Phillip “Comcast isn’t the answer to the problem, it is the problem” Dampier

Just a quick note to alert readers that we haven’t lost interest in keeping you informed about what is going on in the broadband industry. We are taking some time out to do more than just write about what we’re seeing around the country. We’re actually getting involved to try to change things.

The Comcast Time Warner Cable merger proposal is before New York regulators and this week is the deadline for the first round of comments on the proposal. More than 2,700 New York residents have added their two cents, most strongly opposed to the merger. We’re also seeing out-of-state Comcast-backed non-profit groups sending in comments praising Comcast (chapters of the Boys and Girls Club are by far the biggest offenders — something to remember when they ask you for money).

It is also highly unethical for public officials to lobby out-of-state regulators for a private, for-profit business deal, yet that is exactly what North Beach, Md. Mayor Mark Frazer did. So did Barbara A. Miller on the Board of Selectmen for the town of Peterborough, N.H.  And you thought they represented you and your interests and not those of a giant multi-billion dollar cable company. Your vote can make all the difference, especially with Mayor Frazer who is up for re-election.

We will publish our full submission on Stop the Cap! when finished and appreciate your patience as we spend time documenting our arguments in opposition to this merger deal.

If your non-profit or civil rights group has or is thinking of writing a glowing letter in favor of the merger of Comcast and Time Warner Cable, Stop the Cap! is delighted to announce our new Alert Your Donor Base service. Each time we discover a letter submitted to a state or federal regulator announcing your enthusiastic support for the Worst Company in America marrying the second worst, we’ll be sharing that exciting news, along with any contributions we discover Comcast has sent your way, to your members and supporters.

We were surprised to learn that so many non-profit and civil rights groups don’t seem to publicize their sudden fascination with Comcast’s growth agenda. Perhaps it is an oversight. But that’s no problem. We’ll make sure the news lands on your Facebook page, Twitter feed, and your local media outlets. You have nothing to be ashamed about, right?

If donors decide that Comcast has evidently given your group so much support you feel somehow obligated to divert your attention away from your core mission to write a Hallmark Card in favor of $45 billion corporate merger deals, that’s important news for them to know. Perhaps donors will decide it is safe to direct their contributions to the groups that are dedicated to helping real people, not multibillion dollar cable companies.

It’s the least we could do.

Here’s a sample:

Dear Carlisle Hope Station:

For the benefit of your donors, we’d like to share your exciting news that the Carlisle Hope Station of Carlisle, Pa. took valuable time out of its day to send a letter of support for Comcast’s $45 billion merger deal with Time Warner Cable. This merger will have no impact on your group or its constituency because Comcast is already your local cable company. You decided it was best for New Yorkers to also enjoy cable service from the 2014 winner of the Worst Company in America award.

We pondered why your charitable group would spend time, money, and resources on a letter writing campaign for multi-billion dollar corporation. Then we discovered Comcast is a Platinum Donor, contributing more than $10,000 in in-kind/real contributions to your organization. Since Comcast has so generously donated to your effort, perhaps there are other local needy organizations that could do with some donations — ones that don’t have time to write letters to out-of-state regulators about cable company mergers.

Yours very truly,

Stop the Cap!

The New York Public Service Commission needs to hear from you about the Comcast-Time Warner Cable merger. Unlike some of the southern and midwestern states that have utility commissions that basically rubber stamp the agenda of Big Telecom companies, New York’s PSC has a reputation for being tougher and more customer-oriented. But the PSC cannot act in your interest if you don’t share your views.

It is incredibly easy to file your own comments with the PSC. Nearly 2,300 New Yorkers have done so thus far, but we need to make sure they understand our serious objections to Comcast’s usage caps, its expensive service, and customer abuse.

We have provided a sample letter below. We hope you will write your own, but offer ours as a guide that includes some of our biggest concerns. We may prepare another one soon outlining other concerns.

How to file your comment:

• E-Mail: [email protected]
• Mail: Hon. Kathleen H. Burgess, Secretary, Public Service Commission, Three Empire State Plaza, Albany, New York 12223-1350.
• Phone: 1-800-335-2120 (press “1” to leave a recorded comment)

All comments should refer to “Case 14-M-0183, Petition of Comcast Corporation and Time Warner Cable Inc.”

Hon. Kathleen H. Burgess
Secretary
Public Service Commission
Three Empire State Plaza
Albany, New York 12223-1350

Re: Case 14-M-0183, Petition of Comcast Corporation and Time Warner Cable Inc.

