Five years ago, municipal Wi-Fi projects were enjoying a small boom.  The concept of providing low-cost or free Internet access seemed like a winner because it could provide service to those who could not afford traditional broadband, would stimulate economic development downtown, and possibly attract business as shoppers stopped in cafes or stores to use their wireless devices.  In some communities, just the spectacle of a city-wide high technology wireless network delivered worthwhile bragging rights that adjacent communities didn’t have.

For most city or town officials pondering investment in a Wi-Fi network, the idea germinates from a perceived lack of service from private providers.  If private companies were delivering the service, few communities would spend the time, effort, and money duplicating it.

In the community of Marshalltown, public Wi-Fi in 2005 was a service only found in a small selection of stores and cafes in the central business district.  The Marshalltown Economic Development Impact Committee sought to change that, promoting a plan to construct a free-to-use Wi-Fi network covering a 20-block radius centered on the Marshall County Courthouse.  The community of 27,000 got a three month trial of the downtown Wi-Fi network in 1995, with the city and county sharing 50 percent of its cost, with the remaining 50 percent paid for by private donations.

Mediacom, the cable company serving Marshalltown, was incensed by the notion of a community-owned broadband provider delivering improved (and free) Internet access across the city.  Even worse in their eyes, local government officials were pondering creating a public broadband utility.

Marshalltown (Marshall County), Iowa

It wasn’t long before new, shadowy groups with names like “Project Taxpayer Protection” showed up in town attacking the concept of municipal Internet access.  After a blizzard of brochures and exaggerated claims about “government broadband,” the network became a point of controversy among the locals.

Only later would the community learn the group (whose status as a non-profit was later revoked by the Internet Revenue Service for failure to file timely reports on its funding and activities) was actually funded mostly by Mediacom itself, with the full support of the Iowa Cable Association.

The astroturf campaign against public involvement in Wi-Fi, which could threaten Mediacom’s broadband service profits, was effectively an investment against competition.  It was an effort that paid dividends by late 2005, when the city and Mediacom suddenly announced a new “public-private partnership” to administer and expand the Wi-Fi network.  There were a few important changes, however:

1. Mediacom’s concept of “free” was markedly different than the designers’ original vision.  The cable company had other ideas, placing restrictions on how much “free use” was allowed;
2. Customers who used the newly-announced “free service” got it at speeds not much better than dial-up and definitely slower than 3G;
3. Residential Mediacom broadband customers could get unlimited time on the formerly-free network, if they paid $19.95 a month for 256kbps access;
4. To make the network seem business-friendly, business customers were told they could get up to 10Mbps service for $59.95 a month.

The goal of the partnership, according to Mike Miller, chairman of the Marshalltown Economic Development Impact Committee, was to see low-cost broadband Internet access citywide by the end of 2006.

Oh, and Mediacom insisted on something else: no more talk of a city-created municipal telecommunications provider, at least for a year anyway.

“We commend you on the foresight and vision to do this,” Bill Peard, Mediacom’s government affairs manager, told city officials at the time the deal was announced.

Friends until the community-owned...

Once Mediacom got its hands on the formerly community-owned network, it was the beginning of the end.

Business customers could not get Mediacom to sell them access at the promised price because representatives could not find the offer.

It was much worse for residential users.

Free Wi-Fi access soon became limited to one hour a day, up to 10 hours per month for non-Mediacom customers.  After that, you paid if you wanted more.

City and company officials spent most of their time wrangling over the costs of the service and its future potential.  What city officials were not planning for was the network’s virtual demise at the hands of the cable company.

...free Wi-Fi network is at an end.

Today, free access is a distant memory, as Mediacom pulled the plug claiming there was “limited interest.”

Effectively, Mediacom’s idea of a public-private partnership was the systematic decommissioning of a community’s public Internet alternative, all to protect its own broadband business.

That’s a lesson of caution for any community seeking to team up with private broadband providers.  Marshalltown allowed that partnership to first and foremost serve Mediacom’s business interests, not the public.  Now that network is effectively gone and largely-forgotten.

That suits Mediacom just fine.

