JPMorgan “still believes in the potential of an eventual merger of Charter Communications with Altice USA, despite a cool-down in tie-up talk,” according to a short piece in Seeking Alpha.

The Wall Street bank favored a Charter merger with Altice, which owns Cablevision and Suddenlink, because Altice has proven its ability to ruthlessly cut costs out of the cable business, potentially bringing $2.7 billion in synergy savings from layoffs, outsourcing, and killing off employee perks.

JPMorgan analyst Philip Cusack believes the biggest merger prize would be a combination of Cablevision’s footprint in downstate New York, Connecticut and New Jersey with Charter-Spectrum, which serves almost all of New York State and already has a presence in Manhattan and other boroughs in New York City. Cusack also argues Cablevision’s Optimum business would be well served by a familiar executive. Rutledge was Cablevision’s chief operating officer before moving to Charter.

Two years ago, Altice considered acquiring Time Warner Cable, before investors forced Altice to pull back on further acquisitions that would result in even more debt for the European telecom company.

Among the likely challenges would be antitrust and regulatory roadblocks, particularly if Charter is the lead company. Charter is still in hot water with New York’s Public Service Commission and its own merger with Time Warner Cable was decertified by the regulator last summer. It could be a long leap from antagonizing New York’s telecom regulator and the attorney general to winning a green light for yet another cable merger.

AT&T’s merger with Time Warner (Entertainment) is now complete, and despite repeated promises to antitrust regulators AT&T would not use consolidation as an excuse to raise rates, the company is reportedly doing exactly that on its DirecTV Now online streaming service.

According to a report by Cord Cutters News, most current subscribers will be formally notified this week their rates are going up $10 a month and new customers will be offered only two choices for DirecTV Now packages going forward — a slimmed down Plus package of 40 channels and HBO for $50 a month and a slightly larger Max package with 50 channels bundled with HBO and Cinemax for $70 a month. Both represent fewer channels for more money.

News about big changes for AT&T’s streaming services were first announced by AT&T CEO Randall Stephenson in late 2018, telling investors he planned to wring more profit out of DirecTV Now by raising rates and slimming down the number of channels in the remaining packages.

Current customers can keep their current packages indefinitely, but they will pay more starting in April. The $10 rate increase comes on the heels of a $5 rate increase in the summer of 2018, and AT&T has made it clear more price hikes are forthcoming as needed.

AT&T also told Cord Cutters News that DirecTV’s satellite service will soon debut on its own streaming platform, but it won’t come discounted or cheap:

• 65 channel DirecTV package: $93/month
• 85 channel DirecTV package: $110/month
• 105 channel DirecTV package: $124/month
• 125 channel DirecTV package: $135/month

AT&T hopes its simplified menu of offerings for DirecTV Now will prove attractive to subscribers, in part because both packages bundle either AT&T-owned HBO or HBO and Cinemax. But subscribers are also likely to notice the dramatically smaller package of cable channels, now missing AMC, Viacom and Discovery-owned networks. They are also likely to be confused by the forthcoming introduction of DirecTV satellite streaming packages, which will be marketed separately from DirecTV Now. AT&T plans to eventually mothball its satellite fleet and move DirecTV entirely to an internet streaming platform, but will take several years before switching off the last satellite.

An informal FAQ:

Q. When will AT&T make these changes?

A. AT&T is expected to email current customers on or about March 12, 2019 to inform them of the $10 rate hike. At the same time, AT&T is likely to stop signing up new customers for its current DirecTV Now packages and begin offering DirecTV Now Plus or DirecTV Now Max instead. Current customers can expect to see their first bill with the new rates in April.

Q. Will current customers be grandfathered?

A. AT&T plans to tell current customers they can keep their current packages as long as they do not make changes to their account (or cancel), but effective April 12, 2019, rates will increase $10 a month for those subscribed to: Live a Little, Just Right, Go Big, and Gotta Have It.

Q. If I subscribe today to the older packages, can I avoid some of the price increases and channel changes?

A. Yes and no. If AT&T’s schedule holds, today is the last day you will be able to signup for DirecTV Now’s old packages, and you will need to make a payment today and skip the free 7-day trial to lock in these packages or you could face choosing only between Plus and Max after your trial ends. You will pay existing rates for March, but the $10 rate increase will impact you starting in April.

