Warren (center) pictured with representatives of Charter Communications and PowerMyLearning (Photo courtesy of: PowerMyLearning)

The incumbent mayor of Rochester, N.Y., currently up for re-election, has decided to take indirect credit for a low-cost internet program loaded with tricks and traps from a cable company that is worsening the affordable internet problem in the United States.

Mayor Lovely Warren made the head-slapping mistake of teaming up with Charter Communications, already on track to being even more universally despised by its customers than its immediate predecessor Time Warner Cable. Casting political instincts to the wind, Warren decided to team up with an unpopular cable company that is gouging its regular customers while offering a token “low-cost” internet program designed to protect Charter’s internet profits more than offering low-income customers a break.

WHAM-TV:

New low-cost, high-speed broadband Internet service is being launched in Rochester, Mayor Lovely Warren announced Thursday.

PowerMyLearning and Charter Communications announced Spectrum Internet Assist (SIA) would offer the service to eligible low-income household customers in Rochester.

Broadband speeds of 30/4 Mbps are being offered for $14.99 per month by SIA, according to Mayor Warren.

“Lowering the cost barrier to Internet access for families is essential if we are to close the digital divide and help them rise out of poverty,” said Mayor Warren. “Internet access is increasingly essential for students to do homework, for jobs seekers to research and apply for jobs, pay bills and remain connected with society.”

We agree with the mayor that lowering the cost barrier is critical to making essential internet service available to every resident. Unfortunately, Charter Communications is making the problem worse, not better. Charter’s idea of charity doesn’t seem so magnanimous when you read the fine print.

Charter’s solution for affordable internet: Charge most customers more while a select few jump through hoops for a discount.

First, Spectrum Internet Assist is highly discriminatory and only available to families with school age children that qualify for the National School Lunch Program. Don’t have kids? Tough luck. When they leave school, no more affordable internet for you!

Second, if you are a senior citizen on a fixed income, you probably already have 20+ years under your belt dealing with relentless rate increases from the local cable company. Unless you are 65 or over and receive SSI benefits, you’ll keep on paying those rate increases because the only thing Charter has on offer for you is a bigger bill.

Third, and the most egregious insult of all to the most vulnerable members of our society is Charter’s cynical fear its fat internet profits will be cannibalized if they simply lowered the bills of customers that would otherwise qualify for this program. Spectrum Internet Assist is for new customers only (and if you are still on a Time Warner Cable plan, you aren’t a new customer).

Charter refuses to relent on its policy requiring current customers to disconnect internet service for a month before they can qualify for Charter’s “charity.” The company is worried it will lose money from customers downgrading to Spectrum Internet Assist who will pay a lot less for internet access. To prevent that, Charter makes the process of enrolling as difficult and inconvenient as possible. Imagine if RG&E or National Grid demanded poor residents go without heat for 30 days before qualifying for heating assistance or if your elderly grandparents had to disconnect telephone service for a month before qualifying for Lifeline.

While obsessing about whether its poorest customers are taking ‘unfair’ advantage of a money-saving deal, Charter has no problem splurging on fat bonuses and compensation packages for its top executives. In fact, the highest paid CEO in the United States in 2016 was Thomas Rutledge, top dog at Charter Communications, rewarded with a splendid $98.5 million compensation package for finding new ways to charge consumers even more for cable service. Charter can certainly afford to lighten up on its customers. Instead, it seeks to live up to the cable industry’s usual reputation of a modern-day reboot of Oliver Twist, this time starring Rutledge as Fagin. Since Warren wholeheartedly endorses Charter’s paltry efforts for the poor, perhaps residents can call her up and ask why they should be forced off the internet for a month just to qualify for Charter’s “charity.” Or maybe not, considering the fact she had nothing to do with Spectrum Internet Assist beyond having her picture taken at a press event.

As is too often the case, uninformed politicians are quick to take credit for programs they don’t understand and are nowhere to be found when the real problem-solving and hard work needs to be done. How can we say that? Because we were a registered and very involved party in the New York Public Service Commission’s review of the Charter-Time Warner Cable merger deal. Mayor Warren wasn’t. We fought for pro-consumer benefits if such a deal was to be approved. Mayor Warren didn’t. We understood from long experience the cynicism that separates the cable industry’s lofty words from its fine print. She doesn’t.

