Despite growing competition from Bell’s fiber-to-the-neighborhood service Fibe, now expanding into many of Cogeco’s outer suburban service areas, Cogeco will not negotiate a better deal for customers, preferring to emphasize its customer service and “right-sizing” bundles of services to best meet customer needs.

As a result of higher prices, Cogeco’s earnings and profits are up for the second quarter of 2014. In the quarter profits rose to $58.5 million — up from $48.9 million during the same quarter a year ago. Revenue rose to $518.4 million from $458.5 million.

“We don’t like competing on price,” said Cogeco CEO Louis Audet said. “I’m not saying it’s zero, but we really don’t like competing on price.”

Audet

Customers have been offered sign up discounts from Cogeco’s most aggressive competitor on pricing – Bell. But when customers in parts of Ontario and Quebec call Cogeco to negotiate for a lower price, they are largely being turned down.

Audet said Cogeco instead emphasizes that customers will receive better customer service from the cable company, and customer retention specialists are trained to adjust packages to emphasize the services customers want without cutting their cost.

“It’s a right-sizing exercise,” Audet said. “Maybe the person wants a little less video, but they want higher Internet speeds.”

Cogeco isn’t winning the battle to keep its price-sensitive customers, however. The company lost 10,305 subscribers in the second quarter, nearly double the amount lost in the same quarter a year ago. Cogeco now serves 1.96 million Canadian cable television customers.

Customers are also dropping their Cogeco phone service, a decision Audet said makes them “victims” of cell phones. Cogeco permanently disconnected 6,000 landlines in the quarter, up from 5,550 a year ago. It still serves 473,000 phone customers.

The company lost almost 6,000 telephone customers in the quarter compared with additions of 5,550 in the same quarter last year. It had more than 473,000 residential phone customers left.

Despite the customer losses, rate increases more than made up for lost revenue, giving the company a nearly $10 million boost in profits during the second quarter alone.

Phillip “The circus is in town” Dampier

Yesterday afternoon I got to experience both the pain of having a tooth pulled and watch Comcast and Time Warner Cable defend its merger for more than three hours before the Senate Judiciary Committee. The Festival of Nonsense from Comcast’s top lobbyist David Cohen and Time Warner Cable’s chief financial officer Arthur Minson hurt more.

Despite the $45 billion dollar deal, the real powers that be couldn’t be bothered to turn up at the hearing. Comcast’s chief executive was nowhere to be found — perhaps he was playing golf with President Obama again. Comcast’s top lobbyist David Cohen showed up instead, wearing an outfit that looked like it was stuffed with cash waiting to fall from his pockets into the hands of his “friends” on Capitol Hill. Cohen is a well-known Democratic money bundler who raised $1.44 million for the president’s reelection campaign in 2011 and 2012, and $2.22 million since 2007. (Obama spent time in Cohen’s Philadelphia home as well, part of a DNC fundraising party.)

Perhaps Time Warner Cable CEO Robert Marcus was unavailable because he was too busy counting the $8.52 million he was paid before agreeing to sell the company. Don’t expect him at the next hearing either, because he is shopping for a bigger safe to hold the $80 million he will receive for agreeing to change Time Warner Cable’s name to Comcast.

The other usual suspects were also missing in action. Not a peep from the major networks or cable programmers at the hearing. Instead, the Senate endured a guy with a golf channel nobody ever heard of using the hearing to try to get his calls returned by Time Warner and a wireless provider who believes his technology is faster than fiber. Sure it is.

Brought to you in part by America’s cable industry.

I suppose it’s also worth mentioning Christopher Yoo – Comcast’s intellectual sock puppet straight out of the cable company’s home town of Philadelphia. He serves at the pleasure of the “Center for Technology, Innovation & Competition” (cough) at the University of Pennsylvania. The “center” is financially supported by the cable industry. David Cohen just happens (by sheer coincidence) to chair the university’s Board of Trustees. Yoo’s testimony could be boiled down to a nod in Cohen’s direction with an affirming, “whatever he said.”

The Cohen and Minson Comedy Hour began with opening statements extolling the virtues of supersizing Comzilla, with dubious claims about its benefits for consumers.

