The average Comcast broadband customer now consumes over 200 GB of online data per month, an increase of 34% over just one year ago, according to Dave Watson, president and CEO of Comcast Cable Communications.

The increased usage accelerated during the last quarter of 2018, Watson told investors on a quarterly conference call.

What remains unchanged is Comcast’s data cap, which remains fixed at 1 TB per month for many customers. To avoid overlimit penalty fees of $10 for each additional 50 GB block of data consumed (up to $200 per month), Comcast is still pitching its unlimited data option — insurance against Comcast’s own overlimit penalties, which costs a growing number of customers an extra $50 a month.

Watson knows data usage over Comcast’s network is about to grow exponentially, mostly thanks to streaming video.

“I think that we start with the central view that streaming is going to happen, video over the internet is more friend than foe. and we wish every bit was our bit,” Watson told investors this morning. “If people consume more bits and video clearly does that, and 4K video does even more than that, that is the sweet spot of where this company is going to grow.”

Translation: We intend to make a killing on usage growth. Comcast can market you a faster internet package at a higher price, or as your usage approaches the data cap, scare you into buying overlimit insurance.

Remember that Comcast drops usage caps for some customers willing to rent their latest network gateway (available only in some areas at this time).

FCC Chairman Ajit Pai drinking from his oversized mug.

Last fall, FCC Chairman Ajit Pai trumpeted claims that as a result of his successful efforts to rid the United States of net neutrality, the days of reduced investment from the nation’s cable and phone companies were over.

“Since my first day on the job, this agency has been focused on cutting through the regulatory red tape and increasing broadband investment, most importantly in rural America where the digital divide remains all too real,” Pai said in October 2018. “Today’s report confirms that the FCC’s policies to promote broadband deployment are working. After internet service providers reduced new investments in 2015 and 2016 under the prior Administration’s regulatory approach [ie. net neutrality], broadband investment increased in 2017 by $1.5 billion over the previous year. That’s real progress for American consumers, and another step toward better, faster, and cheaper broadband for all Americans.”

Of course, his claims were false last fall. Top executives at the nation’s largest telecom companies have repeatedly admitted that net neutrality had little, if any bearing on their spending plans. Much of the increased spending was, in fact, attributable to:

• AT&T’s required expansion of its fiber to the home network to meet its obligations from the acquisition of DirecTV.
• Charter Communications’ committed upgrades as part of its acquisition of Time Warner Cable and Bright House Networks, including switching off analog video and deploying DOCSIS 3.1.
• Comcast’s increased spending on DOCSIS 3.1 and pushing fiber optics deeper into its hybrid fiber-coax network.
• Wireless carrier investment in further 4G LTE deployments and network densification.

In the past six months, many of these companies have signaled investors the days of big spending are over, despite the fact the so-called regulatory shackles of net neutrality and other reform measures have been abolished under the Republican-led FCC.

Today, Comcast delivered the ultimate truth blow to Pai’s worthless promises, showing the lowest investment intensity in years. In fact, Comcast reported a huge 19.4% drop in capital expenditures, while achieving a 40.1% EBITDA margin — a signal the company is earning even bigger profits than ever, while at the same time literally slashing investment. One thing that did not decrease was Comcast’s total free cash flow, which rose to $4.592 billion dollars in the last quarter.

Comcast and Charter Communications are losing money on their cell service plans because their partner, Verizon Wireless, sets its wholesale rates too high, making certain the two companies cannot cannibalize Verizon’s own customers for long.

MoffettNathanson analyst Craig Moffett claims the cable industry’s 2012 $3.9 billion sale of wireless spectrum to Verizon Wireless, which included an agreement allowing the two cable operators to resell Verizon Wireless service, turned out to benefit Verizon more than Comcast and Charter.

The problem is Verizon set its own price for service high enough to guarantee the two cable operators will have a hard time outcompeting Verizon Wireless. Moffett estimates Verizon is currently charging the two operators about $5/GB and around $5/month per customer for unlimited voice and texting. According to Moffett’s calculations, only the pay-per-gigabyte plans have any chance of marginal profitability. Comcast charges $12/GB for its pay-per-usage mobile plan; Charter charges $14/GB for essentially the same service. Both plans include unlimited voice and texting.

Things quickly get unprofitable when a customer signs up for Spectrum Mobile’s or Xfinity Mobile’s Unlimited plan (both $45/mo). Once a customer uses more than 8GB of 4G LTE data per month, Verizon’s wholesale price, including the cost of voice and texting, reaches the same amount those companies are charging customers for service. That does not include any of the ancillary costs Comcast and Charter have to pay to support and market their wireless plans.