Spectrum Internet Assist does very little to resolve the problem of internet affordability. The program is a close cousin of Comcast’s much-criticized Internet Essentials program, which has similar eligibility requirements and has proven cumbersome to sign up for and leaves too many eligible families behind because of its onerous signup requirements. In 2016, Comcast itself admitted that since 2011 it has only enrolled 750,000 low-income households in its discounted internet program, although more than 2.6 million families were eligible to sign-up but never did.

Charter makes internet affordability worse.

Our research shows that Charter’s token efforts for the few are more than canceled out by the rate increases and reduced options made available to the rest of its customers.

Time Warner Cable used to offer lower-cost internet plans.

Time Warner Cable used to sell six different internet plans ranging from $14.99 to $64.99 for new customers (and practically anyone who ever complained about their cable bill) or $14.99 to $109.99 if you were in the tiny minority of customers who didn’t either bundle service or ask for a promotion. Charter Communications argues it is “better” for consumers to simplify Time Warner’s “complicated” plans and pricing with a one-size-fits-all alternative — 60Mbps for what sells today for $64.99 a month (they raised the price $5 a month back in February). But at least you won’t pay that modem rental fee (if you didn’t bother to avoid it by buying your own cable modem that would have paid for itself long ago.)

So which company makes internet affordability a bigger problem — Time Warner Cable, which sold less expensive internet service at prices of $14.99, $29.99, and $34.99, or Charter Communications which advertises only one internet plan on its website for much of western New York – 60Mbps for $64.99 ($44.99 if you are new to Charter and not a previous Time Warner Cable customer that still has cable service). Spectrum’s plan is more than four times more expensive than Time Warner Cable’s previously well-advertised $14.99 plan.

Regular TWC broadband-only pricing in 2016.

No organization worked harder than Stop the Cap! to keep Time Warner Cable’s $14.99 Everyday Low Price Internet tier as a condition of the merger. While not fast, it is affordable and available to every customer, not just the small percentage that will eventually manage to qualify for Spectrum Internet Assist. Fortunately, New York’s Public Service Commission agreed with us and insisted that option remain available in New York State for the next several years. But Charter has subsequently made that plan almost invisible, removing all mention of it from its website, telling some customers it was not available, and leaving a distinct impression they don’t want customers to sign up.

Charter’s one-size-fits all plan got more expensive in February.

The reason is simple. Revenue cannibalization. Thomas Rutledge has repeatedly stressed to Wall Street investors he intended to end the “Turkish bazaar” of Time Warner Cable’s former cavalcade of plans and promotions. When a customer called Time Warner to complain about their bill, there was always room for negotiation and a better deal. Customers calling Charter looking for a break are hitting a brick wall with “take it or leave it” pricing, and tens of thousands of customers are “leaving it” and Charter behind. In this area, we don’t have that luxury because the alternative is usually Frontier Communications’ dreadful DSL service, which almost never meets the FCC’s definition of broadband — at least 25Mbps.

To give you an idea of just how rapacious Charter’s broadband pricing is, consider local upstart competitor Greenlight, which offers fiber to the home service to a very small number of neighborhoods predominately on the east side of the Genesee River. It charges a no-nonsense $50 a month for 100Mbps internet — $15 less than what Charter charges for 60Mbps. If you want gigabit speed, Greenlight will sell you 1,000Mbps for $100 a month, which is $5 less than Charter’s unadvertised 100Mbps offer ($104.95/mo with a mandatory $199 setup fee). Ten times the speed for less. No wonder their Facebook page is filled with people begging them to expand.

Rochester, like other cities in the upstate region, continues to fall behind with inadequate and costly internet service, insufficient competition, and no sign of gigabit speeds arriving anytime soon, unless you are lucky enough to live in a Greenlight service area. Those kinds of 21st century internet speeds are years away if we continue to depend on the local cable and phone company.