Charter Cable told a Howell, Mich. family that lost everything in a major house fire they owed the cable company $1,600 for cable equipment, remote controls — even the batteries — that were consumed in the blaze.

Kerry Cacchione, her three children and her husband Jeff lost every single possession they owned in the fire seven weeks ago.  The Cacchione family, like many home renters, neglected to purchase all-important renter’s insurance, and without it, all of their furniture, clothing, and other valuables were gone for good.

When the family returned home to see the property, undergoing repairs paid for by their landlord, they were confronted with an enormous bill from Charter Communications, their cable company.

“$1,600, and they [charged us] for every remote, every battery, every modem, every cable box, and every DVR box,” said Cacchione.

The Cacchione family took the bill to Charter Cable and begged for forgiveness, telling employees there was no way they could afford to pay that cable bill.

Kerry reports Charter was unsympathetic and refused to waive the charges, leading her to ask WXYZ’s “Call for Action” to intervene.

With the threat of more bad publicity on the 6 o’clock news, Charter Communications decided to wipe out their bill.

Charter is among the most intransigent cable companies when it comes to demanding compensation for cable equipment destroyed or damaged in fires.  The company always relents when confronted with the prospect of bad publicity, such as when a customer service representative told one tornado victim in Alabama she would wait on the phone while she searched through debris in the neighborhood for lost cable equipment.

Every renter should always have renter’s insurance, which typically will cover damaged cable equipment. It’s very affordable and protects renters from losses. Many consumers believe landlords carry insurance which will protect them in the event of a natural disaster or fire, but those insurance policies protect the landlord’s property, not renters’ possessions. The peace of mind afforded by renter’s insurance can make all the difference in a major loss like the one experienced by the Cacchione family.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WXYZ Detroit Losing It All 8-31-11.mp4[/flv]

WXYZ in Detroit comes to the rescue of yet another family falling victim to an enormous cable bill from equipment lost or damaged in a house fire.  (3 minutes)

Cablevision: Don't Call Us

By the time Hurricane Irene reached upstate New York and New England, it was a tropical storm some say was over-hyped from the outset, but don’t tell that to utility companies facing weeks of service restorations that will leave some of their customers offline until October.

The worst damage to infrastructure was done in this region, with utility poles swept away in flood waters right along with the homes they used to serve.  Telephone and cable companies in several parts of the region cannot even begin to restore service until higher-priority electric service is brought back.  Besides, you can’t use a broadband connection if your power has been out for a week plus.

Those addicted to their online connection are making due in parking lots and other Wi-Fi hotspots where service prevailed over Irene.  Wireless connectivity from cell phone companies is also getting a workout, assuming customers are aware of usage caps and limitations which could make September’s bill much higher than expected.

Stop the Cap! has learned some DSL service restoration appointments in upstate New York, Massachusetts, Vermont, and New Hampshire are now extending into October, although companies suggest outside work may resolve problems.  Customers with the worst luck face a lengthy wait for the replacement of utility poles, new utility lines to be strung across them, and replacement of individual lines connected from the pole to individual homes.

Some FairPoint Communications customers are finding Irene did a real number on their DSL service even if power outages were limited.

In southwestern New Hampshire, Robert Mitchell was presented with a unique error page on his computer after the lights came back on:

“…we are improving the security of your broadband connection. As such, you have been redirected to the FairPoint Communications broadband service page to install a security update.”

That was a fine idea, except its implementation left customers like Mitchell with the most secure broadband connection around, resistant to all malware and viruses — namely, by not having any connection at all.

My annoyance only increased when I realized that FairPoint may have provided a link to download the security update software, but they were not going to make the process of accessing that software easy.

“Your Web browser (Firefox) and Operating System (Mac) are not compatible with the DSL Security improvement process…please re-open this page on a Windows XP, Vista or Windows 7 PC using Internet Explorer,” the message continued.

Bully for me, I have two Macs in the office. Time to call technical support? Nope, sorry. Both of my phone lines use Vonage, a VoIP service that relies on a working DSL modem for dial tone. Cell service at the house was sketchy at best — if I could even get through to technical support during a hurricane.