Dear Ms. Burgess,

I am writing to ask the Public Service Commission to reject the merger proposal of Comcast and Time Warner Cable on the ground the companies have failed to show such a merger would be in the best interests of New York and its residents.

Although Time Warner Cable has never been a prize, Comcast’s reputation for bad service, high prices, rationed Internet access, and customer abuse is well documented in just about every community the company serves. Comcast has repeatedly been voted the “Worst Company in America” by Consumer Union’s Consumerist.com. The American Consumer Satisfaction Index has documented so many complaints about Comcast, it declared it the worst company it has ever scored, performing even worse than the Internal Revenue Service. For more than three years running, Harris Interactive has called Comcast one of the least reputable companies in America.

That alone should be enough to reject this merger out of hand. Permitting it would reward this company’s appalling behavior towards its own customers and expose New Yorkers to an even bigger monopoly problem than we deal with now. Unless you live in a Verizon FiOS service area, cable is your only real choice for true broadband speeds. DSL is rapidly losing favor and market share and Verizon has shown no interest in expanding it.

Comcast already uses its market power to its advantage by raising prices… a lot. Time Warner Cable charges less for its services than Comcast does.

For example, Time Warner Cable offers a standard television service package that provides all the popular cable networks for one price. Comcast offers a similar package but stripped out cable networks including Cloo, CNBC World, Al Jazeera America, Discovery Fit & Health, Disney XD, DIY, a range of ESPN’s extra networks, EWTN, Fine Living, Fox Business News, Great American Country, IFC, Investigation Discovery, Lifetime Real Women, Military Channel, MLB, most of MTV’s extra networks, NBA, National Geographic Channel, NFL Network, NHL Network, most of Nickelodeon’s extra networks, OWN, Oxygen, Sundance, Turner Classic Movies, The Science Channel, and VH1′s extra networks.

Customers who want these networks, like Turner Classic Movies, National Geographic, and IFC will have to pay a stunning price of up to $86 a month — just for television. Many of these networks are especially popular with fixed income older residents, who will now face an even larger cable TV bill.

Comcast promotes the fact its Internet speeds are faster than Time Warner Cable, but that is not true as Time Warner Maxx upgrades arrive. Comcast Internet service costs more, is slower, and increasingly usage-capped. Time Warner Cable has made clear it will not limit customers’ Internet usage. Comcast has made clear it will, predicting usage limits/usage-based pricing will be imposed on customers across its entire footprint within five years. That is no improvement for New York. That is literally a downgrade. We can do better in New York with Time Warner Cable.

In fact, the company has promised extremely little to New York after winning your approval to merge. Comcast is so arrogant, it already announced it will not share any cost savings with customers, promising even higher cable bills for New York with the merger. Even its touted X1 set top system will cost New Yorkers — it comes with a steep installation price of almost $100. Again, how does this serve the public interest?

Comcast’s public service programs are also woefully inadequate. Its Internet Essentials is a bureaucratic nightmare that only provides temporary discounts to a small percentage of customers (with school age children) who need an affordable Internet option. I guess childless couples and the elderly poor don’t matter. Time Warner Cable offers a $14.99 discount program available to anyone who wants it, no paperwork or waiting periods required.

It is my understanding Comcast must prove this merger is in the public interest to win your approval. It has utterly failed to do so, and I expect my state’s Public Service Commission to reject this merger. This is one deal that can never be modified sufficiently to make it acceptable for people like myself. You are doing us no favors trying to negotiate for an Internet discount program or expanding Comcast’s service area by a small amount in rural upstate New York. The end result is that millions of New Yorkers will get worse service than we get today, at a higher price, with little/no competition on the horizon.

This is a rare opportunity for our state, which lost most of its oversight powers over the cable industry years ago. Cable operators have abused their deregulated status and have raised prices, provided dreadful customer service, and have kept competition away. Letting Comcast into New York from Buffalo to the Bronx will only encourage more abuse, wreaking havoc on New York’s growing digital economy. Let’s send a clear message to Comcast New York isn’t willing to put our broadband future in the hands of “the worst company in America.” Let’s make it clear enough is enough.

Sincerely,

All of these media and content companies may be up for grabs.

Could Rupert Murdoch become the next owner of CNN? Will Verizon consider buying out the owner of more than a dozen cable networks, or the Walt Disney Company, owner of ABC?

