All signs are pointing to a relative cake walk for Charter Communications’ executives this afternoon as they seek final approval from the California Public Utilities Commission to acquire Time Warner Cable systems in the state, with the help of an Administrative Law Judge that is recommending approval with a minimum of conditions.

In fact, the strongest condition Charter may have to accept in California came by accident. As part of Charter’s lobbying effort, it proposed a set of voluntary conditions it was prepared to accept, claiming to regulators these conditions would represent benefits of approving the transaction. One of those was a temporary three-year commitment to abide by the FCC’s Open Internet Order, which among other things bans paid prioritization (Internet fast lanes), intentionally blocking lawful Internet content, and speed throttling your Internet connection.

Somewhere along the way, someone forgot to include the language that sunsets (or ends) Charter’s voluntary commitment after three years.

Without it, Charter will have to abide by the terms of the FCC’s Open Internet Order forever.

Soon after recognizing the change in language, Charter’s lawyers appealed to the CPUC to correct what it called a “drafting error.”

“[New Charter does] not seek modification of the second sentence, which matches their voluntary commitments, but believe[s] that the three-year limitation in the second sentence was intended to— and should—apply to the first sentence as well,” Charter’s lawyers argued two weeks ago.

In other words, the Administrative Law Judge’s apparent attempt to ‘cut and paste’ Charter’s own press release-like voluntary deal commitments into his personal recommendation went horribly wrong. Charter’s lawyers prefer to call it an “intent to track” the company’s voluntary commitments. Either way, Charter’s lawyers all call the new language unfair.

“Holding New Charter indefinitely to FCC rules even after the FCC’s rules are invalidated or modified, and irrespective of future market conditions or the practices or rules governing New Charter’s competitors, would be a highly unconventional requirement,” the lawyers complained.

That provides valuable insight into how “New Charter” is likely to feel about Net Neutrality three years from now. Charter’s lawyers argue it would be unfair to hold them to “invalidated” rules — the same ones the company itself has voluntarily embraced as a condition of approval, but only for now.

Remarkably, in the final revision of the Administrative Law Judge’s recommendations to the CPUC recommending approval, the language that is keeping Charter’s lawyers up at night is still there:

New Charter shall fully comply with all the terms and conditions of the Federal Communications Commission’s Open Internet Order, regardless of the outcome of any legal challenge to the Open Internet Order. In addition, for a period of not less than three years from the closing of the Transaction, New Charter (a) will not adopt fees for users to use specific third-party Internet applications; (b) will not engage in zero-rating; (c) will not engage in usage-based billing; (d) will not impose data caps; and (e) will submit any Internet interconnection disputes not resolvable by good faith negotiations on a case-by-case basis.

Charter’s new service area, including Time Warner Cable and Bright House customers.

If it remains intact through the vote expected this afternoon, New Charter will have to permanently abide by the FCC’s Open Internet Order, with no end date. That condition will apply in California, and because of most-favored state status, also in New York.

Stop the Cap!’s recommendations to the CPUC are also in the same document, although our views were not shared by the judge:

Stop the Cap! objects to [New Charter’s] 3-year moratorium on data caps and usage based pricing for broadband services. It argues that such bans should be made permanent or, if not permanent, should last at least 7 years in parallel with the lifespan of the conditions imposed in the FCC’s approval of the parent company merger. In addition, Stop the Cap! objects to what it asserts will be a major price increase for existing Time Warner customers when Charter’s pricing plans replace Time Warner’s pricing plans.

More broadly, Stop the Cap! president Phillip Dampier called the revised recommendations to approve the deal underwhelming and disappointing.

“By window-dressing what is essentially Charter’s own voluntary offer to the CPUC, the commission is continuing to miss a golden opportunity to win deal conditions that will meaningfully benefit Californian consumers that will otherwise get little more than higher cable and broadband bills,” Dampier told Communications Daily. “Virtually everything Charter is promising customers is already available or soon will be from Time Warner Cable, often for less money. Time Warner Cable committed to offering its customers 300Mbps speeds, no usage caps or usage billing, and all-digital service through its Maxx upgrade program, expected to be complete by the end of 2017 or 2018. The CPUC is proposing to allow New Charter to wait until 2019 to provide 300Mbps service and potentially cap Internet service three years after that, four years less than what the FCC is demanding.”

