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Cable One’s Costly Internet Service Helps Cable Company Achieve Record Profits

Phillip Dampier November 12, 2019 Cable One, Competition, Consumer News, Data Caps 1 Comment

Using a combination of lack of competition, high-priced service plans, and data caps, Cable One is once again the nation’s most profitable cable broadband provider, charging residential customers a record-breaking average of $72.09 a month.

Late last week, the country’s fifth largest cable company reported excellent results to its shareholders, as the company collected the proceeds from increasing rates on broadband service while shedding unprofitable cable television customers.

Cable One serves small and mid-sized cities, mostly in the mid-south, Rockies, New Mexico and Arizona. It has grown larger with the acquisition of NewWave and Fidelity Communications, and told investors on a quarterly results conference call the company would take some of its recent gains and move towards further acquisitions in the near future. NewWave customers will now face Cable One’s stiff data caps, rolling out across legacy NewWave service areas in November and December. NewWave customers have already found their cable television package pruned back to match the current Cable One package, which omits Viacom-owned networks. The same will hold true for Fidelity’s customers once the two companies merge systems.

 

Laulis

Revenues for the third quarter were $285 million compared to $268.3 million at the same time last year, representing a 6.2% increase. Even with the high cost of service, the number of Cable One internet customers is increasing, primarily because competing phone companies typically offer little beyond DSL. In the last quarter, Cable One added 7,400 new internet customers and boosted broadband revenue by 8.2%.

“Cable One still has one of the industry’s lowest broadband penetration of homes passed at just 32.2% and, with limited fiber-based competition, their ceiling is arguably one of the highest in the industry,” Moffett Nathanson analyst Craig Moffett told investors. “They are at last growing the broadband business at a rate fast enough to drive meaningfully higher penetration.”

Cable One makes no secret it now calls itself a broadband company and has been de-emphasizing cable television service over the last few years. In fact, customers who cut the cord are doing Cable One a favor because broadband-only customers boost their overall profit margins. Unlike cable television, where licensing expenses are growing, the cost to provide and support broadband service is dropping — even as Cable One raises internet pricing and constrains customer usage with industry-low data caps. That forces customers to upgrade to more costly, higher speed service plans to get a larger data allowance. Cable One also offers a $40/mo add-on that restores unlimited service, which is popular with their premium customers. Once a customer uses more than 5 TB, their speed is throttled.

“I think the interesting thing that I took note of is that the higher [the] speed that our consumer takes the higher the percentage of unlimited [plan] selling. So that is to say if you take our gig service the percentage of customers that take unlimited there is the highest of any consumer group,” noted Cable One CEO Julia M. Laulis.

Pricing is expected to rise further unless phone companies compete with fiber broadband, an unlikely scenario in the rural and exurban areas Cable One serves.

T-Mobile Fixed 4G Wireless Home Internet: $50/month With No Data Caps

T-Mobile is gradually expanding its new fixed wireless home broadband service, prioritizing rural areas next to major highways where the mobile provider has strong 4G LTE service.

T-Mobile Home Internet is initially being targeted to rural customers unlikely to have high speed internet access from a cable company or are stuck with low speed DSL from the phone company. It offers “unlimited service” with no data caps, but T-Mobile reserves the right to temporarily throttle speeds of users exceeding 50 GB of usage per month when their local cell tower is congested. Customers can check T-Mobile’s fixed wireless website to see if they qualify for service.

A Stop the Cap! reader in Indiana testing the service over the last month reports speeds averaging around 50/3 Mbps, with ping times often 30 ms or much more, which makes the service problematic for video games. But T-Mobile Home Internet works fine with streaming video services.

(Image: The Gadgeteer)

The service is currently available only in a few areas. T-Mobile is carefully managing the service by registering the customer’s wireless home internet equipment to a specific cell tower. Customers are not allowed to take the service on the road, such as on vacation. Since the service relies on T-Mobile’s existing 4G LTE cell tower network, it is essential to balance capacity between fixed wireless customers and T-Mobile’s existing mobile users. Pricing is comparable to Verizon’s 5G Home Internet and in most cases the price includes taxes and fees.

T-Mobile began marketing the service to its existing customers in qualified service areas over the summer. Among those enrolled, none have reported speed throttling, despite the fine print warning to heavy users.

“I consistently use over 250 GB a month and speeds have never been impacted,” our reader told us. “However, speeds can suffer around rush hour, when I suspect more people are using their cell phones. But they are still 25+ Mbps for downloads.”

Customers signing up for the service will receive:

  • a T-Mobile LTE Wi-Fi Gateway with a pre-installed T-Mobile SIM card;
  • A 5200mAh battery backup, also likely for future portability options;
  • AC Adapter;
  • Quick Setup Manual.