With the help of an old Windows XP machine, Mitchell managed to finally get back online.  Later, he learned the power spikes and brownouts that preceded the blackout in his neighborhood had caused his DSL modem to resort to its original default settings.  When FairPoint customers first connect a DSL modem, the company prompts them to perform the aforementioned “security update.”  Only FairPoint stopped offering that update more than eight months earlier.  Now, according to Mitchell, it’s just the default start page for newly activated DSL modems.

Customers further east in downstate New York, Massachusetts, Maine, Long Island, Connecticut, and New Jersey are finding getting service restoration highly dependent on which provider they use.

Time Warner Cable customers numbering about 350,000 found their service out Wednesday after leftover flooding and debris tore up fiber cables serving Maine, New Hampshire and Vermont.  Service was restored that evening.

Cablevision customers in Connecticut are still experiencing new outages caused by flooding, and with power company workers contending with more damage in that state than further south in New York, cable crews can’t restore service until the lights are back on.

Cablevision customers on Long Island are still being told not to bother calling the cable company to report outages.  Those that do are often given a date of Sept. 15 for full service restoration, although it could be sooner if damage in individual neighborhoods is less severe.  A Cablevision spokesman said, “Cablevision is experiencing widespread service interruptions, primarily related to the loss of power.  Cablevision crews are in the field and we will be working around the clock to make necessary repairs, in close coordination with local utilities.  Generally, as electricity is returned to an area, customers will be able to access Cablevision service.”

Verizon customers in downstate New York and New Jersey faced lengthy hold times to report service outages, and are given a range of dates from later this week until mid-September for full service restoration.  Some pockets of very badly damaged infrastructure may take even longer to access and repair.  Verizon’s largest union workforce, under the auspices of Communications Workers of America District 1 are accusing Verizon management of slowing repairs with denials of overtime work requests, in part to punish workers for their recent strike action.  John Bonomo, a Verizon spokesperson, denies that accusation, but added the company is not treating the thousands of customers still without service as an emergency, noting landline service “is not as vital as it had been in past years.”

Comcast customers, mostly in Pennsylvania, Vermont and Massachusetts, are turning to smartphones to cope through extended service outages, according to the Boston Globe:

Comcast Corp. customer Soraya Stevens turned to her iPhone when her cable blew out, logging on to Twitter from her Bedford home for the latest power outage updates. “I would not have any communication or insight without my smartphone,’’ said Stevens, a software engineer.

Some customers who lost cable service lost their TV, Internet, and landline phone, which are often bundled and sold together. Many turned to their smartphones, operating on batteries and the signal from cellphone towers, or friends and family who still had cable service.

AT&T, which serves landline customers in Connecticut, experienced more outages a day or two after Irene departed as battery backup equipment installed at landline central offices finally failed.  Those equipped with diesel generators are still up and running, but many AT&T customers sold a package of broadband and phone service may actually be receiving telephone service over a less-robust Voice Over IP network, supported with battery backup equipment that shuts down after 24 hours, when the batteries are exhausted.  This has left customers with standard copper wire phone service still up and running, but customers on Voice Over IP completely disconnected.

Bill Henderson, president of Communications Workers of America Local 1298, told the Hartford Courant those landlines aren’t considered landlines by the Department of Utility Control, and aren’t regulated for reliability, as the old system is.

“Technology has risen. Some of the things we’ve given up in that system is reliability,” he said. “This is what I’ve been screaming about to the DPUC. It’s a telephone! We need to regulate this service.”

Customers are also complaining loudly about AT&T’s poor wireless performance during Irene, with many tower outages and service disruptions that are still ongoing.

Remember, when services are restored, be sure and contact your provider and request a full service credit.  You will not receive one unless you ask.

Residents in greater Philadelphia overpaid Comcast more than $875 million dollars, thanks to the cable company’s alleged anti-competitive practice of building regional cable clusters that scare would-be competitors away.

Those are the primary allegations in a 2003 class action case brought against the country’s largest cable operator — a lawsuit Comcast has appealed, so far unsuccessfully.  A three-judge panel of the 3rd Circuit on Tuesday delivered the latest blow to the cable company, denying Comcast’s efforts to get the case thrown out.

