AT&T is rolling out its gigabit fiber service in Cupertino, Calif., but if you want it you will pay $40 a month more than those who live in cities where Google Fiber offers competition.

AT&T U-verse with GigaPower launched Monday in “select areas,” which traditionally means it won’t be immediately available to most customers. The San Jose Mercury News reports AT&T admitted the service will be available only to a few thousand homes for now in the city and refused to give a percentage of how many of Cupertino’s 20,000 homes would ultimately be able to get the service. AT&T is under no obligation to provide the service and can cherry-pick neighborhoods and skip past government buildings, schools, and hospitals. AT&T won’t give any commitments to the city on its gigabit service.

The company justifies charging $110 a month for the same service it charges $70 for in Austin, Kansas City and North Carolina because it can afford to test higher price points where competitors won’t steal their business.

“We are trying to understand how different markets respond,” Eric Boyer, senior vice president of AT&T U-verse told the Wall Street Journal.

AT&T doesn’t treat the home town of their corporate headquarters much better. In Dallas, Gigapower costs $110, down $10 from its initial price. As Time Warner Cable and Google ponder their own broadband upgrades in North Carolina, AT&T suddenly cut the price of GigaPower on Mar. 17 from $120 to $70 in Winston-Salem and Raleigh-Durham.

AT&T customers who do not want the company to monitor their browsing activities have to pay $29 more for privacy protection, which opts them out of AT&T’s tracking systems. Despite the high-speed and price, AT&T still insists on usage caps for its most premium broadband offering. Customers can use up to 1TB per month, after which AT&T slaps overlimit fees of $10 for each 50GB customers use over their limit. Its primary competitors, including Google, Time Warner Cable, Verizon and Charter do not have usage caps. Boyer says he knows of no customer that has exceeded the 1,000GB usage cap. But that also brings the question if no customer has exceeded the cap, why have one?

More importantly, Boyer added the company isn’t yet offering services that would be exempt from the cap but might do so in the future. “We are open to a whole host of options,” he said. Critics would likely call that an end run around Net Neutrality.

Competition is the significant driver pushing AT&T and other providers to accelerate broadband upgrades and lower prices for higher speed tiers. In markets where cable operators face DSL competition from the phone companies, speeds are lower and prices are higher. Where an incumbent announces major upgrades like GigaPower or Time Warner Cable Maxx, competitors are forced to respond with upgrades of their own.

That leaves cities served by independent telephone companies like Frontier, CenturyLink, and Windstream at a distinct disadvantage because none of those companies have announced sweeping broadband speed increases and have relied instead on acquired fiber networks (Frontier FiOS and U-verse), limited fiber rollouts (CenturyLink) and incremental speed increases using VDSL and bonded DSL (all three). Frontier claims its customers are not interested in faster broadband speeds.

The northeastern United States has seen only one major market disruptor — Verizon FiOS, and it has shelved future expansion. Dominant cable provider Time Warner Cable has not seen its market share hurt much by limited DSL speeds offered in many areas by Verizon, Frontier, and FairPoint Communications. It continues to offer a maximum of 50/5Mbps broadband in upstate New York, Maine, and Massachusetts.

Charter Communications today officially announced it will acquire control of Bright House Networks in a $10.4 billion deal the two companies are calling a “partnership.”

Widely anticipated, the deal will help Charter in its quest to become the second largest cable operator in the country, up from fourth place.

Bright House is the sixth largest cable operator, serving almost two million video customers in central Florida including Orlando and Tampa Bay, as well as Alabama, Indiana, Michigan, and California.

The deal will establish a partnership between Charter and Bright House’s current owner, Advance/Newhouse. But nobody will doubt who is in charge. Charter will own 73.7% of the venture, leaving the Newhouse family with a minority share of 26.3%. Bright House shareholders will receive shares of New Charter stock.