Q. What about the prices for premium channels?

A. If the rumors are true, and we stress these are only rumors at this point, current DirecTV Now customers that already subscribe to premium networks like HBO or Cinemax prior to March 12, will be able to avoid planned rate increases on premium networks that are also supposed to be announced as early as tomorrow. If you sign up today and subscribe to HBO and/or Cinemax, you will pay $5 a month for each going forward. Showtime and/or Starz are also available for $8 a month each going forward. The rumor claims that starting tomorrow, HBO will triple in price to $15 each, with Cinemax, Showtime and Starz supposedly increasing to $11 a month each. These new prices would only apply to grandfathered customers on older packages that want to add a premium network on or after March 12 to their existing package. AT&T would use this new pricing to incentivize customers to abandon their old package in favor of Plus or Max, which bundles HBO and HBO and Cinemax into the base package price. So if you are thinking about subscribing to a premium network and want to keep your old package, you should subscribe today and lock in the current lower price.

Q. What happens to pricing for add-on international channels?

A. If you subscribe to international channels (Vietnamese – $20/mo, Brazilian Portuguese – $25/mo, or Korean – $30/mo) before March 12, your rates stay the same. If you add these channels on or after March 12, you will likely pay more to do so. If you are considering these channels, you may save a lot in the long run subscribing today for at least a month to lock it current prices. If the rate increase does not happen, you can drop the add-on after a month.

Q. What are the biggest differences between the old and new packages?

A. You are getting fewer channels for more money from the new Plus and Max package tiers. DirecTV Now is stripping out popular cable networks from AMC, Discovery-Scripps, and Viacom from the new packages, but bundles HBO in the new Plus package and both HBO and Cinemax in the new Max package. An unofficial new channel lineup of both new packages can be found here.

Q. Why are they raising rates like this?

A. AT&T shareholders have been increasingly critical about the company’s 2015 acquisition of DirecTV. Executives sold Wall Street on the acquisition on the theory that acquiring the country’s largest cable TV programming distributor with 21+ million customers would deliver AT&T’s much smaller U-verse TV (with 4-5 million customers) dramatically better volume discounts on cable TV programming. More importantly, it would help AT&T become a powerhouse in video entertainment and cut through the red tape of getting that programming on AT&T’s mobile products. If you are a cable network’s biggest customer, it helps in negotiations seeking streaming and platform distribution rights.

After the merger, AT&T began de-emphasizing its U-verse brand and even started selling DirecTV satellite service to video-only AT&T customers. DirecTV Now was AT&T’s response to cord-cutting, and its promotional pricing and strong package of channels was customer and regulator friendly. At the same time AT&T was seeking to win regulator approval of its acquisition of Time Warner (Entertainment), it did not hurt to argue AT&T’s prior acquisitions had not hurt the marketplace, and may have even enhanced it, pointing to the DirecTV Now offering in the cord-cutting marketplace.

But Wall Street analysts have often argued AT&T is losing money on DirectTV Now, because the wholesale programming costs plus the distribution and marketing expenses likely exceed the prices AT&T charges. Some analysts are even questioning the wisdom of acquiring DirecTV in the first place, especially as the era of cord-cutting has taken a particularly harsh toll on DirecTV’s satellite subscriber numbers. Just a few weeks after the Justice Department abandoned further court action to block the merger of AT&T and Time Warner, Stephenson followed through on his commitment to shareholders by preparing to prune back DirecTV Now’s packages and dramatically increases prices at the same time.

“We’re talking $50 to $60,” Stephenson told investors last December. “We’ve learned this product, we think we know this market really, really well. We built a two-million subscriber base. But we were asking this DirecTV Now product to do too much work. So we’re thinning out the content and getting the price point right; getting it to where it’s profitable.”

Stephenson fully expects DirecTV Now will soon shed a large percentage of ‘low value’ customers that subscribed only because they locked in a low price or promotion, telling investors he prefers to deal with high-value customers that appreciate AT&T’s brand and quality, and won’t cancel over price increases. He does not want to deal with customers that chase promotions.