Since 1983, media moguls have assembled annually in posh Sun Valley, Idaho to talk business. But never have they met while several huge consolidation and merger deals are on the table among their colleagues. Comcast acquiring Time Warner Cable and AT&T buying out DirecTV are both seen as game-changers among Wall Street bankers and the media elite, leaving many self-consciously pondering whether they are no longer big enough to stay competitive in a consolidated media world.

The Wall Street Journal and the Atlanta Journal-Constitution both report that at least one huge merger deal could emerge as a result of this week’s conference. Among the most likely buyers is FOX CEO Rupert Murdoch, who is reportedly looking to buy a major content company.

The most likely target is Time Warner (Entertainment), former owner of Time Warner Cable. After spinning off its money-losing magazine unit, TW has become much more focused on content and distribution – exactly what Murdoch is looking for. Time Warner owns New Line Cinema, HBO, Turner Broadcasting System, The CW Television Network, Warner Bros., Kids’ WB, Cartoon Network, Boomerang, Adult Swim, CNN, DC Comics, Warner Bros. Animation, Cartoon Network Studios, Hanna-Barbera, MLB Network and Castle Rock Entertainment. In fact, altogether the company owns or controls dozens of television channels which could all soon fall into the hands of Murdoch.

A Murdoch acquisition would be the last death-blow for Ted Turner’s Turner Broadcasting System, which launched CNN, TBS, and TNT and is now a division within Time Warner. Murdoch’s Fox News Channel was launched as a conservative alternative to CNN’s perceived left-leaning reporting. A Murdoch buyout would either deliver bipartisan profits to the media mogul or allow him to shut down the network or relaunch it under the Fox News brand.

Such an acquisition would not be cheap. Time Warner is worth as estimated $62 billion.

A Murdoch buyout would be especially troublesome for those already upset with corporate media consolidation. Murdoch would end up controlling three major U.S. networks – FOX, CW, and MyNetworkTV, multiple cable news channels, dozens of local television stations in major media markets, and more cable networks than most people can count. In fact, the assembled list of Murdoch-owned media properties is enormous:

Murdoch: The next owner of CNN?

Adult Swim, Boomerang, Cartoon Network, CNN Worldwide, HLN, Inside CNN Tour & Store, TBS, TCM, TheSmokingGun.com, TNT, truTV, Turner Sports, Fox Business Network, Fox News, Star India, YES Network, Twentieth Century Fox, Fox 2000 Pictures, Fox Searchlight Pictures, Fox International Productions, Twentieth Century Fox Television, Fox Home Entertainment, Shine Group, Twentieth Century Fox Animation, The Sun, The Times, The Sunday Times, Times Literary Supplement, The Wall Street Journal, The New York Post, The Australian, The Daily Telegraph (Australia), The Sunday Telegraph (Australia), The Herald Sun, The Sunday Herald Sun, The Courier Mail, The Sunday Mail, The Advertiser, NT News, The Sunday Territorian, The Sunday Times (Australia), The Sunday Tasmanian, Mercury, Warner Bros. Pictures, Warner Bros. Pictures International, New Line Cinema, Warner Home Video, Warner Bros. Advanced Digital Services, Warner Bros. Interactive Entertainment, Warner Bros. Technical Operations, Warner Bros. Anti-Piracy Operations, Warner Bros. Television Group, Warner Bros. Television, Telepictures Productions, Warner Horizon Television, Warner Bros. Animation, Warner Bros. Domestic Television Distribution, Warner Bros. International Television Distribution, Warner Bros. International Television Production, Warner Bros. International Branded Services, Studio 2.0, The CW Television Network, DC Entertainment, Warner Bros. Theatre Ventures, HarperCollins General Books Group, HarperCollins Children’s Books Group, HarperCollins Christian Publishers, HarperCollins UK, HarperCollins Canada, HarperCollins Australia/New Zealand, HarperCollins India, FX, FXX, FXM, National Geographic Channel, Nat Geo WILD, Nat Geo Mundo, FSN, FOX Sports 1, FOX Sports 2, FOX Soccer Plus, FOX College Sports, FOX Deportes, FOX Life, Baby TV, Fox Broadcasting Company, Sky 1, Sky Atlantic, Sky Living, Sky Arts, Sky Sports, Sky Movies, Sky News, Sky Deutschland, Sky Italia, MyNetworkTV, MundoFox, FOX International Channels, Fox Sports Enterprises, HBO, HBO On Demand, HBO GO, Cinemax, Cinemax on Demand, MAX GO, HBO2, HBO Signature, HBO Family, HBO Comedy, HBO Zone, HBO Latino, More Max, Action Max, Thriller Max, 5 Star Max, Max Latino, Outer Max, Movie Max, Barron’s, MarketWatch, Factiva, Dow Jones Risk & Compliance, Dow Jones VentureSource, All Things Digital, Amplify, News America Marketing, and Storyful.