Phillip Dampier: We can afford to do without Charter’s “charity.”

In the local mayor’s race, one candidate seems to understand this problem and has a credible solution that fixes it. Rachel Barnhart has a long history of advocating for a citywide public fiber broadband network that would wire every home in the city for an estimated $70 million. The costs would be shared by city residents, the Rochester City School District, and at least one private vendor that would likely be responsible for administering day-to-day operations.

“About forty percent of homes in the city – 35,000 households —  don’t have high-speed internet via cable or DSL,” Barnhart said. “Some of those households can only access the internet via smartphones. The Rochester City School District has estimated half of its students don’t have broadband at home.”

City taxpayers have already paid for a underutilized institutional dark fiber network. Barnhart proposes putting that network to work for the community, selling competitively priced gigabit service for residential and business customers that would effectively subsidize free, slower-speed service for the less-fortunate. Is it expensive? Perhaps. But is it out of line when one considers in one local suburb this year, taxpayers will spend $1 million dollars on a single traffic light and minor road widening project to better manage traffic. Considering how many communities need digital highway traffic improvements, this kind of investment is hardly audacious and isn’t just about giving people fast internet. Managing the local digital economy with the right infrastructure is essential in a community that has seen the loss of tens of thousands of manufacturing jobs and has been economically challenged for years. The alternative is what we have now — watching a mayor impotently smile at a manufactured press event declaring victory while the near-cable monopoly local residents have for broadband service throws *-laden scraps at the public and calls it a day.

Rochester, and other communities that are enduring a cable company that is rapidly turning out to be worse than Time Warner Cable, cannot afford Charter’s “generosity.”

Politicians would do well to remember the sage advice we’ve given consumers since 2008. When a cable company claims they have a better deal for you, watch your wallet. For Mayor Warren, she will have to learn the same lesson we taught city councilman Adam McFadden and Assemblyman Joe Morelle. With friends like Charter/Spectrum or Comcast, you don’t need any enemies.

WideOpenWest, better known to subscribers as WOW!, has filed with the Securities and Exchange Commission to become a publicly traded company as it seeks to raise funding and make itself an attractive proposition for investors and potential buyers.

The company will initially remain under the control of Avista Capital Partners (44%), which has been an investor in WOW! from the beginning, joined by Crestview Partners (29%), which invested $125 million in the cable company in 2015.

WOW! is currently the sixth largest cable operator in the United States and an attractive takeover target for cable operators like Altice USA, Charter Communications or Comcast. In fact, WOW! provides direct cable competition for Charter and Comcast in the midwest and southeastern United States. Should either of those operators acquire WOW!, that competition will cease. The most likely buyer, however, is Altice USA, which is expected to offer its own IPO to raise funds specifically to acquire American cable companies. Altice currently owns Cablevision and Suddenlink.

WOW! has 772,300 subscribers, but is available to up to three million homes.

The cable company has also ditched its traditional logo and adopted a new one:

Old Logo

New Logo

WOW! is known for high quality customer service and aggressive service plans. Here is their current broadband offer:

O’Rielly

Republican FCC Commissioner Mike O’Rielly wants the FCC to prohibit states from attempting an end run around the current majority’s broad-based deregulation of ISPs, likening it to a war of socialist forces vs. free market capitalism.

Speaking at the American Legislative Exchange Council’s Spring Task Force Summit Annual Summit in Charlotte, N.C. on May 5, O’Rielly made it clear he intends to stop states from writing broadband privacy rules to replace those killed by the Republican majority in Congress and also wants to restrict states from enacting new rules impacting Voice over IP and broadband. O’Rielly told the audience he had already spoken to Chairman Ajit Pai about his ideas, potentially giving his agenda a majority vote on the Commission. Currently, the FCC has just three commissioners – Ajit Pai, Mike O’Rielly, and Democrat Mignon Clyburn.

In earlier remarks, Pai rejected allowing states to make their own decisions about broadband privacy policies.