At issue is the cable industry’s practice of acquiring and trading cable systems with each another to create regional “clusters,” — large geographic areas all served by the same cable provider — and what that practice does to cable pricing.  All the rage in the late 1990s and early 2000s, cable clustering largely put an end to multiple cable systems serving individual cities.  In the 1980s and 90s, it was not uncommon to find up to four different cable systems serving different sections of a community.  Philadelphia was no different, served by more than a half-dozen cable operators in the greater metropolitan region and surrounding counties.

In the late 1990s, the Court noted Comcast launched a major shopping spree to consolidate the entire area around one cable provider: Comcast.  The lawsuit claims subscribers have paid the price ever since.

Comcast’s Cable Swaps and Acquisitions

• April 1998: Comcast acquires 27,000 Marcus Cable customers in Harrington, Delaware, which is part of the Philadelphia Designated Market Area (DMA);
• June 1999: Comcast acquires 79,000 Greater Philadelphia Cablevision customers in the city of Philadelphia;
• January 2000: Comcast acquires 1.1 million Lenfest Communications customers in Berks, Bucks, Chester, Delaware, and Montgomery counties in Pennsylvania, and New Castle County in Delaware;
• January 2000: Comcast acquires 212,000 Garden State Cablevision customers in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, and Salem counties in New Jersey, which is part of the Philadelphia DMA;
• December 2000: Comcast acquires 770,000 AT&T Cable customers in Eastern Pennsylvania (Berks and Bucks counties) and New Jersey, in return for trading 700,000 Comcast customers in Chicago with AT&T (Comcast would later win them back by acquiring AT&T Cable itself);
• January 2001: Comcast acquires 464,000 subscribers in Philadelphia and nearby communities in New Jersey in a subscriber trade with Adelphia Communications Corp., wherein Comcast obtained cable systems and approximately 464,000 subscribers located primarily in the Philadelphia area and adjacent New Jersey areas.  In return, Comcast turns over its subscribers in Palm Beach, Florida and Los Angeles, California to Adelphia.
• April 2001: Comcast wins another 595,000 subscribers in the region in a trade with AT&T Cable;
• August 2006: Adelphia implodes and cable companies including Time Warner Cable and Comcast pick over what’s left.  Comcast manages to pick up another 41,000 former Adelphia customers that were originally headed to Time Warner in yet another subscriber swap;
• August 2007: Comcast acquires Patriot Media and its 81,000 New Jersey customers located within the Philadelphia DMA.

When the acquisitions and transfers were complete, Comcast managed to build a major empire in southeastern Pennsylvania.  In 1998, the company had just a 23.9 percent market share in the Philadelphia DMA.  Comcast managed to control 77.8 percent of the market by 2002.  Despite competition from satellite television and one struggling cable competitor — RCN, Comcast still controlled nearly 70 percent of the market as late as 2007.

Who Pays for the Shopping Spree?  Comcast Customers, Say Plaintiffs

Six Comcast customers upset with the relentless rate increases that came with Comcast’s acquisitions joined forces and filed suit against Comcast in 2003.  The plaintiffs charged Comcast with anti-competitive business practices and violations of the Sherman Act for building a monopoly presence in the market that also helped keep competitors at bay.

One plaintiff’s expert was able to calculate what he called “a conservative estimate” of how much Comcast has effectively overcharged customers in Philadelphia by preventing effective competition: $875,576,662.

That figure was hotly disputed in Comcast’s court appeal, but last Tuesday the Court rejected Comcast’s arguments.  In fact, the Court found merit in the formula used to arrive at the amount of overcharging Comcast has allegedly engaged in — in Philadelphia alone.  Comcast’s argument that customers enjoy lower pricing through promotions and other special pricing arrangements fell apart when the Court learned at least 80 percent of Comcast subscribers pay regular “list prices” for service, and the expert who created the ‘wallet damage‘ formula had taken that special pricing into account.