AT&T is also using the changes to reset its video portfolio of products, and the audiences each will target. Those most sensitive to price will be marketed ultra-skinny bundles like AT&T Watch, which can also be used to try and get customers to switch to AT&T wireless. Middle ground customers partially sensitive to price, but want a channel lineup that better reflects what they actually watch will be pushed towards DirecTV Now, which will be marketed as cheaper than cable and a good option for cord-cutters. DirecTV’s forthcoming satellite streaming service will be the new home for customers that gravitated towards DirecTV Now’s higher end bundles. Marketing will focus on customers that want an alternative to cable television, but won’t sacrifice their favorite cable channels just to get a lower bill. These customers will be willing to pay a higher price to have a less-jarring transition from the traditional huge cable TV package to DirecTV’s alternative.

Q. What does AT&T risk doing this?

A. Hundreds of thousands of DirecTV Now subscribers are likely to cancel service as a result of this rate increase, which will leave DirecTV Now at a higher price than many of its competitors. AT&T’s loss will likely deliver a sudden spike of new customer signups for YouTube TV and Hulu Live TV, which are the closest equivalents. Other services like Philo, Vue, and even Sling TV are also likely to grab new customers, albeit in smaller numbers.

AT&T’s biggest threat may turn out to be cable operators — especially Charter Spectrum, which has launched its own response to cable TV cord cutting. Its slimmed down and pick-your-own-channels packages could be more attractive than other streaming services, and bundle all local channels.

More specifics about those options are ‘below the fold’:

… Continue Reading

New York City officials are giving Charter Communications 10 days to send $6 million in unpaid franchise and royalty fees or make a strong and credible case for why it shouldn’t pay, with likely litigation and the possible non-renewal of Spectrum’s contract to supply cable service on the line if the mayor isn’t satisfied.

In a letter addressed to Charter CEO Thomas Rutledge, New York Mayor Bill De Blasio accused the company of deliberately shorting the city’s share of revenue from Spectrum’s advertising sales, calculating the city’s cut based on the lower net amount collected after expenses, instead of on gross revenue, as the contract requires. The mayor also claims Charter is withholding royalty revenue from an ancillary business Charter partly owns.

“Charter Spectrum has proven time and time again that they’re unwilling to play by the rules,” the mayor told the Daily News. “This is money that can be reinvested in our communities instead of going into Charter’s coffers as they continue to hike rates for New Yorkers. [This latest] default is another thing we’ll take into consideration when their contract expires in 2020.”

Charter’s Endless Labor Problems Upset New York Officials

Charter is already in hot water with New York officials over its treatment of workers represented by the International Brotherhood of Electrical Workers (IBEW) Local 3, which have been on strike since March 2017. The highly skilled technicians were incensed when they learned hard-fought benefits were being clawed back by Charter, even as the company paid its CEO a record-breaking $98 million in compensation.

Over 1,800 middle class workers represented by IBEW Local 3 have suffered greatly over the past two years, according to labor reports. Many have had to cash in retirement savings, some have lost their cars or homes to foreclosure, others face mounting medical bills, in addition to family pressure at home. The union argues it is one of the last bastions to protect all middle-income earners from a race to the bottom mentality that is reducing wages and benefits. When a union worker is replaced with a less-skilled contractor, the pay and benefits Charter offers are significantly lower. Those technicians, regardless of their intentions, are also often poorly trained and risk alienating customers when repairs are incomplete or fail.

Many politicians in New York City have sided with the union strikers and have deplored the seemingly endless strike. Time Warner Cable, in contrast, had reasonably good relations with its unionized workforce. Prior to the merger, the biggest cable vs. labor union friction in the city was between the Communications Workers of America and Cablevision, which began after the CWA started organizing workers in Brooklyn and the Bronx in 2012.

With the Charter dispute approaching its second anniversary, the cable company has been spending subscriber dollars on a slick effort to convince its replacement workers to team up with the cable company to vote for decertification of IBEW Local 3 with the National Labor Relations Board.

Ironically, the same company that has dragged its feet settling the dispute has sent email to replacement workers claiming the union has done a lousy and ineffective job… of wearing down Charter.

In a Jan. 31 internal email obtained by In These Times, Charter Communications regional vice president of New York City operations, John Quigley, told workers, “In my opinion, Local 3 has not earned the right to represent you. Over the past several years they have misled their members, led them out on a strike without a clear plan, mishandled almost every aspect of the strike, made it very clear what they think of employees who are working with us today, and continue to make empty threats about harming our business. We hope that you vote ‘no’ and give us a chance to continue to make Charter a great place to work together.”