(Image: The Gadgeteer)

There is no charge for the equipment and start-up kit, but it remains the property of T-Mobile and needs to be returned if you cancel, otherwise T-Mobile will charge you $207.

Users plug in the equipment in an area of their home that gets the strongest T-Mobile reception. Once T-Mobile’s LTE network is detected, the service will register and activate service on the T-Mobile cell tower. Customers manage the rest of the service with a smartphone app, which configures Wi-Fi capable devices, sets streaming speeds, and allows customers to check usage. There are two LAN ports on the back of the device for Ethernet connections and a phone jack, presumably to support landline service sometime in the future. Most will be able to configure the service in less than 10 minutes.

Ironically, one service T-Mobile explicitly says won’t work with its fixed wireless offering is T-Mobile’s new TVision live TV service. But customers report no problems using AT&T TV Now and Hulu’s Live TV service.

The included backup battery provides long lasting power to stay connected during a power interruption.

Customers have reported favorable impressions of the service, assuming they have a solid signal from a nearby cell tower. T-Mobile is cautiously marketing the service only to customers where cell towers are not already congested, and only in areas relatively close to a nearby cell tower, to assure good reception. T-Mobile can also self-limit the number of fixed wireless customers signed up for each cell tower. That means most of its fixed wireless customers will be in semi-rural areas, often nearby a major road or highway where a T-Mobile tower provides service. It is not likely T-Mobile will initially market fixed wireless service in dense suburban or urban areas, because cell towers are much more likely to be congested. It also seems unlikely T-Mobile will sell the service in deeply rural areas where it lacks good cell coverage because T-Mobile is relying on its existing network of cell towers to support the fixed wireless service.

An excellent review of the service and its features has been written by The Gadgeteer.

T-Mobile explains how its fixed wireless home internet service works. (1:15)

Sen. Manchin Wants West Virginians to Call Out ISP Lies About Broadband Availability

Sen. Joe Manchin (D-W.V.) wants every West Virginian to test their internet speed and send his office the results to ferret out deceptive service maps and uncover more information about the state’s ongoing broadband problems.

“We’re urging everyone to do these speed tests,” Manchin told residents in Lewis County last Sunday. “We need to know, and people need to be involved in West Virginia, if they ever want to have broadband, high-speed internet and cell service. This is what we’re fighting for.”

Manchin is on a mission to debunk FCC Chairman Ajit Pai’s claims that rural broadband has grown under Pai’s leadership. Manchin believes the FCC’s broadband coverage maps are wildly inaccurate, advertised speeds are not met, and many rural residents in the state are left without internet access.

The senator intends to send the speed test results to Pai’s office, and he wants consumers to use the FCC’s own free speed test app (for Android and iOS) to “cover [Pai]” with piles of speed test results shining a light on the problem.

“There’s an FCC app that you can download on your phone,” Wes Kungel, legislative director for Manchin’s office told WVNews. “If you download that, you can hit a little button and it will tell you your speeds. If you email or mail that to our office, we will put it in a letter and send it personally to Chairmen Pai.”

Sen. Manchin

The ongoing problem with faulty broadband service maps have allowed a select group of telecom companies (many responsible for the data used by those maps) to receive federal funding to expand their own broadband businesses while preventing others from getting funding claiming the new providers would receive government funding to overlap their existing service areas.

“This is really where it all started,” he said. “[People] contacted us a few years back and basically they weren’t getting the coverage. They could not get coverage because [the FCC] said the maps showed that there was already coverage here. So we came out and did the speed tests.”

Manchin argues that West Virginia is among the most broadband-challenged states and inaccurate maps will result in the state not getting its fair share of the estimated $20 billion the FCC plans to distribute in rural America to improve broadband service.

“There’s no state that needs it more than rural West Virginia,” Manchin added. “A ‘urban’ community is 50,000 (people) or more. We don’t have one city in West Virginia with 50,000 so we have nothing to compare it to. We are all rural and we’re going to have to fight for every dollar that we can to get connected.”

West Virginians can submit their speed test results to Sen. Manchin’s office by following this link.

Comcast Completes Speed Upgrade in Northeast, But Data Cap For Many Stubbornly Remains

Despite a recognition that customers are using more data than ever as they cut traditional cable television in favor of streaming, Comcast’s data cap remains stubbornly fixed at 1 TB a month.

The nation’s largest cable operator last week completed a significant speed upgrade in 14 states in its Northeast and Mid-Atlantic service areas from Maine to Virginia. Some plans are getting as much as a 60% speed boost, but Comcast is not budging a megabyte on its fixed data cap that amounts to 1,000 GB of usage per month.

Comcast acknowledges the speed upgrades are designed to meet the exponential increase in demand for high-bandwidth video streaming in households that now average at least ten devices connected to the internet. Many of those devices are now streaming 4K video, which takes double the bandwidth of traditional HD video.

