Charter Communications is in talks with Si Newhouse, Jr., the billionaire owner of Bright House Networks, to acquire the cable operator in an all-stock deal that could be worth over $12 billion, according to a report by Bloomberg News.

Bright House Networks serves 2.5 million customers, primarily in central Florida but also in parts of Alabama, Indiana, California and Michigan. Bright House has been closely controlled by the Newhouse family and has avoided efforts to consolidate the cable industry for more than two decades.

The deal is not yet finalized, according to two people asking not to be identified discussing confidential details of the deal. A side dispute over who will control voting shares of Charter after any acquisition remains at issue. John Malone’s Liberty Broadband, the largest single shareholder of Charter, is said to be seeking a larger ownership share of Charter Communications in what analysts expect will be a gradual takeover of Charter by Malone.

This afternoon, Bright House confirmed acquisition talks are underway.

“While we have had conversations with many parties about this transaction, we do not have an agreement with anyone regarding future plans for Bright House,” a company spokeswoman said in the statement.

The deal may also depend on whether regulators approve the merger of Comcast and Time Warner Cable. Time Warner Cable currently represents Bright House in most cable programming negotiations and the two cable companies have closely worked together on technology and services for more than a decade. That collaboration is likely to end if the Comcast merger is approved, stranding New House as a small independent operator.

Charter was long-expected to make offers to acquire other cable operators in its quest to grow larger, especially after failing in its bid to acquire Time Warner Cable for itself. An acquisition of Bright House by Charter would allow the company to further expand its presence in the south and midwest where it focuses most of its cable operations.

But it is not a done deal yet. The talks between Charter and Bright House could still fall apart and may not result in a deal, one source cautioned.

[flv]http://www.phillipdampier.com/video/Bloomberg Charter in Talks to Buy Newhouse Bright House Networks 3-12-15.flv[/flv]

Bloomberg News reports Charter Communications is in talks with the Newhouse family to acquire Bright House Networks in an all-stock deal. (1:22)

Charter Communications has quietly dropped usage caps and allowances from the company’s terms and conditions, once again giving Charter broadband customers unlimited access to the Internet.

Like Cox Cable, Charter almost never enforced their usage caps, which were specified as 100GB for its “base” service, 250GB for “Plus” and “Max” tiers and 500GB for “Ultra” service. Customers threatening to cancel service over usage cap matters were assuaged with a commitment by retention specialists that the caps were just a “guideline” and would not be enforced except in the most egregious instances of customer “overuse” of the Internet.

In place of the caps, Charter has returned to boilerplate language found in almost every ISP’s Acceptable Use Policy:

Excessive use of bandwidth that in Charter’s sole opinion, places an unusually large burden on the network or goes above normal usage [is prohibited]. Charter has the right to impose limits on excessive bandwidth consumption via any means available to Charter.

Customers routinely exceeding a terabyte of usage a month have never been contacted by Charter, so such usage apparently does not place a burden on their network. However, Charter also reserves the right to cut your speeds through “reasonable network management tools,” some that may now be forbidden by the FCC’s Net Neutrality policy:

Charter uses a variety of reasonable network management tools and practices consistent with industry standards. In the event the periods of congestion necessitate such management, Charter has available the following tools and practices (without limitation and as may be adjusted over time): (i) use of an upper limit of bandwidth allocated for uploading of files during congested periods; (ii) Subscriber Traffic Management (STM) technology to temporarily lower the priority of traffic with the greatest impact on peak congestion; (iii) spam filtering and detection techniques; and (iv) measures to protect the security and integrity of its network, resources and subscribers. In limited instances if employed, these techniques may affect the throughput rate at which subscribers may send and receive data, the ability of users to establish session connections within the network, or result in the delay of certain traffic during times of peak congestion.

Charter has “simplified” their Internet offers down to two for most customers: 60/4Mbps for Spectrum Internet ($59.99) and 100/5Mbps for Internet Ultra ($109.99). A source at Charter tells Stop the Cap! the company is conducting very limited trials raising speeds to 100/25Mbps for its base package and boosting its Ultra tier to 300/50Mbps, in case fiber competitors arrive. Those tests are not expected to become widespread however as the prevailing view at Charter is to wait until it deploys DOCSIS 3.1 and then raise speeds to 300/50Mbps for its entry-level package and 500/300Mbps for Ultra.

