If you live in parts of the Hudson Valley (N.Y.) or Ohio where Frontier Communications provides phone service, Vantage TV may be coming to your neighborhood soon.

Frontier’s cable television solution for customers still served by its legacy copper wire telephone network appears to be an IPTV service similar to AT&T’s U-verse. Vantage TV is already available to around 200,000 Connecticut customers served by Frontier, inherited from AT&T. Frontier also offers Vantage in Durham, N.C. and has applied for a statewide video franchise in Ohio (granting authority to offer service anywhere in the state it chooses) and another to serve Middletown, N.Y., a community of 28,000 in the Hudson Valley.

Frontier claims over the next four years it will offer Vantage in as many as 40 of its markets, many still served by legacy copper wiring. That represents about three million homes. After a second phase of buildouts, Frontier claims it will to provide video service to about half of the 8.5 million homes in its service area.

In late June, Frontier applied for a video franchise agreement in Middletown, where it expects to compete against Charter Communications (formerly Time Warner Cable). It will be the first time Frontier offers video service in New York.

Vantage TV offers up to 300 channels typically bundled with phone and internet service. Customers are provided a “total-home DVR” with 1TB of storage that can record up to six shows at the same time and played back on up to four wireless cable boxes attached to different televisions. An upgraded version 3.0 of Ericsson’s Mediaroom platform offers advanced set-top box features like improved visual search and the ability to watch up to four channels at once in a mosaic. Another feature lets customers bring up a small video screen showing another channel, useful if you are channel surfing during an ad break.

Multichannel News interviewed several Frontier executives about the service, which the company is confident will give it a competitive video product to market to customers. Until Frontier bought AT&T’s Connecticut customers (and its U-verse fiber-to-the-neighborhood system), its only experience selling cable television came from its acquisition of Verizon FiOS systems serving Fort Wayne, Ind., and parts of Oregon and Washington. Frontier quickly learned the value of Verizon’s volume discounts for video programming, which it lost soon after acquiring the systems. In 2011, customers faced massive price hikes for video service and an unusual effort to convince them to switch to satellite TV instead — quite a downgrade from fiber to the home service.

Connecticut, in contrast, is served with a mix of fiber and old copper wiring that has been in place for decades, since the days the state was served by the independent Southern New England Telephone Company. Learning how to deliver reasonable video quality over copper wires in Connecticut gave Frontier experience to go ahead with targeted upgrades that can boost broadband speeds and deliver HD video over an internet connection as low as 2.6Mbps in other states.

In short, Frontier’s business plan for video may work if it can keep network expansion and technology costs as low as possible. Video programming costs are likely to be another matter, however. As programming costs increase in contract renewals, some cable operators are playing hardball and dropping channels that get too expensive for comfort. But many of those channel drops alienate customers. Frontier appears to be following an opposite formula — making sure potential customers know they are still carrying networks the cable operator in the area dropped. Comcast dropped Yankees regional sports channel YES, but Frontier still offers it to its Connecticut customers and goes out of its way to promote its availability.

Hallmark Channel and Hallmark Movies & Mysteries — two networks popular with older viewers who are among the most loyal to cable television, got the axe in 2010 on AT&T U-verse in Connecticut. After Frontier acquired the Connecticut system, it put the two networks back on the lineup.

The more customers Frontier can show it has at the negotiating table, the better position Frontier is in to secure discounts for the video programming it carries. Volume, volume, volume makes all the difference when competing against giant cable conglomerates like Comcast and Charter. Even if Frontier finds it eventually has to drop overpriced channels, it has a much more friendly relationship with over-the-top online video services like Netflix to offer customers as an alternative. Vantage customers can find Netflix’s main menu as a traditional TV channel on the Vantage lineup, allowing subscribers to choose any Netflix show to watch on their television. In the future, Frontier might offer customers other network’s apps as well, making it easy to stream on demand video without having to use a Roku or other similar device.

The Federal Communications Commission is getting an earful from satellite provider Dish Network, upset with the agency’s proposal to boost regulatory fees covering direct broadcast satellite services by 125% this year.

If the FCC adopts its new fee structure, Dish will pay 24 cents per subscriber (up from 12¢) per year to cover the cost of full-time employees at the FCC who spend their days monitoring and regulating satellite television providers. Satellite companies will also pay a one-time fee of 3¢ per subscriber in 2016 to cover the FCC’s downsizing expenses.

The regulator has successfully found a way to cover some of its expenses by charging the companies it oversees “user fees.” In 2015, the FCC collected nearly $340 million in regulatory fees. This year, the FCC wants more, seeking to impose a temporary “facility reduction cost” surcharge that will cover the expenses of moving employees to new, smaller offices, or downsizing the current ones to save money. The FCC says that will cost an extra $44 million. Taxpayers won’t pay those expenses, but pay television customers ultimately will when providers pass both of those fees on.

