Comcast blocks C-SPAN programming for those who are not Comcast customers

Public interest groups today began an offensive against the cable industry’s attempts to stave off potential online video competition with an industry dominated and controlled online video platform that guarantees consumers won’t cut cable’s cord.

Free Press, Media Access Project, Public Knowledge and Consumers Union are sending letters to the Justice Department and the Federal Trade Commission calling for a probe into the industry’s “TV Everywhere” project, designed to weed out non-cable subscribers from accessing online video programming.

The undertaking, which the industry claims will eventually rival Hulu in size and scope, seeks to provide their broadband customers with on-demand access to as much programming as possible, as long as they subscribe to a corresponding video programming and broadband service package.

Known in the industry as a “pay wall,” the system would assure pay television companies affiliated with the project that they will not lose subscribers from customers cutting the cord to watch programming online for free.  Consumer groups call that collusion, and accuse the industry of secretly meeting to outline the TV Everywhere concept and may be violating anti-trust laws in the process.

“The old media giants are working together to kill off innovative online competitors and carve up the market for themselves,” said Marvin Ammori, a law professor at the University of Nebraska and senior adviser to Free Press. Ammori’s report: TV Competition Nowhere: How the Cable Industry Is Colluding to Kill Online TV, is included in the mailing to the federal agencies.

Ammori says the industry has a long history of controlling behavior.

“Over the past decade, they have locked down and controlled TV set-top boxes to limit competing programming sources; they have considered imposing fees for high-capacity Internet use in ways that would discourage online TV viewing; and they have pressured programmers to keep their best content off the Internet,” Ammori writes.

In addition, these companies, which already dominate the Internet access market, have threatened to discriminate against certain online applications or have already been caught violating Network Neutrality. Indeed, the FCC issued an order in 2008 against Comcast for blocking technologies used to deliver online TV, noting the anti-competitive effect of this blocking. While it may be economically rational for cable, phone and satellite companies to squash online competitors, the use of anti-competitive tactics is bad for American consumers and the future of a competitive media industry.

The latest method of attack aimed at online TV, however, may be the most threatening — and is also likely illegal. Competition laws aim to ensure that incumbent companies fight to prevail by providing better services and changing with the times, not by using their existing dominant position and agreements to prevent new competitors from emerging.

TV Everywhere has a simple business plan, under which TV programmers like TNT, TBS and CBS will not make content available to a user via the Internet unless the user is also a pay TV subscriber through a cable, satellite or phone company. The obvious goal is to ensure that consumers do not cancel their cable TV subscriptions. But this plan also eliminates potential competition among existing distributors. Instead of being offered to all Americans, including those living in Cox, Cablevision and Time Warner Cable regions, Fancast Xfinity is only available in Comcast regions. The other distributors will follow Comcast’s lead, meaning that the incumbent distributors will not compete with one another outside of their “traditional” regions.

In addition, new online-only TV distributors are excluded from TV Everywhere. The “principles” of the plan, which were published by Comcast and Time Warner (a content company distinct from Time Warner Cable), clearly state that TV Everywhere is meant only for cable operators, satellite companies and phone companies. By design, this plan will exclude disruptive new entrants and result in fewer choices and higher prices for consumers.

This business plan, which transposes the existing cable TV model onto the online TV market, can only exist with collusion among competitors. As a result, TV Everywhere appears to violate several serious antitrust laws. Stripped of slick marketing, TV Everywhere consists of agreements among competitors to divide markets, raise prices, exclude new competitors, and tie products. According to published reports and the evident circumstances, TV Everywhere appears to be a textbook example of collusion. Only an immediate investigation by federal antitrust authorities and Congress can prevent incumbents from smothering nascent new competitors while giving consumers sham “benefits” that are a poor substitute for the fruits of real competition.

Ammori

The benefits of controlling the marketplace of video and online entertainment is a lucrative one, earning players billions in profits each year.  Losing control of the business model risks the industry repeating the mistakes of the music industry, which overpriced its product and alienated consumers with annoying digital rights management technology and lawsuits.  It also risks a repeat of the newspaper industry which many in the cable industry believe made the critical mistake of giving away all of their content for free.

With online video services like Hulu generating enormous online traffic from its free video programming, the cable industry fears they might already be headed down the road newspapers paved.  TV Everywhere is part of a multi-pronged defense plan according to Ammori.

Indeed, what the industry cannot control themselves, Internet Overcharging schemes like usage caps and “consumption billing” can handily manage.

Ammoni notes:

Cable and phone companies have proposed cap-and-metered pricing for Internet service that appears to target online TV. Unlike the current all-you-can-eat monthly fee-plans, cap-and-metered pricing would charge users based on the capacity used. As a result, downloading or streaming large files will be more expensive than smaller files. In March 2009, Time Warner Cable announced metered pricing trials in four cities that would have made watching online TV cost prohibitive.

AT&T is testing a metering plan on its wireline U-verse service with hopes for national expansion. Even under generous allowances for bandwidth, users could not watch high-definition programming for many hours a day.

