Franken

Sen. Al Franken (D-Minn.) has turned over much of his campaign website to expressing concern about the merger of Time Warner Cable and Comcast.

Franken has maintained a comparatively low profile since arriving in the U.S. Senate and rarely grants interviews to reporters outside of Minnesota, but after the announced $45 billion merger deal between the two largest cable companies in the country, he started making exceptions.

Franken has repeatedly tangled with Comcast, the dominant cable operator in his home state, since being elected. He favors Net Neutrality/Open Internet policies, strongly opposed Comcast’s purchase of NBCUniversal, and believes cable rates are too high and service quality is too low.

Although the senator claims he remains undecided about the merger, his public comments suggest he is likely going to oppose the deal.

“We need more competition, not less,” said Franken, who mocked Comcast’s claim that the two cable companies never compete with each other. “This is going exactly in the wrong direction. Consumers, I am very concerned, are going to pay higher bills and get even worse service and less choice.”

Although the merger will leave the combined company serving nearly one in three households, Comcast says it plans to keep its total nationwide broadband market share under 30%. But Franken points out Comcast isn’t just a cable company. It also owns a major television network and has ownership interests in nearly three dozen cable networks and television stations around the country — many in America’s largest cities.

Franken mass e-mailed his campaign supporters to express concern about the current state of the cable and broadband business and asked consumers what they thought about their cable company. More than 60,000 have shared their mostly negative views so far.

Minnesota Public Radio takes a closer look at why Sen. Al Franken is interested in the merger of Time Warner Cable and Comcast. Feb. 24, 2014 (4:32)
You must remain on this page to hear the clip, or you can download the clip and listen later.

That may prove to be smart politics for Franken, seen as a polarizing figure in the left-right divide. The near-universal loathing among consumers for both Comcast and Time Warner Cable threaten to rise above traditional partisan politics. Republican lawmakers have kept largely quiet about the merger deal, and some are even openly questioning it. Franken may tapped into a re-election issue that voters across Minnesota are likely to support — especially older Republican-leaning independents.

Franken claims his survey is trying to level the playing field by getting consumers involved in the issue. For Washington regulators accustomed to only hearing from company lobbyists and various third party groups often financially tied to merger advocates, it could be a game-changer.

Comcast’s connections in Washington are legendary. Former Republican FCC commissioner Meredith Attwell Baker wasted no time taking a job as a senior Comcast lobbyist shortly after voting in favor of Comcast’s buyout of NBCUniversal. Former Republican FCC chairman Michael Powell today heads the National Cable and Telecommunications Association (NCTA), the cable industry’s largest lobbying group and supporter of the merger.

The merger deal’s regulatory review will be conducted by current FCC chairman Thomas Wheeler, a past president of the NCTA and former cable and wireless industry lobbyist. Bill Baer is in charge of the Antitrust Division that will examine the merger at the U.S. Department of Justice. His last job was leading the law firm that represented NBC in support of the Comcast-NBCUniversal merger.

[flv]http://www.phillipdampier.com/video/CNN Al Franken Talks With CNN About TWC-Comcast Merger 2-13-14.flv[/flv]

Sen. Al Franken spoke to CNN’s Jake Tapper earlier this month about the Time Warner Cable-Comcast merger. Tapper admitted he dropped Comcast because he was dissatisfied with their service. (7:45)

Beck

Glenn Beck and his independent network TheBlaze are not happy about Time Warner Cable and Comcast merging operations and think it will concentrate too much power in the hands of a single entity that already ignores independent voices seeking a spot on the cable dial.

Beck left Fox News Channel to help start a new network — TheBlaze — that began as GBTV, an online streaming video operation. In the fall of 2012, the network, which airs more than 40 hours a week of new programming, secured exclusive carriage on Dish, the satellite television provider. Now that the exclusivity agreement has expired, TheBlaze management and viewers have launched a very vocal campaign to get the channel on cable systems across the country. The venture has been modestly successful with smaller cable operators like Buckeye Cablevision in Ohio and ETC Communications in Michigan. Beck’s network can also be seen on Cablevision’s lineup in the suburbs of New York City. But for most of the country, the only way to watch is to stream it online for $9.95 a month/$99.95 a year. Large cable systems have so far shown little interest in picking up the network.

“Comcast is one of the bigger pains in the neck for TheBlaze,” Beck told his radio listeners.

