Exurban communities in northern Illinois bypassed for upgrades from second-rate cable companies and considered too-small-for-fiber by AT&T are clamoring for a third option that will deliver fiber optic broadband.

In the Fox River Valley, west of Chicago, Sugar Grove residents are hopeful that a midwestern upstart that specializes in taking on larger cable and phone companies in the region will come to town with gigabit broadband and better service.

MetroNet is currently surveying residents of this fast-growing village of 9,000, looking for future customers willing to put down deposits of $20 to join a “MetroZone,” an area where MetroNet sees enough potential to begin construction of its fiber to the home network, over which it sells television, phone, and internet service.

The Kane Country Chronicle reports local resident Wendy Betustak can’t wait. Betustak has been a customer of both AT&T and Mediacom, and both underwhelmed her.

“I hate AT&T now, but I don’t want to make a jump back to Mediacom because I remember what that was like,” she said. “But AT&T has been out so many times that I’ve stopped calling them.”

While both Mediacom and AT&T have been promoting their investments in upgrading service, those benefits often take many years to reach smaller communities inside their service areas. In some cases, those upgrades will never arrive.

Sugar Grove is just one of several exploding exurban communities in the far western suburbs of Chicago. As residents migrate further away from the city center, they expect services to migrate with them. But when essential utilities are in the hands of private companies, smaller towns and villages are often frustrated to hear there is not enough Return On Investment to provide 21st century quality service.

But MetroNet’s business plan is more forgiving, in part because it recognizes it will almost always compete head to head with one or two long-established telecom companies. It also does not hurt to have neighboring communities already wired up by MetroNet, which serves Batavia, Geneva, Montgomery, North Aurora, Oswego, and St. Charles. MetroNet has already installed fiber throughout the village of Sugar Grove and plans to install more.

“These installations will facilitate service to the village at a later date. Currently they are being utilized as transport routes,” Sugar Grove village administrator Brent Eichelberger told the newspaper. “We do not have a firm date for when MetroNet plans to start providing service within the village. If residents and businesses are interested in having MetroNet provide service they should contact MetroNet directly.”

They might want to hurry. Residents are encouraged by the company to visit www.metronetinc.com/metrozone and select Sugar Grove (or another community MetroNet is considering) and create an account. A refundable $20 deposit allows MetroNet to know that a would-be customer is seriously interested in getting service. Right now, MetroNet estimates around 10% of Sugar Grove residents have placed deposits.

“The MetroZone opportunity is a milestone in that we are able to track those who are interested in us coming to the village of Sugar Grove,” said Kathy Scheller, business development manager for MetroNet. “Our goal is to have 25 percent of the village pre-signed by Feb. 28.”

MetroNet’s broadband customers blow past Mediacom and AT&T’s offerings with 100/25 Mbps internet service for $49.95 a month. MetroNet’s top speed – 1000/250 Mbps costs $89.95 a month.

The usual alternative for most towns and villages unwilling to consider building their own broadband networks is to wait for the cable and phone company to upgrade service, which could take years in smaller communities. But a growing number of small commercial ventures are starting to offer fiber broadband service in a growing number of communities to meet the demand for better and faster broadband service.

While giant cable company mergers unexpectedly took a breather in 2017, Fierce Cable predicts this year isn’t likely to be a repeat of last year.

“With polls showing Democrats poised to begin sweeping back into power with the 2018 midterm elections, look for cable operators to make hay on the current regulatory climate and start turning their rivals into that most precious of resources: scale,” writes Daniel Frankel.

With time for large cable operators to get easy approval of merger deals from deregulation-minded Republicans potentially running out, 2018 could bring dramatic consolidation in the cable industry, with Comcast a likely buyer and Charter Communications a potential seller… if the offer is good enough.

Many industry observers expected the first year of the Trump Administration to be a banner year for cable mergers, especially with the entry of Altice, a European cable conglomerate known for its willingness to overpay to acquire cable operators. Altice has since run into significant financial challenges and investor blowback, forcing the company to shelve acquisition plans for now and focus on debt reduction and developing a stronger business plan to operate its ailing cable and wireless properties in Europe. Altice USA, which owns Suddenlink and Cablevision, has not shelved its plans to upgrade many of its customers to fiber to the home service, but is also no longer seen as an immediate bidder for Charter, Cable One, or WideOpenWest.

Fierce Cable expects Comcast to respond to AT&T’s merger with Time Warner, Inc., assuming the deal successfully overcomes Department of Justice objections in court, and 21st Century Fox’s asset sales to Disney. Both transactions threaten to consolidate programming production and distribution around an even smaller group of media giants, which could challenge Comcast’s NBCUniversal unit as well as the cost of cable programming networks. Comcast has shied away from acquisitions after an embarrassing failure of its attempt to buy Time Warner Cable a few years ago.