Race to the Bottom for Workers, Higher Rates for You

If Charter is successful in organizing replacement workers to side with the cable company and vote in larger numbers than the strikers, the current union representation will essentially end, along with the strike, handing total victory to Charter Communications. The cable company will likely impose its own terms on workers shortly afterwards. Critics claim that should be a familiar story for Spectrum subscribers.

“The company is basically union busting in New York City, and they’ve come in, raised rates on people and set their own terms because they hold a monopoly right now and there’s really no one to stop them from doing what they’re doing,” Troy Walcott, a striking worker, told In These Times.

With ongoing controversies with Charter on both the state and local levels, the company is likely to face increased scrutiny if the cable operator applies for a franchise renewal with the city next year, assuming state regulators do not move to enforce their own July 2018 decision to effectively kick Charter Communications out of New York State.

The merger of AT&T and Time Warner (Entertainment) is safe.

A federal appeals court in Washington handed the U.S. Department of Justice its worst defeat in 40 years as federal regulators fought to oppose a huge “vertical” merger among two unrelated companies.

In a one page, two-sentence ruling, a three judge panel affirmed the lower District of Columbia Circuit Court decision that approved the $80 billion merger without conditions. In the lower court, Judge Richard Leon ruled there was no evidence AT&T would use the merger to unfairly restrict competition, a decision that was scorned by Justice Department lawyers and consumer groups, both claiming the merger would allow AT&T to raise prices and restrict or impede competitors’ access to AT&T-owned networks.

The Justice Department and its legal team seemed to repeatedly irritate Judge Leon in the lower court during arguments in 2018, making it an increasingly uphill battle for the anti-merger side to win.

Unsealed transcripts of confidential bench conferences with the attorneys arguing the case, made public in August 2018, showed Department of Justice lawyers repeatedly losing rulings:

• Judge Leon complained that the Justice Department used younger lawyers to question top company executives, leading to this remarkable concession by DoJ Attorney Craig Conrath: “I want to tell you that we’ve listened very carefully and appreciate your comments, and over the course of this week and really the rest of the trial, you’ll be seeing more very gray hair, your honor.”
• Leon grew bored with testimony from Cox Communications that suggested Cox would be forced to pay more for access to Turner Networks. Leon told the Cox executive to leave the stand and demanded to know “why is this witness here?”
• Leon limited what Justice lawyers could question AT&T CEO Randall Stephenson about regarding AT&T’s submissions to the FCC.
• Justice Department lawyer Eric Walsh received especially harsh treatment by Judge Leon after the Justice lawyer tried to question a Turner executive about remarks made in an on-air interview with CNBC in 2016. Leon told Walsh he already ruled that question out of order and warned, “don’t pull that kind of crap again in this courtroom.”

During the trial, AT&T managed to slip in the fact one of its lawyers was making a generous contribution towards the unveiling of an official portrait of Judge Leon, while oddly suggesting the contribution was totally anonymous.

“One of our lawyers on our team was asked to make an anonymous contribution to a fund for the unveiling of your portrait,” AT&T lawyer Daniel Petrocelli told the judge. “He would like to do so and I cleared it with Mr. Conrath, but it’s totally anonymous.”

Leon responded he had no problem with that, claiming “I don’t even know who gives anything.”

AT&T also attempted to argue that the Justice Department case against the merger was prompted by public objections to the merger by President Trump, who promised to block the deal if he won the presidency. That clearly will not happen any longer, and it is unlikely the Justice Department will make any further efforts to block the deal.

AT&T received initial approval of its merger back in June and almost immediately proceeded integrating the two companies as if the Justice Department appeal did not exist. The Justice Department can still attempt to appeal today’s decision to the U.S. Supreme Court, something AT&T hopes the DoJ will not attempt.

“While we respect the important role that the U.S. Department of Justice plays in the merger review process, we trust that today’s unanimous decision from the D.C. Circuit will end this litigation,” AT&T said in a statement.

Stop the Cap! today filed comments with the N.Y. Public Service Commission urging the regulators to publicly disclose the nature of their ongoing discussions with Charter Communications.