In response to trials by Time Warner Cable, a House bill was introduced in Congress, and Time Warner Cable dropped its immediate plans under consumer pressure. The company stated the plans would be reintroduced following a “customer education process.”

“Online TV is this nation’s best shot at breaking up the cable TV industry oligopolies and cartels. Permitting online distributors to compete vigorously on the merits for computer screens and TV screens will result in increased user choice, more rapid innovation, lower prices and a more robust digital democracy,” Ammoni concludes.

The tradition some have of firing off weapons at the stoke of midnight on New Year’s Day managed to go awry when a stray bullet severed a Comcast fiber optic cable serving 300 subscribers with cable and broadband service in southwest Albuquerque.  Service was out for approximately 12 hours while the cable was repaired.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KRQE Albuquerque Bullet cuts cable services for 300 1-1-10.flv[/flv]

KRQE-TV Albuquerque reports on the impact of stray bullets on your Comcast broadband service.  (1 minute)

Several staff members working for the Washington Utilities and Transportation Commission (WUTC), the regulatory agency reviewing the proposed Frontier purchase of Verizon territories in Washington state, have reversed their opposition to the Frontier-Verizon deal because of concessions they believe will better serve consumers impacted by the deal.  But the provisions don’t come close to protecting consumer rights and do not sufficiently protect local telephone and broadband service.

The WUTC must be told that broadband expansion from a service provider that insists on a 5 gigabyte usage limit in its Acceptable Use Policy makes such expansion barely worth the effort.  The WUTC must insist on a permanent exemption from any usage limits for Washington state consumers, especially because many may find Frontier DSL to be their only broadband option for years to come.  To allow a company with such a paltry limit to be the monopoly provider of broadband puts Washington residents and small businesses at a serious economic disadvantage in the digital economy.

Would you choose to reside or locate your business in a community with one broadband provider offering a limit so low, your broadband usage will be limited to web page browsing and e-mail?

High Speed Internet Access Service

Customers may not resell High Speed Internet Access Service (“Service”) without a legal and written agency agreement with Frontier. Customers may not retransmit the Service or make the Service available to anyone outside the premises (i.e., wi-fi or other methods of networking). Customers may not use the Service to host any type of commercial server. Customers must comply with all Frontier network, bandwidth, data storage and usage limitations. Frontier may suspend, terminate or apply additional charges to the Service if such usage exceeds a reasonable amount of usage. A reasonable amount of usage is defined as 5GB combined upload and download consumption during the course of a 30-day billing period. The Company has made no decision about potential charges for monthly usage in excess of 5GB.

Frontier will be a part of the lives of almost 500,000 state residents, including those in Wenatchee and other parts of North Central Washington.  That covers a lot of rural residents with no hope of cable competition or other broadband options.  Verizon is the second-largest local telephone service provider in Washington, serving cities such as Redmond, Kirkland, Everett, Bothell, Woodinville, Kennewick, Pullman, Chelan, Richland, Naches, Westport, Lynden, Anacortes, Mount Vernon, Newport, Oakesdale, Republic and Camas-Washougal.  Currently, Verizon has approximately 1,300 employees in Washington, who would be transferred to Frontier once the deal is complete.

Frontier’s concessions don’t come close to assuring residents they can get the kind of broadband service they need in the 21st century, especially from a company that could easily find itself swamped in debt.  Let’s look at what Frontier has offered:

• Invest $40 million to expand high-speed Internet access in Washington.
• Submit quarterly financial reports to identify merger savings.
• Branding and transition costs to be paid by stockholders, not ratepayers.
• Increase financial incentives to prevent a decline in service quality.
• Adopt Verizon’s existing rates and contracts for at least three years.

Frontier would also be required to pay residential customers $35 for missed service repairs or installation appointments. That’s $10 more than Verizon now pays. Current Verizon customers would also have 90 days after the transition to choose another provider without incurring a $5 switching fee. Low-income customers who qualify through the Washington Telephone Assistance Program will also receive a one-time $75 credit if the company fails to offer appropriate discounts or deposit waivers.

Our take:

• Investing $40 million in low speed DSL service with a 5GB usage allowance saddles residents with yesterday’s technology with a usage allowance that rations the Internet.
• Customers don’t care about merger cost reductions because they’ll never enjoy those savings, but they’ll feel their impact if they include layoffs and reduction in investment.
• Consumers will be more concerned about what happens to their phone and broadband service when the “transition” results in service and billing problems.  Will stockholders pay inconvenienced customers?
• Vague promises of increased financial incentives for a company to do… its job, without declines in service quality, exposes just how unnecessary this deal is.  Why not offer incentives for Verizon to stay?
• Freezing rates for three years doesn’t prevent massive increases to make up the difference in year four and beyond.

The WUTC staff had it right the first time when it opposed the deal.  A healthy, financially secure Verizon is still a better deal than a smaller independent company saddled with debt.  Frontier seals the fate of Washington state residents from the benefits of fiber optics wired to the home, delivering high speed broadband for the future because Frontier doesn’t do fiber to the home on its own.  With a tiny usage allowance, just waiting for the company to decide to enforce it means you won’t be using your broadband account too much anyway.