If Comcast wants to build scale, it would naturally target an acquisition of Charter Communications, the second largest cable company in the country. The deal would give Comcast dominance over the New York and Los Angeles media markets and broadband service provision across most major American cities. Comcast could also seek a less controversial acquisition of Cox Communications, one of the few major independent cable companies left. But Comcast could also seek acquisitions in Hollywood to bolster its production capabilities.

Most other cable acquisition options would be considered scraps by the largest operators. Altice could be persuaded to prematurely exit the American market and sell Cablevision and Suddenlink if convinced it has no chance of building adequate scale to stand with Comcast and Charter. Beyond that are smaller rural and regional operators including Mediacom, Midco, WOW!, GTT, RCN, and many others that serve fewer than one million customers.

Company executives may be hoping the objections to the AT&T/Time Warner deal are an anomaly for the Trump Administration. But it’s clear that whatever smooth waters exist for upcoming mergers will get choppy as the midterm elections approach. Should Democrats win back the House and/or Senate, life will get considerably more difficult for future media consolidation deals.

With many cable operators reporting a need to double network capacity every 18-24 months to keep up with customer traffic demands, the industry is spending time and money contemplating how to meet future needs while also finding ways to cut costs and make networks more efficient.

Top technology executives from five major cable operators answered questions (sub. req’d.) from Multichannel News about their current broadband networks and their plans for the future. Some, like Mediacom, are aggressively adopting DOCSIS 3.1 cable broadband upgrades for their customers while companies like Cox and Comcast are deploying multiple solutions that use both traditional hybrid fiber-coax network technology and, on occasion, fiber-to-the-home to boost speed and performance. But at least one cable company — Charter Communications — thinks it can continue operating its existing DOCSIS 3 network without major upgrades for several years to come.

Cable Broadband Traffic Can Be Handled

“We’ve been on a pretty steady path of doubling our network capacity every 18-24 months for several years, and I don’t see anything that makes me think that will change,” said Tony Werner, president of technology and product at Comcast. “We’ve been strategically extending fiber further into our network to meet customer demand, and that effort, combined with our commitment to deploying DOCSIS 3.1 has given us a network that’s powerful, flexible, and ready for what’s next.”

J.R. Walden, senior vice president of technology at Mediacom was more aggressive.

“We have completed the removal of all the analog channels. That was the big step one,” Walden said. “Step two was to start transitioning high-speed data over to DOCSIS 3.1, so we’re not adding any more 3.0 channels, and reuse spectrum for 3.1, which is a bit more efficient. The whole company is 3.1, all the modems we’re buying since June have been 3.1, so we’ve begun that next transition.”

Walden added Mediacom is also trying to improve broadband performance by reducing the number of customers sharing the same connection.

“We average about 285 homes to 290 homes per node as an average,” he said.

Mediacom is also scrapping older technology on the TV side to open new bandwidth. The cable company is getting rid of MPEG-2-only set-top boxes so the company can transition its video lineup to MPEG-4. But even that won’t last long. Walden admits the company will then quickly start moving less-viewed channels and some premium networks to IP delivery.

Traditional cable broadband service relies on a hybrid fiber-coax network.

In its European markets, Liberty Global has adopted Converged Cable Access Platform (CCAP) equipment across its footprint. CCAP technology saves cable operators space and operates more efficiently, and supports future convergence of technologies that cable operators want to adopt in the future. CCAP has helped Liberty Global deal with its 45% traffic growth by making upgrades easier. The company is also using advanced features of CCAP to better balance how many customers are sharing a connection. The next step is adopting DOCSIS 3.1.

“Seventy to 80% of our plant will be DOCSIS 3.1 ready by the end of next year, giving us a path to even greater capacity expansion allowing us to continue to increase the available capacity across our access network, upstream and downstream,” said Dan Hennessy, chief architect of network architecture for Liberty.

Charter is prioritizing maximizing performance on the network it already has.

“Our priority is to constantly balance capacity against demand. It’s a never-ending quest,” said Jay Rolls, Charter’s chief technology officer. “We watch it very closely, and we’re very pragmatic about it — the volume of tools, metrics and ways to see what’s really happening, and invest accordingly, is really deepening in ways that matter.”

Is Fiber-to-the-Home in Your Future?

While some cable operators like Altice’s Cablevision are scrapping their existing hybrid fiber-coax networks in favor of fiber-to-the-home (FTTH), America’s largest cable operators are not in any hurry to follow Altice.

