticized for dramatically raising the price of its internet service and for its regime of data caps, which limits most of its customers to 300 GB of usage a month. Customers who exceed their usage allowance three times during a calendar year “may be required to upgrade to an appropriate plan for data usage.”

Cable One currently offers four broadband options:

• Starter Plan (100/3 Mbps) $55/mo with up to 300 GB of usage
• Family Plan (150/5 Mbps) $80/mo with up to 600 GB of usage
• Streamer and Gamer Plan (200/10 Mbps) $105/mo with up to 900 GB of usage
• GigaONE (1000/50 Mbps) $175/mo with up to 1,500 GB of usage

Under the rebrand, the company will “streamline” its residential broadband options and pricing, which will likely push customers towards a more expensive, higher-speed tier. Sparklight will also offer unlimited data on any of its revamped tiers for an additional monthly fee. Both measures are likely to boost revenue, and customer bills.

“As consumer data consumption continues to increase, multi-device households become the norm, and businesses expect a broad suite of services, Sparklight will continue to evolve with our customers by offering innovative options to fit their needs, while providing helpful, proactive and personal local service,” Laulis said.

Cable One, the Phoenix-based mid-sized cable operator serving some of the poorest communities in the country is charging some of the nation’s highest prices for broadband service, raking in an unprecedented 47% margin in the fourth quarter of 2017, the highest in the cable industry.

That growth has come courtesy of CEO Julie Laulis, who has doubled down on data caps — automatically enrolling customers in higher priced plans if they exceed data caps three times in any 12-month period, raised prices, and ended most new customer and customer retention promotions in favor of ‘take it or leave it‘ pricing, especially on broadband service. Laulis has also decided to devote most of Cable One’s marketing efforts on selling broadband service, while de-emphasizing cable television. As a result, customers dissatisfied with Cable One’s lineup are encouraged to leave quietly.

Because video programming is costly to provide and broadband is relatively cheap to offer, the more the company can extract from its internet customers, the higher the profits earned. In 2011, cable television represented 49.1% of Cable One’s $779 million in revenue, with residential and commercial broadband comprising 34%. Today, 57% of Cable One’s $960 million in revenue comes from selling internet service. Cable One not only de-emphasized its video business, it also raised prices on internet service to further enhance earnings.

New customers coming to Cable One can subscribe to an entry-level broadband plan of 100 Mbps with a 300 GB monthly data cap for $55 a month. There are no discounts or promotions on this plan. But Cable One also requires customers to lease ($10.50/mo.) or buy an added-cost cable modem, raising the price higher. To prevent customers from taking advantage of promotions on higher speed products, Cable One requires customers to disconnect from service for a full year before being considered a new customer once again.

Laulis

Cable One has been able to raise prices and attach stingy usage caps to customers primarily because there are no good alternatives in the rural markets it prefers. One analyst said 77% of Cable One’s customers are in largely rural areas of Arizona, Idaho, Illinois, Missouri, Montana and Oklahoma. But prices are clearly getting too high for some, because the company lost more video and phone customers that it gained in new broadband subscriptions during the fourth quarter of 2017.

The fact Cable One broadband is now considered by many subscribers to be “too expensive” is also reflected by the extremely anemic broadband growth at Cable One. In 2017, the company added just 1.5% to its residential broadband customer base, despite very limited competition from phone companies.

MoffettNathanson’s Craig Moffett has complained all winter that Cable One is sacrificing broadband subscriber growth in favor of profits from price increases.

“[Cable One has] the most limited broadband competition of any publicly traded operator, and they have the lowest starting penetration,” Moffett told his investors. “Should they not be growing broadband the fastest of anyone? If price elasticity is greater than anyone thinks, how long is the runway, not just for Cable One, but for any operator choosing a strategy of price increases rather than unit growth?”

Cable One is also squeezing its newest customers at its latest acquisition – NewWave, which now features pricing very similar to Cable One. It recently started to turn over past due NewWave customers to collections after going 40 days past due. Previously, it was 90 days before account holders were threatened with cancellation and collections.

For now, NewWave’s introductory offer remains: 100 Mbps High-Speed Internet is $39 for the first three months before these rates kick in:

Rosenworcel

Significant, days-long outages of wireless cell, wireline, and 911 service in the aftermath of Hurricane Harvey are prompting a FCC commissioner to ask how things could go better the next time, even as Category 5 Irma is expected to head for Florida this week.

Democratic Commissioner Jessica Rosenworcel believes the FCC should look closely at the impact of Harvey on telecommunications networks in southeastern Texas and Louisiana and see what improvements can be made.

