“We just don’t see the need of delivering [gigabit broadband] to consumers.” — Irene Esteves, former chief financial officer, Time Warner Cable, February 2013

“For some, the discussion about the broadband Internet seems to begin and end on the issue of ‘gigabit’ access. The issue with such speed is really more about demand than supply. Most websites can’t deliver content as fast as current networks move, and most U.S. homes have routers that can’t support the speed already available.” — David Cohen, chief lobbyist, Comcast Corp., May 2013

“We don’t focus on megabits, we don’t focus on gigabits, we focus on activities. We go to the activity set to get a sense of what customers are actually doing and the majority of our customers fit into that 6Mbps or less category.” — Maggie Wilderotter, CEO, Frontier Communications, May 2013

“It would cost multiple billions” to upgrade Cox’s network to offer gigabit speeds to all its customers. — Pat Esser, CEO, Cox Communications, Pat Esser, chief executive of Cox Communications Inc., January 2013

“The problem with [matching Google Fiber speeds] is even if you build the last mile access plant to [offer gigabit speeds], there is neither the applications that require that nor a broader Internet backbone and servers delivering at that speed. It ends up being more about publicity and bragging. There has been a whole series of articles in the paper about ‘I’m a little startup business and boy it is really great I can get this’ and my reaction is we already have plant there that can deliver whatever it is they are talking about in those articles, which is usually not stuff that requires that high-speed.” — Glenn Britt, CEO, Time Warner Cable, December 2012

“Residential customers, at this time, do not need the bandwidth offered with dedicated fiber – however, Bright House has led the industry in comprehensively deploying next-generation bandwidth services (DOCSIS 3.0) to its entire footprint in Florida – current speeds offered are 50Mbps with the ability to offer much higher. We provision our network according to our customers’ needs.” – Don Forbes, Bright House Networks, February 2011

‘Charter [Cable] is not seeing enough demand to warrant extending fiber to small and medium-sized businesses — and certainly not to every household.’ — “Speedier Internet Rivals Push Past Cable“, New York Times, Jan. 2, 2013

Unless you live in Kansas City, Austin, in a community where public broadband exists, or where Verizon FiOS provides its fiber optic service, chances are your broadband speeds are not growing much, but are getting more expensive. The only thing innovative coming from the local phone or cable company is a constant effort to convince customers they don’t need faster Internet access anyway.

At least until a competitor threatens to shake up the comfortable status quo.

Time Warner Cable claims they are perfectly comfortable offering residential customers no better than 50/5Mbps, except in markets like Kansas City (and soon in Texas) where 100Mbps is more satisfying. Why is a glass Time Warner claims is full to the brim everywhere else in the country only half-full in Kansas City? Google Fiber might be the answer. It offers 1,000/1,000Mbps service for less money than Time Warner used to charge for 50Mbps service, and Google is also headed to Austin.

AT&T scoffed at following Verizon into the world of fiber optic broadband, where broadband speeds are limited only by the possibilities. Instead, they built their half-fiber, half-Alexander Graham Bell-era copper wire hybrid network on the cheap and ended up with broadband speeds topping out around 24Mbps, at least in a perfect AT&T world, assuming everything was ideal between your home and their central office.

At the time U-verse was first breaking ground, cable broadband’s “good enough for you” top Internet speed was typically 10-20Mbps. Now that incrementally faster cable Internet speeds are available from recent DOCSIS 3.0 cable upgrades, AT&T is coming back with an incremental upgrade of its own, to deliver around 75Mbps.

It is still slower than cable, but AT&T thinks it is fast enough for their customers, except in Austin, where Google Fiber provoked the company to claim it would build its own 1,000Mbps fiber network to compete (if it got everything on its Christmas Wish List from federal, state, and local governments).

Are you starting to see a trend here? Competition can turn providers’ investment frowns upside down and get customers faster Internet access.

Wilderotter: Most of our customers are satisfied with 6Mbps broadband.

In rural markets were Frontier Communications faces far less competition from well-heeled cable companies, the company can claim it doesn’t believe most of its customers need north of 6Mbps to do important things on the Internet. If they did, where would they go to do them?

Where Comcast and AT&T directly compete, major Internet speed increases are a matter of “why bother – who needs them.” Comcast is more generous where it faces down Verizon FiOS. AT&T also knows the clock is ticking where Google Fiber is coming to town.

Verizon FiOS, Google Fiber, and a number of community-owned fiber to the home broadband networks like EPB in Chattanooga and Greenlight in Wilson, N.C. seem more interested in boosting speeds to build market share, increase revenue to cover their expenses, and make a marketing point their networks are superior. They respond to requests for speed upgrades differently — “why not?”

Verizon figured out offering 50/25Mbps service was simple to offer and easy to embrace. Two clicks on a FiOS remote control and $10 more a month gets a major speed upgrade for basic Internet customers that used to get 15/5Mbps service. Verizon management reports they are pleased with the number of customers signing up.

