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FCC Seeks to Strip Broadband Oversight, Net Neutrality Authority from Local Governments

Phillip Dampier September 25, 2018 Net Neutrality, Public Policy & Gov't, Video 3 Comments

The Federal Communications Commission moved Tuesday to formally strip local franchise authorities from regulating cable companies’ non-video services, prevent town and city governments from enforcing their own net neutrality policies, and limit the amount of obligations cable companies owe communities in return for winning and keeping a cable television franchise agreement.

The Commission announced a notice of proposed rulemaking that most observers claim is a mere formality before the Republican majority formally adopts the proposal in what is being seen as a clear and sweeping victory for the cable television industry.

Under the FCC proposal, local franchising authorities that issue franchise agreements allowing cable television companies to provide service in a community will see their powers of oversight and regulation significantly cut, threatening existing agreements that require cable operators to wire public schools, libraries, and local government offices and offer certain other services, excluding Public, Educational, and Government access channels.

Some franchise agreements require cable operators to maintain a certain number of local cable customer service offices, support local infrastructure projects by placing fiber or service cables in shared conduits, offer services or scholarships to communities in need, and provide near-universal service availability in neighborhoods without regard to income. While communities would be allowed to continue requiring these extra benefits, the cost could be deducted from franchise fee payments made by cable operators to local governments. Currently, franchise fees are capped at a maximum of 5% of gross revenue, although cable companies and corporate-funded interest groups like FreedomWorks and Free State Foundation argue “in kind” required contributions found in some franchise agreements allow cities and towns to exceed that amount.

Cooper

The FCC also reiterated its intention to limit local franchising authorities to only regulating cable television services, disallowing them from writing rules, regulations, or requirements that govern a cable system’s non-television services, most notably telephone and broadband service. While some at the FCC suggest this ruling allows broadband and voice services to remain unregulated as intended, analysts suggest the real impact of this declaration is to lay a legal foundation to prohibit communities from imposing local net neutrality requirements on cable broadband services designed to replace the federal net neutrality rules that were vacated by the Republican majority on the Commission earlier this year.

“Congress has designated information services such as broadband for non-regulated or light-touch treatment,” said Seth Cooper, senior fellow from the conservative group Free State Foundation. “The Commission’s proposed rulemaking clarifies that local governments cannot leverage their cable franchising authority to regulate broadband services. This will help shore up important limits on local government regulation set out in the Communications Act.”

After passage, cable operators could complain to the FCC about requirements imposed by local governments or regulatory bodies requiring them to honor basic net neutrality principles. FCC Chairman Ajit Pai has repeatedly voiced his view that only the federal government should be allowed to regulate the internet, and he is prepared to challenge state and local laws that attempt to create an end run around the decision to eliminate federal net neutrality protections.

“What we’re going to do is take a look on a case-by-case basis at each state law and determine the right course, but at a broad level, the internet is inherently an interstate service,” Pai told CNBC in June. “We don’t [want] every one of the 50 states and however many local jurisdictions to have a bite of the regulatory apple.”

The FCC has also asked for input on extending its authority to overrule similar franchising requirements on the state level as well, a significant expansion of the FCC’s authority that Mr. Pai himself has questioned when his predecessor, Chairman Thomas Wheeler, attempted to override state laws deterring or forbidding public/municipal broadband networks.

“In taking this step, the FCC usurps fundamental aspects of state sovereignty. And it disrupts the balance of power between the federal government and state governments that lies at the core of our constitutional system of government,” Pai complained in 2015. “What is clear, however, is that the FCC does not have the legal authority to override the decisions made by Tennessee and North Carolina. Under the law, it is up to the people of those two states and their elected representatives—not the Commission—to decide whether and to what extent to allow municipalities to operate broadband projects.”

But in Pai’s view, it is not up to those and other states to decide for themselves what type of level playing field will be provided to internet users if a sovereign state wishes to define those terms in the public interest.

FCC’s Ajit Pai talks net neutrality on CNBC in June 2018 and is skeptical of state efforts to preserve net neutrality rules, saying the internet “has to be regulated by the federal government.” (10:48)

Comcast & Spectrum Open Up Free Wi-Fi Service in Georgia and the Carolinas

Hurricane Florence

Comcast and Charter Communications are providing free and open access to more than 12,000 Wi-Fi hotspots in Georgia and the Carolinas as Hurricane Florence begins impacting the three states.

“In response to Hurricane Florence, we have opened up more than 5,100 Spectrum Wi-Fi hotspots in North and South Carolina. These hotspots are open to all users until further notice in coastal communities like Wilmington, N.C., and Myrtle Beach, S.C., as well as inland to the Charlotte, Raleigh-Durham, Fayetteville and Greensboro areas,” Charter said in a statement.