Without laughing, read the following out loud:

“We welcome this opportunity to discuss the proposed transaction between Comcast Corporation (“Comcast”) and Time Warner Cable Inc. (“TWC”), and the substantial and multiple pro-consumer, pro-competitive, and public interest benefits that it will generate, including through competitive entry in segments neither company today can meaningfully serve on its own,” the two companies wrote in their joint opening statement.

Cohen

“Comcast and TWC do not compete for customers in any market – either for broadband, video, or voice services. The transaction will not reduce competition or consumer choice at all. Comcast and TWC serve separate and distinct geographic areas. This simple but critically important fact has been lost on many who would criticize our transaction, but it cannot be ignored – competition simply will not be reduced. Rather, the transaction will enhance competition in key market segments, including advanced business services and advertising.”

To emphasize just how little this merger will impact the current state of non-competition in the broadband marketplace, Comcast repeatedly emphasized you can’t subscribe to a competing cable company today and still won’t tomorrow:

“Consumers in Comcast’s territories cannot subscribe to TWC for broadband, video, or phone services. And TWC customers cannot switch to Comcast. For that reason, this is not a horizontal transaction under merger review standards, and there will be no reduction in competition or consumer choice,” said the written statement.

In other words, since there was no competition between cable companies before, making sure consumers still don’t have a choice is not anti-competitive.

Watch the entire hearing on the Senate Judiciary Committee website.

(The hearing begins at the 24 minute mark.)

Here are some other “benefits” promised by Cohen and Minson:

Post-transaction, Comcast intends to make substantial incremental upgrades to TWC’s systems to migrate them to all-digital, freeing up bandwidth to deliver greater speeds. For example, Comcast typically bonds 8 QAM channels together in its systems, and Comcast’s most popular broadband service tier offers speeds of 25/5Mbps upstream across its footprint. In comparison, TWC bonds 4 QAM channels in nearly half of its systems, and its most commonly purchased service tier offers speeds of 15/1Mbps. Comcast’s fastest residential broadband tier offers speeds of 505/100Mbps; TWC’s current top speeds are 100/5Mbps. Comcast’s investments in the TWC systems will also improve network reliability, network security, and convenience to TWC customers.

Minson

Of course, nothing prevented either company from boosting speeds without a $45 billion merger deal. In fact, Comcast is doing exactly that this week. Marcus’ own revival plan for TWC, dubbed TWC Maxx, promised Time Warner Cable customers would get even faster speeds than Comcast offers most of its customers.

Time Warner Cable now advertises it does not have usage caps on broadband. Comcast cannot say the same, although it tries very hard to tapdance around the matter by calling the 300GB monthly cap spreading into more and more Comcast territories a “data threshold.”

Comcast’s speed upgrades for TWC customers are likely to come with a big catch — an arbitrary usage allowance that limits their usefulness. By the way, that 505Mbps service is available only from Comcast’s extremely limited fiber network that the overwhelming majority of customers cannot get.

The transaction will similarly speed the availability of advanced Wi-Fi equipment in consumers’ homes. The quality of broadband service depends not only on the “last-mile” infrastructure but also the delivery of the signal over the last few yards. Comcast has led the entire broadband industry in rolling out advanced gateway Wi-Fi routers to approximately 8 million households and small businesses, giving these customers faster speeds (up to 270 Mbps downstream as compared to 85 Mbps downstream from the prior generation devices) and better performance over their home and business wireless networks. In contrast, TWC only recently began deploying advanced in-home Wi-Fi routers. With the greater purchasing power and economies of scale resulting from the transaction, Comcast can not only offer TWC customers access to today’s best routers, but also invest in and deploy next-generation router technologies for all of the combined company’s customers.

Comcast doesn’t like to mention that “advanced Wi-Fi” equipment costs customers $8 a month… forever. Comcast is also using it to boost its own Wi-Fi service by sharing it with the neighbors. This merger “benefit” will cost customers almost $100 a year. Customers can do better buying their own equipment and don’t need a merger to make that decision.

The transaction will give Comcast the geographic reach, economies of scale, customer density, and return on investment needed to massively expand Wi-Fi hotspots across the combined company’s footprint, including in the Midwest, South, and West, particularly in areas like Cleveland/Pittsburgh, the Carolinas, Texas, and California, where there will be greater density and clustering of systems. Our goal is to provide greater Wi-Fi availability that allows the combined company’s customers to access the Internet in more places, more conveniently, and at no additional charge.