In Chattanooga, Tenn. EPB Fiber offered gigabit Internet service because, in the words of its managing director, “it could.” The community-owned utility did not even know how to price residential gigabit service when it first went on offer, but the costs to EPB to offer those speeds are considerably lower over fiber to the home broadband infrastructure.

Broadband customers in Chattanooga, Kansas City and Austin are not too different from customers in Knoxville, Des Moines, and Houston. But the available broadband speeds in those cities sure are.

LUS Fiber in Lafayette, La. changed the song Cox was singing about their ‘adequate’ broadband speeds. Earlier this year, Cox unveiled up to 150/25Mbps service to cut the number of departing customers headed to the community owned utility, already offering those speeds.

Convincing Wall Street that spending money to upgrade networks to next generation technology will earn more money in the long run has failed miserably as a strategy.

“Competitors have been overbuilding, investors are wondering where the returns are,” said Mark Ansboury, president and co-founder of GigaBit Squared. “What you’re seeing is an entrenchment, companies leveraging what they already have in play.”

With North American broadband prices rising, and some cable companies earning 90-95% margins selling broadband, one might think there is plenty of money available to spend on broadband upgrades. Instead, investors are receiving increased dividend payouts, executive compensation packages are swelling as a reward for maximizing shareholder value, and many companies are buying back their stock, refinancing or paying off debt instead of pouring money into major network upgrades.

That is not true in Europe, where providers are making headlines with major network improvements and speed increases, all while charging much less than what North Americans pay for broadband service.

UPC Netherlands is Holland’s second biggest cable company and is in the middle of a broadband speed war with fiber to the home providers.

In the Netherlands, the very concept of Google Fiber’s affordable gigabit speeds terrify cable operators like UPC Netherlands, especially when existing fiber to the home providers in the country are taking Google’s cue and advertising gigabit service themselves. UPC rushed to dedicate up to 16 bonded cable channels to boost cable broadband speeds to 500Mbps in recent field trials, without giving any serious thought to the cable operators in the United States that argue customers don’t need or want the faster Internet speeds fiber offers.

“We had to address it head on very recently because of the fiber (competition)” said vice president of technology Bill Warga. “The company is called Reggefiber in the Netherlands. What they’re touting is a 1Gbps service, [the same speed] upstream and downstream. We came out with 500Mbps service. We had to build a special modem because (DOCSIS) 3.1 chips aren’t out yet. We had to double up on the chips in the modem and put it out there because we had to have a competing product, if anything just in the press. That was a reaction but that tells you how quickly in a marketplace that something can move.”

Despite that, groupthink among cable industry attendees back home at the SCTE Rocky Mountain Chapter Symposium agreed that Google Fiber was a political and marketing stunt, “since the majority of users don’t need those types of speed.”

Who does need and want 500Mbps? Executives at UPC, who have it installed in their homes, admits Warga. But cost can also impact consumer demand. Currently, the most popular legacy UPC broadband package offers 25Mbps for €25 ($32.50). The company now sells 60/6Mbps for €52,50 ($48.75), 100/10Mbps for €42,50 ($55.25) or 150-200/10Mbps for €52,50 ($68.25).

Warga also admits the competition has put UPC in a speed race, and boosted speeds are coming fast and furious.

“They’ll come in and say they’re 100, or 101Mbps we’ll come back and say we’re 110 or 120, or 130Mbps,” Warga said. “It’s a bit of a cat and mouse game, but we always feel like we can be ahead. For us DOCSIS 3.1 can’t come soon enough.”

[flv width=”640″ height=”367”]http://www.phillipdampier.com/video/WSJ Cable Broadband Speeds 1-13.flv[/flv]

The Wall Street Journal investigates why cable companies are getting stingy with broadband speed upgrades while gigabit fiber networks are springing up around the country. (4 minutes)

Time Warner Cable’s decision to spend $11 billion to broadcast Los Angeles Lakers and Dodgers games at an estimated cost of $50-60 a year per subscriber is the subject of a class action lawsuit from fed up customers.

The plaintiffs are upset cable subscribers across Southern California will have to cover the cost of the 20-year deal with no option to opt-out of the sports channels because they are bundled into the most popular cable package.

The suit, filed this week in Superior Court alleges at least 60 percent of subscribers have no interest in the sports programming, but will collectively cover $6.6 billion of the deal and never watch a single game.

Time Warner Cable is also accused of forcing AT&T U-verse, Charter Cable, Cox Cable, DirecTV and Verizon FiOS to sign restrictive contracts that compel the companies to include the sports channels on the basic lineup.

Ironically, Time Warner Cable itself regularly complains about the increasing cost of programming and contract terms that force it to bundle expensive sports channels inside the basic tier instead of offering customers optional, added-cost sports programming packages.

Both sports teams are also named as defendants in the suit because they were aware that all subscribers would face rate increases as a result of the deal.

“TWC’s bundling results in Defendants making huge profits, much of which is extracted from unwilling consumers who have no opportunity to delete unwanted telecasts,” the complaint states.

The suit claims there is no legitimate reason Time Warner Cable and the sports teams could not have offered the new networks only to customers that wished to pay for them. The suit wants the bundling of the sports networks stopped and customers given refunds for the higher television bills that resulted.