Among the conditions Charter will be expected to fulfill in return for approval of its merger in California:

• Within a year of the closing of the merger deal, New Charter must boost broadband download speeds for customers on their all-digital platform to at least 60Mbps, an upgrade that is largely already complete.
• Within 30 months, New Charter must upgrade all households in its California service territory to an all-digital platform with download speeds of not less than 60Mbps, an upgrade that has already been underway for a few years.
• By Dec. 31, 2019, New Charter shall offer broadband Internet service with speeds of at least 300Mbps download to all households with current broadband availability from New Charter in its California network. Time Warner Cable essentially promised to do the same by early 2018, with many of its customers already getting up to 300Mbps in Southern California.
• While Charter talks about a bright future for the Time Warner customers joining its family, the company has not done a great job maintaining and upgrading its own cable systems in parts of California. Many smaller communities still only receive analog cable TV from Charter, with no broadband option at all. Therefore, the CPUC is giving New Charter three years to deploy 70,000 new broadband “passings” to current analog-only cable service areas in Kern, Kings, Modoc, Monterey, San Bernardino and Tulare counties. But the CPUC is giving New Charter a break, only requiring them to offer up to 100Mbps service in these communities.
• Time Warner Cable and Bright House customers in California will be able to keep their current broadband service plans for up to three years. Customers will also be allowed to buy their own cable modems and set-top boxes, but there is no requirement New Charter compensate customers who do with a service discount.
• Within six months of the deal closing, New Charter must offer Lifeline phone discounts within its service territory in California.
• New Charter must print and distribute brochures explaining the need for backup power to keep phone service working if electricity is interrupted. Those brochures must be available in multiple languages including, but not limited to, English, Spanish, Chinese and Vietnamese, as well as in accessible formats for visually impaired customers.

The CPUC is also expected to adopt Charter’s own voluntary commitments not to impose usage caps, usage billing, modem fees, and other customer-unfriendly practices for three years, a point that drew strong criticism from Stop the Cap! and the California Office of Ratepayer Advocates for being inadequate.

Both groups proposed that bans on data caps and usage billing should stay in place “until there is effective competition in Southern California, or no shorter than seven years after the decision is issued, whichever is later.”

ORA’s program supervisor Ana Maria Johnson believes the proposed changes don’t go far enough to “mitigate the harms that the merger will likely cause, especially in Southern California.”

Dampier was surprised how little the CPUC seemed to be asking of New Charter, especially in comparison to regulators in New York.

“The New York Public Service Commission did a more thorough job protecting consumers by insisting on faster and better upgrades, including readiness for gigabit service, and the same level of broadband service for all of New Charter’s customers in New York,” Dampier argued. “It also demanded and won meaningful expansion in rural broadband, low-cost Internet access, protection of New York jobs, and improved customer service. It is remarkable to us the CPUC did not insist on at least as much for California.”

The CPUC is expected to take a final vote on the merger deal this afternoon, starting at 12:30pm ET/9:30am PT and will be webcast. It is the 20th item on the agenda.

Stop the Cap! continues the fight for a better deal for Time Warner Cable customers that could soon end up as Charter Communications customers, if the California Public Utilities Commission (CPUC) approves the merger.

While the Federal Communications Commission formally approved the deal last week, California has yet to sign off on the transaction, giving consumer advocates like Stop the Cap! an opportunity to recommend the state regulator impose stronger consumer-friendly deal conditions that guarantee customers their share of the anticipated windfall in “deal benefits” that shareholders and executives of the companies involved are likely to receive.

Our California coordinator Matthew Friedman has been educating the CPUC about the true nature of data caps and usage-based billing, and sharing our view that Charter’s promised merger deal benefits are illusory, offering little more than what Time Warner Cable already offers its Maxx-upgraded service areas. In fact, Time Warner’s ongoing commitment to not impose compulsory data caps or usage billing is likely to be canceled by Charter Communications, which has only agreed not to impose such billing schemes on customers for three years.

Even worse, future Charter customers are likely to pay higher broadband bills after Charter imposes its regular prices on Time Warner Cable customers — prices often higher than what Time Warner charges for similar services. Although Time Warner customers have been able to negotiate a better deal for themselves after threatening to cancel, Stop the Cap! anticipates Charter will not be as generous with those customers in the future.

At the minimum, Stop the Cap! is recommending the CPUC either permanently ban compulsory usage caps and usage billing from Charter, or add a competition test that will allow such billing only where consumers can switch to a competitor that offers comparable unlimited broadband service.