“Since launching the GetTheBlaze campaign, 50 small, midsized and major cable systems have begun carrying our network,” said TheBlaze CEO Chris Balfe. “These are the cable systems that must be responsive to their customers to survive. Monopoly type [multichannel video programming distributors] like Comcast and Time Warner Cable do not have a good history of listening to customers or supporting independent programmers whose content is in demand like TheBlaze. While we are skeptical that giving Comcast even more market power will benefit consumers, promote competition or lead to more diversity of voices, we will continue our successful campaign because eventually, even giants have to listen to what their customers want.”

“Look, the amount of decision makers, which is so surprisingly small in the industry in general, is potentially getting smaller,” Steve Krakauer, TheBlaze’s vice president of digital content told POLITICO. “Keeping up the fight is so important.”

Cable industry observers agree that life can be difficult for an unaffiliated independent cable network. Ovation found itself thrown off Time Warner Cable’s lineup for nearly a year because of a lack of original programming and miniscule ratings. But networks owned by studios like Universal or large broadcasting entities like Viacom stay, despite similar viewer response. Ovation had no leverage to compel continued carriage. Networks owned by larger companies often do, because they are packaged and sold to cable operators in a bundle. A cable company refusing to carry one low-rated cable network could be threatened with a much more expensive rate for the channels it does want or even face the loss of larger, must-have channels owned by the same company.

Polka

Beck isn’t alone being concerned.

The American Cable Association, a trade group that represents small and medium-sized cable operators, said it is carefully considering the potential impact of the merger on the cost of video programming sold to smaller operators.

“ACA has long acknowledged many problems in the pay-TV market, including the soaring cost of retransmission consent and sports networks and the record-setting number of broadcaster-imposed TV signal blackouts,” CEO Matthew Polka said in a statement. “ACA will be looking closely to see whether this transaction makes matters worse for small and medium-sized cable operators and their customers.”

The largest drops in Netflix streaming speeds are coming from ISPs that may be stalling necessary upgrades at the cost of their paying customers’ online experience.

Netflix performance for Verizon customers is deteriorating because Verizon may be delaying bandwidth upgrades until it receives compensation for handling the growing amount of traffic coming from the online video provider.

Verizon customers have increasingly complained about Netflix slowdowns during prime-time, especially in the northeast, and Netflix’s latest statistics confirm FiOS customers have seen average performance drop by as much as 14% in the last month alone.

Verizon told Stop the Cap! a few weeks ago the company was not interfering with Netflix traffic or degrading its performance, but there is growing evidence that may not be the whole story. The Wall Street Journal reports Netflix and at least one bandwidth provider suspect phone and cable companies are purposely stalling on upgrading connections to handle traffic growth from Netflix until they are compensated for carrying its video traffic.

The dispute involves the plumbing behind parts of the Internet that are invisible to consumers. As more people stream movies and television, that infrastructure is getting strained, intensifying the debate over who should pay for upgrades needed to satisfy America’s online-video habit.

Netflix wants broadband companies to hook up to its new video-distribution network without paying them fees for carrying its traffic. But the biggest U.S. providers—Verizon, Comcast, Time Warner Cable and AT&T Inc. —have resisted, insisting on compensation.

The bottleneck has made Netflix unwatchable for Jen Zellinger, an information-technology manager from Carney, Md., who signed up for the service last month. She couldn’t play an episode of “Breaking Bad” without it stopping, she said, even after her family upgraded their FiOS Internet service to a faster, more expensive package. “We tried a couple other shows, and it didn’t seem to make any difference,” she said. Mrs. Zellinger said she plans to drop her Netflix service soon if the picture doesn’t improve, though she will likely hold on to her upgraded FiOS subscription.

She and her husband thought about watching “House of Cards,” but she said they probably will skip it. “We’d be interested in getting to that if we could actually pull up the show,” she said.

Netflix relies on third-party traffic distributors to deliver much of its streamed programming to customers around the country. Cogent Communications Group is a Netflix favorite. Cogent maintains two-way connections with many Internet Service Providers. When incoming and outgoing traffic are generally balanced, providers don’t complain. But when Cogent started delivering far more traffic to Verizon customers than what it receives from them, Verizon sought compensation for the disparity.

“When one party’s getting all the benefit and the other’s carrying all the cost, issues will arise,” Craig Silliman, Verizon’s head of public policy and government affairs told the newspaper. The imbalance is primarily coming from the growth of online video, and as higher definition video grows more popular, traffic imbalances can grow dramatically worse.

