A new wave of industry consolidation has begun to pick off smaller independent cable operators who find profits squeezed by increased programming costs and dwindling subscriber numbers.

This month, the private equity firms that back Atlantic Broadband have put the company up for sale. ABRY Partners, which controls the cable venture as well as much larger RCN and Grande Communications, is ready to ditch the Atlantic venture and its 255,000 subscribers in Pennsylvania, New York, West Virginia, Florida, Maryland, Delaware, and South Carolina. Most of the cable systems controlled by Atlantic Broadband were considered “non-strategic assets” by former owner Charter Communications, which sold them to the Atlantic Broadband start-up in 2004.

Although profitable, Atlantic has been losing customers — 4 percent last year alone — and that worries investors. Acquiring television programming continues to grow more difficult for smaller operators who do not receive the volume discounts larger players do. As programming costs rise, pressure on profit margin results.

Atlantic Broadband was the 14th largest cable operator in the country. The sale could bring $1.4 billion to the equity firms, and industry analysts predict another equity firm will likely emerge as the buyer. Most of Atlantic’s systems are outside of the the areas where large cable operators create enormous regional clusters of operations. Time Warner Cable dominates in New York, Comcast in Pennsylvania, Maryland, and Delaware, and Suddenlink in West Virginia.

Atlantic Broadband is not the first smaller cable venture to find itself for sale.

• Time Warner Cable acquired Insight Communications last August;
• WideOpenWest announced plans to buy Knology for $750 million in April;
• WaveDivision Holdings LLC, which serves more than 325,000 residential and business customers in Washington, Oregon and California, also is exploring a sale.

When a company like Comcast grows so big, it no longer cares whether its marketing claims are true or false, perhaps it is time to put those claims to the test in court or before a state attorney general for review.

Recently, Comcast’s claim it runs the fastest Internet Service Provider in the nation came under scrutiny by the Better Business Bureau. The simple truth is, Comcast is not the fastest ISP in the nation — not even close. But because PC Magazine ran a limited test of some national broadband providers and found Comcast barely making it to the top, the cable giant has been running ads across the country that are disingenuous and incomplete at best, completely misleading and false at worst.

Phillip “Comcast is not too big to deserve a FAIL“ Dampier

The National Advertising Division of the BBB, a self-regulating industry-controlled body, found the advertising deceptive, which says a lot for a group that lives or dies on the whims of the industries that support its operations.

NAD previously determined that Comcast cannot, based on its current offerings, make an unqualified claim in national advertising to be faster than the competition. NAD noted that while Comcast is the fastest Internet option for 94 percent of the 52 million households in its competitive footprint, it is not the fastest where Verizon FiOS is available.

Consumers need deep pockets to read the actual report that mildly criticizes Comcast. The NAD keeps the public out of its business with a subscription rate of $550 a year to read detailed individual case reports. We learned about the case from one of our readers who shared a copy.

Among the false claims Comcast is still making:

• “It’s official.  We’re the fastest.” — Officially, Comcast is not the fastest.
• “…the fastest downloads available.” — False.
• “FiOS Does Not Live up to Expectations….With Speeds of Up to 105Mbps, XFINITY was rated as the fastest Internet provider in the nation by PC Magazine.” — But FiOS speeds are faster than Comcast. PC Magazine did not test Verizon FiOS.

Comcast agreed to consider making changes to their advertising to comply, but that now appears to be a non-starter.

In Chattanooga, Tenn., EPB Fiber broadband beats the pants off Comcast. No, it’s actually worse than that. EPB embarrasses Comcast’s comparatively slow broadband service. While Comcast was looking for a way to manipulate customers into using its Xbox online video app to avoid their unjustified usage cap, EPB customers were bypassing that problem altogether by choosing EPB’s fiber to the home service that doesn’t have usage caps and delivers speeds up to 1Gbps.  Comcast, (remember they are “America’s fastest”) tops out at 105Mbps.

One would think Comcast would be hurrying their blatantly false advertising off the air and out of sight in Chattanooga, but the company has refused.

The Times Free Press reports Comcast won’t be making any changes to their ads, and has actually doubled-down with more blatantly false marketing claims. Why? Because EPB is too small of a player for Comcast to be concerned with telling the truth:

Jim Weigert, vice president and general manager of Comcast in Chattanooga, said the request won’t apply to this area and advertising will stay the same.

“I don’t see any changes at all,” he said. “Our use of that designation as the fastest ISP and fastest commercial ISP is still the same and will still be used the same as it is today.”

Weigert said local networks such as EPB, which delivers maximum download speeds about 10 times faster than those of Comcast, is too small of a player to affect the region’s advertising or PC Magazine‘s designation.

“Those awards exist, and we just need to make sure we’re using it properly and quoting it properly,” he said. “It doesn’t reference EPB at all because they’re not national. They’re not big enough to get that attention.”

