Heynen

Equipment vendors serving the cable industry had one of the worst years in recent memory, with cable industry investment in upgrades dropping like a stone in 2019.

Companies supplying cable broadband equipment that powers internet service saw steep revenue declines to just over $1 billion, compared to $1.6 billion in 2018 and $1.7 billion in 2017. One vendor reported a 30% drop to just $255 million last year, according to Jeff Heynen, Dell’Oro Group’s senior research director for broadband access and home networking. Providers spend this money on DOCSIS broadband upgrades, cable modems and routers, and laying the foundation for next generation cable broadband and fiber networks.

Heynen blamed a reduction in capacity upgrades, an ongoing debate about where cable operators will take the DOCSIS standard next, and an overall lack of broadband competition.

Light Reading reports that a general decline in broadband investment by Charter and Comcast were hard-hitting on vendors. Both companies have been profit-taking after completing DOCSIS 3.1 upgrades and believe that gigabit download-capable broadband networks will suffice for several years to come. Phone company broadband competition growth has also waned as AT&T ends its large-scale fiber to the home expansion and as other phone companies refuse to undertake widespread upgrades; most will continue to rely on DSL technology in non-fiber-upgraded markets. The overall lack of competition from phone company broadband speed upgrades has given the cable industry no reason to undertake more upgrades, except in competitive service areas.

Still, the cable industry is planning to deploy two relatively low cost upgrades starting this year: increasing upstream broadband speeds and growing adoption of routers supporting Wi-Fi 6, a new Wi-Fi standard.

Light Reading:

[Heynen expects] moves to expand upstream bandwidth to help lead the next network investment cycle as cable operators deploy mid-splits or high-splits that expand the amount of bandwidth used for upstream traffic. In most legacy North American DOCSIS networks, the spectrum dedicated to the upstream is in the range of 5MHz to 42MHz. Mid-splits will raise that to 85MHz and high-splits could elevate it to around 200MHz.

Those upstream-impacting network decisions will also help to drive a new generation of DOCSIS consumer premises equipment (CPE) that can tune to these updated upstream/downstream bandwidth splits.

Heynen also notes the business picture is brighter in Europe, where phone companies are moving at a much faster pace to ditch DSL in favor of fiber to the home service. As a result, competing cable and wireless providers are investing in fiber networks of their own to remain competitive.

New York’s Public Service Commission (PSC) has come under fire in an audit by State Comptroller Thomas DiNapoli for “falling short” monitoring Charter Spectrum, Altice-Optimum, and Windstream, some of the state’s largest telecom companies.

“When New Yorkers flip on the lights, log in or make a call, they should be confident that someone is making sure these service providers are living up to their promises,” DiNapoli said. “My auditors found the state Public Service Commission was not doing enough to make sure utilities are holding up their end of the deal. PSC lacked critical equipment to do its job and rarely inflicted financial consequences when companies did not deliver. This has to change.”

The audit found that the regulator was often arbitrary in its orders, frequently failed to verify compliance of conditions imposed on providers, and quietly dropped compliance penalties including fines and merger revocation orders when the Commission faced pushback from companies.

Most of the audit’s criticism was directed at how the PSC managed the 2016 merger-acquisition of Time Warner Cable by Charter Communications (better known as Spectrum). The merger was approved after Charter agreed to ten deal conditions. But DiNapoli’s auditors found Charter failed to either complete four of these conditions or the PSC failed to verify they were completed. New York also lost the opportunity to collect $5 million from Charter’s failure to meet its rural broadband commitments. Instead, the PSC settled for $1 million and agreed to extend the deadline for Charter to expand its rural footprint, rewarding the company for its failure.

DiNapoli’s audit criticized the PSC’s verification procedures to determine if Charter adequately upgraded its cable systems to all-digital technology and raised broadband speeds by the end of 2018. Instead, the Comptroller found the Commission often took Charter’s word for it because it lacked the equipment and resources to independently verify Charter’s performance.