The speed upgrades:

  • Performance Starter: was 15 Mbps, now 25 Mbps
  • Performance: upgrades from 60 Mbps to 100 Mbps
  • Performance Pro: up from 150 Mbps to 200 Mbps
  • Blast: A slight upgrade from 250 Mbps to 300 Mbps
  • Extreme: This premium plan used to provide 400 Mbps, but it is now 600 Mbps.

Comcast faces significant competition in this part of the country from Verizon’s FiOS fiber to the home network. That may explain why it is also the only significant part of Comcast’s service area that remains exempted from the cable company’s data caps. Verizon has no data cap of consequence, although the company has shut down some customers that were likely using their residential internet connection as a server, running up many terabytes of usage a month.

For now, Comcast’s speed upgrades come with no price hike.

The speed increases are likely to be welcomed by most customers, but Comcast’s pervasive data cap for most of its nationwide footprint is not. In November, that data cap will be tested like never before as Google launches its Stadia cloud-based video game service. Up to six million broadband customers are expected to blow through their provider’s monthly data cap while using the service, which replaces traditional home game consoles. That is because Stadia will consume an enormous amount of bandwidth — as much as 15.75 GB an hour at 4K resolution.

An article published by Vice Media warned video game enthusiasts they could easily face steep overlimit usage penalties on a future bill:

According to data from The NPD Group, America’s estimated 34 million gamers play 22 hours per week on average. Were those gamers to all shift to Stadia as their primary game platform at 4K, they’d burn through 1,386 GB of data monthly. And that’s just the bandwidth consumed by gaming; it doesn’t include music and video streaming or other activities.

The result will be an even higher broadband bill for US consumers who already pay some of the highest prices in the developed world for bandwidth. For many this will be a surprise. Of the 943 gamers surveyed by the company, only 17 percent were certain they had a broadband cap. 21 percent say they weren’t sure one way or the other whether their broadband was metered.

Most providers set their overlimit penalty at $10 per 50 GB of excess usage. Some offer to waive data caps for a monthly additional charge of $50. That makes Google’s $10 video game service much less of a bargain than many initially thought.

When questioned about the impact data caps could have on Stadia, Google vice president Phil Harrison hoped the nation’s ISPs would do the right thing by their customers.

“ISPs have a strong history of staying ahead of consumer trends and if you look at the history of data caps in those small number of markets…the trend over time, when music streaming and download became popular, especially in the early days when it was not necessarily legitimate, data caps moved up,” he said. “Then with the evolution of TV and film streaming, data caps moved up, and we expect that will continue to be the case.”

Except Harrison’s utopian world view is not accurate. In fact, most broadband providers have set data caps and left them unchanged for years, even as those same companies promote frequent speed upgrades. In effect, more and more customers are running over their usage allowances and either paying steep penalties, reducing usage, or agreeing to pay another $50 a month to dispense with the cap altogether.

Vice author Karl Bode reminds readers “broadband caps are complete nonsense.”

“Experts say the real purpose of such limits is to covertly jack up your already expensive broadband bill—and punish customers looking to cut the cord on traditional cable TV services,” Bode added.

Correction: Data cap expressed at 1,000 MB changed to 1,000 GB to reflect the correct allowance.

Nevada’s Attorney General Finds Frontier Internet Lacking, Wins Refunds and Upgrades

Frontier residential customers in Nevada could receive a refund and improved service after a court filing from the Nevada Attorney General’s Bureau of Consumer Protection (BCP) found Frontier’s internet services lacking.

Since 2017, BCP has collected scores of complaints about Frontier’s internet service and its performance, mostly regarding slow service, frequent outages, and ongoing billing problems.

The BCP found Frontier liable under NRS Chapter 598 which forbids providers from misleading consumers about internet speed and service performance in marketing and advertising. An Assurance of Discontinuance filed with the court allowed Frontier to settle while avoiding admitting any wrongdoing and agreeing to correct service deficiencies.

The state found Frontier repeatedly did not disclose limitations of broadband service availability and knowingly marketed its DSL service at speeds the company could not provide customers.

According to the court document:

  • Frontier is required to “clearly and conspicuously” disclose in its print and broadcast advertising the actual internet speeds available to customers in terms of minimum and maximum speed.
  • Customers that sign up for a high-speed plan that Frontier cannot provide may switch to a lower speed plan or discontinue service incurring no penalties or early cancellation fees.
  • Existing customers that do not receive at least 90% of the highest speed their current plan advertises will receive a service credit of 50% of the internet charge for each month Frontier did not provide such speed. Credits will begin in 2020 and end three years after the date the court accepts the Assurance.
  • Frontier has also agreed to invest at least $1 million to improve internet service in Elko County.

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