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Comcast Invades: New Hampshire Cities Latest to Get Cable Competition

Comzilla

Comcast is increasingly invading the territories of neighboring small cable operators, a rare move that could eventually trigger price wars and threaten the informal “gentlemen’s agreement” that has kept cable companies from directly competing with each other for decades.

In New Hampshire, residents of Laconia and Rochester will have a choice between incumbent Atlantic Broadband or newcomer Comcast. 

Comcast is already the dominant cable operator in the state, providing service in 104 communities. The cable company recently filed its draft franchise proposal with Laconia city officials to extend Comcast service into areas already serviced by Atlantic Broadband, an independent cable operator owned by Montréal based Cogeco.

“We believe Laconia offers attractive opportunities for Xfinity and Comcast business products in an area close to Comcast’s existing footprint and part of the same designated market area we already serve,” said Comcast regional spokesman Marc Goodman. “We offer internet speeds of up to two gigabytes per second and 100 gigabytes for businesses. We have an award-winning video platform with voice remote.”

It is the second time Comcast announced it would directly compete with Atlantic in New Hampshire. Comcast is already overbuilding Atlantic’s service area in Rochester and is scheduled to finish sometime next year.

In response, Atlantic has introduced very competitive service and pricing plans to fend off Comcast.

Atlantic Broadband is trying to lock in their customers with two-year rate guarantees and lower introductory prices.

Consumers are thrilled.

“After years of MetroCast’s dark ages of bad service, Atlantic Broadband bought them up, raised some internet speeds, and raised our bill even more,” said Charlie Saunders. “It is real easy to pay a $200 cable bill around here, so I am glad Comcast is giving us a choice.”

Atlantic Broadband, at least in public, seems unfazed about Comcast’s entry. Ed Merrill, Atlantic Broadband’s regional general manager for New Hampshire and Maine stressed his company’s innovations, such as bringing gigabit internet speed to the region and using TiVo set top boxes. 

“Our plans are based not on what other providers are doing, but by anticipating customer needs and preferences, then developing and delivering the kinds of products and services that will make customer lives better, whether they’re residential customers or business clients with customers of their own,” Merrill said in a statement.

Comcast Invasion: Communities Where Consumers Can Also Choose Comcast as Their Cable Company

  • Dec. 2017: Rochester, N.H. (Atlantic Broadband vs. Comcast)
  • May 2018: Waterford and New London, Conn. (Atlantic Broadband vs. Comcast)
  • Summer 2018: Warwick Township, Warwick Borough, Ephratah Township, Ephratah Borough and Lititz, Penn. (Blue Ridge Communications vs. Comcast)
  • Nov. 2018: Laconia, N.H. (Atlantic Broadband vs. Comcast)

Grove

Comcast said it is only responding to the public’s demand for more choice and better service, which explains why it is expanding into territories already served by another operator. But so far, Comcast has only chosen to expand in areas adjacent to its current territory, and only in places served by smaller, independent cable companies. In short, Comcast is in no hurry to run cable lines into areas served by Charter/Spectrum or Cox.

A Multichannel News article on the subject suggests Comcast’s real interest is reaching lucrative commercial/business customers just out of reach of their existing service areas. 

“I can tell you that our primary focus is on business service expansion where from time-to-time we explore new opportunities, based on a case-by-case analysis, to bring our state-of-the-art products and services to more businesses,” Bob Grove, vice president of communications for Comcast told the trade magazine. “Some of our existing customers in the contiguous footprint and shared DMA have operations in this area, which is why it made sense for us to expand our commercial network here. We’re also exploring limited residential opportunities, but that’s in the very preliminary stages as well.”

“My heart and wallet skipped a beat,” Lennart Swenson, Jr., told The Laconia Daily Sun. “When we had Comcast, at our last home, they provided superior service and more options for less money than Atlantic Broadband. Comcast was also easier to contact and provided quicker service than has been our experience with Atlantic.”

Some customers also complain Atlantic lures people with temporary teaser rates that exponentially increase after introductory pricing expires. Others report it is difficult to get a representative on the phone.

Competition is “tiresome” for the cable industry

Comcast’s growing interest in expanding service into already-cabled areas means the company will have to convince customers to switch cable providers, something that runs contrary to traditional cable industry economics, where companies carefully avoid direct competition with each other.

“When I started in this business, we all helped each other,” former Buford Media CEO Ben Hooks told Multichannel News. Buford retired in 2018 after a 50-year career in the cable industry. “You don’t see that, especially with Comcast. As far as they’re concerned, there’s them and there’s the rest of the industry.”