Starting in January, Charter began notifying its broadband-only customers it was raising prices $5 a month (from $54.99 to $59.99).

Moffett

Nearly 20 years after the 1996 Telecom Act deregulated much of the cable industry, the renewed threat of increased consumer protection and oversight by the Federal Communications Commission and the dwindling chance regulators will approve the merger of Comcast and Time Warner Cable has increased pessimism about guaranteed high cable industry profits on Wall Street.

Craig Moffett, senior analyst at MoffettNathanson has departed from his usual optimism about the prospects of cable industry stocks and downgraded Comcast, Time Warner Cable and Charter Communications this morning to “neutral,” suggesting the Title II reclassification of broadband could eventually lead to FCC mandated price cuts on broadband after the agency finalizes Net Neutrality regulations.

The cable industry had maintained high hopes for the Republican majority in Congress to trample Net Neutrality and allow the cable industry to continue boosting rates and introducing other pricing schemes including usage-based billing, but Moffett has grown increasingly convinced Republicans cannot override President Obama’s veto power if Congress attempts to change or end FCC oversight over the broadband business.

The cable industry has grown increasingly panicked over a new spirit of activism inside the FCC, particularly after FCC chairman Thomas Wheeler began asserting their “worst-case scenarios” for broadband speed and Net Neutrality. The National Cable and Telecommunications Association has warned Net Neutrality and Title II would stifle innovation. But Moffett fears it will more likely stifle profits.

“It would be naïve to suggest that the implication of Title II, particularly when viewed in the context of the FCC’s repeated findings that the broadband market is non-competitive, doesn’t introduce a real risk of price regulation,” Moffett wrote. “Not tomorrow, of course, so yes, near term numbers won’t change. But terminal growth rate assumptions need to be lowered. Multiples will have to come down.”

Moffett, who had been optimistic about the likely approval of the merger deal between Comcast and Time Warner Cable is much less so today.

His earlier 70-30 odds in favor of the merger are now down to 60-40. The headwind of negative press and the reclassification of broadband to a minimum speed of 25Mbps poses considerable risk the deal will be ruled anti-competitive.

Moffett claims the cable industry was also banking on jacking up prices for Internet access, already a very profitable service, to cover reduced profits from cable television. But now the FCC will be watching.

“In the past, changes to broadband pricing would have been the natural remedy,” Moffett said. “That avenue may be no longer open.”

Are you still paying $15+ for HBO and $13+ for Cinemax? Stop.

Most major cable television providers are slashing the price for both premium movie channels to protect subscriber numbers from the April introduction of HBO’s standalone video streaming service, likely to be called HBO Go.

Most analysts expect the on-demand service will cost $15 a month for one or both co-owned networks. With Time Warner Cable recently raising the price of HBO to $16.99 a month, the company may have priced itself out of the market.

“Why would I waste my time with HBO from Time Warner Cable when I will be able to get HBO Go for $2 less a month and won’t have to buy their larded-up cable television package,” asks Watertown, N.Y. resident Jeff Kates. “Their greed will cost them when they lose more subscribers than they gain in revenue from the rate hike.”

Comcast has already seen the writing on the wall and this year cut its regular pricing for HBO from $18.95 to $15 — matching the likely price of standalone HBO Go.

In an effort to lock in customer loyalty and avoid accelerating cord-cutting, many major pay television providers are putting one or both Time Warner (Entertainment)-owned networks on sale for much of 2015. These prices are available to any new premium cable subscriber. If your provider will not switch your current subscription to the new promotional rate, cancel one or both channels for a few days (or threaten to cancel service altogether) and then resubscribe at the discounted price.

Here are the current offers:

• AT&T U-verse: Bundles HBO and a year of Amazon Prime service with a package of mostly local over the air channels for around $40-50 a month depending on the promotion;
• Charter Cable: Charter’s Triple Play Silver package bundles HBO, Cinemax, Showtime/Movie Channel premium channels into the television package at no extra charge;
• Comcast: Offers HBO for online sign ups at $10 a month for a year. Comcast attempts to limit the offer to customers who have not subscribed to HBO for the last 120 days, but this condition is usually waived if you threaten to cancel service and switch to a phone or satellite company;
• Cox: Stingier than others, Cox is offering discounts for just six months, but gives you quantity discounts. Buy 1 premium channel at $10/mo, two channels for $15, three for $20 or four networks for $25 a month. Your choices include HBO, Cinemax, Showtime, and Starz;
• Time Warner Cable: Now has a sale running for $9.99/mo HBO and the same rate for Cinemax, Showtime, and Starz when ordered online. Current non-premium customers can upgrade from the My Account portal. Current premium channel customers will have to call Time Warner and argue for the discount or cancel HBO and quickly resubscribe;
• Verizon: Also offers HBO and others at $9.99/mo for the first year.