Your usage allowance will likely apply to this “free Wi-Fi” that most customers cannot access because they live in an area where neither company offers it now and likely won’t anytime soon.

The transaction will also enable Comcast to invest in network expansions and last-mile improvements that provide an even stronger foundation for innovative applications, including education, healthcare, the delivery of government services, and home security and energy management. And with greater coverage and density of systems, Comcast will also have the ability and incentive to build out and make available interconnection points in more geographic regions. This will be especially beneficial to companies like Google, Netflix, and Amazon, which aggregate massive data traffic when they deliver their own and others’ services to consumers.

For the right price. Nothing precluded Comcast or Time Warner Cable from investing some of their lush profits into improvements for customers. But why bother when your only serious competitor is usually DSL. Investment in broadband networks has declined for years in favor of profit-taking. Making Comcast bigger introduces no new market forces that would provoke it to improve service. In fact, Comcast’s massive size and reach would likely deter would-be competitors from entering a market where Comcast can use predatory pricing and retention offers to keep customers from switching.

Helping people successfully cross the digital divide requires ongoing outreach. To increase awareness of the Internet Essentials program, Comcast has made significant and sustained efforts within local communities. To date, those outreach efforts have included:

• Distributing over 33 million free brochures to school districts and community partners for (available in 14 different languages).
• Broadcasting more than 3.6 million public service announcements with a combined value of nearly $48 million.
• Forging more than 8,000 partnerships with community-based organizations, government agencies, and elected officials at all levels of government.

Cohen does not mention the company planned to offer Internet Essentials earlier than it did, but held it back for political reasons.

“I held back because I knew it may be the type of voluntary commitment that would be attractive to the chairman” of the Federal Communications Commission, Cohen said in a 2012 interview. Comcast’s generosity was limited. It specifically designed its discount Internet program to make it difficult to qualify and protect its regular-priced broadband offerings. The goodwill from handing out Comcast sales brochures and getting free exposure in the media offers little to customers. Comcast also has a way of getting the community-based organizations it “partners” with to advocate for Comcast’s business interests.

“Sometimes we need a kick in the butt.” — Cohen

If only the government got out of the way and approve the merger, Comcast will improve on its already amazing customer service:

Improving the customer experience is a top priority at Comcast. We are investing billions of dollars in our network infrastructure and are developing innovative products and features to make it easier and more convenient for our customers to interact with us. While our satisfaction results are beginning to rise, we know we still have work to do and are laser-focused on continuing to improve our customers’ experiences in a number of ways.  Comcast has improved its customer satisfaction ratings significantly. Since 2010, Comcast has increased its J.D. Power’s Overall Satisfaction score by nearly 100 points as a video provider, and close to 80 points in High Speed Data – more than any other provider in our industry during the same period.

Twice nothing is still nothing. Cohen even admitted at the hearing Comcast’s progress at improving customer service is not as rosy as his written testimony might suggest.

“It bothers us we have so much trouble delivering high quality of service to customers on a regular basis,” Cohen said. “Sometimes, we need a kick in the butt.”

That has never worked before. Comcast has kicked its customers around since at least 2007 when it also promised major customer service improvements that turned out to be figments of a press release. Comcast’s “laser-focused” efforts to improve instead won it the 2014 Consumerist Worst Company in America award this week and more than 100,000 consumers signing petitions vehemently opposing the merger.

Comcast has a long record of improving consumers’ online experiences and working cooperatively with other companies on interconnection, peering and transit.

Just ask any Comcast customer about their Netflix viewing experience lately and how it took a checkbook to improve matters. Ask any online video competitor whether Comcast is a good neighbor when it exempts its own video traffic from its “usage threshold” while making sure to count competitors’ traffic against it.

Comcast also likes to suggest Americans are awash in competitive options for broadband service. Why there is DSL, satellite broadband, fiber, wireless Internet, public libraries, and books.

