Comcast’s national low-income Internet service, Internet Essentials, is getting an upgrade.

Out of more than 14 million Comcast broadband customers, fewer than 50,000 families managed to qualify and successfully obtain the $9.95/mo low-speed Internet service. On Tuesday, Comcast announced it was relaxing some of the program’s requirements to include more families and has also doubled the service’s speeds to 3Mbps for downloads and 768kbps for uploads.

Susan Jin Davis, vice president of Comcast’s Strategic Services explained the changes on the company’s blog:

[…] When we first started out, Internet Essentials was offered to families with children eligible to receive “free” school lunches under the National School Lunch Program (NSLP). Today, we have officially extended the program to include families with children eligible to receive “reduced” price lunches too. This change adds about 300,000 households in our service area who can now apply for the program — bringing our estimated total to about 2.3 million eligible families.

[…] Second, we doubled the speed of the broadband connection provided with Internet Essentials. It now comes with up to 3 Mbps downstream and up to 768 Kbps upstream, which makes the online experience even better than it was before. The increase is available now and we notified customers by email that the only thing they need to do is reboot their modems in order to immediately get the new speeds.

Third, as we announced in January, we have streamlined the application process by providing an instant approval process for all students attending schools with the highest percentage of NSLP participation, including Provision 2 schools.

Comcast’s Internet Essentials program was launched as part of an agreement with the Federal Communications Commission to win approval of the cable operator’s merger with NBC-Universal.  Comcast also committed to an expansion of its broadband service in rural areas.  The company says it expanded its service area by 199,876 additional homes in 33 rural communities.

A Philadelphia community group is accusing Comcast of keeping its low-income budget Internet program a secret and denying needy families access for the flimsiest excuses.

Action United, which fights for low and moderate income Pennsylvanians, dropped off complaints with federal officials in Philadelphia from residents who are upset because they never heard of the discounted Internet access program or were disqualified from applying.

Comcast’s Internet Essentials offers families who qualify for the federal student lunch program access to 1.5Mbps broadband for around $9.95 a month.  But an informal survey by the group found scores of residents who never heard of the program and would have applied if they had known it existed.

The group, which says it has 44,000 members in Philadelphia, Pittsburgh, Harrisburg and Allentown, says it could find only two families among its members that actually qualified to sign up for the service.  Some were disqualified because they didn’t participate in the school lunch program, others because they already have Internet service or had a long-forgotten past due bill.

“I feel as though the Internet service will help my son to progress in math, reading, spelling,” Dawn from North Philadelphia told CBS Philadelphia. But she says Comcast refused to sign her up.

“They told me I had a back bill from 10 years ago, so I was not qualified,” Dawn said.

As Stop the Cap! reported in September, Comcast’s program is effectively designed to reap positive publicity for the cable company while discouraging customers from applying and actually obtaining the service.

Action United protests the digital divide in downtown Philadelphia. (Courtesy: Action United)

Action United says area schools, an obvious place to promote low cost Internet for students, knew nothing about the program.

Comcast counters it sent mailings about Internet Essentials to 4,000 school districts, which covers 30,000 schools.

The group originally planned to protest Wednesday in front of Comcast’s corporate headquarters in Philadelphia to draw attention to the problem.  Earlier today, Action United announced it had reached an agreement to meet with Comcast executives to discuss the program and help cut some of the red tape for families experiencing trouble applying.

Comcast’s decision to offer budget Internet service came as a result of negotiations with the federal government to approve its merger with NBC-Universal. Critics contend Internet Essentials is too restrictive and requires applicants to navigate through a cumbersome qualification process.  After approval, the program only provides discounted service for a period of three years and can be terminated if a family falls past due on their account.