Dish says the rate hike is unjustified because of its size and scope, and runs contrary to the FCC’s goal of minimizing consumer bill shock. The satellite provider also wants the FCC to explain how it can justify more than doubling user fees while downsizing.

If the FCC doesn’t answer, the American Cable Association, representing small independent cable operators, is willing to share their views on the matter. The ACA complains the FCC isn’t charging DirecTV and Dish enough, noting they are still getting preferential treatment over cable and IPTV providers that are being asked to pay $1 per subscriber this year.

“There is absolutely no basis for keeping the proposed DBS fee levels over 75% below those proposed for other entities in the Cable/IPTV category,” wrote ACA president Matt Polka in comments to the FCC. “DBS providers should be paying the same Media Bureau regulatory fee.”

Polka pointed to AT&T’s acquisition of DirecTV as an example of how disproportionate fees cost small independent cable companies much more on a per-subscriber basis than telecom giant AT&T has to pay for almost 20 million DirecTV satellite customers.

“AT&T, now the nation’s largest [pay TV company], operates two types of services – its U-verse IPTV service and its DirecTV DBS service,” noted Polka. “Yet, AT&T will be assessed starkly lower regulatory fees for its approximately 20 million DirecTV subscribers than it will pay for its approximately 6 million IPTV subscribers, even though all of these services make absolutely comparable use of Media Bureau […]  resources and AT&T’s advocacy […] is on behalf of all its [pay TV] subscribers.”

Polka wants fee parity – charging the same user fees for all providers, regardless of the technology they use.

“Doing so will avoid the competitive distortions the current fee structure creates by having cable operators and IPTV providers, most of whom are far smaller than the DBS providers, cross-subsidize the fee burden of their primary and direct competitors in the marketplace,” Polka argued.

Whatever fee structure is ultimately approved by the FCC, customers can be certain providers will pad those fees when passing them on to customers. For more than a decade, some providers have used regulatory fee increases amounting to spare change as an excuse to pass on new “regulatory surcharges” that are many times more than what those providers actually pass on to the government.

“It’s a price increase,” bluntly notes Mark Cooper from the Consumer Federation of America back in 2004.

This spring, The Consumerist broke down a typical AT&T U-verse bill loaded in junk fees and surcharges. (The RED numbers [1, 4-10, 13-14, 17-20, 22] are AT&T-originated fees, fake surcharges/bill padding, or fees that represent the cost of doing business; BLUE numbers [2-3, 11-12, 15-16, 21, 23-25] are real government fees passed on to local, state, and federal taxing authorities.)

Frontier Communications plans to leverage their existing fiber-copper infrastructure to offer broadband-powered television service for up to half of their national customer base over the next four years.

Like many Frontier initiatives, the company’s IPTV effort relies on minimal spending, with just $150 million in capital budgeted for the project, spread out over several years.

“Our plans are to introduce video service to more than 40 markets representing approximately three million households over a three- to four-year period,” said Frontier CEO Daniel McCarthy. “Once complete, video service will be available to about 50% of the 8.5 million households in Frontier’s existing footprint, not counting the pending Verizon acquisition.”

Frontier intends to sell the service to the 57% of customers it claims can receive at least 20Mbps broadband speed. The video streams will co-exist with customers’ data service.

“Our IPTV applications employ the latest very advanced compression technology,” said McCarthy. “[Each] HD television channel will require approximately 2.5Mbps of capacity, meaning a household with four HDTVs active at once will require 10Mbps of capacity into the home, leaving the remainder available for data usage.”

Frontier’s IPTV approach is similar to AT&T U-verse. The company will depend on fiber to the neighborhood service already in place in certain markets, coupled with existing copper wiring already on telephone poles or buried underground in each neighborhood. To further minimize expenses (and customer inconvenience), Frontier will rely on customer-installable wireless set-top boxes that can be relocated to any television in the home.

McCarthy

Frontier has experimented with its video service since last fall in its test market of Durham, N.C. That city also benefits from an extensive fiber upgrade undertaken by Frontier. Frontier’s website sells the service as Frontier FiOS TV, even though Durham’s fiber network was built by Frontier, not Verizon.

For customers, it will likely be a welcome change from Frontier’s ongoing dependence on its partnership with satellite provider Dish Networks to offer video service. One clue Frontier has not well withstood heavy competition from competing cable operators comes from the company’s latest quarterly earnings report. Frontier executives admitted voice service disconnects are accelerating beyond expectation and average revenue per customer dropped 1.1% to $63.14 for the fourth quarter of 2015.