“It is both impractical and very harmful for each state to enact differing and conflicting privacy burdens on broadband providers, many of which serve multiple states, if not the entire country,” said Pai. “If necessary, the FCC should be willing to issue the requisite decision to clarify the jurisdictional aspects of this issue.”

FCC action could potentially pre-empt any state laws from at least 10 states that have either passed ISP privacy laws or are planning to.

O’Rielly declared he intends to move broadband regulation away from the agenda favored by the Obama Administration’s FCC chairman Thomas Wheeler and return to hands-off policies allowing cable and phone companies to manage their businesses without government interference. O’Rielly told a cheering audience at the corporate-funded conference that under Chairman Pai’s watch, the FCC will return to “its previous approach to broadband that enabled staggering innovation, creativity, competition, disruption and consumer benefit.”

O’Rielly characterized groups fighting for consumer legislation banning zero rating/data caps, rate regulation, oversight, and consumer protection laws as part of a nefarious “progressive agenda to vanquish capitalism and economic liberty.” Like ALEC, O’Rielly claimed, the FCC has been unfairly attacked by progressive groups that call out both Chairman Pai’s agenda at the FCC and ALEC itself for ghostwritten legislation actually written by large corporate interests and passed for their welfare.

“Like ALEC, the new commission is facing its share of unwarranted and inappropriate criticism,” O’Rielly complained.

O’Rielly’s speech declared war on three hot issues broadband companies and consumers are concerned with: Net Neutrality, community-owned broadband networks, and state regulators seen as meddling with the free market.

• Net Neutrality: “All of the propaganda in the world cannot paper over the fact that these new burdens were not in response to actual marketplace events but hypothetical concerns dreamed up by radical activists.”
• Regulation of Voice over IP Phone Service in Minnesota to assure quality of service: “Such inappropriate jurisdictional overreaches by states should be nipped in the bud.”
• Municipal Broadband: “It would be easy, as some have done, to blindly support any means necessary to get more and faster broadband to people they represent.”

O’Rielly sought a tighter partnership with ALEC to stop consumer groups from enacting new laws that protect an open internet:

“The members of ALEC can serve an important role as the new Commission seeks to restore free market principles to broadband offerings. Many of you know all too well of the pressure on us to buckle and acquiesce to the whims of the misinformed screaming for Net Neutrality. You likely face it at your respective statehouses as you debate the various matters before you. The ‘progressive agenda’ being pushed in so many settings is really an effort to use government as a means to redistribute hard earned assets from one group of people to favored interests. Do not let your voices go unheard as Net Neutrality advocates slowly, but surely, seek to drag the U.S. economy toward socialism.”

On municipal broadband, O’Rielly stretched his premise into a comparison of communities that want to have the ability to build their own networks with past offers of discounted heating oil from former Venezuelan dictator Hugo Chavez, suggesting good deeds on the surface may lead to unintended consequences later on.

Byron is on ALEC’s Communications and Technology Task Force

O’Rielly has also been infuriated with Minnesota’s Public Utilities Commission, which has been sparring with Charter Communications over its cable “digital phone” service in the U.S. District Court in St. Paul.

In March 2013, Charter Fiberlink Companies transferred 100,000 Minnesota customers to “an affiliate, Charter Advanced Services Companies, which provided VoIP phone service that was not certified” by the PUC, the Commerce Department said.

Better known as Spectrum Voice, Charter’s VoIP service had failed to collect any fees to support the state’s Telecommunications Access Minnesota program, which provides equipment for hearing-impaired and blind consumers who use the Minnesota Relay Service. Charter also refused to credit low-income consumers who would otherwise qualify for Lifeline phone service at discounted rates.

If the court determined VoIP was a “telecommunications service,” Minnesota regulators could force Charter to comply with state law. If determined to be an “information service,” federal rules exempting Charter would apply.

The week after O’Rielly delivered his speech a Minnesota federal charge ruled in favor of Charter and against the state regulator.

U.S. District Judge Susan Richard Nelson relied on arcane terminology that lets Charter avoid state regulation:

“The court agrees with Charter Advanced that Spectrum Voice engages in net protocol conversion, and that this feature renders it an ‘information service’ under applicable legal and administrative precedent,” according to the opinion. Although Judge Nelson agreed that “the frank purpose” behind Charter’s customer shuffling was to “limit the reach of state regulation, thereby enhancing Charter’s market competitiveness,” she said the service fit the qualifications of an information service.