Hooks remembers the 1970s and 1980s when cable companies did attempt to expand into each other’s territory.

“In most cases overbuilds were a disaster,” Hooks said. “Neither party won very much, both were fighting for the same customer, cutting prices and neither company was doing well. It was just a tiresome battle.”

But as costs plummet to less than $500 per home to extend fiber to the home service, and the costs to provide internet service continue to fall, cable companies like Comcast can afford the risk of upsetting smaller operators. 

“A company today like Comcast has so much more margin/size over a small company that if they want to expand into an adjacent territory, it is no contest,” Hooks told the trade publication. “Now, if they were to take on Charter, the competition would be a greater challenge. While Comcast still has the advantage, Charter is large enough that it would be ugly.”

Charter Spectrum CEO Says Company Using Tax Breaks to Buy Back Its Own Stock

Rutledge

Charter Communications is using the benefits of the Republican-promoted tax cut to buy back its own stock, because the only other option under consideration was using the money to buy up other cable operators.

“From a [mergers and acquisitions] perspective, I think cable is a great business. If there were assets for sale that we could do more of, we would do that,” said Charter Communications CEO Thomas Rutledge at this week’s UBS Global Media & Communications Conference. “We’ve been buying a lot of our own stock back. Why? Because we think the cable business is a great business and we haven’t been able to buy other cable assets.”

Charter is not using the company’s lower tax rate to benefit Spectrum customers with lower bills or more extravagant upgrades. Instead, it is accelerating efforts to please shareholders and executives with efforts to boost its share price — something key to top executives’ performance bonuses.

With digital and broadband upgrades nearly complete in areas formerly served by Time Warner Cable and Bright House Networks — the cable companies Charter acquired in 2016 — Rutledge told investors he can initiate additional upgrades without spending huge sums on infrastructure buildouts.

Gigabit speed is now available in most markets, and the company has doubled its lowest internet download speeds in areas where it faces significant competition from AT&T from 100 to 200 Mbps, boosting sales of Spectrum broadband service, according to Rutledge.

Today, about 60% of Spectrum customers are offered 100 Mbps, while the other 40% — mostly in AT&T service areas — are getting 200 Mbps.

Rutledge told investors he does not see much threat from Verizon FiOS or its newly launched 5G offerings, and has no immediate plans to upgrade service in Verizon service areas because neither offering seems that compelling.

“I saw that Verizon had some passings that they could do 800 Mbps in,” Rutledge said. “We have 51 million passings that we can do 1 gigabit in and we can go to 10 gigabits relatively inexpensively and I think we will because I think the world will go to 10 gigabits.”

Analysts are uncertain whether Rutledge’s comments are naïve or brave.

“We see 5G fixed wireless broadband [like that offered by Verizon] as the largest existential threat to broadband providers, by far,” wrote analysts at Cowen. Until now, most broadband competition for cable operators came from phone companies pitching DSL. Verizon retrenched on its FiOS offering several years ago. But AT&T has been more aggressive upgrading urban areas to fiber service, which has forced Charter to respond with higher speeds and better promotions.

Rutledge does not see Verizon’s 5G being a significant competitive threat for several years, and suspects Wall Street may once again punish Verizon for spending money on a wireless network less capable than what the cable industry offers today. Shareholders may also dislike watching Verizon distracted by the home broadband market when portable wireless revenues are much more important to the company.

Verizon officials claim about half of those signing up for its 5G service plan were not current Verizon customers. But the company would not say whether their new fixed wireless customers were coming largely from cable or DSL disconnects, which would prove marketplace disruption.

Cable Companies Expand Broadband Lead in U.S.; Subscriber Adds Up 35%

Phillip Dampier November 15, 2018 Broadband Speed, Competition, Consumer News 2 Comments

Cable companies continue to dominate the U.S. broadband marketplace, and the gap between cable broadband and telephone company DSL continues to widen.

Leichtman Research Group reports the top seven cable companies together added 728,423 internet customers in the last three months, an increase of 35% over 2017. One of the biggest gainers was Comcast, which grew 363,000 subscribers during the third quarter. At the same time last year Comcast added 213,000 customers. Charter Spectrum grew by 308,000 customers in the third quarter, bolstered by speed upgrades in select areas and more aggressive promotions. At the same time in 2017, Spectrum added 285,000 customers.

Cable’s gains are phone company losses. AT&T, Frontier, CenturyLink, and Consolidated (formerly FairPoint) saw 159,974 customers disconnect service in the last three months. Phone company losses were buffered in part by government-funded rural broadband expansion campaigns, which typically introduce broadband service in rural areas for the first time. Where customers have a choice, they are increasingly choosing cable companies to supply internet service because speed and reliability are often better, especially compared to DSL service still prevalent in a lot of areas.