In fact, Comcast’s filing points to various “competitors” that don’t even exist yet, if they ever will. Comcast suggests Google Fiber is popping up everywhere, despite the fact Google announced it was delaying its fiber rollout in Austin, and most of its latest expansion plans lack firm commitments to deploy and are framed only in the context of opening a dialogue with targeted communities.

Satellite Internet speeds are severely limited and usage-capped. The same is true for exorbitantly expensive mobile broadband. Comparing a $40 unlimited broadband offering from Time Warner Cable to Verizon Wireless’ 4GB for $50 mobile wireless Internet package is silly.

Comcast characterizes the competitive telecom marketplace as a veritable dogfight, but it looks a lot more like a well-executed dog and pony show. Just how rabid are these dogs?

• Verizon’s pit bull zeal to compete has more bark than bite. Verizon Wireless customers can sign up for Comcast or Time Warner Cable service in Verizon stores (woof);
• Comcast’s rottweiler isn’t supposed to get along well with others, but it manages pretty well pitching Verizon Wireless service (grrr).

An hour into the hearing, it was clear there was some bipartisan discomfort with the merger, with Sen. Al Franken (D-Minn.) leading the charge with pointed questions cutting through Comcast’s government relations fluff.

“I’m against this deal,” Franken concluded. “My concern is that as Comcast continues to get bigger, you’ll have even more power to exercise that leverage — to squeeze consumers.”

Like an orange.

AT&T customers in Carbon Hill, Ala. received an unwelcome surprise in their mailbox recently when AT&T informed them they will be part of an experiment ending traditional landline service in favor of a Voice over IP or wireless alternative.

Affected customers are involuntary participants in what AT&T calls an “exciting opportunity for our customers and for our company,” but many residents want no part of it.

The Wall Street Journal reports Carbon Hill city clerk Janice Pendley says some people in the former mining town are not pleased.

“Some of them like their landline, and they like it just the way it is,” she says.

AT&T’s experiment will force new and existing customers to switch to its more-expensive U-verse broadband platform, use a mobile phone, or a home landline replacement that works over AT&T’s cellular network. The FCC has granted AT&T permission to impose its experimental plan to end traditional landline service in two communities where regulatory protections for landline customers are weak to non-existent — Alabama’s Carbon Hill and Delray Beach, Fla.

Carbon Hill is a small town of around 880 households in extreme western Walker County. It is the kind of rural town AT&T would likely never consider for a U-verse upgrade. AT&T embarked on a second major push to extend U-verse into more communities last year, but also indicated it would strongly advocate for a wireless replacement for its landline network in the rest of its service areas. Because Carbon Hill is an experiment, AT&T will offer U-verse to at least part of the community regardless of the usual financial Return on Investment requirements AT&T usually imposes on its U-verse expansion efforts.

AT&T is pushing forward despite the fact it  has no idea how it will offer service to at least 4% of isolated Carbon Hill residents not scheduled to be provided U-verse and not within an AT&T wireless coverage area. There are also no guarantees customers will be able to correctly reach 911, although AT&T says the technology “supports 911 functionality.” Serious questions among consumer advocates remain about whether the replacement technology will support burglar alarms, pacemakers and even systems used by air-traffic controllers.

The difficulties service Carbon Hill relate to its rural makeup and income profile. In Delray Beach, it is all about customer demographics. Half of the city is home to residents over 65 years old — the group most likely to prefer their existing landline service. Many are likely to be unhappy about a transition to new technology that will not work in the event of power interruptions, will require the installation of new equipment, or will be tied to a wireless platform that some say reduces the intelligibility of telephone conversations and often introduces audio artifacts like echo, background noise, and dropouts.

In both cities, customers only offered wireless-based service will no longer have access to DSL or wired broadband service of any kind. The wireless alternative from AT&T comes at a high cost and a low usage allowance.

The benefits to AT&T are unquestionable, however. The company will win almost universal deregulation as a Voice over IP or wireless telephone provider. Legacy regulations on customer service requirements, pricing, and obligations to provide affordable phone service to any customer that requests it are swept away by the new technologies. Competitors are also worried AT&T will be able to walk away from regulations governing open and fair access to AT&T’s network.