Frontier also continues to feel the wrath of former AT&T customers in Connecticut that withstood a messy “flash cut” from AT&T to Frontier that left some customers without service for days. Despite the expiration of special pricing promotions for Connecticut customers resulting in the prospect of higher revenue, Frontier still recorded a $7 million decline from Connecticut alone, which it mostly blamed on customers ditching landlines. In the rest of the country, Frontier’s “legacy service areas” (those still dependent on aging copper infrastructure) delivered another $4 million decline in revenue for the quarter.

Where are those customers going? Cable operators continue to grab Frontier’s unhappy DSL customers and wireless companies continue to benefit from landline disconnects.

To prevent a repeat of Connecticut in the Frontier-acquired Verizon territories in Florida, California, and Texas, Frontier will keep Verizon’s service plans and only gradually shift services away from Verizon, with the ability to back out of the transition immediately if something goes wrong.

Frontier’s IPTV service will depend on the classic cable television model — 100+ local, network, and cable channels delivered in a bundle with broadband and voice service. At the outset, Frontier won’t be emphasizing skinny bundles of TV channels, but will allow existing Verizon FiOS customers to keep the slimmed down packages they already have.

Comcast will challenge cord cutting and entice cord-nevers with an online video package of about a dozen television channels it will sell for $15 a month and likely exempt from its usage cap.

“Stream” will offer about 12 channels — almost all over the air stations including NBC, CBS, ABC, PBS, Fox, The CW, Telemundo, Univision — and HBO to Comcast’s broadband customers and deliver the package over Comcast’s privately managed IP network, which it considers separate from the public Internet. That will also allow Comcast to offer on-demand programming, cloud DVR storage and access to Streampix, Comcast’s movies-on-demand feature it largely abandoned a few years ago.

Comcast’s new no-contract video service will begin in Boston by the end of summer, quickly followed by launches in Chicago and Seattle. Comcast plans to expand the service nationwide by early 2016.

Stream will target millennials and others that have turned their backs on traditional cable television. It will also directly take aim at competing Sling TV, which sells streaming cable TV channels for about $20 a month.

But at first glance, Comcast may have one up on its competition.

Comcast will deliver Stream over the same network it uses for content delivery to game consoles that does not count against Comcast’s trialed usage caps. Watching competitor Sling TV does count against your Comcast usage allowance because it is delivered over the public Internet.

That advantage alone may not help Comcast overcome some of the harsh restrictions it will impose on Stream customers that could prove major turn-offs:

• Viewing must be done from a web browser, tablet, or phone. Stream will not be available on TV-connected platforms like Roku or Apple TV;
• Viewers must stay inside the home to access live streamed content;
• Customers must subscribe to Comcast High Speed Internet service to buy Stream;
• Only Comcast customers inside a Comcast service area can subscribe;
• There are no cable networks offered, except HBO, for now.

Customers will be able to sign up for Stream (and cancel it) over the web with no service technician visit needed. Customers can cancel anytime.

Windstream this week introduced its fiber to the neighborhood service Kinetic – its attempt to bring a competitive triple-play package of broadband, home phone, and television service to about 50,000 homes initially in Lincoln, Neb.

“We’re extremely excited to launch Kinetic in Lincoln,” said David Redmond, president of small business and consumer at Windstream. “Over the last year, we have heard loudly and clearly that this community is excited and eager for an alternative TV service. Windstream is confident that residents that sign up for Kinetic will find a highly interactive experience and a smarter way to watch TV than cable or satellite.”

The project in Lincoln will test consumer reaction and help the company plan if or how it plans to expand the service across many of its other service areas across the country.

Powered by the Ericsson Mediaroom platform, Kinetic is Windstream’s effort to squeeze about as much use of its existing copper wire infrastructure as possible. Like AT&T U-verse, Kinetic requires a fiber connection part of the way to customers, but continues to rely on existing copper telephone wiring already in the subscriber’s neighborhood. In effect, it’s an enhanced DSL platform that will split available bandwidth between television, Internet access and home phone service.

One unique aspect of Kinetic is its use of a next generation, compact whole home DVR that can record four shows at the same time, supplemented with wireless set-top boxes ($7/mo each), that allow subscribers to take the service to any television in the home without wiring. A subscriber can even move a television out into the yard and not lose service.

Remarkably, Windstream — an independent telephone company — completely de-emphasizes its own phone service in its up front promotions. Unless customers dig deeper into the Kinetic website, they will find prominently featured double play packages of television and Internet service starting at $59.98 a month. Telephone service is offered (and priced) almost as an afterthought, bundled into various packages for $5 extra a month. Phone customers get unlimited nationwide local and long distance calling.