To connect your device, look for the “SpectrumWiFi” network under your device’s WiFi settings in Charter service areas, “xfinitywifi” in Comcast country.

“It’s critical that impacted residents are able to communicate during challenging weather events such as Hurricane Florence,” said Doug Guthrie, regional senior vice president for Comcast.

As a result, Comcast is opening up almost 7,000 hotspots in Augusta and Savannah, Ga., and Charleston, S.C. Both cable companies are welcoming subscribers and non-subscribers alike.

Hurricane Florence, although currently downgraded to a Category 2 hurricane, remains a vast hurricane with a large wind field of hurricane force winds, and will likely pummel the region until Saturday. Combined with intense rainfall and catastrophic storm surges, devastation is likely along coastal regions of all three states. Duke Energy, which serves North and South Carolina, anticipates extended outages for at least three million customers during Hurricane Florence.

As of 5 p.m. ET Thursday, the center of Florence was 100 miles east-southeast of Wilmington, N.C. and 155 miles east of Myrtle Beach, S.C. The hurricane has slowed to just 5 mph.

Other states likely to be impacted by flooding rains, storm surge, and winds are Maryland and Virginia.

Actual landfall of Florence is not expected until at least Friday afternoon, according to Neil Jacobs at the National Oceanic and Atmospheric Administration (NOAA).

Cable outages are often a result of power outages. If electricity goes out in an area, cable services will go as well, and remain unavailable until power is restored. If cable infrastructure is also damaged, service won’t return when electricity does and outages should be reported to the cable company. Traditional landline service is powered independent of the electric grid. Report any service outages to the telephone company.

If infrastructure is severely damaged, it could take several weeks to restore electric, phone, and cable service after a major hurricane.

Independent Cable Companies Selling Philo Streaming Alternative to Cord-Cutters

Phillip Dampier July 30, 2018 Competition, Consumer News, Online Video No Comments

The National Cable Television Cooperative (NCTC) has reached an agreement allowing its 750 independent cable, video, and broadband providers the opportunity of selling Philo, a streaming cable TV alternative, to customers.

Philo, which offers up to 49 cable channels owned by Discovery, Viacom, AMC, and A&E Networks, normally sells for $16-20 a month, depending on package.

The deal gives independent cable companies affiliated with NCTC another retention tool for cord-cutters looking for an alternative to a traditional cable television package. It also offers a less expensive bundled TV option for customers subscribing to a broadband-only provider. In all, NCTC members offer service to nine million Americans.

“Our partnership with NCTC will expand the available options for millions of TV lovers by giving them access to the unique entertainment-focused package we’ve created,” explained Andrew McCollum, Philo’s CEO. “Philo is a perfect complement to the existing services, particularly high-speed internet, that these companies already offer.”

Subscribers can watch Philo through browsers, Amazon Fire TV, Apple TV, Roku, iPhone App & Android via Chrome, as well as 37 TV Everywhere apps and websites for participating networks.

Also included:

  • The ability to watch on up to three different devices at the same time;
  • An unlimited 30-day DVR, on-demand library, pause any live channel, start programs from the beginning, and watch programs that have aired in the past three days;
  • A streamlined interface, intelligent search, and the ability to easily send your favorite shows to others;
  • Easily share favorite shows with friends and family. For non-Philo users, signing up and watching is as easy as entering a phone number;
  • Subscribers are eligible for a $5 Philo credit for referring friends and family and there’s no limit to number of referral credits an individual can earn.

Philo lacks agreements with popular sports networks, WarnerMedia networks like TNT and CNN, and local over the air stations. It also does not sell premium channels.

Philo 35+ Channels – $16

  • A&E
  • AMC
  • Animal Planet
  • AXS TV
  • BBC America
  • BBC World News
  • BET
  • Cheddar
  • CMT
  • Comedy Central
  • Discovery Channel
  • DIY
  • Food Network
  • FYI
  • GSN
  • HGTV
  • History
  • IFC
  • Investigation Discovery (ID)
  • Lifetime
  • Lifetime Movies
  • MTV
  • MTV2
  • Nickelodeon
  • Nick Jr.
  • OWN
  • Paramount Network
  • Science
  • Sundance Channel
  • Tastemade
  • TeenNick
  • TLC
  • Travel Channel
  • TV Land
  • Velocity
  • VH1
  • Viceland
  • We TV

9 channels add-on pack – $4

  • American Heroes Channel
  • BET Her
  • Cooking Channel
  • Destination America
  • Discovery Family
  • Discovery Life
  • Logo
  • MTV Live
  • Nicktoons

NCTC also has agreements to sell two other streaming providers: Sony’s PlayStation Vue and sports-oriented fuboTV.