From the byzantine terms and conditions for enrollment in the Comcast Internet Essentials program:

The program is only available to households that (i) are located where Comcast offers Internet service; (ii) have at least one child who receives free school lunches through the National School Lunch Program (the “NSLP”) and as confirmed annually while enrolled in the program; (iii) do not have an overdue Comcast bill or unreturned equipment; and (iv) have not subscribed to any Comcast Internet service within the last ninety (90) days (sections 1(i)-(iv) collectively are defined as “Eligibility Criteria”). This program is not available to households that have children who receive reduced price lunches under the NSLP. The program will accept new customers for three (3) full school years, unless extended at the sole election of Comcast. Comcast reserves the right to establish enrollment periods at the beginning of each academic year in which it accepts new customers that may limit the period of time each year in which you have to enroll in the program.

2. In order to confirm your eligibility for the program, Comcast will need to verify that your children receive free school lunches through the NSLP in the initial enrollment year and each subsequent year you are enrolled in the program. In order to confirm eligibility, participants in the program will be required to provide copies of official documents establishing that a child in the household is currently receive free school lunches through the NSLP. Each year you will be required to reconfirm your household’s current eligibility by providing Comcast or its authorized agent with up-to-date documentation. If you fail to provide documentation proving your eligibility in the program, you will be deemed no longer eligible to participate in the program.

3. You will no longer be eligible to participate in the program if (i) you no longer have at least one child living in your household who receives free school lunches under the NSLP; (ii) you fail to maintain your Comcast account in good standing; (iii) Comcast ceases to provide the Covered Service to your location; or (iv) your account opened under the program is closed. A change in address may result in your account being closed, even if you continue to receive Comcast services at a different address. Program participation also may be terminated if the Covered Service is upgraded, altered or changed by you for any reason. If you are no longer eligible for the program, but continue to receive the Covered Service from Comcast, regular rates, and any other applicable terms and conditions will apply to the Covered Service.

Cablevision's top executives head on out. Tom Rutledge (left) and John Bickham (right) left within weeks of each other.

The unexpected and sudden departure of two senior executives at Bethpage, N.Y.-based Cablevision has pushed the rumor mill into overdrive the cable company is about to be sold or taken private.

John Bickham, president of cable communications and chief operating officer Tom Rutledge will both be spending more quality time with their respective families after departing Cablevision.  Last Thursday’s announcement that Rutledge would resign caused Cablevision’s stock price to drop by nearly 14% during trading Friday.

The inevitable conclusion on Wall Street: Cablevision is about to be sold or taken private.

Major shareholders and investment firms have criticized Cablevision over the years for being “too successful” signing customers to fixed price double or triple-play packages that provide a full suite of products and services, but deliver few growth opportunities shareholders demand. With heavy competition from Verizon FiOS in most of their service areas, Cablevision’s ability to simply raise rates is limited, especially when customers bounce between promotional offers from the phone and cable companies.

Rutledge’s departure, in particular, has been seen as a major negative on Wall Street because he was responsible for many of Cablevision’s most innovative products, including streamed video, his advocacy for boosting broadband speeds, and the company’s aggressive move into home security.

Craig Moffett, a Wall Street analyst from Sanford Bernstein, thinks Comcast and Time Warner Cable are set to divide the spoils in a shared buyout — Comcast grabbing northern New Jersey and Connecticut and Time Warner Cable assuming control of Cablevision’s systems in New York.  But other analysts don’t think that scenario is so likely, especially when considering the Dolan family’s long history in the cable business.

ISI Group Inc. analyst Vijay Jayant told Light Reading Cable he believes the more likely scenario would have the Dolan family buying out shareholders and taking the cable company private.

Time Warner Cable has repeatedly informed shareholders the company will not engage in bidding wars or overpay to win new acquisitions, and the Dolan family’s selling price for Cablevision is likely far higher than Time Warner would be willing to pay.  Comcast might have a political problem assuming control of more cable systems after its recent merger with NBC-Universal.  Shareholders may also rebel, as they did in a 2007 effort to take Cablevision private.  Investors felt they were offered too low a price to compensate them for their shares.