The plaintiffs suggest that had Comcast not engaged in system clustering, one or more of the area’s cable systems might have decided to compete against the other cable systems.  In that scenario, customers might have been able to choose from Comcast, Lenfest Communications, Marcus Cable, and/or Patriot Cable for cable service, resulting in increased price competition.  While there have been instances of traditional cable operators overbuilding into each other’s territories, those instances have been rare — a point Comcast made in an effort to have the case tossed out.  Comcast’s case is that the majority of Americans are served by a single cable provider, but that’s not a problem because the industry faces increasing competition from satellite TV providers and, as of late, large phone companies.

But the Court found the reason for this lack of competition could be, as plaintiffs argue, the successful outcome of the alleged anti-competitive, cable system-clustering strategy.

As an example, a railway monopoly from 100 years ago could claim it isn’t economical for more than one railroad to serve a particular community, but that isn’t a problem because other forms of transportation exist to move goods and people.  That argument would be based on a market reality created by the railway industry, which routinely bought out the competition through withering price wars, cross-subsidized by higher prices in other monopoly markets. The end effect was a shrinking number of competitive markets, increasing profits (and prices), and a strong deterrent for would-be competitors to enter the business.

A similar case has been brought by the plaintiffs struggling with high cable bills.  In their eyes, cable customers paid for the Monopoly game board on which cable properties were traded or sold.  When the shopping spree was complete, higher rates were the result, indefinitely.

The Case of RCN — Programming Denied

Most traditional cable companies do not compete in areas already served by another cable company.  It’s a tradition some liken to a cartel, where companies carve up territories and enjoy the market benefits afforded by a lack of competition.  But this model is also considered standard operating procedure by Wall Street and other private investors, who fear all-0ut price wars cutting revenues and destroying value and profits.  But there are some companies whose entire mission is to challenge this economic model: the cable overbuilders.  The business plan of the cable overbuilder is to challenge the status quo and deliver service where cable TV already exists and do so profitably.

One such overbuilder is RCN Corporation, which delivers competitive cable service in Boston, Washington, D.C., New York City, Chicago, and parts of the Lehigh Valley.  RCN began operations in 1996 in Boston, just before the cable industry’s quest for clusters went into hyper-drive.  Their plans to compete have been challenged by the ever-increasing concentration in the cable-TV marketplace ever since, and the company has had a particularly tough time attracting subscribers in the Philadelphia area.  Much of RCN’s service area these days is limited to multi-dwelling units like high-rise condos and apartments, where wiring costs are lower.

One of the most effective ways to keep customers from switching to a competitor is to develop or maintain exclusive programming rights.  If a Comcast customer discovered his favorite sporting events could only be seen with a Comcast subscription, that could be a deal-breaker for signing up with RCN.  Before the 1992 Cable Act, the cable industry which owned and controlled a number of popular cable networks refused to sell those channels to would-be competitors (or charged unreasonable prices for access).

When this lawsuit was filed in 2003, RCN found itself locked out of Comcast’s SportsNet, just one of several regional sports networks that cable operators withheld from satellite and cable competitors.  That’s because the 1992 Cable Act included a loophole: it applied only to networks distributed on satellite.  Several regional sports channels were not on satellite, so they could, and were, legally withheld from competitors like RCN.  That loophole was finally closed by the FCC last summer.  But for more than a decade, RCN had to convince sports fans to sign up for a competing service that didn’t have one of the most popular sports channels on the lineup.

Satellite competitors DirecTV and DISH Network were in the same boat, and the legal case recognizes the impact: satellite TV competition in Philadelphia has a below-average percentage of the market, when compared to other cities.

Plaintiffs argued RCN never had fair access to programming, leaving them to compete with one hand tied behind their back.  Even worse, they allege Comcast compelled local contractors into non-compete contracts agreeing not to work for any Comcast competitor, and signing customers up to unusually long contract terms with hefty cancellation penalties in RCN service areas.

All of these accusations were deemed credible by the Court, much to the objection of Comcast, which argued RCN was in serious financial distress and would never be a strongly viable competitor in Philadelphia.  Last week’s Court decision found that ironic, accepting that RCN’s present condition could be, as plaintiffs allege, the result of the anti-competitive, unfair business practices Comcast is charged with.