Charter’s broadband “deal”

The loss of [Time Warner’s] commitment [to always offer unlimited broadband options to consumers] could result in the following harms, according to Friedman:

1. New Charter’s commitment to provide low cost broadband will become completely voluntary and unenforceable;
2. increased broadband pricing resulting in decreased demand for broadband;
3. New Charter will be able to circumvent Net Neutrality rules;
4. New Charter will be able to engage in a multitude of anticompetitive behaviours, increasing the cost and reducing the attractiveness of competing video content from edge providers, thus lessening the demand for high-speed broadband access to the Internet, and thus running counter to Section 706(a)’s mandate to promote competition in broadband services;
5. innovation and investment will potentially decrease significantly;
6. network security can be adversely affected; and,
7. Californians, especially low-income Californians, may lose access to education opportunities.

We’re not drinking “New Charter’s” Kool-Aid

“Stop the Cap! (and the Office of Ratepayer Advocates as well) has offered a reasonable option of requiring a competition test to sunset the prohibition on data caps and usage based pricing,” wrote Friedman. “This suggestion is based on Charter’s own expert testimony and [the conditions] must be rewritten per these suggestions if it is to fulfill multiple statutory requirements.”

Stop the Cap! also advocates that Time Warner Cable customers that purchased their own cable modems to avoid Time Warner’s modem fees deserve an ongoing bill credit for providing their own equipment, because Charter builds the cost of its modem into the price of broadband service.

“Charter already bakes the price of the modem rental into the monthly cost of the plan,” Friedman noted. “New Charter [should be required] to offer a discount to customers who bring their own modems. Charter currently allows customers to bring their own modems… they just continue to charge those customers for a Charter modem that the customer never uses.”

Although Charter’s pledge to increase broadband speeds for Time Warner customers seems laudatory, in fact Charter’s proposed service offerings also represent a significant rate increase for broadband customers who don’t need or want 60Mbps service. They won’t have much choice after Charter imposes its own plans and pricing, which are now limited to 60 or 100Mbps options for most customers, at prices starting at $60 a month.

“Clearly these TWC customers are materially much worse off under New Charter than TWC,” Friedman told the CPUC. “Equally clear is that Charter’s ‘Simplified Pricing’ (perhaps more accurately described as ‘Fewer Options and Higher Prices’) is far from a public benefit. This massive price increase will affect literally every stand-alone-broadband TWC customer other than the few who qualify for the School Lunch/Senior Assistance plan. While the low-cost School Lunch/Senior Assistance plan is great for the narrowly targeted group of consumers who manage to qualify, roughly doubling the cost of broadband for every other standalone customer more than offsets the combined value of every other ‘benefit’ that the applicants allege will come from this transfer.”

Stop the Cap! also advocates that the CPUC guarantee Charter customers have a choice about the broadband speeds they need and the amount they have to pay for Internet access.

“New Charter should be required to retain TWC’s pricing and plan structure in perpetuity, for both new and existing TWC customers. TWC customers should retain the ability to switch back and forth between TWC’s cheaper, larger variety of plans,” Friedman wrote. “New Charter should be required to continue TWC’s practice of increasing customer speeds as technology advances with no
accompanying price increase.”

Although Charter’s lobbying efforts promote improved service for Time Warner Cable customers, it is our view that once one examines the full scope and impact of Charter’s proposal, customers will be worse off under Charter than they would be staying with Time Warner Cable.

“TWC stands out in its field for its customer-friendly policies such as providing discounts for those who own their own modems, its public commitment to refuse to impose data caps or
usage based pricing even in the face of pressure from Wall Street to do so, and the creation of its TWC Roku App to allow customers to avoid set-top box rental fees,” argued Friedman. “This transfer, as currently conditioned, creates a net public benefit harm, not a benefit, or even a status quo.”

Time Warner Cable Maxx upgrades are on the way for customers in several Wisconsin cities, bringing all-digital cable television service later this year in preparation of boosting broadband speeds up to 300Mbps.

The company has begun notifying customers in the Fox Cities – including Green Bay, Appleton and Oshkosh as well as in southeast Wisconsin, including Milwaukee, Kenosha, Waukesha and Racine that analog television service will be switched off in the next several months.

“Going all-digital brings the benefit of better picture and sound immediately, and will enable us to offer customers faster Internet speeds and additional services in the future,” said Jack Herbert, regional vice president of Time Warner Cable.

The transition to an all-digital network will require video customers without TWC digital equipment (customers who plug their cable line directly into the TV, VCR or similar device) to order a TWC digital adapter.

TWC will offer existing TV customers one or more digital adapters at no charge through at least October 6, 2017. To qualify, customers must order their digital adapters by January 29, 2017. After this free period, each adapter will be billed at the prevailing price, now around $3 a month. Customers can visit www.TWC.com/digitaladapter to place an order or call toll-free 1-844-841-5085 to request equipment. Digital Adapters are also available at most Time Warner Cable stores.