The WUTC is accepting comments and you need to start calling and writing.  Make sure to tell the Commission it must secure a permanent exemption for Washington from any Internet Overcharging schemes like consumption/usage-based Internet billing and any usage limits Frontier defines in its Acceptable Use Policy.  Better yet, tell them Frontier’s concessions don’t come close to making you feel good about Verizon turning over your phone service to a company that is traveling the same road three other companies took all the way to bankruptcy.

Customers who would like to comment on the provisions can call toll-free: (888) 333-9882 or send e-mail to [email protected]. The deadline for comments is January 10th.

Frontier's latest promotion promotes one price, but you'll pay considerably more thanks to profit-padding fees, surcharges, and taxes.

Frontier Communications is mass-mailing its latest DSL promotion to customers — a year of their fastest tier DSL service for just $20.10 per month.

Labeled “FrontierFast,” the promotion claims you will get a “groundbreaking value” on their fastest Internet service for $20.10 per month, with a Price Protection Plan and a $4.50 monthly modem fee.  Frontier says you will enjoy:

• Breakthrough speeds at an unbeatable price
• Dedicated, unshared connection that won’t bog down during peak hours
• Safe, secure Frontier Mail and a personal online portal powered by Yahoo!
• Free professional installation
• A three month free-trial of Peace of Mind Hard Drive Backup and unlimited technical support.

Sounds reasonable… until you explore the terms and conditions that are attached to it.  Frontier has created a minefield of tricks and traps designed to maximize their profits and make you jump through hoops to minimize your exposure to them.

Let’s explore:

1. The $4.50 monthly modem fee makes it $24.60 for 2010.  The modem fee is nothing more than profit-padding.
2. That “Price Protection Plan” is really a nice way of saying “contract term” committing you to sticking with Frontier broadband for one year, or face a $200 early cancellation penalty.
3. That “Peace of Mind” trial is anything but if you forget to cancel before the three free months are up.  If you don’t they’ll charge you an extra $9.99 a month for the service.  Forgot to cancel during the trial?  Then pony up a $50 cancellation fee if you want out.  At least the free trial is optional.  Do yourself a favor and opt out before Frontier opts-in your wallet.
4. The promotion is available to new customers only, and you are required to bundle it with phone service -and- pay installation fees for that phone line, if you don’t have one already.
5. Service is subject to availability, speeds are not guaranteed, and your credit will be checked before you get service.
6. Taxes and surcharges apply, and they do add up fast.  You can easily add an additional $10 when combining the modem rental fee with the other fees Frontier collects for various taxing authorities.
7. Don’t forget Frontier defines an appropriate amount of usage at just 5GB per month in their Acceptable Use Policy.

Broadband service shouldn’t have to come with a minefield of fine print and profit-padding fees and surcharges.  The out-the-door price should be published so customers can truly understand what they are getting into, before exposing themselves to those steep cancellation fees.  They should also not have to worry about a ridiculous 5GB limit in Frontier’s Acceptable Use Policy.

Sir Michael Rake

Hambleden residents who have fought for years to obtain broadband service from British Telecom are boiling mad over their discovery one comparatively recent arrival to the Oxfordshire village near Henley-on-Thames managed to get service shortly after moving in a year ago.  It turns out the “lucky” resident chosen to participate in a very limited trial of so-called “broadband enabling technology” is none other than the chairman of the company providing the service.

Sir Michael Rake managed to obtain the only broadband connection in the rural community as part of what the company called a pilot trial to test out the commercial feasibility of new technology to extend broadband service to more rural locations across Great Britain.

Of course, the “new technology” is reportedly little more than an extender for DSL service that is capable of delivering 1Mbps service on Britain’s aging copper telephone wiring.

The neighbors are furious anyway.

Some have been trying to get broadband service installed for at least five years to no avail.  Hambleden is just one of many rural communities bypassed by BT broadband.

Hambleden is just 35 miles northwest of London

Gary Ashworth, head of Abacus Recruitment told the Daily Telegraph: “It stinks of corruption. The chairman of BT is given preferential treatment over long-serving customers. I run a business and we probably have 1,000 BT lines. Clearly there is preferential treatment if you happen to be the chairman. I think it is a disgrace.”

Ashworth inquired if he could participate in the “BT trial.”  BT promptly said no, saying he’d have to wait until 2010 at the earliest.

“Sir Michael Rake is the only person allowed to participate in the trial in our area. He moved into the village a year ago and surprise, surprise, he has got broadband,” Ashworth complains.

Although Rake can enjoy the benefits of broadband as a trial participant, BT was willing to extend Ashworth broadband service, if he ponied up £68,000 for the installation.

While the chairman of BT browses the web today at his Hambleden estate, the company admits wiring the entire community would not be profitable.

The Daily Mail interviewed Paul Goodman, the Tory MP for Wycombe, who said “the lack of broadband in the Hambleden Valley is a very serious problem for my constituents.”

“Unless all BT staff members are entitled to participate in the trial on exactly the same terms, I think some of my constituents will find this very strange,” he told the Daily Mail.

The government has promised to underwrite broadband expansion into rural areas by 2012 with revenue earned from a 50p surcharge on phone bills.