[flv]http://www.phillipdampier.com/video/Windstream Kinetic TV 4-2015.flv[/flv]

Windstream produced this introductory video to its new Kinetic TV service, offered initially to 50,000 homes in Lincoln, Neb. (1:20)

We added the pricing details for Home Phone service.

The biggest limitation Windstream faces marketing the service is its legacy network of copper wires. Customers can only qualify for the service if the connection between their home and Windstream’s central office is good enough to sustain the speeds required to handle all three services at the same time. The company is focusing Kinetic squarely on customers looking for a cable television alternative to Lincoln’s only other provider — Time Warner Cable. That may be because Kinetic remains disadvantaged in the broadband department.

The highest Internet speed a Kinetic customer can buy is 15Mbps, which is the speed Time Warner Cable offers in its “Standard” package. Time Warner currently sells up to 50/5Mbps in Lincoln — more than three times faster than Windstream’s Kinetic. Many Windstream DSL customers have complained they don’t come close to the speeds they are paying for, particularly during peak usage periods. A Facebook group with over 500 customers exists to discuss exactly that issue. Whether it will be different for Kinetic customers is not yet known, but the company’s lawyers are prepared for that possibility.

Windstream’s Whole House DVR is only about the length of its remote control.

“Windstream cannot guarantee speeds or uninterrupted, error-free service,” the company says in its terms and conditions. “Internet speed claims represent maximum network service capability speeds.  Actual customer speeds may vary based on factors including simultaneous use of multiple devices, use of other Windstream services, customer device capabilities, Internet and Network congestion, website traffic, content provider service capacity, customer location, network conditions, and bandwidth devoted to carriage or protocol and network information.”

At least there are no usage caps.

Kinetic subscribers are also warned that just like DSL broadband, line quality will impact the kind of television service received.

“Kinetic TV includes digital channels (including local channels), one receiver and up to four standard direct video streams to the customer residence,” Windstream notes. “Of the four standard direct video streams per residence, customer’s location will determine both high definition (“HD”) availability and the maximum number of HD video streams (between one and four) a customer can view and record in HD at any one time, regardless of the number of receivers in the residence.  The remaining streams will be standard definition.”

Kinetic’s channel lineup is comparable to that of Time Warner Cable, with some minor exceptions. Time Warner imports some regional over the air channels from adjacent cities, Windstream does not. Certain channels like Turner Classic Movies are available on Kinetic, but only for customers subscribing to the most expensive tier. Time Warner offers that channel on its less expensive Standard tier.

Limited bandwidth may limit your broadband speeds and the number of HD channels you can watch at any one time.

Time Warner Cable spokesman Mike Hogan took indirect shots at both the City of Lincoln and Windstream in response to the introduction of Kinetic.

“Lincoln residents can count on the fact that Time Warner Cable will offer the best choices for TV, Internet, home phone and home security to the entire city — in sharp contrast to competitors who only serve select areas, or won’t even say where they will or won’t serve,” Hogan said in an email to the Journal-Star.

That’s a reference to Windstream’s refusal to specify exactly where in Lincoln Kinetic is available.

Stop the Cap! surveyed more than 100 Lincoln-area addresses this morning and found Kinetic available primarily in wealthy and newer neighborhoods south and southeast of the city center, including zip codes such as 68516. A review of real estate transactions across the city of Lincoln showed home prices in this area are well above other parts of the city. That suggests Windstream is targeting the service to higher-income neighborhoods during its initial rollout, which plans to reach up to 45 percent of city households.

Although Windstream officials expect to bring Kinetic to about 80% of Lincoln, the city has given the company 15 years to complete the project. Further expansion may also depend on how customers respond to Kinetic.

With plenty of time, Windstream may choose to turn its attention elsewhere, eventually introducing the service in other cities across its 18-state service area of Alabama, Arkansas, Florida, Georgia, Iowa, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina and Texas, before it gets around to wiring urban poor neighborhoods in Lincoln.

Cable industry defenders believe Time Warner Cable and Windstream are being treated differently by city officials. Hogan notes the cable company is required to serve the entire metropolitan area, unlike Windstream that critics contend may be interested only in cherry-picking the low-hanging fruit.

Windstream’s announcement leaves just two significant independent telephone companies without IPTV offerings: FairPoint and Frontier Communications.

[flv]http://www.phillipdampier.com/video/KLKN Lincoln New television service in Lincoln 4-16-15.mp4[/flv]

KLKN in Lincoln covered the Windstream event introducing Kinetic TV to Lincoln and talked with company officials about what the new service offers Lincoln and how much it costs in comparison to Time Warner Cable, the area’s incumbent cable company. (2:29)