After the free equipment period ends, Stop the Cap! recommends customers return the digital adapters and consider purchasing an online video console such as a Roku device, which supports the Time Warner Cable lineup without recurring equipment rental charges.

Customers can expect free broadband speed upgrades after the digital conversion is complete, with faster Internet access likely available late this year or in early 2017.

Usage caps and usage billing are especially unpopular.

Americans do not have a love affair with their phone or cable company, according to a new study that found most customers either wouldn’t recommend or are neutral about their Internet Service Provider (ISP).

A survey conducted by Incognito Software Systems unintentionally stumbled on the fact consumers deal with either a monopoly or duopoly for broadband service, giving them few alternative options if they do not like the service they are getting. Despite the mediocre ratings many customers give their ISP, only 10% have switched providers in the last year.

“This could reflect a lack of choices in certain regions, or it may be indicative of subscriber apathy toward Internet Service Providers,” the survey found.

Urban and suburban residents hold slightly more favorable views about their broadband service than their rural counterparts. The report found rural residents were less satisfied with service speeds and pricing options, which in most cases involve traditional DSL service from the local phone company.

Incognito’s findings show broadband providers are reducing initiatives to acquire new customers as broadband penetration in the United States approaches 90%. Instead, they want current subscribers to pay more to satisfy demands for higher average revenue per customer. Customers already believe their current ISP is charging too much for too slow service.

“In this era of subscriber monetization, it’s essential that broadband providers clearly grasp what’s important to their existing subscribers,” Stephane Bourque, president and CEO of Incognito, said in a statement. “As our survey shows, providers are expected to do more than ever before: provide faster speeds, lower prices and superior WiFi capabilities to live up to their subscribers’ demands.”

“Most subscribers want to pay less (39%) for faster Internet services (24%),” the survey found. At least 33% want faster speeds and 28% are looking for better Wi-Fi reliability. An additional 32% want more choice in Internet plans at different prices.

The survey also found one thing customers absolutely do not want from their ISP: usage-based pricing. The fact that 58% of respondents didn’t want a usage-based billing plan might seem low until the report explains another 27% did not know what usage-based plans were. Only 15% of consumers would prefer a usage-based plan, assuming it would save them money. Most usage billing plans available to customers today do not, unless a customer is willing to cut their usage to 5GB or less per month.

In an effort to appease disappointed cable and phone company executives, the report’s authors optimistically suggest “further education could go a long way into changing the subscribers’ perception” about usage pricing.

Besides raising speeds and reducing prices, the value-added feature customers want their ISP to offer the most in the future is a robust network of accessible Wi-Fi hotspots.

A fiber upgrade offering 17 million homes in the United Kingdom broadband speeds up to 200Mbps is proving controversial in parts of York because a local councillor is concerned the project will wreak havoc with the area’s daffodils.

“Having seen the disruptive and shoddy way these works have been carried out in the rest of York, I will not let that situation arise in this ward unchallenged,” said Osbaldwick and Derwent councillor Mark Warters (Ind.). “Given that Osbaldwick is currently covered in daffodils, most of which I planted with the local scouts over the years, as well as many other parts of the ward, I most certainly want to know which areas of verge are to be destroyed and what reinstatement/compensation plans are in place for local communities.”

Warters also questioned the need for Virgin Media’s $4.4 billion national cable broadband upgrade, especially since BT has already improved its DSL service in England.

“Assuming this is a competing system, what then is to stop ‘XYZ super, super fast broadband’ coming along and digging up the streets in a few years time for yet another competing system?” he asked. “The whole issue seems to be getting out of control with utility companies.”

Warters has long objected to telecommunications competition.

Warters (Ind.)

“I can well remember the disruption caused across the city in the 1990s when the cable TV systems were installed, which very few people needed due to [satellite provider] Sky TV,” Warters told The Press.

Some constituents were unimpressed with Warters’ Luddite views.

“That’s right Mr. Warters, keep your peasants in the dark ages,” responded one local. “After all there are plenty carrier pigeons around aren’t there.”

Some portrayed the issue as generational, noting York’s industrial base is rapidly being replaced with an information age economy that requires high quality broadband to compete.

“This is so typical of the attitudes that drag York down,” wrote Dillan York. “The days when northern blokes who were thick of arm and thicker of head could scrape a living from hitting lumps of metal with big hammers have gone. Shame there is an aging population who lives in hope that such ‘good times’ will return.”

But some residents acknowledge the project, which requires considerable underground digging, has made a mess of roads and sidewalks in other areas and utility company restoration efforts are lacking.

“It makes absolutely no difference which utility company digs up the road or pavement,” wrote another York resident. “They all leave them in a mess.”