Moffett believes Cablevision’s days of high earnings and rapid growth are behind them, because just about everyone who wants cable service already has it, either from Verizon FiOS or Cablevision.

“No, we don’t think [Cablevision] can grow. And, no, we don’t think the rest of cable is doomed to the same fate,” Bernstein’s Moffett wrote in a report in late November. “The cause of [Cablevision’s] growth decline is straightforward: it has been so successful in achieving high product penetrations that growing further is quite challenging.”

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Joyce Says Cablevision May Be a Takeover Target 12-16-11.mp4[/flv]

David Joyce, media analyst at Miller Tabak & Co., talks about Cablevision Systems Corp. Chief Operating Officer Tom Rutledge’s resignation and the outlook for the company.  Bloomberg News.  (5 minutes)

Haven't we been here before?

History is best ignored when a Wall Street Journal columnist frames an argument in favor of strengthening the hegemony of Ma Bell, and darn ‘ole past precedent gets in the way of the writer’s “facts.”

Gordon Crovitz is a media and information industry adviser and executive, including former publisher of The Wall Street Journal, executive vice president of Dow Jones and president of its Consumer Media Group.  But today he’s unofficially, unabashedly AT&T.

In a column published this week, Crovitz hosts a whine and cheese festival on behalf of poor and abused AT&T, whose multi-billion dollar takeover of T-Mobile is in tatters. Crovitz places the blame squarely on the government for ruining everything:

How soon we forget the risks of overregulation: Last week, the Federal Communications Commission flexed the same muscle it once used to quash market forces in the phone industry to quash market forces in the wireless industry.

Today’s AT&T, a spinoff from the original, needs more spectrum to catch up with market leader Verizon, also a Ma Bell descendant, to support iPhones, Androids and other devices that feature video and sophisticated apps. It wants to buy T-Mobile, a division of a German company, which doesn’t have the resources to compete in the United States on its own. But the FCC decided to apply antitrust theory from the industrial era and claims to know better than wireless companies how they should operate their businesses.

AT&T’s proposed acquisition is best understood as a private-sector solution to a government-created problem. The FCC has not been able to get Congress to approve auctions to reallocate spectrum to wireless from less valuable uses. AT&T wants T-Mobile’s bandwidth so it can extend the latest fourth-generation network to 97% of the country from 80% and improve its spotty service in congested areas.

Under laws dating to the 1920s, the FCC gets to decide if a merger is in the “public interest,” a vague standard for top-down decision making. Government is the last institution in this era of fast technological innovation to act as if it has the information and power to dictate how change happens.

Crovitz apparently prefers AT&T and its phone pal Verizon Wireless dictate how “change happens,” because the two companies control the vast majority of wireless telecommunications in the United States.  Both also charge near-identical prices for near-identical levels of service.  AT&T & VZW are completely comfortable with that status quo, especially if disruptive competitor T-Mobile is dealt with in the usual industry manner (merger/buyout).

There is nothing vague about the FCC report that condemns the merger of AT&T and T-Mobile for the anti-competitive monstrosity it represents.  In hundreds of pages Crovitz evidently never read, a careful and credible argument against the deal was laid out for all to examine.  That evidence is far more persuasive than AT&T’s heavily-redacted filings the public was not authorized to see (for ‘competitive reasons’), and a multi-million-dollar-a-holler public relations distortion strategy based on hollow promises.

Playing Catch-Up With Verizon Wireless?  Hardly.

AT&T hardly needs to “catch up” with Verizon Wireless.  Both companies own wireless spectrum they have warehoused for “future use.”  As a backdrop to the merger, FCC Chairman Julius Genachowski has already indicated the agency is hard at work carefully re-allocating spectrum to make more room for wireless services.  The “bandwidth crisis” AT&T talks about is a convenient argument for a merger, until you realize T-Mobile’s mostly-urban wireless network won’t help AT&T achieve its goal of rural wireless expansion.  T-Mobile has never provided service in rural America and never will.