A spat last summer between Cogent and some ISPs is nearly identical to the current slowdown. Ars Technica reported the traditional warning signs providers used to start upgrades are increasingly being ignored:

“Typically what happened is when the connections reached about 50 percent utilization, the two parties agreed to upgrade them and they would be upgraded in a timely manner,” Cogent CEO Dave Schaeffer told Ars. “Over the past year or so, as we have continued to pick up Netflix traffic, Verizon has continuously slowed down the rate of upgrading those connections, allowing the interconnections to become totally saturated and therefore degrading the quality of throughput.”

Schaeffer said this is true of all the big players to varying degrees, naming Comcast, Time Warner, CenturyLink, and AT&T. Out of those, he said that “AT&T is the best behaved of the bunch.”

Letting ports fill up can be a negotiating tactic. Verizon and Cogent each have to spend about $10,000 for equipment when a port is added, Schaeffer said—pocket change for companies of this size. But instead of the companies sharing equal costs, Verizon wants Cogent to pay because more traffic is flowing from Cogent to Verizon than vice versa.

Cablevision, which participates in Netflix’s Open Connect program, experiences no significant speed degradation during prime time. The same cannot be said of Time Warner Cable, which refuses to take part.

Netflix offered a solution to help Internet Service Providers manage its video traffic. Netflix’s Open Connect offers free peering at common Internet exchanges as well as free storage appliances that ISPs can connect directly to their network to distribute video to customers. Free is always good, and Netflix claims many ISPs around the world have already taken them up on the offer, slashing their transit costs along the way.

A few major North American ISPs have also agreed to take part in Open Connect, including Frontier Communications, Clearwire, Telus, Bell, Cablevision and Google Fiber. Open Connect participating ISPs also got an initial bonus for participating they could offer customers – exclusive access to SuperHD streaming.

But most Americans would not get super high-resolution streaming because the largest ISP’s refused to participate, seeking direct compensation from content providers to carry traffic across their digital pipes instead.

On Sep. 26, 2013 Netflix decided to offer SuperHD streaming to all customers, regardless of their ISP. As a result, one major ISP told the newspaper Netflix traffic from Cogent at least quadrupled. ISPs taking Netflix up on Open Connect saw almost no degradation from the increased traffic, but not so for Verizon, AT&T, Time Warner Cable, and Comcast customers.

Net Neutrality advocates fear the country’s largest phone and cable companies are making an end-run around the concept of an Open Internet. Providers can honestly guarantee not to interfere with certain web traffic, but also refuse to keep up with needed upgrades to accommodate it unless they receive payment. The slowdowns and unsatisfactory performance are the same in the end for those caught in the middle – paying customers.

“Customers are already paying for it,” said industry observer Benoît Felten. “You sell a service to the end-user which is you can access the Internet. You make a huge margin on that. Why should they get extra revenue for something that’s already being paid for?”

Some of the web’s biggest players including Microsoft, Google and Facebook may have already capitulated — agreeing to pay major providers for direct connections that guarantee a smoother browsing experience. Netflix has, thus far, held out against paying ISPs to properly manage the video content their subscribers want to watch but in some cases no longer can.

“…every kitten grows up to be a cat. They seem so harmless, at first, small, quiet, lapping up their saucer of milk. But once their claws get long enough, they draw blood, sometimes from the hand that feeds them. For those of us climbing to the top of the food chain, there can be no mercy. There is but one rule: Hunt or be hunted.” — Francis Underwood

Addicts of Netflix’s hit series House of Cards may need to grab a card of a different kind to cover overlimit fees charged by your Internet Service Provider for blowing past your usage allowance.

As online video streaming moves into the realm of 4K — the next generation of high-definition video — watching television shows and movies online could get very expensive because of the massive file sizes involved. It’s all just in time for ISP’s increasing enforcement of usage caps.

Gizmodo just did the math for those intending to spend a weekend watching the entire second season of the made-for-Netflix series in high-definition:

Streaming in 1080p on Netflix takes up 4.7GB/hour. So a regular one-hour episode of something debiting less than 5GB from your allotment is no big deal. However, with 4K, you’ve got quadruple the pixel count, so you’re burning through 18.8GB/hour. Even if you’re streaming with the new h.265 codec—which cuts the bit rate by about half, but still hasn’t found its way into many consumer products—you’re still looking at 7GB/hour.

But you’re not watching just one episode, are you? Of course not! You’re binging on House of Cards, watching the whole series if not in one weekend then certainly in one month. That’s 639 minutes of top-quality TV, which in 4K tallies up to 75GB if you’re using the latest and greatest codec, and nearly 200GB if not. That means, best case scenario, a quarter of your cap—a third, if you’re a U-Verse customer with a 250GB cap—spent on one television show. Throw in a normal month’s internet usage, and you’re toast.