DiNapoli

The auditors also complained Charter offered scant evidence of compliance with two other terms of its merger approval agreement — wiring 50 community locations for free broadband service and investing at least $50 million to improve service quality for New York customers. The audit found no evidence Charter had wired any community locations for free broadband service, and the Commission failed to verify Charter made suitable investments in service improvements by its May 2018 deadline.

The Commission disagreed with several of the audit’s findings. The Commission claimed it held comprehensive proceedings to review the Charter acquisition of Time Warner Cable, imposed deadlines on the conditions, and eventually threatened to revoke Charter’s cable franchises for the company’s failure to comply with its orders.

“After pursuing escalating enforcement actions, the Commission in mid-2018, revoked the merger authorization,” the Commission responded. “This final enforcement action which revoked the company’s authorization to operate in in the state set an important precedent in New York — and across the nation — as this type of enforcement remedy had not been previously utilized in the regulatory community. Ultimately, the enforcement action was settled in a manner that resulted in a company commitment to expand its network entirely Upstate at an estimated cost of more than $600 million, more than twice the original estimate at the time of the merger approval, and $12 million paid by the company in lieu of penalty for additional network expansion work.”

The settlement effectively rendered the PSC’s fines against Charter for not meeting its rural broadband expansion deadlines moot. The Commission argued New Yorkers benefited more from Charter’s additional commitments to expand its cable footprint even further than originally envisioned.

“The Department utilizes penalty actions in a strategic manner to address violations,” the Commission explained. “It can be more beneficial to the state’s customers to obtain at shareholder expense expanded infrastructure, reductions in rates, or improvements in customer service rather than imposing financial penalties, and when that is the case, the [Commission] does indeed prefer the best response for customers.”

But DiNapoli’s audit noted that utilities are well aware of how to avoid paying fines by delaying their collection indefinitely through legal remedies. The audit slammed the PSC for walking away from collecting the fines owed, noting it “creates a lack of accountability and inspires little motivation to stay in compliance.” It also complained that regardless of what additional remedies the PSC extracted from Charter in a final settlement, tens of thousands of rural New Yorkers remain without the internet service they were promised, and will probably have to wait until as late as 2021 to get it.

“As it has been over three years since the merger was approved, network expansion should have already been provided to approximately 126,875 unserved or underserved premises based on the 2016 Commission Order approving the merger,” the audit found. “As of July 2019, Charter had only extended its network to 64,827 premises. Based on the original Order, 62,048 additional customers should have received access to these services. Charter now has until September 2021 to complete the network expansion of 145,000 premises previously scheduled to be completed by May 2020.”

The PSC also claimed it was distracted by legal actions it was taking surrounding the revocation of the merger’s approval, but after the case was settled, the Commission did undertake random speed testing to verify Charter had raised the broadband speeds as agreed in the merger agreement.

“Staff is confident that, in all areas field tested to date, the Charter network is capable of providing broadband service with download speed in excess of 300 Mbps, and the network itself has the potential to provide download speed beyond 1 Gbps. In fact, the company is marketing 1 Gbps service in much of the New York State service footprint,” the Commission argued.

The Commission confirmed Charter has not yet showed it is providing free broadband service to 50 community service locations, such as libraries, schools, or town halls. Charter initially refused to provide information about the service locations it selected for complimentary service “for privacy reasons.” But since the Commission placed no deadline on complying with this condition, it cannot penalize Charter for not meeting it on a timely basis.

“After multiple discussions, Charter finally provided a list of the 50 Anchor Institutions on July 17, 2019 and included bill copies and/or account screen shots demonstrating no charge for broadband service to these institutions,” the Commission responded. “Staff has been able to independently confirm that 33 of the 50 institutions are receiving broadband service from Charter at no charge. For the remaining institutions, Charter was asked to provide additional evidence that these institutions have been provided this complimentary service. If Charter cannot definitively demonstrate that the 17 institutions are receiving free service, Charter must select a replacement institution in order to fulfill this condition. Once Charter has provided this information, Staff will then begin its independent confirmation.”