“As we begin to assess Harvey’s horrible toll on human life and property, we will need to take stock of what worked, what didn’t, and how we can improve when it comes to our communications infrastructure,” Rosenworcel said. “As we have done in disasters in the past, the Commission will need to study this hurricane and issue a report. That report must include a full plan for fixing the vulnerabilities that we are finding, from overloading 911 systems to out-of-service cell sites.”

Rosenworcel is also urging the Commission to insist that providers replace damaged telecommunications networks with better, more capable networks.

“[The study] should also include a framework for rebuilding so that the communities that have been impacted are not permanently relegated to the wrong side of the digital divide,” Rosenworcel urged. “Above all, we need to get started. We don’t have time to waste, because we know that weather emergencies can occur anywhere at any time, and learning from what happened with Harvey can help strengthen our communications networks and save lives.”

A week after the storm, telecommunications networks in the area affected by Harvey are still experiencing problems, although most cell service has been restored. The worst affected areas are in Aransas, Tex., where four of 19 cell towers are out of service and Orange, Tex., where 13 out of 85 cell towers are not working as of this morning.

Category 5 Irma projected to affect Florida.

There are at least 153,850 subscribers (down from at least 158,086 yesterday) out of service in the affected area. This includes users who get service from cable system or wireline providers.

Cable ONE announced last week that it will be waiving billing for its Texas Coast customers impacted by Hurricane Harvey for the duration of the storm until services are restored. The company also will not be charging customers for equipment damaged during the hurricane.

“Our thoughts and prayers are with the Texas and Louisiana communities that have been ravaged by Hurricane Harvey,” said Julie Laulis, president and CEO of Cable ONE.  “We urge all of our customers to stay safe and continue following the directives of local public safety officials as response and recovery efforts begin.”

Cable ONE’s disaster recovery plan is underway as teams review and map fiber breaks, assess damage to impacted plant and equipment, and assist and coordinate with other organizations to begin the process of repairing and rebuilding.

“We will do everything we can to restore service to every one of our affected customers as quickly as possible, including deploying additional technicians and resources,” Laulis said. “Our priority, after first ensuring the safety of our associates, is to continue to serve our residential and business customers during and after the hurricane.”

There are 5 (2 down from yesterday) radio stations out of service. Those are all in Texas – KFNC, KTXB, KKWV, KRVT, and KAYK.

Two television stations went off the air over the weekend but have now been restored as of this morning. KBTV is back at reduced power and KFDM is operating from a backup transmitter.

Emergency 911 service is back up and working normally in most parts of the region with these exceptions:

• 911 Calls Rerouted With No Automatic Location Information (ALI): Refugio County SO, Tex.
• 911 Calls Rerouted With ALI: Harris County Neutral SO, Tex.; Houston EC Training, Tex.; Port Aransas PD, Tex.; and West Columbia PD, Tex.

If the average customer isn’t paying $90 a month for broadband service, they are paying too little and that needs to stop.

That is the view of persistent rate hike advocate Jonathan Chaplin, a Wall Street analyst with New Street Research, who has advocated for sweeping broadband rate increases for years.

“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” Chaplin wrote in a note to investors. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 with a modem, paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable.”

Companies that fail to raise prices risk being downgraded by analysts with views like these, which can have a direct impact on a stock’s share price and the executive compensation and bonus packages that are often tied to the company’s performance.

But there is a dilemma and disagreement between some cable industry analysts about how much companies can charge their customers. Companies like Cable ONE have been aggressively raising broadband prices to unprecedented levels in some of the poorest communities in the country, which worries fellow Wall Street analyst Craig Moffett from MoffettNathanson LLC.

“Never mind that the per capita income in Cable ONE’s footprint is the lowest (by far) of the companies we [Moffett’s firm] cover, or that the percentage of customers living below the poverty line is the highest (also by far),” Moffett told his investor subscribers. “What matters is that there is very little competition in Cable ONE’s footprint. If you want high-speed broadband, where else are you going to go? The unspoken fear among their larger peers is that over-reliance on broadband pricing invites regulatory intervention, not just for Cable ONE, but for everyone.”

Chaplin thinks the risk from gouging broadband customers is next to zero. With cable TV becoming less profitable every day, all the big profits that can be made will be made from broadband, where cable operators often enjoy a monopoly on high-speed service.

According to Chaplin, if customers value internet access, they will pay the higher prices cable companies charge. So what are companies waiting for? Raise those prices!