Crovitz attempts to leverage Verizon Wireless’ recent deal with America’s largest cable companies as an argument for the AT&T and T-Mobile merger, suggesting that deal was a game changer.  What goes unsaid is the fact AT&T could have pursued that deal for themselves.  Did they?  No.  Despite AT&T’s public relations spin, the proposed merger with T-Mobile is much more than a spectrum acquisition. As the FCC and the Justice Department have argued, this merger is about ridding AT&T of a competitor willing to offer more services at lower prices.  That forces AT&T to respond in kind to compete, and consumers have benefited greatly from that competition. Verizon Wireless is hardly competition at all considering both companies price services nearly identically.  Beyond that is Sprint, already saddled with the financial albatross Clearwire and questions about its long term viability in a duopolistic wireless market.

Crovitz is wrong on his other “facts” as well:

Deutsche Telekom is hardly short on cash.  The company has plenty of resources and could bolster T-Mobile USA to compete if it saw fit.  It doesn’t, preferring to focus on its more lucrative European markets.  Instead of selling the operation on the open market to other players, which could include foreign providers interested in competing in the high-priced American market, it elected to be courted by AT&T.

Overconfident AT&T

Henry De Lamar Clayton, Jr.: Author of the Clayton Act

The merger illustrates AT&T’s unparalleled level of overconfidence it could deal with regulators and consumer groups who would certainly object to the deal.  The company has since spent millions it could have used to improve its network on campaign-contribution-fueled support building on Capitol Hill, a shameless dollar-a-holler astroturf campaign that pays off non-profit groups to sing the deal’s praises, and an expensive ad campaign to sucker Americans into thinking reduced competition will somehow deliver lower prices and better service.

Even former Republican FCC Chairman Kevin Martin would have likely paused over such an obvious monopoly-building operation.  The Obama Administration’s FCC chairman — Julius Genachowski —  while often too timid for our tastes, at least knows when it is time to join the chorus of opposition.

The FCC doesn’t pretend to tell AT&T how to run its business.  It does, however, serve the public interest by providing checks and balances to unfettered corporate power.  While the Wall Street Journal‘s world view of capitalism would have been favored by the most egregious robber barons, history has taught us that when big corporations get a stranglehold on vital industries, the entire economy can suffer.

Crovitz would have us ignore the massive corporate abuses of 100 years ago that eventually provoked Congress into trust-busting legislative reform, breaking up the monopolies and oligopolies that presided over the railways, early telecommunications networks, and industrial raw materials like oil and steel.  Restrained competition brought monopoly prices and blockades against would-be competitors.  What was true then is still true now, only the technology has changed.

In 1911, the economy was powered in part by railroads, which transported goods and raw materials.  Telecommunications networks like the telegraph and early telephone helped conduct business and coordinated the movement of goods.  In 2011’s growing digital economy, telecommunications increasingly represents the railroads, telegraph, and telephone all combined-into-one.  Some of America’s richest tech companies depend on broadband and communications to fuel demand for their products.  Allowing AT&T to control the largest part of that pipeline could be disastrous to everyone but that company and their shareholders.

History Repeats Itself

In 1914, the Clayton Act was passed to put a stop to increasing anti-competitive activity and abusive market tactics.  Amazingly, the problems being solved a century ago are back with a vengeance today, all thanks to the endless drumbeat for deregulation, which has fueled mergers, acquisitions, and increased concentration of market power.  That Act cracked down on:

• Price discrimination: selling products and services at different prices to similarly situated buyers;
• Tying and exclusive-dealing contracts: sales on condition that the buyer sign exclusive contracts that force an end to dealing with the seller’s competitors;
• Corporate mergers: acquisitions of competing companies to reduce competition; and
• Interlocking directorates: Boards of directors of competing companies, packed with common members.