“Since last July’s vote revoking Charter/Spectrum’s merger approval with Time Warner Cable, the PSC has been engaged in secret talks with the cable company in what we now believe was actually an enforcement bludgeon to get the cable company to meet its commitments,” said Stop the Cap! president Phillip M. Dampier. “We suspect Charter got the message to either clean up its act and follow through on its original merger obligations, or the regulator would make good on its threat to boot the company out of New York. If Charter behaves, the Revocation Order exiling Charter from the state will probably disappear in a final settlement.”

Stop the Cap! agrees with the PSC that Charter should be held to all the merger obligations it originally agreed to, but by keeping the talks secret, consumers and lawmakers have no idea what is happening and cannot intelligently participate in the discussions.

“After multiple extensions, enough is enough,” Dampier said. “Charter also hides from public view almost all the details about its progress in reports to the Commission, making it impossible for rural New Yorkers to know when they might expect to get wired for service.”

Stop the Cap! recommends the PSC take the discussions public and let all New Yorkers have their say about what happens next. The consumer group also reminded the PSC that there are other matters that should be considered in the discussions, including a long-lasting strike of Charter’s workers in the New York City area that is impacting the quality of service for customers.

“Anyone who has had a service problem with Spectrum knows the more experienced a technician you get, the better,” Dampier said. “Using replacement workers or third-party outsourced technicians reduces customer satisfaction and often leaves problems unresolved.”

Stop the Cap! also repeated its recommendation that any assessed penalties or fines that come from any settlement should be targeted to improving broadband service in the state.

“There are more than 75,000 New York homes and businesses that have been thrown under the bus by the New York State Broadband for All program, which assigned slightly subsidized satellite internet access for those locations, making it harder than ever for future funding opportunities for wired broadband to reach these rural residents,” Dampier said. “Most funding programs exclude areas already provided with broadband expansion funds or served by another provider, regardless of how well that provider serves their customers.”

Stop the Cap! suggests that Charter be required to expand its rural broadband commitment to reach as many of the 75,000 stranded rural locations as economically feasible.

“It is about the only solution that can cut through the red tape at this point, because these locations are usually scattered across the state, making it unlikely another provider will ever show much interest,” Dampier said. “I know it isn’t ideal to stick these homes and businesses with a cable company with a poor customer satisfaction score, but when I hear from rural unserved New Yorkers, they are desperate and cannot wait 5-10 years for something else to come along, especially if it turns out to be low-speed DSL.”

Dampier also worries about the reputation of the PSC if it suddenly announces a settlement that allows Charter/Spectrum to stay.

“Last summer, every newspaper in the state reported Charter was being thrown out of New York. Many consumers were thrilled. Then things went quiet as the public learned about extension after extension, delay after delay” Dampier said. “If the Commission suddenly announces the case is settled and Charter can stay without explaining why that is the right decision, a lot of New Yorkers are going to accuse the Commission of selling them out. Comments like that are already appearing in the docket from fed up New Yorkers who have run out of patience.”

The full text of the Stop the Cap! letter follows:

 

February 19, 2019

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

Re: 15-01446/15-M-0388 Joint Petition of Charter Communications and Time Warner Cable for Approval of a Transfer of Control of Subsidiaries and Franchises, Pro Forma Reorganization, and Certain Financing Arrangements.

Dear Secretary Burgess,

Please share our comments with Chairman John B. Rhodes and Commissioners Gregg C. Sayre, Diane Burman, and James S. Alesi.

As a party in the proceeding whose views and recommendations were recognized by the Commission and its staff in drafting a final Merger Order granting Charter Communications its request to merge with Time Warner Cable, we remain actively interested and engaged in this transaction on behalf of consumers in New York.

As you know, most Upstate New Yorkers have just one choice for a telecommunications supplier capable of achieving the FCC’s broadband speed benchmark of 25/3 Mbps. That company is generally Charter Communications. Wireline phone companies in much of western, central, and northern New York offer DSL service to many of their customers, often at speeds well below the FCC’s definition of broadband. At our location, incumbent local exchange carrier Frontier Communications only offers up to 3.1 Mbps, a speed few consumers would consider acceptable in 2019. As a result, whatever cable company offers service in large parts of Upstate and Western N.Y. enjoys a de facto monopoly on broadband service in most of these areas.