The Consumer’s Guide to Spectrum’s Possible Demise in New York State

Moving on out?

New York’s Public Service Commission on Friday set the stage for ‘an orderly transition’ ending Spectrum’s brief life in New York, to be replaced with a ‘to be announced’ new cable operator to serve the needs of New York subscribers.

Or so the New York Public Service Commission hopes.

Although Friday’s 4-0 unanimous decision to revoke Charter’s merger deal in New York is a public relations and legal nightmare for the country’s second largest cable operator, we suspect top executives are getting a good night’s sleep tonight, not too concerned about the immediate consequences of today’s stunning vote.

Losing New York is what Wall Street would call “a materially adverse event” for any cable operator. New York City is the country’s largest media market. Billions of dollars worth of cable infrastructure, subscriber and advertising revenue, and prestige are at stake. Despite the ‘vote to revoke,’ Charter’s attorneys have signaled for weeks they intend to preserve and protect the cable company’s legal rights, and it is almost certain the PSC’s merger revocation order will meet a court-ordered injunction as soon as next week.

The courts are likely to make the final decision about whether Spectrum can stay or has to go. That aforementioned injunction will stop the clock on any ‘rash action’ and start what could be years of litigation, filled with discovery, endless hearings, stall tactics, blizzards of motions, appeals, more appeals, and then more lawsuits over whatever final exit plan is eventually filed, if one is required by the courts. A judge could also order the cable company and the state to work it out in a court-approved settlement, something the PSC seems loathe to do in its two orders published today which make it clear the regulator is done talking only to feel strung along by the cable company.

For the near term, Spectrum customers won’t notice a thing. Even if the PSC was not taken to court, Charter has 60 days to file a six month transition plan, making the earliest date to waive Spectrum goodbye is sometime in early 2019.

To help readers out, we’ve prepared a short FAQ to address any concerns:

Q. Will I lose my cable and internet service?

A. No. Regardless of what happens, the PSC has ordered a transition plan designed to provide a seamless switch between Spectrum and a future provider. For most customers, it will resemble Charter’s own transition from Time Warner Cable to Spectrum.

Q. Who will replace Spectrum?

Not again.

A. The cable industry often resembles a cartel, whose members go to great lengths to protect each other. Historically, no large cable operator will entertain requests for proposals from cities or states requesting a replacement of a cable company already providing service. In short, if a city is fed up with Comcast and wants to shop around for another provider, it is highly unlikely Charter/Spectrum, Cox, Altice/Cablevision, Mediacom, or other providers will submit a bid to replace Comcast. If they did, Comcast could theoretically retaliate in their service areas. Should the Public Service Commission itself solicit bids to replace Spectrum, it is unlikely any operator will send a proposal unless/until Charter indicates it wants to leave the state. This kind of informal protectionism has proven highly effective limiting the power of towns and cities to play companies off each other to get a better deal for their residents.

Q. If Charter loses its court challenge and has to leave, what happens then?

A. If Charter exhausts its appeals and realizes it can no longer do business in New York, it will seek a private sale or system swap with another provider. Comcast would be the most likely contender, having shown prior interest in serving New York and having contiguous cable operations in adjoining states, especially in northern New England, Massachusetts, Pennsylvania and New Jersey. Comcast could agree to trade its cable systems in states like Texas, Florida, or California in return for its New York State’s Spectrum systems, which cover cities across the state. But that is likely years away.

Q. Isn’t Comcast worse than what we have now with Spectrum?

A. Consumer satisfaction surveys suggest the answer is yes. Comcast is routinely rock bottom in customer satisfaction, customer service, pricing, and service options. Its 1 TB data cap on internet service has not yet reached many of its northeastern customers, but most observers expect it eventually will. In contrast, Charter has agreed not to impose data caps for up to seven years after its 2016 merger. But Comcast has delivered more frequent broadband speed upgrades and has more advanced set-top boxes and infrastructure.

Stop the Cap! would vociferously oppose Comcast’s entry in New York, however, just as we did a few years ago when we participated in the successful fight to stop Comcast’s merger attempt with Time Warner Cable.

Q, What other providers might be interested?