The deal is partly contingent on Time Warner Cable, which has a right to acquire Bright House for itself as part of a long-standing partnership between the two cable companies on programming and technology matters. But such an acquisition now seems remote, considering Time Warner Cable remains tied up in its year-long effort to be acquired by Comcast. An even larger Time Warner Cable would further complicate that transaction in Washington, where regulators are clearly concerned about supersizing Comcast. Since some regulators count Bright House customers as de facto Time Warner Cable customers, having Bright House acquired by Charter would seem to reduce Comcast’s influence over American broadband and cable television by cutting its combined market share from 29 to 27 million subscribers.

The Charter Sucks website could soon be getting more traffic.

But Charter is also dependent on the Comcast deal closing, because that transaction delivers Charter another 2.5 million Time Warner and Comcast castoffs that will be sold service under the brand GreatLand Connections. The combination of those subscribers and Bright House will make Charter the second largest cable operator in the country.

Unfortunately for customers, Charter isn’t even close to second place in customer satisfaction or service. Beyond the very active Charter Sucks website, every consumer satisfaction measurement firm places Charter substantially below average in service, satisfaction, and pricing. Bright House scored on the high side.

“From the frying pan into the fire,” lamented Sam Pama, a former Bright House customer turned FiOS fan in Tampa. “First Frontier bought Verizon FiOS in Florida and now Charter is buying Bright House. Both treat their customers like crap.”

One piece of good news: Charter quietly shelved their usage caps months ago and Frontier has only toyed with them in the past, taking significant heat from Stop the Cap! before backing off. Neither are expected to slap usage limits or usage billing on customers in the foreseeable future.

Spanish telephone company Telefónica knows the days of traditional ADSL broadband are numbered, so the company is junking its copper wire network and upgrading customers to fiber broadband at no extra charge.

Telefónica president Luis Miguel Gilpérez said the upgrade is part of Spain’s march to be the most digital country in Europe. It also establishes a modern broadband platform on which Telefónica can sell its streaming video and pay TV services to the public. The company holds an 85 percent share in the fiber network.

Gilpérez likened the company’s current top-tier of 100Mbps as yesterday’s news.

“It appears that 100Mbps falls short and customers demand more speed, so the company is looking to develop these services [with] an increase in speed,” Gilpérez told El País.

Spain already has 10.3 million households connected to fiber. Telefónica hopes to reach an additional 3.6 million homes this year, but is threatening to cut its investment if it is forced to share its fiber network with competitors.

Telefónica is already required by Spanish regulators to open its copper network to competing ISPs at a regulated wholesale price. The Comisión Nacional de los Mercados y la Competencia (CNMC), the Spanish trade and competition regulator, is currently proposing to extend open access to Telefónica’s fiber network as well.

At present, the telephone company faces competition from Vodafone/Ono, Jazztel and Orange, which all offer up to 200Mbps speeds. Most expect competitors will boost speeds to match or exceed Telefónica’s new speed offer.

A typical promotional offer from Comcast for a bundle of broadband, TV and phone service.

Cable and phone companies will continue to raise the price of broadband-only service while also increasing the value proposition of bundled packages of broadband, television, and phone service to keep customers from cutting the cable television cord.

For at least four years, cable companies have refocused rate increases and fees on Internet access, especially for broadband-only customers. At the same time, cable-TV rate hikes are easing, especially for customers subscribed to two or more services. Today, customers face prices as high as $67 a month for standalone Internet service. But that price can drop in half if customers bundle broadband with television and phone service. Most triple play promotions in markets where AT&T U-verse and Verizon FiOS compete can be as low as $90 a month. In less competitive markets, a similar promotion often costs $99-119 a month.

Recent research by Sanford Bernstein reveals these pricing strategies are not happening by accident.

Media analyst Todd Juenger recently held his second cord-cutting focus group in Comcast-dominant San Francisco and found some of those most likely to cancel cable television decided to keep their Comcast bundle after they discovered the cable company charges $66.95 a month for Internet-only service, excluding the modem rental fee. For $10 more per month during the first year, customers can get that same 25Mbps broadband service bundled with 140 TV channels. Assuming the customer doesn’t protest the subsequent rate increase beginning a year later, that rate will eventually reset to $136.90 a month. But price-sensitive customers who complain often avoid any rate increase at all.