In July, 2018 the Commission rightly found that despite multiple warnings, Charter Communications flagrantly failed to meet its obligations to New York as part of the Commission’s Merger Order. Charter Communications has failed to challenge that decision in court or offer credible evidence to rebut your conclusions. In fact, the company has largely relied on selective interpretations of the Merger Order to renege on its rural broadband expansion commitments – a key condition that was necessary for this merger to be in the public interest. While counting new passings in the urban New York City area, the company was also running television ads promoting its rural broadband expansion that we believe misled customers about Charter’s true performance of meeting its commitments to New York.

However, nearly seven months after the Commission voted to effectively expel Charter Communications from New York, the Commission and/or its staff has instead entered into in-camera negotiations with the cable company in what we can only suspect is an effort to enforce Charter’s compliance with the original Merger Order in return for a settlement eventually dispensing with the July 2018 Revocation order.

While we have no objection to the Commission’s actions seeking Charter’s compliance with its merger obligations, we remain concerned that these ongoing negotiations have remained secret for over half a year, with little ability for public interest groups, consumers, and others to provide informed input in those discussions or track their progress. Virtually all of the compliance reports submitted by Charter since the Revocation Order are also heavily redacted, leaving the public and lawmakers in the dark.

A growing number of New Yorkers are now questioning the credibility of the Commission in public comments in the docket. For example, Matt Stern on Nov. 26, 2018 (Comment 572) opined:

“Negotiations done in secret with never ending extensions are not in the best interest of the people of NYS. […] Charter has made little or no line extensions in my town in 20 years. 2 full decades. Many of us live less than 1 mile from the existing infrastructure. This is the same all over upstate NY. We are tired of excuses. If you are unable to secure these necessary infrastructure expansions then resign immediately. We are done waiting.”

Wayne Martin offered in comment 576 (Dec. 15, 2018):

“Surprise, surprise, surprise, another extension granted. The (non)actions of this commission are a slap in the face to the taxpayers of New York.”

On Dec. 18, 2018, Assemblyman Anthony Brindisi (Comment #580) asked the Commission to cease granting extensions to Charter:

“It is simply unacceptable to keep delaying Charter’s exit from New York State if they cannot meet their obligations to customers. While the company keeps getting extensions granted, I am hearing on a daily basis from Charter customers experiencing poor service and increased rates. […] The PSC’s November 23, 2018 order granting Charter an extension until January 11, 2019 to present its exit plan reads, in part, “The Compliance and Revocation Orders were designed to deal with very serious consumer issues presented by Charter’s conduct related to the company’s network expansion.” This is exactly the problem. Charter has had since July to prepare an exit strategy and delaying it any further is not in the best interests of its customers, many of whom rely on cable and internet service for their job, or to communicate with family members.”

On Feb. 6, 2019, Adam Nash complained about the Commission’s repeated extensions in Comment 614:

“[…] I’m concerned with constant extensions Time Warner has been given since July, 2018, so far they’ve been given 5. If this commission was serious on this matter there wouldn’t be this many extensions. It was stated in a article done by the Times Union News in Oct, 2018 that, “Staff believes that the commission should direct that any request granted in response to Charter’s most recent filing be final in form and that any additional time allowed must either result in a settlement agreement being presented to the commission or the cessation of settlement talks,” PSC acting general counsel John Sipos wrote in response to Charter’s request.” This statement was made when it was at its 3rd extension, NYS is at its 5th currently.”

We believe it is long past time for the Commission to publicly disclose the nature of the ongoing negotiations, specific details about the progress that has been made, and the ultimate goal of these discussions. The Commission’s July 2018 Revocation Order provoked shock headlines in the media across the state, and consumers have the expectation Charter will be leaving the state. If that ultimately does not happen, the Commission should be prepared to explain why.[1]

Our group’s view is that Charter Communications must meet each and every obligation in the Commission’s Merger Order if it wants to do business in New York and that a significant penalty is now due for failing to meet those obligations on a timely basis.

We also believe a long-standing labor dispute between the company and its unionized workforce is having an ongoing detrimental impact on the quality of service received by customers in the New York City area. We recommend the Commission undertake an investigation to see how this dispute is impacting customers.