“The touchstone of the information services inquiry is whether Spectrum Voice acts on the customer’s information — here a phone call — in such a way as to ‘transform’ that information,” the opinion said.

Regardless of the judge’s decision, O’Rielly wants to prevent a recurrence of state regulator interference in the cable industry’s phone business.

“The commission should have just declared VoIP to be an interstate information service,” O’Rielly told the audience. “Arguably, VoIP is just an application not even subject to FCC jurisdiction much less that of individual states.”

Republican Gov. Paul LePage has picked a former telecom industry insider and lobbyist to serve the interests of public utility customers and consumers in Maine.

Barry Hobbins is known as an “old school” Democrat, and has been a part of Maine politics for 26 years — since 1972 — most recently as a top political fundraiser. Perceived as unlikely to rock many boats, he was appointed by the Republican governor to replace the current Public Advocate Tim Schneider, who worked on a solar energy bill the governor loathed and vetoed last year.

At the same time the governor is suing the state’s Attorney General for refusing to toe his line on the political positions of his administration, LePage insists Hobbins will serve only the interests of public utility customers and not those held by special interests. The Public Advocate is the public’s representative before the Maine Public Utilities Commission, federal regulators and the state legislature.

“That’s what the public advocate job is: to represent the ratepayer, not to represent a special interest,” LePage told reporters at a recent press conference.

Hobbins

But consumer advocates note Hobbins has already represented several special interests, most notably AT&T, where he served as a lobbyist after temporarily leaving the legislature in 1990. Hobbins is also no stranger to taking lavish gifts from the state’s largest telecom companies, including Time Warner Cable (now Charter Communications). In 2013 and 2015, Hobbins was paid $5,300 and $8,257 respectively to attend industry-sponsored events the cable company called their “winter policy conferences.”

In 2015, Stop the Cap! reported on one of these conferences held at the cushy Cape Elizabeth seaside resort Inn by the Sea, where room rates routinely hit the $500 a night mark. Hobbins was in attendance with about a dozen other legislators, enjoying the complimentary menu which included light noshing options like a herb marinated skirt steak with roasted mushrooms, chimichurri, piquillo aioli, and herbed hand cut steak fries that would cost you or I at least $26, drinks not included.

Hobbins also stayed to enjoy a full menu of lobbyist hobnobbing and “educational” attacks on community broadband, opposition to government oversight of broadband, and efforts to ensure state laws continued to favor incumbent providers:

“Welcome to Inn by the Sea, where relaxed coastal luxury comes naturally.”

• Moderator (Session 1): Jadz Janucik, National Cable & Telecommunication Association – The NCTA is the nation’s largest cable industry lobbying group;
• Dave Thomas, Sheppard Mullin Richter & Hampton LLP: A corporate attorney representing cable companies, particularly when they face competitive threats;
• Lisa Schoenthaler, National Cable & Telecommunication Association;
• Moderator (Session 2): Charlie Williams, Time Warner Cable;
• Charles Davidson and Michael Santorelli from the Advanced Communications Law and Policy Institute at New York Law School. Both have received direct compensation from Time Warner Cable for their  “research” reports and are very active and frequent defenders of Time Warner Cable’s public policy agenda;
• Joe Gillan, Gillan Associates – an economist working under paid contract with the cable industry;
• Moderator (Session 3): Tom Federle, Federle Law: Chief lobbyist for Time Warner Cable in Maine for over seven years;
• Robin Casey, Enockever LLP: Casey is one of the nation’s pre-eminent cable industry lawyers, called by the Texas Cable Association “the authority on the telecom industry;”
• Mary Ellen Fitzgerald, Critical Insights: A Maine pollster hired by Time Warner Cable to carry out the company’s carefully worded survey on broadband issues;
• Moderator (Session 5): Melinda Poore, senior vice president of governmental relations, Time Warner Cable Maine.