Comcast has expanded its fiber network closer to customers in the last few years, but sees no need to convert customers to FTTH service.

“I feel pretty strongly that the best path ahead is to leverage the existing coaxial network and DOCSIS resources to the fullest, then inch towards FTTH, over time Why? Because we can. We don’t have to build an entire network just to turn up one customer.”

The next generation of cable broadband service may depend on CCAP – technology that will cut operator costs and lay the foundation for changing the way video and other services are delivered to customers.

Cox has a 10-year Network 2.0 plan that will bring fiber closer to customers, but not directly to every home. More important to Cox is having the option to support symmetrical speeds, which means delivering upload speeds as fast as download speeds. In the meantime, network cabling Greensboro can improve your current connectivity and reliability, preparing your network for high-speed internet.

“We’re also thinking about the fiber investment and fiber deep as it relates to our wireless strategy, enabling some of our customers with a small cell strategy but also positioning ourselves to take advantage of that in the future, as well as thinking about fiber deep to benefit both residential and our commercial customers simultaneously,” said Kevin Hart, Cox’s executive vice president and chief product and technology officer.

Liberty/Virgin Media’s Project Lightning is bringing cable broadband and TV service to places in the UK that never had cable service before.

In Europe, Liberty Global’s “Project Lightning” network expansion initiative is building out traditional cable service in the United Kingdom. Most of the UK never adopted cable service, favoring small satellite dish service instead. Now Liberty Global is putting cable expansion on its priority list. But decades after most North Americans got cable service for the first time, today’s new buildouts are based largely on fiber optics — either fiber to the home or fiber to the neighborhood, where coaxial cable completes the journey to a customer’s home.

Charter admits the technology it will use in the future partly depends on what the competition is offering. Rolls says the company can eventually roll out DOCSIS 3.1, take fiber deeper, or offer symmetrical download/upload speeds presumably targeted towards its commercial customers. But he also suggested Charter’s existing network can continue to deliver acceptable levels of service without spending a lot on major upgrades.

“It’s a rational approach, where we’re trying to balance the needs, the available technologies, and the costs,” Rolls said. But he also suggested DOCSIS 3.1 isn’t always the answer to upgrades. “DOCSIS 3.1 has some pretty remarkable capabilities, but it’s not necessarily a hard-and-fast reason to not take fiber deeper, for instance [allowing for additional DOCSIS 3 node splits]. Different situations drive different capacity decisions.”

Walden agreed, and Mediacom customers should not expect more than DOCSIS 3.1 upgrades for the near future.

“[Fiber deep] is a bit further out, at least as a large-scale type of project,” Walden told Multichannel News. “I think fiber deep for multi-dwelling units, high-density areas and some planned higher end communities doing deeper fiber or fiber-to-the-home [is happening]. But as a wholesale [change] and going to node+0 kind of architecture, I don’t see that in the next two years.”

Are Symmetrical Speeds Important for Customers?

Verizon’s fiber to the home service FiOS uses symmetrical broadband speeds to its advantage in the marketplace.

Many fiber to the home networks offer customers identical upload and download speeds, but cable broadband was designed to favor downstream speeds over upstream. That decision was based on the premise the majority of users will receive much more traffic than they send. But as the internet evolves, some are wondering if cable broadband’s asymmetric design is now outdated and some competitors like Verizon’s FiOS fiber to the home service now use its symmetrical speed advantage as a selling point.

Cox Communications does not think most customers care, even though its network upgrades are laying the foundation to deliver symmetrical speeds.

“It’s a little but further out on the horizon,” said Hart. “The upstream growth rate is ticking up a couple of notches, but not to the tune that we would need significant additional capacity and/or a complementary need for symmetrical bandwidth. [A]t this stage, the symmetrical is a nice-to-have for residential and definitely will be a good option for our commercial customers.”

Rolls isn’t sure if symmetrical speeds are important to customers either and Charter has no specific plans to move towards upload speed upgrades.

“The world of applications and services continues to evolve, obviously, but so far we’ve been able to meet those needs with an asymmetrical topology,” Rolls said. “That said, things like real-time gaming, augmented and virtual reality, and the Internet of Things — some of those will likely drive more symmetry in the network. It remains to be seen.”

While Mediacom introduces gigabit speeds to a growing number of their customers, it also acknowledges it has one of the worst customer satisfaction scores of any cable company in the country.

Company officials were in the Quad-Cities of northwest Illinois and southeastern Iowa to speak about 1,000Mbps service introduced earlier this year for its 92,000 customers in the area, according to an article in the Dispatch-Argus.