A. Altice, which does business as Cablevision or Optimum, is New York’s other big cable operator, providing service exclusively downstate. Altice had aggressive plans to become a big player in the U.S. cable business, but its acquisition dreams were halted by shareholders, concerned about the European company’s already staggering debt, run up acquiring other companies. Altice is currently scrapping Cablevision’s existing Hybrid Fiber Coax infrastructure and replacing it with direct fiber to the home service, which offers improved service. But the company charges a lot for its advanced set-top box, has bloated modem rental fees, and is notorious for vicious cost-cutting, which stalled service improvements at its mobile and cable companies in France and raised a lot of controversy among employees.

Cox could be another contender, but would have to find a few billion to acquire Spectrum’s statewide system. Wild card players include AT&T and Verizon. Verizon would face extreme regulatory challenges, however, because it is the local phone company for most residents in the state. AT&T sold its U-verse system in Connecticut to Frontier Communications and seems increasingly focused on content, not on the systems that deliver content. A hedge fund or private equity firm could also be contenders, but perhaps not considering the high cost to acquire the systems and New York’s reputation for fierce customer protection. Remember, New York insists that a cable company ownership transfer must meet public interest tests, not simply enrich hedge fund participants.

Q. What happens to Charter’s pre-existing deal conditions on rural broadband and speed increases?

A. Officially, the PSC has ordered Charter to continue abiding by the 2016 Merger Order and its deal commitments. The state will likely continue to fine Charter if it keeps missing rural broadband rollout targets until a court stops them or the company leaves. Charter will probably continue rural broadband expansion to show good faith. Charter has met its merger obligations related to speed increases, so it is not currently out of compliance. But a legal challenge offers the opportunity for a third-party judge to suspend or modify existing deal commitments, at least temporarily. It is unlikely Charter will want to invest large sums in its cable systems if it believes it will lose its case in court. The timetable for an upgrade to 200 Mbps Standard speed will likely now occur on a regional basis. The northeast division will still likely activate these speeds across multiple cities in the region sometime this summer, especially in places where it faces competitive pressure. The 300 Mbps upgrade in 2019 is more likely to be impacted by any forthcoming legal action.

Q. Is this political or about the union striking Charter? It is an election year.

A. All things are political to some degree in an election year in New York. That said, the New York Public Service Commission has the nation’s best track record of protecting consumers from bad actor telecom and energy companies. They take their responsibilities very seriously, and have shown consistent independence from the governor’s office, especially in recent years. The Commission was by far the most responsive of any state, including California, in taking our concerns about the Charter/Time Warner Cable merger seriously, and incorporated several of our suggestions into the final Merger Order. We warned the PSC cable companies have routinely reneged or slipped through deal conditions. We even predicted Charter would attempt to count new buildouts in non-rural areas and business office parks towards any commitment to expand their service areas. The PSC smartly conditioned its Merger Order by defining the goal of Charter’s broadband expansion — serving the unserved and underserved. That is why the company is not getting away with counting New York City buildouts towards this commitment.

Cynthia Nixon and Andrew Cuomo, both running for New York governor, neither fans of Charter Spectrum.

Few voters are likely to tie a PSC decision to the governor’s race, although Gov. Andrew Cuomo has repeatedly taken credit and praised the PSC for not tolerating bad behavior from Spectrum. If it was a purely political play, it would originate in the governor’s office. Gov. Cuomo’s Broadband for All program depends on achieving near-100% broadband penetration, something it may not manage if Charter fails its rural buildout commitments. That would be a PR mess. There is ample evidence that Charter’s own conduct was sufficient to trigger this kind of response, with or without an election looming.

New York is also a union-friendly state, and the International Brotherhood of Electrical Workers (IBEW) Local 3 has held out for over a year in the New York City area striking to preserve important job benefits Charter wants to discontinue. New revelations from the PSC outlining Charter’s increasingly bad safety record has strengthened the union’s case that Charter would rather bring in unqualified replacement workers and put safety at risk than settling with a union that essentially built the cable system serving New York City. There is no credible evidence that the union is involved in the PSC’s decision to revoke the merger agreement, although we suspect most affected members will fully support the decision.

Q. Is the PSC being too harsh? Can’t they work it out with Charter?

A. For New York to revoke a merger and effectively boot the company out of business in the state is remarkable. Utility companies that irresponsibly lack a credible disaster plan or do not comply with industry standards to maintain tree trimming and infrastructure repairs that result in plunging parts of upstate into darkness for up to two weeks after wind storms in two consecutive years were fined, but not ordered to leave. The ongoing scandal of competing private ESCO electric companies that have almost all scandalously overcharged New Yorkers with electric bills higher than their incumbent utility have been threatened with de-certification and fines, but are still conducting business, even though much of their marketing material was misleading.

Is it too late to work it out?