Satellite services are expected to change their pricing on premium channels sometime this month.

Charter Cable customers in Mesa County, Col., experiencing the latest service outage from the cable company were told to “quit whining” and “check your attitude” when they called Charter’s customer service line to ask when the problems would be fixed.

“If Mesa County didn’t whine so much, maybe something would be done,” one Charter representative told a customer in Grand Junction.

“Talking to [Charter] is like trying to put socks on an octopus,” said Dillard Jenkins.

Stop the Cap! reader June Jones found that to be true when she complained to Charter about not being able to reach 911 on her Charter phone during the recent outage.

“I was unhappy after the representative literally told me ‘that’s not our problem, get a cell phone like everyone else’,” Jones said. “I was so shocked being talked to that way I didn’t know what to say. I am 76 years old and in all my life I have never heard a company use that tone with me. The next thing I heard was, ‘is there anything else? I didn’t think so’ and she just hung up.”

Alex Danders waited on hold 35 minutes to speak to a representative about the Charter Internet outage at his business. He later wish he hadn’t.

“All I wanted to know is if they knew when it was going to be fixed and the guy told me ‘to check my attitude’ and later told me to ‘go screw yourself’ and disconnected me,” said Rodriguez.

Charlotte Conboy is a Charter customer who has had trouble with Charter for the last six months. Her two home-based businesses have suffered from no Internet access during frequent outages.

“If […] their company [had] issues [affecting their offices], they would have it fixed right away” said Conboy. “They say that’s beside the point and I get hung up on.”

A county official calling to find out when repairs would be completed was told, “we have excellent service and do not appreciate your complaint for one incident of interruption of service.”

The latest outage took out Internet service for schools across Mesa County for several hours two days in a row. Teachers scrambled to change their lesson plans to work around the outages.

“I’ll tell you the last couple of weeks the last three weeks or so I’ve been out talking to people, they’re furious, people are upset I mean this is our primary communications,” commissioner Scott McInnis told KKCO. “In exchange for using the right of way we expect them to deliver a service that the reasonable person would say ‘hey the quality of this service is good’ and we expect that [they will] deliver that.”

[flv]http://www.phillipdampier.com/video/KKCO Grand Junction County Commissioners get involved with Charter issues 1-15-15.flv[/flv]

KKCO in Grand Junction reports that hundreds of area residents are outraged about ongoing problems with Charter Cable and the rude responses they get when they call Charter’s customer service line. (3:23)

The ongoing problems with Charter Cable and the company’s surly responses to customers prompted a stern letter from the Mesa County Board of Commissioners to Charter Communication’s senior manager of Government Relations. They plan to meet with senior Charter officials today to discuss the matter.

Dear Mr. Rasmussen;

Today we have received multiple complaints from businesses and residents of Mesa County regarding interruption of Charter’s Cable Service. Currently, District 51 Schools are without service and we have been informed that service has been down for several hours.

Please note that this is unacceptable for Charter subscribers who feel that they can go to no one for resolution. When calling the customer service line they are told multiple ‘reasons’ for the outage, including responses such as ‘we have excellent service and do not appreciate your complaint for one incident of interruption of service,’ and ‘If Mesa County didn’t whine so much, maybe something would be done.’

Timely resolution of this issue would be prudent. We are requesting immediate and prompt dispatch of a response team to fix the system post haste; as well as a heightened awareness of the frustration Mesa County subscribers are having with your Customer Service Department. Good faith compliance is implied with the franchise agreement. We have also been informed by the City of Grand Junction that they have also heard from frustrated citizens regarding this issue.

Sincerely,
Mesa County Board of Commissioners
Rose Pugliese, Chair
John Justman
Scott McInnis

[flv]http://www.phillipdampier.com/video/KKCO Grand Junction School district loses phones and internet again 1-16-15.flv[/flv]

The entire Mesa County school district lost Internet access for a second day after another Charter Cable outage. KKCO reports parents and staff are concerned. (3:08)

 Thanks to reader June Jones for tipping us about this story.