We recommend you review our submission (item #278) of Apr. 5, 2018 recommending specific penalties against Charter that would, among other things, expand the company’s rural broadband expansion commitment even further (either in lieu of, or in addition to, financial penalties) to assist at least some of the 75,000+ unserved New York locations that are being offered substandard satellite internet access[2] from Hughes Network Systems, LLC. These locations lack wired broadband because no provider bid for financial assistance to undertake a buildout during the last round of the New NY Broadband Program, administered by the New York Broadband Program Office.[3]

These addresses are effectively stranded because programs offering public subsidy funding usually disqualify locations already provided with subsidies as duplicative.[4] But satellite internet providers cannot guarantee the speeds required to qualify as broadband, leaving those locations as a distinct disadvantage and less likely to ever get suitable broadband.[5] HughesNet also includes a very low data cap ranging from 10-50 GB.[6] In 2018, the average internet-connected home used 268 GB of data per month.[7] A penalty that includes an incentive or requirement for a private company like Charter to wire many of those locations offers a unique opportunity to resolve this serious problem. Charter offers customers at least 100 Mbps of speed and no data caps.

We appreciate the Commission and its staff’s hard work on this matter, and hope you will seriously consider our input and ideas, demonstrating once again that the New York Public Service Commission takes its obligations to the citizens of New York seriously.

Very truly yours,

Phillip M. Dampier
President and Founder

[1] “New York Moves to Kick Spectrum Out of State,” New York Times (Jul. 27, 2018) (https://www.nytimes.com/2018/07/27/nyregion/new-york-spectrum-charter-cable-broadband.html), “NY State Regulators Move to Order Charter Out of New York Over Alleged Broadband Woes,” WNBC-TV/NBC News (Jul. 27, 2018) (https://www.nbcnewyork.com/news/local/NY-PSC-Charter-New-York-489356141.html), “New York’s order kicking Spectrum cable out of state ‘pretty radical’,” The Post-Standard (Syracuse), (Jul. 27, 2018) (https://www.syracuse.com/news/index.ssf/2018/07/new_yorks_move_to_kick_spectrum_cable_out_of_state_pretty_radical.html), “PSC Orders Cable Giant Charter Out of NY,” (Albany) Times-Union, (Jul. 27, 2018)  (https://www.timesunion.com/business/article/PSC-holding-special-meeting-on-Charter-Friday-13109921.php), “New York tells Spectrum Cable to get out of the state,” The Buffalo News, (Jul. 27, 2018) (https://buffalonews.com/2018/07/27/psc-wants-spectrum-cables-owner-to-get-out-of-new-york/)

[2] Satellite Broadband Remains Inferior to Wireline Broadband (VantagePoint) (Sept., 2017) (https://www.vantagepnt.com/wp-content/uploads/dlm_uploads/2018/04/vps-satellite-broadband-remains-inferior-to-wireline-broadband-090717.pdf)

[3] “Broadband Delays Prompt Frustration in Rural NY” Lockport Union-Sun & Journal (Apr. 2, 2018) (http://www.govtech.com/network/Broadband-Delays-Prompt-Frustration-in-Rural-New-York.html)

[4] “While the first round NOFA was silent on the eligibility of such overlapping projects, the second round NOFA specifically stated that areas already served by a RUS incumbent service provider were not eligible for subsequent funding.” (Selected passage from USDA’s “Broadband Initiatives Program – Pre Approval Controls Audit Report 09703-0001-32”) (March, 2013) (https://www.usda.gov/oig/webdocs/09703-0001-32.pdf)

[5] “HughesNet service is available in the contiguous U.S., Alaska and Puerto Rico. Stated speeds and uninterrupted use of service are not guaranteed. Actual speeds will likely be lower than the maximum speeds during peak hours.” (HughesNet Subscriber Agreement last revised March 10, 2017 — PART I – KEY PROVISIONS – 1.1 SPEED CLAIMS AND DISCLAIMERS.) (http://legal.hughesnet.com/SubAgree-03-16-17.cfm)

[6] “HughesNet Gen5 Fair Access Policy for the 10 GB, 20 GB, 30 GB and 50 GB Service Plans” (http://legal.hughesnet.com/FairAccessPolicyGen5.cfm)

[7] “OpenVault U.S. Household Broadband Data Consumption” (Jan. 22, 2019) (http://openvault.com/openvault-broad-based-broadband-usage-acceleration-in-2018-1tb-power-users-double-to-4-12-of-all-households/)