Today’s laissez-faire attitude towards government checks and balances helped provoke the Great Recession, corporate scandals of epic proportions, and a revolving door in Washington where regulators end up working for the companies they used to regulate. Just ask former FCC chairman Michael Powell. Three years ago he worked for us.  Today he works for Big Cable’s largest lobbying group — the National Cable & Telecommunications Association.  FCC Commissioner Meredith Attwell Baker went to work for Comcast shortly after green-lighting their super-merger with NBC-Universal.

It’s All About the Money. Always.

The only thing stopping AT&T from providing wireless nirvana to rural America is its own unwillingness to spend money on behalf of customers to upgrade its network.  The company claims it didn’t see the value of spending nearly $4 billion needed to deliver expansive 4G service, but suddenly had no trouble at all finding nearly ten times that amount to purchase T-Mobile USA.

Did AT&T suddenly win PowerBall?

AT&T saw crushing a competitor Job #1.  Central Idaho’s 4G service could wait.

Crovitz later notes AT&T “was unusually blunt” criticizing the FCC report, a classic case of protesting too much.  The company got caught with its rhetorical pants down, with a series of evolving arguments for a deal that never made the first bit of sense once you began to dig deeper into their case.

In the end, Mr. Crovitz wants you to blame Big Government for AT&T’s pervasive dropped-call problem that its competitors don’t seem to have.

It’s not the company that owns and runs the network, it is that Obama and his nasty henchmen at the FCC who are responsible!  Who knew?

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg FCC Says ATT Failed to Show Public Benefit of Merger 11-30-11.mp4[/flv]

Bloomberg News reports the FCC found AT&T failed to demonstrate any real public benefit of its merger with T-Mobile USA.  (2 minutes)

1.5Mbps "broadband" is not the cure-all Comcast claims it to be.

When multi-billion dollar Comcast Corporation decided it was the right time to acquire multi-billion dollar NBC-Universal, one of the concessions Comcast made to win federal approval of the deal was to deliver budget-priced Internet service to those too poor to pay the company’s current asking price of $40-60 a month.

Comcast Internet Essentials was the result, and as Comcast rolls its publicity train from city to city, promoting the new package, politicians and cable executives have teamed up to take credit, suggesting the company’s limited-access $9.95 1.5Mbps service will somehow erase the high-tech job deficit, eliminate the digital divide, and will even somehow help America’s broadband speed gap with the rest of the world.

But it will do none of those things for the vast number of income-challenged families who won’t actually qualify for the three year program, either because they already scrape up enough for Comcast service, don’t have children, or manage to miss a payment due date.  In fact, 1.5Mbps budget-priced Internet is a service providers should have been willing to offer all along, to anyone who wants the service.  But it took a colossal-sized merger concession to get Comcast to sort of do the right thing.

I say “sort of” because the terms and conditions that accompany the service resemble the gotcha fine print the banking industry so loves:

The program is only available to households that (i) are located where Comcast offers Internet service; (ii) have at least one child who receives free school lunches through the National School Lunch Program (the “NSLP”) and as confirmed annually while enrolled in the program; (iii) do not have an overdue Comcast bill or unreturned equipment; and (iv) have not subscribed to any Comcast Internet service within the last ninety (90) days (sections 1(i)-(iv) collectively are defined as “Eligibility Criteria”). This program is not available to households that have children who receive reduced price lunches under the NSLP. The program will accept new customers for three (3) full school years, unless extended at the sole election of Comcast. Comcast reserves the right to establish enrollment periods at the beginning of each academic year in which it accepts new customers that may limit the period of time each year in which you have to enroll in the program.

2. In order to confirm your eligibility for the program, Comcast will need to verify that your children receive free school lunches through the NSLP in the initial enrollment year and each subsequent year you are enrolled in the program. In order to confirm eligibility, participants in the program will be required to provide copies of official documents establishing that a child in the household is currently receive free school lunches through the NSLP. Each year you will be required to reconfirm your household’s current eligibility by providing Comcast or its authorized agent with up-to-date documentation. If you fail to provide documentation proving your eligibility in the program, you will be deemed no longer eligible to participate in the program.