Broadband Providers Subscribers at end of 3Q 2018 Net Adds in 3Q 2018
Cable Companies
Comcast 26,872,000 363,000
Charter 24,930,000 308,000
Cox* 5,040,000 20,000
Altice 4,096,300 14,200
Mediacom 1,260,000 9,000
WOW (WideOpenWest) 755,100 7,300
Cable ONE 660,799 6,923
Total Top Cable 63,614,199 728,423
Phone Companies
AT&T 15,746,000 (26,000)
Verizon 6,958,000 2,000
CenturyLink^ 5,435,000 (71,000)
Frontier 3,802,000 (61,000)
Windstream 1,015,000 8,300
Consolidated^^ 781,912 (1,974)
Cincinnati Bell^^^ 310,700 200
Total Top Telco 34,048,612 (149,474)
Total Top Broadband 97,662,811 578,949

Sources: The Companies and Leichtman Research Group, Inc.

*LRG estimate
^CenturyLink only reported residential subscribers in 3Q 2018.  LRG estimate including non-residential subscribers
^^Consolidated includes a minor sale of a local exchange carrier
^^^Cincinnati Bell does not include the acquisition of Hawaiian Telecom
Company subscriber counts may not solely represent residential households. Top cable and telephone companies represent approximately 95% of all subscribers.

FCC Proposes Another Grand Giveaway of Public Rights-of-Way to Cable Operators

The Federal Communications Commission (FCC) has proposed a new policy allowing cable companies to deduct the fair market value of their obligations to serve the public interest from franchise fee payments to towns and cities.

The proposal, MB Docket No. 05-311 — Cable Franchise Fee Deduction, will turn cable franchise laws upside down in virtually every state, reducing local government revenue and threatening public, educational, and government (PEG) access channels, access to cable in schools and other educational institutions, and undermining local control over the placement of wireless cell equipment and other infrastructure that some cable operators propose to install.

Critics of the proposal claim it would continue a concerted effort to shift oversight and regulatory controls away from local communities and states to a federal government that currently has a policy of favoring the interests of telecommunications companies over the interests of community leaders and the public.

Concord, Calif. Mayor Edi Birsan warned the FCC that if it adopts its proposal, it would strip his city, along with others, of its ability to manage where cable companies place cellular equipment and at what price.

Birsan

“Local governments may lose their authority to manage a cable company’s deployment of non-cable facilities, such as ‘small cells,’ Birsan wrote in a letter to the FCC. “This preemption would threaten to extend to fees for use of the rights of way, meaning:

  • Cable companies can use local rights of way for any purpose, regardless of the terms of the franchise, and avoid having to pay fair compensation to the local government for the use of publicly funded assets in the rights of way.
  • Cable companies could potentially install “small wireless facilities” with little to no public input, without having to meet any aesthetic or equipment size requirements aimed to mitigate blight and preserve community character.
  • Cable companies would gain a significant advantage against their competitors, including telecommunications providers even though the FCC has just adopted an order lowering their deployment standards, resulting in a race-to-the-bottom deployment strategy for both cable and telecommunications companies.”

Officials in King County, Wash., which includes the city of Seattle, were critical and suspicious of the FCC’s argument that the burdens of providing benefits to communities as defined in franchise agreements are slowing down the deployment of broadband services, a claim Tanya Hannah, chief information officer of the Department of Information Technology and Christina R. Jaramillo, manager of the Office of Cable Communications found had little merit and no evidence to back it.

Hannah

“It is not obvious that if a cable operator’s profit increases by one dollar that the operator will invest an additional dollar in broadband infrastructure deployment,” they wrote in a joint letter to the FCC. “Many cable companies are functional monopolies. Because the data transfer speed of fiber-line cable systems significantly exceeds the speed of wireless systems, cable broadband is the preferred broadband service if the prices for other broadband services are comparable.”

The two officials made it clear that since the FCC was proposing to impose these changes retroactively on town and cities around the country, the result would be detrimental to local government finances.

“If the FCC were to allow the value of the proposed franchise fee offset activities that were done in the past to be deducted from current or future franchise fee payments, the results to local  governments would be debilitating,” the officials wrote. “It could essentially end all monetary fee payments to King County by Comcast and WAVE Broadband for a number of years. This is not a feasible option. It is not realistic and it is not fair.”

The Alabama League of Municipalities told the FCC the issue was about basic state sovereignty, and Alabama does not want the federal government to run its affairs.