Murdoch has already shown a willingness to spend big. He has recently taken an ownership interest in the up and coming Vice Media, popular with the under 30-viewing crowd. He also spent $415 million to buy romance novel publisher Harlequin Enterprises.

But Murdoch may not be the only one shopping for a deal. The Wall Street Journal offered a shopping list:

• Small cable network owners: Nobody just owns three or four cable networks these days. Content conglomerates like CBS, Disney, Time Warner and Comcast own 15, 30, or even 40 different channels. Smaller players are ripe for the picking. Chief among them include Scripps Networks Interactive (Food Network, HGTV), AMC Networks (AMC, IFC, Sundance), and Crown Media (Hallmark).
• Small studios: Owning a small Hollywood studio is quaint, but Wall Street investment bankers think the time is long past to sell out to larger corporate entities who can better leverage distribution of their releases, easy enough if you own your own theater chain, pay cable network, broadcast stations, and basic cable outlets.

Both phone companies are attending Sun Valley for the first time.

In addition to buyout offers from the largest networks around, Discovery Networks is also in the mood to grow larger at the urging of its board of directors, which includes Dr. John Malone, CEO of Liberty Global. Malone is behind much of the cheerleading to consolidate the cable industry and helped spark the Comcast-Time Warner Cable deal when his partly owned Charter Communications sought a takeover of Time Warner Cable itself.

Wall Street bankers love even better the idea of selling Discovery to a new owner – Disney.

For the first time, phone companies AT&T and Verizon are also in attendance at Sun Valley, and analysts don’t believe the CEOs are there for summer vacation.

Jimmy Schaeffler, chairman of media and telecom consulting firm Carmel Group, says Verizon has been most lacking in the content ownership department and “needs something else right now” as rivals bulk up. AT&T’s acquisition of DirecTV only underlines that sentiment among many Wall Street analysts who think Time Warner (Entertainment) could be an option if Verizon isn’t outbid by Murdoch.

All of this shopping has caused alarm for some, including CNN’s media reporter Brian Stelter who declared, “I will eat my remote control … in fact, I will eat my copy of the New York Post … if Murdoch becomes the owner of CNN.” 

[flv]http://www.phillipdampier.com/video/WSJ Digits Media Consolidation 7-7-14.flv[/flv]

The Wall Street Journal’s ‘Digits’ explores the ongoing consolidation of media creators and distributors. This year’s media conference in Sun Valley could spark more merger deals. (5:02)

Phillip “Time Warner Cable ironically debunked Lyons’ advocacy of usage-based billing” Dampier

As part of the broader push to drive support for the merger between Comcast and Time Warner Cable, academics with ties to corporate-funded think tanks and the cable industry are trotting out nearly identical guest editorials appearing in newspapers around the country that attempt to educate the masses about the wonders of cable industry consolidation.

Daniel Lyons, who has written several papers supporting and endorsing the cable industry’s business agenda, is back with his helpful advice:

Consumers have more video options than ever before. Technology has eroded the lines between hardware, content and media companies. Today, Comcast’s biggest competitive threat is not other cable and satellite providers but new entertainment sources not even imaginable a decade ago. Netflix streams video online and is responsible for one-third of all Internet traffic during peak times. Apple is transforming itself from a device manufacturer into an entertainment company that delivers music, video and games instantly through a seamless customer interface. Google has expanded beyond Internet search to video services and even broadband data networks. Verizon, a traditional telephone company, recently bought the rights to stream NFL games to smartphones. Even Walmart has entered the streaming video business.

It is a challenging transaction, one that antitrust regulators should review carefully. But they should avoid rushing to judgment merely because Comcast is consolidating its position over a stagnant cable sector. Some consolidation may be necessary for cable to avoid Blockbuster’s fate and instead compete effectively in this rich, dynamic and increasingly competitive video landscape.