The Commission also claims Charter met its obligation to invest at least $50 million in service improvements.

“In its May 2018 Annual Update, Charter provided a list of expenditures totaling over $90 million to comply with this condition. From that list, Staff identified completed projects totaling approximately $70 million that were dedicated to New York State. To verify these expenditures, Staff requested and analyzed actual invoices to determine whether the expenditures were made,” the Commission claimed.

The audit found some of these same issues also applied to two other telecom merger and acquisition deals impacting New York consumers. Altice’s acquisition of Cablevision’s Optimum cable service received approval with five deal conditions. The audit found the Commission failed to adequately verify compliance with three of those conditions, relating to internet speed and performance, free broadband service to 40 community institutions, and improvements to customer service requiring Altice to fix customer issues within two days. The Commission responded that its belated verification found no non-compliance, but the audit urged the Commission not to delay its verification procedures going forward.

FairPoint is now known under the name of its owner, Consolidated Communications.

FairPoint Communications offers telephone and internet service to 13,700 customers in a few rural communities in New York. Its new owner, Consolidated Communications, was required to implement eight deal conditions, and the audit found it failed to meet two of them. FairPoint was required to invest at least $4 million in network reliability and service quality improvements, including the expansion of internet access service to at least 300 additional locations. FairPoint submitted an expansion plan, and updated reports, including the number of locations completed which is claimed to be over 300.

But the audit found the Commission failed to verify these claims, citing inadequate staffing to visit FairPoint’s rural service areas to perform field inspections. The audit found the Commission didn’t bother to verify service improvements in any location. Another deal condition was designed to protect FairPoint’s “customer-facing” employees from layoffs. Soon after the merger, “FairPoint reclassified 9 of the 39 customer-facing positions and ultimately eliminated them, claiming they ‘duplicated work being performed in other work centers.'” The audit’s initial findings triggered an investigation by the PSC to determine if FairPoint violated the terms of its merger order. Ultimately, the Commission found it did not, but the audit warned the PSC was completely unaware of the employment changes until the audit discovered them.

The Comptroller’s Office made four recommendations the PSC should either implement or improve:

1. Actively monitor all conditions listed in Orders to ensure all utilities are in compliance.
2. Develop and issue Orders that include well-defined, measurable, and enforceable conditions. The Orders should also include the consequences for non-compliance, as appropriate.
3. Verify the accuracy of data submitted by utilities that is used by the Commission or Department to evaluate or make decisions concerning the utilities. This includes data submitted for performance metrics, safety standards, and Utility Service Quality Reports.
4. Develop policies and procedures that provide employees with standard monitoring steps to perform when overseeing compliance with merger or acquisition Orders, as well as steps addressing the auditing of data submitted in support of Utility Service Quality Reports.

With the average speed of DSL service under 10 Mbps in rural counties across the United States, this legacy technology is disenfranchising a growing number of rural Americans and is largely responsible for dragging down overall U.S. internet speed scores. Only satellite internet offers overall lower speed and poor customer satisfaction, according to consumer surveys.

In some areas, customers cannot even get bad DSL service, despite the fact the Federal Communications Commission marks many of those addresses as well-served. According to a new report by the company Broadband Now, the FCC could be claiming at least 20 million Americans have access to robust internet service that, in fact, does not exist, especially in rural counties.

Citylab:

To get its estimate, the Broadband Now team manually ran 11,663 randomly selected addresses through the “check availability” tool of nine large internet service providers that claim to serve those areas. All in all, the team analyzed 20,000 provider-address combinations. A fifth of them indicated that no service was available, suggesting to the researchers that companies may be overstating their availability by 20%, said John Busby, the managing director of Broadband Now. The results also show that 13% of the addresses served by multiple providers didn’t actually have available service through any of them. They then applied these rates across the country to get their final estimate of 42 million people without broadband.