“No where else in the country has this much broadband capability,” said Phyllis Peters, director of communications for the north central division of Mediacom. “You can live in Port Byron or Ottawa or down the road in Marion or Carbondale, and you’re using the same amount of bandwidth. You have just as much demand and need for bandwidth as if you were living in Austin, Texas.”

To support the expansion, the company added nearly 30 miles of additional fiber capacity to support the faster internet speeds. But so far, fewer than 250 customers in the area have upgraded to gigabit speeds. Most seem content with paying less for slower speeds, but that does not mean customers are not using their internet connections.

“We’ve been looking at an internet business that has been growing,” said J.R. Walden, senior vice president of technology and chief technology officer for Mediacom. “The bandwidth is growing at as much as 65 percent a year for close to 20 years. It means we have to double the size of the network every 18 months.”

Walden

Walden claims that once gigabit speed is embraced by a larger number of their customers, they will contemplate another upgrade to 10Gbps speeds.

Along with faster wired internet, Mediacom has also been installing Wi-Fi hotspots for its customers. XStream Wi-Fi is available to non-customers for a 30-minute trial or unlimited use during certain special events. Mediacom’s broadband customers get free unlimited access by logging in with their Mediacom username and password.

The cable company has 249 Wi-Fi hotspots in Moline, Rock Island, East Moline, Silvis, Davenport and Bettendorf, mostly in business districts or around event venues. Mediacom customers can also use their credentials to access Wi-Fi from other nearby cable operator-operated hotspots, notably those belonging to Comcast, which dominates in Illinois.

The cable company has also been promoting its internet program for the income-challenged. Connect2Compete is a $9.95-a-month internet service for families with at least one student in kindergarten through 12th grade who qualifies for the federal school lunch program. But like most cable companies, Mediacom’s first interest is to protect its own revenue, so it excludes current customers from enrolling if they already scrape enough money together to pay for regular broadband service or who have a past-due balance or unreturned equipment from an old disconnected account.

The American Consumer Satisfaction Index rates Mediacom dead last in 2017.

That is one of the many reasons Mediacom’s customers dislike the company. It perennially scores dead last among all the nation’s cable operators in Consumer Reports’ annual surveys. The Better Business Bureau has also documented multiple bad reviews and KWQC-TV in Moline reports Mediacom’s internet service is notorious for its repeated outages:

JoEllen Seibel said she’s used the company for internet for the last 8 years and has had little to no connection for the last four months.

“It’s all day long, all day long we get no reception.”

Seibel said technicians have come to her house multiple times to fix the problem but is still without service.

“It makes me frustrated if something is really going on on their end that’s what they need to tell their customers or something instead of just sending someone out.”

Nathan, another Mediacom customer, complained to the Better Business Bureau his internet service is completely unreliable.

“As much as I was excited about our internet speeds, they are never persistent. Internet goes out at least ten times a day,” he told the BBB.

Glendon adds Mediacom advertises fast internet speeds it cannot reliably provide its customers.

“I subscribe to 150/30Mbps internet. I rarely get 150 down, usually 50-60, and during peak [usage periods], [speeds drop] into the teens,” he complains, noting things have not improved despite multiple technician visits and a manager’s intervention.

“Very incompetent company that doesn’t seem to care if they’re billing you for a service they can’t provide,” is Glendon’s conclusion.

“We’re not unaware that some of the customer satisfaction scores put out by third-party organizations have had us on the lower end and we think we can do better and to some extent deserve a better score and we’ve been working on that,” Walden told the TV station.

Altice USA today revealed the terms of its long-expected initial public offering likely to bring more than a billion dollars to the company’s merger and acquisition fund that many Wall Street analysts now expect will be spent to acquire privately held Cox Communications and/or Mediacom.

Cox has long claimed it is not for sale. But Altice founder Patrick Drahi has a history of being willing to overpay for the companies he covets, including Cablevision, which was a reluctant seller for at least a decade before Altice made an offer the Dolan family that founded Cablevision couldn’t refuse.

Telsey Group analyst Tom Eagan told his Wall Street clients he expected Altice would be “active” in American cable consolidation, with Cox and Mediacom systems being likely targets. Other analysts have downplayed potential interest in Cable ONE, another likely target, because of the company’s recent aggressive rate increases and the fact its systems are often in economically depressed areas. An acquisition of Cox and/or Mediacom would make Altice the third largest cable company in the country, but it would still be far behind Comcast and Charter Communications, which hold first and second place respectively.

Any acquisition would likely not get much scrutiny on the federal level by the FCC and Justice Department, and most states would likely give the deal only a perfunctory review before approving it.

Altice USA has applied to be listed as “ATUS” on the New York Stock Exchange.