Moffett believes the two companies overestimated how often subscribers would offload traffic to Wi-Fi, and the future potential for more solid Wi-Fi coverage “looks cloudy.” The problem, as Moffett sees it, appears to be the cable industry’s loss of interest building out their metro Wi-Fi networks. Moffett called the joint CableWiFi project between Comcast, Charter, Cox, and Altice USA “a bust” because the members of the coalition have largely stopped investing in new hotspot installations. That leaves about 500,000 working hotspots around the country, a number that has remained unchanged for two years. Only in-business Wi-Fi continues to grow, as business cable broadband customers are offered the opportunity to provide Wi-Fi service for their customers. But those hotspots don’t typically offer outdoor coverage.

Comcast has grown its Xfinity Mobile service to 1.2 million lines since launching in 2017 and Spectrum Mobile, which began in last September, had attracted almost 134,000 customers by the end of 2018.

Comcast has begun gradually rolling out 2019’s rate increases for cable television, equipment, and various service fees, starting with some markets on the east coast, sending the cost of Xfinity’s Digital Starter TV package over $100 a month when customers add typical equipment fees and surcharges.

Comcast has also set a $70 charge for service calls, a $70 installation fee, and up to $99.99 for a complete setup of Xfinity Home.

Customers on lower priced tiers will find the paperless bill discount is gone, as are discounts for selecting more than one service. In fact, Multi Product discounts no longer apply to certain Xfinity TV and Xfinity internet services, including but not limited to: Limited Basic, Digital Starter, Internet Essentials, and services purchased under a bulk service agreement.

Cable TV Rates for 2019:

• Limited Basic: $32.95
• Basic: (Includes Limited Basic, Streampix, and high definition programming) $30.00
• Extra: (Includes Limited Basic, Sports & News, Kids & Family, Entertainment, Streampix, high definition programming, and 20 hours of Cloud DVR) $70.00
• Preferred: (Includes Extra plus additional digital channels) $90.00
• Digital Starter: (Includes Limited Basic, additional digital channels, TV Box and remote for primary outlet, access to Pay-Per-View and On Demand programming and Music Choice) $69.95

Fees (often compulsory) for 2019:

• Broadcast TV Fee: $10.00
• Regional Sports Fee: $8.25
• DVR Service: $10.00
• HD Technology Fee: $9.95

Xfinity Internet Prices for 2019 (discounts apply for some packages when bundled)

• Performance Starter: $50.00
• Performance: $70.00
• Blast!: $80.00
• Extreme: $90.00
• Extreme Pro: $100.00
• Gigabit Speed: $110.00
• Gigabit Pro: $299.95

If your home or business is more than 150 feet from the nearest Comcast cable, the company will think twice before providing you with service.

Pat Ulrich and her 50 neighbors in a rural subdivision in Arkansas have waited more than 15 years for Comcast or AT&T to extend broadband service to no avail, not unless they are willing to pay an installation fee of almost $50,000.

“When we evaluate prospective new build opportunities, we take into account such factors as distance from where our nearest network exists, costs associated with a proposed build-out, and number of homes and businesses that could be served. … This subdivision is many miles from our nearest plant.” Alex Horwitz, vice president of public relations for Comcast, told Arkansas Business. A nearby neighbor of Ulrich was quoted $46,000, mostly to install over 6,400 feet of fiber optic cable to connect the subdivision to Comcast’s network.

Pulaski County, Ark.

AT&T is no help either, because the homes are too far away from the phone company’s central switching office to deliver adequate internet service.

The FCC’s Connect America Fund (CAF) and other broadband funding initiatives normally might offer Ulrich and her neighbors some help, except for the fact the FCC’s broadband availability maps falsely claim the subdivision is already getting broadband service, which disqualifies it from receiving broadband expansion subsidy funding.

“We built a house in 2004 and never imagined it would take this long to get reliable broadband service,” Ulrich said.

Comcast and other cable operators did, however. Unlike phone companies that are mandated to provide basic telephone service to any customer seeking it, cable companies are allowed to choose the areas they service, typically based on population density and the costs associated with providing service. For Comcast, service extensions must meet the company’s return on investment test, and Ulrich’s subdivision failed. Horowitz claimed extending service would require Comcast to route a fiber extension through an area that “is almost all rock.”

Comcast is investing in some buildouts in its service area, but mostly to serve business parks. For residential areas, the company wants to limit the amount of cable it must install to reach a prospective customer to under 150 feet. If service is not available on your street, chances are the company will quote an installation fee running into the thousands of dollars.

Unfortunately for Ulrich, even if she managed to have the FCC correct their broadband availability map, Horwitz said Comcast has not bid for any of the FCC’s CAF projects in Arkansas.