The disparity between their estimate and the FCC’s largely comes from the agency’s reliance on Form 477 reports, in which internet providers self-report the locations they serve. Providers can claim to serve the population of an entire census block if service is provided to just one household in that block. After the release of FCC’s May report, the agency’s Democratic commissioners dismissed the report, berating their colleagues for “blindly accepting incorrect data” and using the numbers to “clap its hands and pronounce our broadband job done.”

Across DSL-heavy rural Ohio, weary residents have nothing to clap about as they desperately look for something better than slow speed DSL from the local phone company.

“It’s a good day when Frontier DSL breaks 2 Mbps, although they advertise (and we pay for) 10 Mbps,” said Fred Phelps, a Frontier DSL customer for more than a decade. “In rural Ohio, it is take it or leave it internet access and we have no choice other than Frontier.”

Phelps has longed for Charter Spectrum to wire his area, next to a large farm operation, but the nearest Spectrum-connected home is a half-mile down the road. Phelps was lucky to get DSL at all. That aforementioned farm paid Frontier a handsome sum to extend its commercial DSL service to the farm’s office, putting Phelps in range for a residential DSL connection.

“It is always slow and frequently goes offline on rainy and snowy days because water is getting into the phone cable somewhere,” Phelps told Stop the Cap! “Service calls are a waste of time because the problem always disappears by the time the repair crew shows up.”

Cindy B (last name withheld at request) is in a similar situation in Ohio. She has a CenturyLink DSL line that averages 1 Mbps, although some of her relatives have managed to get almost 12 Mbps from CenturyLink closer to town.

Warren County, Ky.

“CenturyLink treats you like they are doing you a favor even offering DSL service in this part of Ohio. There is no cable TV service for at least 20 miles, so cable internet is out of the question,” Cindy tells us. “They have also made it crystal clear there are no plans to upgrade service in our area.”

She used to be a Viasat satellite internet customer but quickly canceled service.

“Satellite internet should be considered torture and banned as illegal,” Cindy said. “You can spend five minutes just trying to open an email, and the only time we could download a file was overnight, but even that failed all the time.”

Cindy and Fred are collateral damage of the country’s broadband dilemma. They are stuck with DSL, a service that often wildly over-claims advertised speed that it actually cannot deliver in rural areas. In much of rural Ohio, DSL speeds are usually under 6 Mbps, although companies often claim much faster speed on reports sent to the FCC.

“According to the FCC website, we should be getting 24 Mbps internet from Frontier and two other companies, but that simply does not exist,” said Phelps. “I really don’t understand how the FCC can rely on its own database for broadband speed that is not available and never has been.”

Cindy said her children cannot depend on their DSL line and have to do their homework at school or in the library, where a more dependable Wi-Fi connection exists.

“The problem is getting worse because websites are becoming more elaborate and are designed for people who have real internet connections, so often they won’t even load for us,” she said.

Warren Rural Electric Co-Op’s service area.

But according to the FCC, neither Cindy nor Fred live in a broadband-deprived area. For this reason, public funding to improve internet access is hard to come by because the FCC deems both areas well-served.

South of Ohio, in Warren County, Ky., a local rural electric co-op is not waiting for the State of Kentucky or the federal government to fix inaccurate data about broadband service in the rural exurbs around Bowling Green, usually stuck with slow DSL or no internet access at all. Warren Rural Electric Cooperative and Lafayette, Tenn.-based North Central Telephone Co-Op are working together to lay fiber optic cables to bring fiber to the home internet service to some broadband-deprived communities in the county. Warren RECC serves eight counties in south central Kentucky with over 5,700 miles of electric transmission and distribution lines, mostly in rural parts of the state. Two communities chosen for service as part of a pilot project — Boyce and September Lakes, are more than a little excited to get connected.

The Bowling Green Daily News reports that an informational meeting held in early February drew 300 residents (out of nearly 800) ready to hear more information about the project. Almost 150 signed up for future fiber service on the spot. Many more have subsequently signed up online. The new service will charge $64.95/mo for 100 Mbps service or $94.95 for 1,000 Mbps service. That is about $5 less than what Charter Spectrum charges city folks and is many times faster than what most phone companies are offering in rural Kentucky.