Hobbins claimed his extensive involvement in the telecommunications industry never influenced his legislative work and won’t if he becomes public advocate. But Hobbins has kept extremely close ties with his friends in the cable industry. Tom Federle, Time Warner Cable’s former chief lobbyist also served as former treasurer of a political action committee directly controlled by Hobbins, one that raised more than $30,000 for Maine politicians from Time Warner Cable, AT&T, an industry association, and Federle’s own law firm. That fundraising committee coincidentally disbanded.

Federle promotes his close ties to legislators like Hobbins on his website:

Since 2000, Tom has been an extremely effective advocate and lobbyist for clients before the Maine Legislature. Tom has represented some of Maine’s largest businesses and associations in advancing sound public policy positions. Tom’s work experience both in the private sector and at the highest levels of state government provides him with invaluable perspective and real know-how. Tom puts this to work for his clients to influence the outcome of legislation that impacts his client’s objectives. Tom’s balanced demeanor and tenacity combine to make him a particularly effective advocate before the Maine legislature.

Federle

In recent testimony, Federle used his position and influence to blast efforts to improve community-owned broadband services in Maine, telling the legislature: “There are countless examples of government getting into the business of providing broadband, with taxpayers footing the bill, only to end in failure with mountains of debt.”

In April, Maine State Representative Nathan Wadsworth (R-Hiram) introduced a bill to revoke local authority over building internet networks needed by local businesses and residents. The one-time Maine state ALEC chair introduced HP 1040 (also cross filed as LD 1516) to attempt to block efforts to construct public broadband networks and protect incumbent providers. This, despite the fact Maine has ranked 49th out of 50 states in the quality and availability of broadband service.

“This effort joins a national trend of big cable and telephone companies, like Time Warner Cable and FairPoint, leaning heavily on state legislatures to protect themselves from competition,” says Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance. “Communities do not make these investments when they are well served. If big cable and telephone companies want to preserve market share, they should invest in better services rather than crony capitalist laws.”

Where Hobbins stands on the issue isn’t known.

The nomination will go before a legislative confirmation hearing May 9.

Thought paying $65 a month for broadband service is too much? Just wait a few years when one Wall Street analyst predicts you will be paying twice that rate for internet access, all because the cable industry is gradually achieving a high-speed broadband monopoly.

Jonathan Chaplin, New Street Research analyst, predicts as a result of cord-cutting and the retreat of phone companies from offering high-speed internet service competition, the cable industry will win as much as 72.2% of the broadband market by the year 2020. With it, they also win the power to raise prices both fast and furiously.

In a note to investors, Chapin wrote the number of Americans left to sign up for broadband service for the first time has dwindled, and most of the rest of new customer additions will come at the expense of phone companies, especially those still selling nothing better than DSL.

“Our long-term penetration forecast is predicated on cable increasing its market share, given a strong network advantage in 70% of the country (this assumes that telco fiber deployment increases from 16% of the country today to close to 30% five years from now),” Chaplin wrote.

Cable companies already control 65% of the U.S. broadband market as of late last year. Chaplin points out large cable operators have largely given up on slapping usage caps and usage pricing on broadband service to replace revenue lost from TV cord-cutting, so now they are likely going to raise general broadband pricing on everyone.

“Comcast and Charter have given up on usage-based pricing for now; however, we expect them to continue annual price increases,” Chaplin said. “As the primary source of value to households shifts increasingly from pay-TV to broadband, we would expect the cable companies to reflect more of the annual rate increases they push through on their bundles to be reflected in broadband than in the past. Interestingly, Comcast is now pricing standalone broadband at $85 for their flagship product, which is a $20 premium to the rack rate bundled price.”

Chaplin himself regularly cheerleads cable operators to do exactly as he predicts: raise prices. Back in late 2015, Chaplin pestered then CEO Robert Marcus of Time Warner Cable about why TWC was avoiding data caps, and in June of that year, Chaplin sent a note to investors claiming broadband was too cheap.

“Our analysis suggests that broadband as a product is underpriced,” Chaplin wrote. “Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”