Werner

Cable operators are getting ready for competition from Google and other fiber providers with an upgrade to the cable broadband standard DOCSIS that will support up to 10/1Gbps service.

Comcast chief technology officer Tony Werner told attendees at the Washington, D.C. Cable Show that DOCSIS 3.1 will deliver about a 50% improvement in spectrum efficiency.

The new standard relies on orthogonal frequency-division multiplexing (OFDM), a standard already used by the wireless industry to get tighter performance from existing wireless spectrum.

The cable industry’s weakness remains its broadband upstream capacity. Standards originally developed for cable broadband assume users will download far more content than upload, so the focus has always been on download speeds. Upload speeds have been anemic in comparison. Until recently, cable technicians worried they would have to dedicate considerably more bandwidth for faster upstream speeds, but with improved standards, that may no longer be true.

Time Warner Cable’s chief technology officer Mike LaJoie is convinced his company will not have to widen upstream bandwidth. Time Warner has been among the stingiest providers of broadband speed upgrades,  still offering residential customers in most service areas a maximum of 50/5Mbps service, even as Comcast has upgraded to 305Mbps in certain markets, mostly in the northeast. This week Comcast demonstrated 3Gbps broadband, primarily to prove the cable broadband platform will be able to compete with fiber technology.

LaJoie

The first trials of the new broadband standard are anticipated in 2014, with modems for sale later that year or early 2015. Comcast is expected to begin buying and deploying DOCSIS 3.1-capable modems “when it makes financial sense.”

Major speed increases will require cable companies to accelerate the transition to all-digital video platforms to free up available cable spectrum. The faster the offered speeds, the more channels must be dedicated to providing broadband. Operators don’t see a space crunch anytime soon, especially if they move towards an all-IP platform that would support all services through a giant broadband pipe.

Cox Cable, for example, is planning to move more of its analog channels to digital to free up capacity for faster broadband speeds.

But exactly when consumers will be able to use the faster speeds possible from DOCSIS 3.1 is up to your provider.

Time Warner Cable is not convinced customers even need or want 100Mbps speed, so expect some cable companies to not even attempt gigabit broadband for years to come.

LaJoie dismissed triple digit megabit speeds as a novelty that is not “very deeply penetrated” in the marketplace — marketspeak for “not attracting many customers.”

“There has not been a demonstrated appetite for it,” LaJoie said.

In response to the deadly tornadoes in Moore, Okla., Cox Communications today said it would lift viewing restrictions for dozens of networks for Cox Cable customers who want to watch cable programming online using Wi-Fi or mobile broadband.

Cox video subscribers in Oklahoma can download the Cox TV Connect app (iOS or Android) to view streamed programming either inside or outside the home for the next three months. The cable operator said it had reached emergency agreements with programmers to lift the usual restrictions preventing online viewing away from home.

“We hope to help those impacted by providing access to TV on some mobile and tablet devices while the area recovers in the weeks and months ahead,” Cox spokesman Todd Smith told FierceCable in an email.

Cox now offers around 90 channels on its TV Connect platform.

Tornado-ravaged customers in Moore will need a lot longer than three months to get cable service back in many areas completely devastated by the storm.

Cox parent Cox Enterprises announced Tuesday that it plans to give $1 million to support relief and recovery efforts in Oklahoma, including a $500,000 cash donation to the American Red Cross and $500,000 of “in-kind support,” including public service announcements.

Stop the Cap! will be monitoring the situation in Moore and other parts of Oklahoma damaged in the storm. Most cable operators waive equipment fees for unreturned cable equipment lost in major storms. If a Cox customer is asked to pay for lost cable boxes, DVRs or cable modems, please use the Contact Us button at the top of the screen and report it to us for further investigation.

Despite efforts to improve their reputation, cable companies are hated so much the industry now scores lower than any other according to the American Customer Satisfaction Index (ACSI).

The only reason the industry’s average score or 68 out of 100 ticked higher are some new competitors, especially Verizon’s FiOS fiber optic network, which scores higher than any other provider.

The cable companies you grew up with still stink, ACSI reports, with Comcast (63) and Time Warner Cable (60) near the bottom of the barrel.

At fault for the dreadful ratings are constant rate increases and poor customer service. As a whole, consumers reported highest satisfaction with fiber optic providers, closely followed by satellite television services. Cable television scored the worst. Despite the poor ratings, every cable operator measured except Time Warner Cable managed to gain a slight increase in more satisfied customers. Time Warner Cable’s score for television service dropped five percent.

Customers are even less happy with broadband service. Verizon FiOS again scored the highest with a 71% approval rating. Time Warner Cable (63) and Comcast (62) scored the lowest. Customers complained about overpriced service plans, speed and reliability issues. Customers were unhappy with their plan options as well, including the fact many providers now place arbitrary usage limits on their access.

The best word to describe customer feelings about their broadband options: frustration, according to ACSI chair Claes Fornell. “In a market even less competitive than subscription TV, there is little incentive for companies to improve.”