Sure you can send 900+ emails, download hundreds of songs, upload hundreds of pictures, and play online games 24 hours a day, but you can’t also watch one standard and one HD movie a day at the same time without blowing well past your AT&T DSL limit.

What is worse is that h.265 is still more theoretical than actually available to most consumers, so customers will either have to settle with degraded video or prepare to eat close to 19GB an hour at the highest resolution. No wonder Netflix has introduced video degradation settings to save you from your ISP’s arbitrary cap. Of course, your video quality will suffer, especially on a big screen television.

Comcast customers (and presumably Time Warner Cable customers also eventually subjected to Comcast’s cap) will still have a generous 100GB left over to watch, browse, and send that avalanche of e-mails usage cappers love to boast about. If you live in the reality-based community and have a family active online, that 100GB isn’t going to go too far. Video game addicts regularly face downloading huge updates, many ranging from 8-12GB apiece. Call of Duty: Ghosts? That’s 39.5GB. Madden NFL 25? Another 12.51GB, says Gizmodo. Using a file backup cloud storage service can also eat your allowance for breakfast.

Gizmodo also mentions Sony’s Unlimited Video service has 70 titles (and growing) available in 4K. A Sony representative admits a single two-hour movie will burn up 40GB. Watch a few of those and you are well on your way to blowing your allowance Vegas-style.

AT&T cooked up the arbitrary de facto standard overlimit fee now adopted by many American ISPs, and granular it isn’t. Exceed your allowance by even 1 kilobyte and you will be charged an extra $10 for 50 extra gigabytes. Because AT&T, Comcast, Suddenlink, and others are not already paid enough for broadband service and their modem rental.

Online video is the online application most likely to put you over your limit. Most ISPs don’t like to talk about that, however. They prefer to explain caps in terms of activities no online user is likely to ever exceed, including sending thousands of e-mails, viewing hundreds of thousands of web pages, transferring boatloads of songs and images, and watching YouTube videos at low resolution.

If you don’t watch online video, your cable or phone company thanks you for paying for cable television instead. If you haven’t used a peer-to-peer network in years, chances are you won’t exceed any limits either. But as Internet usage continues to evolve, anything that appears to be a competitive threat delivered over your ISP’s broadband pipe can be effectively controlled with the elimination of flat rate Internet service and imposing overlimit fees that deter usage.

Comcast will announce later this morning it has reached an agreement to acquire all of Time Warner Cable in an all-stock deal worth $44 billion.

If approved by regulators, Comcast will dramatically increase its size as the nation’s largest cable operator with over 33 million subscribers — vastly outnumbering every other cable company in the country. It also likely means Time Warner Cable broadband subscribers will eventually be subject to Comcast’s usage caps and overlimit fees, now being market tested around the country.

The offer of $159 a share for Time Warner Cable stock – $1 less than what TWC CEO Rob Marcus demanded for a buyout – is far higher than the $133 a share in cash and stock offered earlier by Charter Communications.

Tonight’s revelation that Time Warner Cable and Comcast reached a deal, first reported by CNBC, likely caught Charter by surprise. Charter had tried to acquire Time Warner Cable for months, going as far as nominating candidates for TWC’s board of directors that could have influenced a sale of the company. At the same time, Charter thought it was negotiating a friendly deal with Comcast to divide Time Warner Cable territories between the two companies.

Time Warner Cable management offered no clues they were negotiating with Comcast and delivered a presentation to shareholders last week promising major upgrades for Time Warner customers and future success as a standalone cable operator. All of those plans are now in doubt.

Comcast and Time Warner Cable reportedly believe the deal will quickly pass any antitrust review before the end of the year because neither company competes in the same markets, but Comcast will offer to divest a token three million subscribers from the combined company, according to sources.

The FCC formerly limited cable companies from owning or controlling more than 30% of the cable industry, but Comcast successfully sued to have that ownership cap overturned. A belief the deal would present looming antitrust problems could be grounds for the U.S. Department of Justice to oppose the deal, likely terminating it.

Consumer groups hope the deal gets derailed as soon as possible.

“In an already uncompetitive market with high prices that keep going up and up, a merger of the two biggest cable companies should be unthinkable,” said Free Press president Craig Aaron. “This deal would be a disaster for consumers and must be stopped. No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download. But that — along with higher bills — is  the reality they’ll face tomorrow unless the Department of Justice and the FCC do their jobs and block this merger. Stopping this kind of deal is exactly why we have antitrust laws.”