It is especially hard to take Mr. Lyons seriously when he claims with a straight face the cable industry is “stagnant” and on the verge of following Blockbuster into irrelevance. The only product in the cable bundle seeing flat growth is cable television. But that has not presented a difficult financial challenge because cable operators are shifting their priorities towards broadband. Just to make sure they are covered, broadband providers have raised prices and introduced equipment fees that have more than made up the difference. Despite Lyons’ prediction of doom and gloom, industry observers still find the cable business “comically profitable.”

Lyons

In fact, the cable industry now dominates the American broadband marketplace and is well positioned to deal with any competitive threat looming on the horizon. All of the competitors Lyons mentions depend on companies like Comcast and Time Warner Cable to reach customers. Cord-cutting looks much less tenable if companies like Comcast return to a regime of usage caps on their broadband accounts. Netflix, Apple, and Google cannot sustain video streaming businesses if customers fear using these services will put them over their monthly usage allowance. Sony’s forthcoming 4K video service for its video player could consume between 40-60GB per movie. Even with Comcast’s “generous” allowance of 300GB per month in its usage-capped test markets, as few as 10 movies a month will put customers over the limit, before they do anything else with their broadband connection.

Despite the threat of Internet stagnation, Lyons is a prolific writer of pro-usage cap and usage-billing studies. In at least one of those papers, he was joined by Michigan State University Professor of Information Studies Steven Wildman, also then an adviser at the Free State Foundation. Wildman was more forthcoming about where the money comes from for these studies – the National Cable and Telecommunications Association (NCTA), the largest cable industry lobbying and trade group in the United States.

Unfortunately for the Free State Foundation and the NCTA, Time Warner Cable inadvertently proved Lyons and Wildman’s theories wrong.

“Pricing experimentation may also help narrow the digital divide,” Lyons wrote. “By recovering more fixed costs from heavier users, firms may have more freedom to extend service at a lower rate to light users who are unable or unwilling to pay the unlimited flat rate. There is evidence that these opportunities are beginning to emerge from companies engaged in usage-based pricing.”

What actually emerged from Time Warner Cable’s tests of discounted usage pricing is a repudiation of Lyons’ theories. Time Warner Cable admitted its usage-based pricing options were so unpopular with customers, only a few thousand out of 11 million broadband customers signed up — hardly a ringing endorsement. Even income-challenged customers preferred unlimited Internet over a usage cap. Time Warner Cable give customers a choice between a cap or no cap. The others, including Comcast, don’t offer an unlimited option and repeatedly claim usage cap tests have met with little resistance from customers, as if they had a choice.

Short Title: Total Deregulation

Other members of Free State Foundation’s Board of Academic Advisors, including Richard A. Epstein, Justin (Gus) Hurwitz, Daniel Lyons, James B. Speta, and Christopher S. Yoo advance the cable industry agenda in other ways too.

Speta submitted an Amicus Brief: ‘In the Matter of Comcast Corporation v. FCC,’ that basically argued the Federal Communications Commission “does not have jurisdiction to address most Internet regulatory issues, because whatever expansive readings such ancillary jurisdiction has received in the past are no longer tenable.”

In fact, the Free State Foundation unabashedly supports near-total deregulation of the telecommunications industry and an elimination of most FCC powers to oversee it. In comments before the House Energy & Commerce Committee, the foundation’s Board of Academic Advisers recommended:

• Updating the Communications Act by wiping it out — a clean slate approach is needed to adopt a “replacement” regime – a new Digital Age Communications Act, which is another way of saying near-complete elimination of all current oversight and enforcement powers exercised by the FCC;
• Lyons, among others, supports eliminating regulation designed around the concept of “in the public interest” with a near-complete deregulation of telecommunications oversight, letting marketplace competition check any bad behavior. The only regulatory activities permitted would require the FCC to show the resulting harm from lack of sufficient competition;
• The group supports disallowing the FCC from issuing rules to prevent anti-competitive or abusive behavior until such behavior has been proven to have taken place. Any rules that result would automatically expire after a fixed number of years;
• States would be prohibited from regulating telecommunications services in instances where states feel federal regulation is inadequate.

Ironically, some of the biggest supporters of the group’s ideas to restrict states from writing telecommunications laws seem to have no problem letting states write laws that ban community broadband networks.

And finally, how could we forget to mention Mr. Yoo, who testified in recent hearings in the Senate Judiciary Committee enthusiastically supporting the merger deal, while not bothering to mention his employer, the University of Pennsylvania law school, has close ties to Comcast. In fact David Cohen, the Comcast executive who is the company’s leading voice in Washington and was the first witness at the hearing, is chairman of the trustees of the University of Pennsylvania.