In other words, actual facts about broadband speed don’t matter. With standards like this, it is only a matter of time before we’ll be seeing program length commercials for snake oil.

Beyond the fact Comcast is morally and ethically wrong here, I’m not sure I would want my company admitting to customers truth should come in second. With that kind of attitude, Comcast customers should put their wallets in their front pockets, leave the kids home and lock their car doors before visiting a Comcast Cable Store.

Deborah Dwyer, public relations supervisor for EPB, notes the Comcast ads are self-serving and “cause pretty significant confusion among the public.”

At least the public that still believes what Comcast Cable tells them represents the truth.

Sprint is notifying their mobile hotspot customers the company is now prepared to enforce their formerly soft-capped 5GB plan with a $50/GB overlimit fee, billed at $0.05/MB increments.

Sprint has long informally capped customers using their phone as a Wi-Fi hotspot or tethered device, but until now was not prepared to enforce the limit because it could not accurately track usage.

“Starting June 2012, and effective on your next bill, your phone or tablet’s Mobile Hotspot on-network data allowance will be limited to 5 GB,” reads the message sent to Sprint customers.

Customers will begin receiving text message alerts when they reach 75% of their usage allowance, with repeated alerts at both 90 and 100%. When the 5GB limit is reached, Sprint will give customers the option of continuing service at the penalty price of $50/GB billed in megabyte increments, or shut the service down until the next billing cycle.

Some customers have been confused by the change, in part because Sprint has made a series of sometimes-confusing adjustments to their data pricing. But the company insists it has always had a limit on its mobile hotspot service, even if not enforced.

Smartphone customers using broadband on their phone still receive unlimited access. But other devices with mobile broadband access are usage capped based on the usage tier selected.

Chattanooga, Tenn. is teaming up with U.S. Ignite to leverage America’s first Gigabit broadband city as the home of super high speed broadband innovation.

Municipally-owned EPB’s fiber to the home network is already attracting big businesses and high tech jobs to southeastern Tennessee, but now it will become an incubator for America’s next generation of broadband applications and services. U.S. Ignite will use EPB Fiber’s network to help foster the creation of new digital applications that will transform health, education, public safety, and manufacturing and help keep America a leader in high tech innovation.

It took a public, community-owned utility with the vision of an American fiber optic future to make this possible. Cable and phone companies have unilaterally decided there is no need for gigabit broadband. Will community broadband and marketplace game-changers like Google ultimately be the salvation of America’s high speed future?

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Chattanooga US Ignite.flv[/flv]

Learn more about Chattanooga’s broadband success story through this video, which also introduces U.S. Ignite’s new project. (3 minutes)

Holder

The Justice Department has been quietly conducting a wide reaching investigation into whether cable operators are using Internet Overcharging schemes like usage caps and metered billing to squash online video competition, according to a report in this morning’s Wall Street Journal.

The Antitrust Division has spoken to major online video providers like Netflix and Hulu as well as cable operators, including Time Warner Cable and Comcast.

At issue are data caps — limits on how much a subscriber can use their broadband account.  Justice officials are exploring whether major broadband providers like Comcast and AT&T are using usage limits to protect their video businesses from cord-cutting — canceling a cable subscription to watch shows online.

Providers of online video like Netflix are particularly concerned about operators showing favoritism to their own video platforms. Comcast, for example, exempts partnered content from its usage allowance while continuing to count Netflix viewing against its cap. Comcast’s Xbox “free pass” is attracting particular attention in the Justice probe, in part because it could violate the merger agreement with NBC-Universal which requires the company to not discriminate against third party video content.

Some cable operators claim usage caps protect their networks from heavy users overwhelming their facilities. Comcast claimed its decision not to count Xbox video traffic against the operator’s monthly usage cap was fair because the video content did not travel across the Internet. Now the company has temporarily suspended  usage caps altogether in preparation for testing a new usage limit that also carries overlimit penalty fees.

Federal Communications Chairman Julius Genachowski last month publicly announced his support for usage limits and metered billing, describing both as innovative and enabling customer choice. The Justice Department probe would indicate otherwise, because it suggests customers are finding their options increasingly limited, possibly in violation of federal antitrust laws.

The Justice Department is also investigating the industry’s TV Everywhere project, which provides access to cable network online video exclusively to those with an existing cable television package. Most cable networks specifically prohibit online streaming of their live content, which itself might run afoul of antitrust rules.

The Journal notes Attorney General Eric Holder on Tuesday suggested he would like to be a cord-cutter himself, picking and choosing only the channels he wants to watch. At a recent Senate hearing, Sen. Al Franken (D-Minn.) said cable bills were “out of control” and consumers want alternative options to watch shows online. Holder responded, “I would be one of those consumers.”