The evidence on the record “demonstrates that Comcast’s alleged clustering conduct indeed could have reduced competition, raised barriers to market entry [by other competitors] … and resulted in higher cable prices to all of its subscribers in the Philadelphia Designated Market Area,” the court ruled.

Comcast: A Competitive Marketplace Begins And Ends Only at Home

One of the most-disputed elements in the case is determining how much, if any, damage was done to consumers in the greater Philadelphia area.  Much of the plaintiffs’ case rests on pricing anomalies found in the Philadelphia region, where customers are alleged to be paying significantly higher prices for cable service and not enjoying a significant amount of competition.  To build that case, lawyers measured cable rates and available competitors in the various counties in and around the city of Philadelphia.

This is also critical for determining the size of the “class” in the class action lawsuit.  The larger the class, the greater risk of significant damages if the court rules against the cable company (or if the case reaches a settlement.)  Plaintiffs claim their case should include all cable television customers who subscribe or subscribed at any time since December 1, 1999, to the present to video programming services (other than solely to basic cable services) from Comcast, or any of its subsidiaries or affiliates in Comcast‘s Philadelphia cluster.

They specifically defined the cluster as “areas covered by Comcast‘s cable franchises, or any of its subsidiaries or affiliates, located in the following counties: Berks, Bucks, Chester, Delaware, Montgomery and Philadelphia, Pennsylvania; Kent and New Castle, Delaware; and Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer and Salem, New Jersey.”

Comcast counters the geographic market is exactly the size of one, single household.  They argue that subscribers can only choose among video providers serving that customer’s specific home, so what cable competition exists in other counties or communities isn’t relevant.

The side effect of such an argument would be the end of a class action case, since the class size would be reduced from a number in the millions to just one, requiring every impacted consumer to file their own case.

The three judge panel was wholly unimpressed with Comcast’s argument, throwing it out and allowing the case to proceed.

Slingbox PRO-HD

In a shot across the bow to programmers demanding compensation for the cable company’s TV Everywhere project, Time Warner Cable has announced it will give away a free Slingbox PRO-HD device to every customer signing up for its top-tier 50/5Mbps Road Runner ‘Wideband’ broadband service.

The Slingbox, which allows customers to watch live streams of cable television programming and other video over a broadband connection, retails for $300 and that is what Time Warner will rebate to new “Wideband” customers who are willing to pay $99 a month for the fastest possible Internet service from the cable operator.

By handing out a free Slingbox, which customers can use to watch whatever channels they want, Time Warner is sending a message to intransigent programmers, particularly Viacom. which has been particularly hard-nosed in its negotiations for streaming rights of popular Viacom networks like Comedy Central and MTV.  Time Warner found its efforts to stream those networks on its free iPad app stymied when Viacom went to court to stop the streams pending compensation negotiations.

With the Slingbox, customers can bypass messy business debates and watch whatever channels they choose to subscribe to, although Time Warner Cable won’t officially declare that as their intention for the new promotion.

Instead, Jeffrey Hirsch, Time Warner’s executive vice-president and chief marketing officer, claims the Slingbox offer is an attempt to drive subscriptions for its DOCSIS 3-based Wideband service.

“Over time we’re really trying to emphasize Wideband as a mainstream product,” Hirsch told the New York Times.

Currently, only a small percentage of customers subscribe to the company’s 50/5Mbps service, most through Time Warner’s super-premium SignatureHome service, which includes the speedy tier as part of its triple-play bundle of phone, Internet, and cable service.  The company sells SignatureHome in most markets for around $200 a month.

The Slingbox promotion is planned for launch this September.  Customers are expected to pay upfront for the device and receive a $300 prepaid debit card as part of the rebate offer.  No word on whether the promotion will extend to new SignatureHome customers, or only to those choosing Wideband service a-la-carte.

Ironically, Slingbox use promotes a major increase in broadband traffic, thanks to high bandwidth HD streaming video.  Time Warner’s Slingbox promotion will drive increased traffic on their broadband networks once customers start watching shows outside of their home.