3. You will no longer be eligible to participate in the program if (i) you no longer have at least one child living in your household who receives free school lunches under the NSLP; (ii) you fail to maintain your Comcast account in good standing; (iii) Comcast ceases to provide the Covered Service to your location; or (iv) your account opened under the program is closed. A change in address may result in your account being closed, even if you continue to receive Comcast services at a different address. Program participation also may be terminated if the Covered Service is upgraded, altered or changed by you for any reason. If you are no longer eligible for the program, but continue to receive the Covered Service from Comcast, regular rates, and any other applicable terms and conditions will apply to the Covered Service.

No kids in your home?  No discount Internet access for you!  Refuse on principle to accept a government handout to pay for school lunches?  Sorry, you need to buy the full-priced Internet Comcast will happily sell you.  Missed a cable bill payment because you needed to buy medicine this month?  It will cost you your inexpensive access.  Comcast even reserves the right to cancel your discounted service if you choose (or are forced) to move.

Most would-be customers who assume they are eligible because they, like so many others, are income-challenged these days, are thrilled to read and watch news accounts about the discount Internet program for their kids.  But like Santa reneging on Christmas, the excitement turns to disappointment when they discover they are ineligible for one reason or another.

In Baltimore, WBAL-TV got nearly breathless with excitement telling their audience, “Things are looking up for Maryland families — way up. A new effort is under way to help connect 250 families to cyberspace at an affordable price.”

Baltimore is a city of 620,000 people.  Before the Great Recession, 15.4% of families and 19.3% of Baltimore’s residents fell below the poverty line, excellent candidates for inexpensive Internet access.  That’s more than 32,000 people, but Comcast is apparently making room for just 250.

Despite those figures, Comcast’s David Cohen thinks his company’s discount Internet will make all the difference.

“We believe we have a shot to be able to make a real impact on the digital divide with this program,” he told the Baltimore TV station.

He might be right… for 250 families anyway.  Everyone else… pay up or go without.

Terms and conditions apply

WBAL Investigative reporter Jayne Miller got slightly carried away on behalf of Comcast, equating their program with a solution for high-tech jobs and increased Internet speed:

Internet access and speeds have become national issues. The U.S. lags behind other countries in broadband availability, hurting what some believe to be the nation’s ability to compete, said Miller.

In comparison, “China recently graduated over 440,000 engineers, and we in the U.S. graduated 65,000,” said U.S. Rep. “Dutch” Ruppersberger.

I’m sorry to bring people back to reality, but 250 families getting the right to buy up to three years of Internet access at speeds that are half of what the FCC National Broadband Plan defines as actual broadband is not an answer to anything beyond Comcast’s poor public relations in the customer service department.  It’s not going to help America’s broadband speed rating (it will actually hurt it at 1.5Mbps).

WBAL is hardly the only station overdoing their celebrations of Comcast (a prolific advertiser by the way).  I’ve watched reports that suggest Comcast is doing this out of the goodness of their heart, not because they agreed to as a condition of their mega-merger with NBC.  Considering the lawyer-like limitations that are certain to keep many people out of the program and others from downgrading their existing service to something more affordable, charity is hardly a word I would extend to the nation’s largest cable operator who found cause to limit access to even the lowest broadband speeds to protect its bottom line, which it hopes will get much fatter with the acquisition of NBC-Universal.  When the three year program ends, let’s just see how charitable Comcast is about extending it.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KASA Santa Fe Internet Accessibility with Internet Essentials 8-26-11.mp4[/flv]

KASA-TV in Santa Fe talks with their “very good friend at Comcast” about Internet Essentials and the company’s general Internet expansion plans in New Mexico.  The interview resembles an infomercial for Comcast products and services.  (5 minutes)