That should tell you the PSC’s move today was a final straw. The two parties have negotiated and debated Spectrum’s performance lapses for nearly a year. Tension was clearly rising by the spring after the PSC uncovered evidence Charter was intentionally counting areas it knew were outside of the spirit and language of the merger order’s rural broadband deal commitments. Charter’s brazen behavior achieved a new low when it questioned the PSC’s authority to oversee the merger agreement Charter signed. At one point, it unilaterally announced it would only honor the deal commitments found in one appendix of the Merger Order, conveniently ignoring the section describing and defining the rural broadband commitment Charter agreed to. The company also continued to air what the PSC declared to be false advertising, promoting Charter’s claimed accomplishments in rural broadband expansion. Charter repeatedly ignored warnings to suspend and remove those ads. In fact, the PSC issued strongly worded warnings to Charter at least twice, specifically outlining the possibility of canceling the merger agreement and forcing Spectrum out of the state. In response, Charter began staking out its legal arguments in filings, obviously preparing for litigation.

The PSC would probably argue it is impossible to work things out with a company that repeatedly breaks its own commitments. The PSC also openly worried what message it would send to other regulated utilities if it did not react strongly to Charter’s behavior. If the company had a corporate agenda to cheat New York out of important rural broadband expansion, negotiating, fining, and sanctioning a company is unlikely to change its behavior at the top.

Stop the Cap! had earlier recommended the PSC adopt new sanctions to force Charter to comply with its commitments, and expand them to bring service to many New Yorkers who were left behind by Gov. Cuomo’s Broadband for All program, suddenly saddled with satellite internet service. A large percentage of those affected are frustratingly close to nearby Spectrum service areas and although it would cost Charter a significant sum to reach them, it would deliver a financial sting for their bad behavior while also bringing much-needed internet access to the leftovers left-behind by the governor’s broadband expansion program. Such a settlement would require the company to actually comply with their commitments, something the PSC had been unable to achieve through no fault of their own. Perhaps a judge might have better luck should a negotiated settlement come up in litigation.

Data Cap Vendor Shows Off “Revenue Accelerator,” Helping Cable Companies Monetize Usage

Phillip Dampier July 24, 2018 Consumer News, Data Caps, Net Neutrality No Comments

OpenVault’s technology can automatically slow down “abusers” who use too much internet service.

Cable companies looking for ways to raise prices for their broadband services without spending money on network upgrades may be interested in OpenVault’s “Revenue Accelerator” — a cloud based internet usage measurement system that can help push subscribers into higher priced tiers or warn them when they are about to face punitive overlimit fees for exceeding their monthly usage allowance.

OpenVault’s goal is to monetize customers’ internet usage, making cable operators certain each customer is paying as much as possible for internet service without facing customer-displeasing overlimit fees from exceeding their monthly usage allowance.

“All these solutions are designed really to do of a couple things,” said OpenVault CEO and founder Mark Trudeau, in an interview with FierceTelecom. “One is to drive incremental revenues, and two is to drive costs [for cable operators] down, all with the idea of increasing profit for cable operators.”

OpenVault will collect customers’ usage behaviors, reporting back every 15 minutes how much bandwidth each customer is using, as well as enforcing cable company policies to automatically slow down “abusers” who are sending and receiving more than their fair share of data. Enforced network management, built into the platform, can automatically punish customers based on violations of the ISP’s Acceptable Use Policies. Usage violators are then reported to the cable operator, targeted for future marketing campaigns to upgrade their service to a more expensive tier to avoid further time-outs on the internet slow lane.

The technology is cheap to deploy, relying on a set of command lines inserted into cable modem termination systems that collect Internet Protocol Detail Record data and send it on to OpenVault.

“We measure all that for the operators and then what our Revenue Accelerator product does is it helps them micro-target their upgrade candidates,” Trudeau said. “This can have just really massive impacts on their revenues, to be able to truly not just micro-target the upgrade candidates, but also provide their reps with the ammunition they need and the visibility they need into their customer’s behavior and into their homes so they can intelligently talk to a subscriber.”

OpenVault claims the implementation of usage based billing and data caps are immediate money-makers for operators, both from current customers forced to upgrade to avoid the cap and from overall usage billing that delivers an immediate payday to cable operators without having to invest in expensive upgrades or service improvements.

“In real-number terms, evidence shows an immediate return as some OpenVault customers have enjoyed as much as seven percent of subscribers upgrading their service within 90 days of usage based billing deployment,” the company wrote on its blog. “For some operators, this translates into increased ARPU (average revenue per unit) of over $5 per subscriber per month. OpenVault customers that have deployed usage based billing have experienced increased ARPU ranging from $1.50 up to $12 per subscriber per month.”

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