The Wall Street Journal reports:

The all-Internet protocol “transition holds many promises for consumers, but losing access to affordable voice and broadband services cannot be part of that bargain,” wrote Angie Kronenberg, general counsel of Comptel, in a letter to the FCC last month on behalf of the small-carrier trade group, several companies and public-interest groups.

AARP said it believes AT&T’s plan has “numerous problems.” The technology might not be reliable enough or fail when calling 911 in an emergency, the advocacy group for seniors told regulators in its comment letter. The FCC is reviewing hundreds of comments received in response to AT&T’s request.

EarthLink piggybacks on the “incumbents as little as economically possible” and has laid nearly 30,000 miles of fiber-optic cables throughout the U.S. to help it reach more than a million customers, says Rolla Huff, a former EarthLink chief executive. Still, the company needs access to the connections built by AT&T and Verizon into buildings.

Telecom carriers such as Windstream in Little Rock, Ark., and sellers of broadband data services like EarthLink and XO Communications LLC, of Herndon, Va., have had the right to buy last-mile access at regulated prices since the last major overhaul of federal telecom laws in 1996.

If AT&T ends its traditional network, those competing service providers will have to negotiate with AT&T for access at whatever price AT&T elects to charge.

A preview of what is likely to happen has already been experienced by TW Telecom, an independent firm selling phone and Internet services to businesses over more than 30,000 miles of fiber lines. But that fiber network means nothing if a customer’s last mile connection is handled by a local phone company no longer subject to regulated pricing and access rules.

In Tampa, where Verizon has deployed FiOS as an unregulated replacement for its older, regulated copper-based network, TW Telecom learned first hand what this could ultimately mean:

Rochester Telephone Corporation was born in 1921 after a merger between the Rochester Telephonic Exchange, a branch of the Bell Company of Buffalo and locally owned independent Rochester Telephone Company, which was not allowed to use Bell’s long distance network.

TW Telecom approached Verizon in 2012 to seek last-mile access to a Tampa, Fla., building being converted into a bank from a restaurant. Verizon had installed only FiOS at the building.

Verizon said no, telling TW Telecom to build its own connection or pay Verizon thousands of dollars to do the job. TW Telecom declined to pay and lost the customer’s business.

“When it happens, it’s devastating,” says Kristie Ince, who oversees regulatory policy at TW Telecom. Similar snarls have cost the company at least six customers since then. Other carriers say they have had similar clashes.

In Illinois, Sprint’s business phone network has run into a barricade manned by AT&T. Sprint needs AT&T to interconnect calls placed on Sprint’s network intended for AT&T’s customers. The two companies cannot agree on an asking price under the deregulation scheme so Sprint converts its Voice over IP calls to older technology still subject to regulation just so calls will successfully reach AT&T’s customers. AT&T promptly converts those calls back to Voice over IP technology as it completes them.

AT&T said it has “no duty” to connect its Internet protocol traffic with Sprint’s.

If the FCC keeps IP-based traffic deregulated, if and when the old landline network is decommissioned, AT&T will have the last word on access, potentially putting competitors out of business.

Our great-great grandparents experienced similar problems in the early days of telephone service, when high rates from the local Bell telephone subsidiary provoked local competition. But Bell companies routinely refused to handle calls placed on competitors’ networks, forcing customers to maintain a telephone line with both companies to reach every subscriber. Additionally, only Bell-owned providers had access to the long distance network – a competitive disadvantage to competing startups.

Regulatory changes, a handful of mergers and the eventual establishment of the well-regulated Bell System eventually solved problems which threaten to return if AT&T has its way.

The Plain English Campaign’s Golden Bull Award is given to companies that prefer gobbledygook over plain English.

Comcast is outraged by slanderous suggestions it has data caps on its broadband service.

In response to the scathing report from the Writers Guild of America that pleads for the FCC to block the merger of Comcast and Time Warner Cable, Comcast has accused to WGA of getting its facts wrong and being nothing more than a meddling union.

The WGA writes in their filing with the FCC:

The WGAW has also joined Public Knowledge in asking the FCC to enforce the condition that Comcast not use “caps, tiers, metering, or other usage-based pricing” to treat affiliated network traffic differently from unaffiliated traffic. Comcast has violated this condition by exempting its online video service, Xfinity Streampix, from its own data caps, while the viewing of content by other, unaffiliated video services such as Netflix or YouTube would count against a user’s data cap. The violation of this merger condition is a clear threat to competition from online video distributors, and the FCC should respond by requiring Comcast to stop exempting its Streampix service from data caps.