Juenger’s focus group surveyed 18 men and women in the age group most likely to drop cable television – 21-38 year-olds. Despite their love for Netflix, Hulu, Amazon, and other online video services, the participants broadly recognized the cable/telco bundle now delivers a better value proposition and as long as cable and phone companies continue to price up standalone Internet service, many will choose to stay with the company they hate and not try to cobble together a comparable package of broadband and television service from other providers.

“Hence, we remain cautiously optimistic that cord-cutting, in large numbers, isn’t likely to happen,” Juenger wrote his clients. “It’s one of those ideas that sounds great in the abstract but crumbles when faced with the reality.”

As cable television pricing continues to exceed many household budgets, providers are seeking new customers that can afford cable TV but choose not to subscribe. One of their primary targets: broadband-only customers and cord-nevers who might be persuaded to add cable television at a starting price of $10-20 above what they pay for broadband service. That price is less than what Sling TV or PlayStation Vue charges for far fewer channels.

The challenge competing online video providers face is finding a compelling limited channel lineup that will appeal to all-comers. Although the average cable subscriber generally watches fewer than a dozen cable channels regularly, not having access to one or more of those favored channels is a deal-breaker for many.

Juenger’s focus group was most open to a hypothetical a-la-carte package of any 10 customer-chosen channels for $20 a month. But Juenger reminded his investor clients no such package currently exists and probably never will.

“Simply put, for existing pay-tv subs, the content [available to Sling or View customers] is too limited (relative to the cost savings); and for cord-nevers, the price is too high (relative to the appeal of the content),” Juenger wrote.

But Juenger did warn that customers are enthusiastic about sticking it to their current provider, if they can get the programming they want. That could make some programmers, especially broadcast stations and networks, more vulnerable to revenue loss. If a company can reliably offer a variety of theme-based slimmed down cable packages coupled with an effective and seamless over-the-air antenna, no retransmission fees would be paid to over-the-air stations and networks.

If the bundled package pricing argument doesn’t work with cord-cutters, the broadband usage cap probably will. Customers will quickly learn they can eat through their monthly Internet usage allowance watching live television online, or avoid that prospect by subscribing to cable TV, which offers unlimited viewing.

The Golden Triangle of southeastern Texas encompasses the cities of Orange to the east, Port Arthur to the south, and Beaumont to the west.

Nine years after Hurricane Rita swamped parts of the Golden Triangle region of southeastern Texas, Time Warner Cable is finally getting around to restoring service to parts of Orange County that haven’t had cable broadband since 2005.

A warm spring has allowed crews to start construction to parts of Orange County affected by the storm that wreaked havoc on the area nearly a month after Hurricane Katrina struck New Orleans. Although some properties were severely damaged by the hurricane, other utilities restored service to the area years ago. Time Warner Cable is the last, and it cannot come soon enough for Chelsey Walters.

The Orange, Tex. resident is forced to get usage-capped DSL broadband from AT&T, and her last monthly bill reached over $750.

“Both of my car notes are less than that and even with our Internet you cannot do anything because it drops and there are times when it does not work,” Walters told KBMT-TV in Beaumont. “When we first moved out there, they (Time Warner) came out and ran all the cables in my house, then called us and said – oh we do not service that area.”

The construction schedule for Orange County, Tex.:

• Hwy. 105 East on Hwy. 62 to Caribou Ln. is forecast to be serviceable by the middle of May
• From Woodcock St. to Michell Rd. is forecast to be serviceable by the middle of May
• On Hwy. 62 from S. Meadow Dr. to Egan Dr. is forecast to be serviceable by the middle of May
• On Tulane Rd. from Hwy. 62 to Burton Dr. is forecast to be serviceable by the middle of June
• On Tulane Rd. from Burton Dr. to Old Hwy. 90 is scheduled to be on by the middle of June
• On Old Hwy. 90 from Tulane Rd. to E. Wood Fern St. is forecast to be serviceable by the end of June
• I-10 west from Med Davis Rd. to N. Lewis Dr. is forecast to be serviceable by the first of July
• I-10 West from Naquin Rd. to Peru Rd. is forecast to be serviceable by the first of July
• From Moss Ln. to Hartzog Rd. is forecast to be serviceable by the first of August