“Section 220 of the Alabama Constitution of 1901 provides that no person, firm, association, or corporation shall be authorized or permitted to use the streets, avenues, alleys, or public places of any city, town, or village for the construction or operation of any public utility or private enterprise without first obtaining the consent of the proper authorities of such city, town, or village,” the League wrote. “The Supreme Court of Alabama has labeled this grant of authority as ‘an essential and sovereign power in local authorities […] in the nature of a bill of rights [that] recognize certain fixed constitutional rights which shall not be invaded.'”

Under the FCC’s proposal, Alabama’s Constitution would be violated by allowing cable operators near carte-blanche access to public rights-of-way without fair compensation or permission, the League argued.

For a lot of communities, any reduction in franchise fee payments will lead to a corresponding decrease in funding for PEG television services.

“Our town’s ability to invest and support its public access television unit and the telecommunications curriculum in our schools is directly linked to the funding received from Charter Communications as part of the franchise fee (“cable tax”) agreement,” noted Robert J. Oliveira, chairperson of the Westport, Mass. Cable Advisory Board. “Any reduction in these funds would mandate a corresponding reduction in programming levels and information access to the community and curriculum support to our students.”

Public comments are due to the FCC by the end of today — Wednesday, Nov. 14. Consumers can share their opinions by visiting the docket on the FCC’s website, and then selecting + Express on the left hand side of the page, which will open an online comment form. Municipalities can file formal submissions using the + New Filing link.

Cord-Cutting Accelerating: 1.2 Million Customers Canceled Cable TV in Last Three Months

Phillip Dampier November 13, 2018 Competition, Consumer News, Online Video 1 Comment

Cord-cutting is taking an increasing toll on pay TV companies as 1.2 million customers canceled their accounts in the last three months, according to industry research firm Kagan.

At least 367,000 customers said goodbye to satellite TV company Dish in the third quarter. DirecTV lost more than 300,000 customers, delivering the worst quarter on record for satellite television since the services launched. Combined, more than 726,000 customers removed their satellite dishes in the last three months.

Cable companies have lost almost 1.1 million TV customers so far this year. Telco TV companies reported losses of about 94,000 customers, mostly as a result of 63,000 Verizon customers pulling the plug.

As competition for streaming TV services continues to heat up, some companies have seen their growth slow. Dish’s Sling TV and AT&T’s DirecTV Now were among the worst impacted, the latter likely the result of rate hikes in 2018.

Hulu with Live TV, YouTube TV and PlayStation Vue were all reported up by Kagan, picking up subscribers looking for cheaper and smaller television packages.

The residential pay TV penetration rate stood at 76.2% as of Sept. 30, which includes traditional cable, satellite, and streaming paid television services.

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  • EJ: Lack of competition equals high prices. If I had to guess they are in undeserved areas so they can of course do what they want. The map tells the stor...
  • Dylan: Yeah. No way Comcast is going to be competing with Charter Spectrum anytime soon. If it all. Tom Rutledge and Brian Roberts are good friends!...
  • Ian S Littman: Question is, when will C1 start doing DOCSIS 3.1, so they can afford to have higher tiers. They could double speeds on all but the top tier. Particula...
  • Milo: Comcast rep said "We offer internet speeds of up to two giga'bytes' per second and 100 giga'bytes' for businesses." Charter Spectrum in my area only ...
  • Ian S Littman: Good to know Comcast's rep still doesn't know the difference between gigabits and gigabytes. Wonder whether they'll do the overbuild via FTTH or coax...
  • Pat: My Internet bill was $14.99 in 2017 (33% increase) then $19.99 in 2018 (25% increase) and in November of 2018 (20% increase), it was raised to $24.99....
  • YC Wong: one of the reason I am using phone service is VoIP app... not this app is not longer available to us... what is the alternative solution!!!...
  • Debbie Hudson: Last month my bill was $55.09 this month is jumped up to $115. I called to ask for offers and they would only get my bill back down to $83 with a $100...
  • EvilCorp: Early Xmas 200 Mbps $1 increase from $69.99 to $70.99 use my own modem...
  • Abby: Did you find out why they wanted this information? I also got the same email and was just curious as to why they wanted it. Proof of residency? Credit...
  • Steve: As more people opt out of cable TV for Sling TV and the like (which requires internet), Spectrum will continue to raise their rates on the internet po...
  • Andy: They hiked the legacy ELP internet from 19.99 to 24.99 in november 2018. It used to be 14.99. The only reason these Charter spectrum effin ass holes a...

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