Comcast pounced on the WGA filing, calling it inaccurate.

“We don’t have data caps — and haven’t for about two years,” said Sena Fitzmaurice, Comcast’s vice president of government communications. “We have tested data thresholds where very heavy customers can buy more if they want more — but that only affects a very small percentage of our customers in a few markets.”

Until 2012, Comcast had a uniform usage cap of 250GB a month, above which a customer risked having their broadband service suspended. In 2013, the usage allowances were back, reset at 300GB a month and rolled out to a series of expanding “test markets” that today include Huntsville and Mobile, Ala., Atlanta, Augusta and Savannah, Ga., Central Kentucky, Maine, Jackson, Miss., Knoxville and Memphis, Tenn., and Charleston, S.C.

Customers who exceed this allowance won’t have their broadband service suspended, they will just get a higher bill, as Comcast charges $10 for each additional 50GB of usage.

In contrast, Time Warner Cable neither has a data cap or a data threshold. Stop the Cap! made sure that didn’t happen when Time Warner attempted to impose its own usage limits back in 2009. We successfully organized protests sufficient to get Time Warner executives to back off and shelve the idea. If Comcast takes over, Time Warner Cable customers will likely eventually face Comcast’s “data thresholds,” which are a distinction without much difference. Whatever you call it, it’s a limit on how much a customer can use Comcast’s already-expensive broadband service before bad things happen.

The WGA and Comcast get along about as well as oil and water, so the back and forth is to be expected. The Writer’s Guild also fiercely opposed Comcast’s merger with NBCUniversal. But when it comes to who is playing fast and loose with the truth, it isn’t the group that writes for a living. Comcast’s doublespeak about data caps is no better than calling The Great Recession a periodic equity retreat. It isn’t fooling anyone.

Charter Communications’ latest attempt to rehabilitate its reputation with customers in Fort Worth, Tex. arrived this week in area mailboxes, as Charter reintroduced itself as “Charter Spectrum.”

Fort Worth is the first major city to get Charter’s broad-based service upgrade that began more than a year ago with a switch to all digital television service.

The newly available bandwidth no longer needed to support analog television has allowed Charter to expand its video service to more than 200 HD channels, up from fewer than 100.

Customers also start their Spectrum experience with a free broadband speed bump — from 30Mbps to 60/4Mbps (with a barely enforced monthly usage cap of 250GB), and an improved cable telephone service with nationwide calling.

Charter Spectrum’s mailer is now arriving in Ft. Worth mailboxes. (Courtesy: TheTechGuru)

Charter CEO Thomas Rutledge openly admitted last year Charter had an inferior product compared against the competition. Upgrading Charter’s cable systems was designed to correct that and the company hopes its rebranding will deliver a marketplace reset, but some Charter customers remain skeptical.

“Same pig, fresh lipstick,” wrote one Charter customer in Missouri.

Others complain Charter’s upload speeds remain anemic at just 4Mbps.

Charter’s new pricing promotions were designed to simplify the shopping experience. There are now just three heavily promoted Spectrum triple play packages:

A customer taking advantage of the Triple Play Gold promotion will pay a one-year promotional price of $129.97 a month. (Customers can also select individual services or build their own double-play bundle). The fine print mentions the price rises to $149.97 the second year and then reverts to an undisclosed “standard rate” after that. TV set-top boxes are required on every cable-connected television ($7 a month each – not included in the price). The Internet modem carries no additional charge. Phone taxes, fees and surcharges are also covered, but other taxes, fees, and surcharges are not.

Offers are valid for new customers only, and those who have not subscribed within the last 30 days and have no outstanding debt obligation to Charter.

[flv]http://www.phillipdampier.com/video/WLOS Asheville Charter Going Digital 11-11-13.flv[/flv]

Charter Spectrum arrives only after your local Charter system moves to all-digital television service. That happened last fall in Asheville, N.C., where customers were told they needed a digital set-top box on every television in the home. WLOS-TV covered the story back on Nov. 11, 2013. (1:44)