Nearly two-thirds of counties in the United States have real world wireless download speeds below the Federal Communications Commission’s minimum to be considered broadband — 25 Mbps. In rural counties, the number is even higher: 77% cannot get reliable speed at or above 25 Mbps.

That is the finding of a new report, “Understanding the True State of Connectivity in America,” produced by the National Association of Counties (NAC), and a handful of other rural-focused advocacy groups.

Unlike the Federal Communications Commission, which relies on providers voluntarily supplying the broadband speeds they claim to offer customers, NAC developed TestIT, an app allowing the public to test actual wireless broadband speeds and report back results. Since March 2019, users have conducted over 100,000 speed tests from 2,391 U.S. counties (representing 78% of all counties nationwide).

The results found widespread differences between the speeds advertised to customers and those experienced by them. Among fixed wireless broadband networks, almost 60% of counties lacked providers that consistently supplied service with speeds at or above 25 Mbps. Wireless speed was inconsistent everywhere, but particularly in rural areas, where 74% of rural counties had slow speed service.

“The TestIT app results show a disparity of broadband access across America,” said NAC executive director Matthew Chase. “Armed with this data, we will advocate for adequate funding for broadband infrastructure and better inform federal, state and local decision-making to help level the playing field.”

The app also identified a much larger section of rural America where there was no service at all, despite claims of coverage from wireless providers on coverage maps. The organization believes this disparity may be coming from taking providers at their word instead of independently verifying actual coverage is available.

“Accurate connectivity data is the foundation for investments in our nation’s broadband infrastructure,” the report found. “Unfortunately, connectivity data provided to the FCC is often inaccurate and inflated — leaving many communities overlooked and disconnected.”

(Image: WPMI-TV)

An Alabama woman who lost everything in a condo fire has been hit with a $300 charge because she couldn’t return a cable modem that literally melted in the fire.

Mediacom representatives were adamant that if she did not pay her final bill, including a $300 non-returned equipment charge for a cable modem that costs considerably less, her account would be turned over to a collection agency.

Barbara Rose told WPMI-TV she “was shocked” by how Mediacom treated her, and the ongoing battle with the cable operator was adding to her stress. The company said she could always claim the damaged modem on her insurance, something Rose neglected to get for her leased condo. Attempts to negotiate the amount of her final bill with Mediacom went nowhere.

The cable modem/router in question, manufactured by Technicolor, is estimated to have cost Mediacom less than half the amount they were asking. In fact, customers typically pay the cable company more than $12 a month in modem rental fees, but Mediacom showed no willingness to pro-rate the damaged modem and sought ‘more than’ full payment. When Rose refused, “they turned me over to collections,” Rose told the station.

When WPMI contacted Mediacom, the company’s intransigence disappeared immediately.

“We have a longstanding policy to waive equipment return charges for customers who have been displaced by disasters like a fire,” a Mediacom representative told the TV station. “The person this customer spoke to must not have been aware of the policy.”

Rose said she contacted at least five Mediacom employees, including a supervisor, and none were apparently familiar with this policy.

Still, Rose is delighted Mediacom has now waived the modem fee and the cost of her final month of service.

It is just another example of public relations working in favor of customers. When a reporter shows up threatening to make a dispute public on the evening news, most companies buckle in favor of customers they may have refused to help for weeks or months earlier.

Charging for unreturned cable equipment after a fire or other disaster is very common, despite most cable companies claiming to waive fees in the event of such personal disasters. Most instruct victims to pay the charges and seek compensation through an insurance claim. But in most cases, customers need not pay anything at all if they inform the company of its own policies regarding unreturned equipment damaged in fires, floods, or other tragedies.

At the same time, every renter should purchase renter’s insurance to protect the value of their personal property. It is inexpensive and the only way to recoup losses in the event your property is damaged or destroyed.

WPMI-TV in Mobile covers another dispute between a cable company and customer over unreturned cable equipment destroyed in a fire. (2:31)