Spectrum markets where gigabit speed is already available.

Charter Communications is accelerating the deployment of the next generation cable broadband standard DOCSIS 3.1 so that it can offer almost every customer gigabit download speed by the end of this year.

“We plan to be 1 Gbps everywhere and marketing 1 Gbps everywhere this year, which is [also includes] taking up a significant portion of our business to minimum speeds of 200 Mbps at the same price we were charging for 60 Mbps a year ago,” said Thomas Rutledge, CEO of Charter Communications, on a Feb. 2 investor conference call. “And we plan to do that as quickly as we can, but because of the all-digital rollout and some of the other operational issues we have, we haven’t fully planned out [200 Mbps speed for] the whole country yet.”

Charter’s biggest challenge is expected to be swapping legacy modems inadequate for the task of delivering 200 Mbps and higher speeds to residential customers. Many Charter customers are still using modems originally provided by Time Warner Cable and Bright House Networks, generally considered adequate for supporting top speeds only between 50-100 Mbps. But Charter is planning to offer faster internet speeds to position itself as a viable broadband competitor in markets where fiber competitors have poached subscribers and the future threat of 5G speeds up to 1 Gbps are on the horizon. That could require a substantial modem exchange program, especially in cities that were never upgraded to Time Warner Cable Maxx before Charter acquired Time Warner Cable.

Charter’s migration for Time Warner Cable/Bright House customers continues, while Charter Legacy markets stall

In 2017, Charter intentionally focused most of its time and money integrating its acquired Time Warner Cable and Bright House Networks customers into Charter’s billing, provisioning, service, and retention systems. This came, Rutledge admitted, at the expense of long-time Charter customers who saw new product launches and upgrades delayed because of the ongoing integration effort.

It will take until 2019 to fully integrate all of Charter’s customers onto a single platform that will no longer distinguish if a customer was a long-standing Charter customer or a former TWC or BH subscriber.

Customers willing to abandon their legacy Time Warner Cable or Bright House plans in favor of a Spectrum plan are also dragging their feet. As of the end of 2017, 51% of TWC and Bright House customers were still sticking with their original plan, refusing to switch to Spectrum pricing and packaging. As customers face Spectrum’s new plans, some are canceling service. Time Warner Cable residential video customers dropped by 2.5% over 2017. Charter Legacy customers dropped by 1%, while legacy Bright House customers declined by 0.5%.

Legacy Charter areas saw subscribers running out of patience. The company lost 10,000 video customers in the last quarter versus a gain of 20,000 customers a year ago. Company officials blame the complications associated with absorbing millions of acquired customers for the results.

“In 2016 and 2017, we delayed a number of new product launches through the integration, particularly at legacy Charter within our fundamental structured operating model and business rules now in place, we will more aggressively launch new products nationwide,” said Rutledge.

Charter is also spending a considerable amount of its financial resources buying back its stock. During the fourth quarter, Charter accelerated its buyback program repurchasing 13.5 million shares in Charter Holdings stock totaling $4.7 billion at an average price of $347 per share. For all of 2017, Charter bought back $13.2 billion worth of its own stock.

Digital television conversions drag on…

Charter did not restart its digital television conversion program until June of 2017, and 30% of Time Warner Cable and 50% of Bright House Networks customers are still watching analog cable television as a result. Company officials promise digital conversion will be completed nationwide by the end of this year, the first step the company will take to make dramatic broadband speed increases possible.

“Our video products in those markets will improve,” Rutledge said. “Internet speeds will increase further and all-digital will drive more efficient operations in the field including electronic disconnects, self-installation and a reduction of unauthorized connections.”

Among the most significant improvements is the introduction of the Worldbox set-top box, which will be available nationwide by the end of 2018, but generally only to new video customers. The new box runs faster and is less expensive than the traditional set-top box, and better integrates on-demand and streaming video services.

Worldbox will also highlight Spectrum’s new Spectrum Guide, an improved on-screen program guide and content portal. The new guide will also include support for third-party streaming services like Netflix.

Charter has also begun to deploy an improved Wi-Fi router known as Wave 2, which claims to offer faster speeds and better signals throughout a customer’s home. Availability is reportedly spotty, but improving.

Charter Communications CEO Thomas Rutledge is fed up with customers sharing their passwords to unlock television streaming services for non-subscribing friends and family and promises to lead an industry-wide crackdown on the practice in 2018.

“There’s lots of extra streams, there’s lots of extra passwords, there’s lots of people who could get free service,” Rutledge said at an industry conference this month.

Password sharing used to be limited to services like Netflix, HBO, Showtime and Hulu, but since the cable industry opened up its “authenticated” TV Everywhere services to viewing outside of the home, unauthorized viewing by non-subscribers has allegedly exploded.

Three typical tweets exemplify the problem for Rutledge. One sought to trade for a Spectrum user ID and password, another thanked a friend for sharing their Spectrum TV user credentials to unlock a channel showing the World Series. A third delighted in the fact he managed to hack his parent’s Spectrum account password and now watches cable television for free.

Rutledge complained that password sharing is now so rampant, one unnamed network authorized 30,000 simultaneous streams using a single customer’s login credentials.

Rutledge believes many non-paying customers are now enjoying Spectrum TV and other services as a result of the practice. Shareholders and Wall Street analysts are also concerned, particularly as cord-cutting continues to take a toll on cable TV subscriber numbers and revenue.

Rutledge

Bloomberg News reports there is divergent thinking about password sharing and how serious it actually is. Top executives at Time Warner, Inc., which owns HBO and Turner Broadcasting, have shrugged about password sharing in the past, believing it is a good way to introduce potential customers to their services and eventually become paying subscribers.

Password sharing “is still relatively small and we are seeing no economic impact on our business,” said Jeff Cusson, a spokesman for HBO.

But anecdotal evidence at networks like ESPN, owned by Walt Disney Co., suggests millennials have no moral dilemma routinely sharing their passwords, even with strangers. At one focus group targeting younger sports fans, all 50 participants raised their hands when asked if they shared passwords, according to a fuming Justin Connolly, executive vice president for affiliate sales and marketing at ESPN.

“It’s piracy,” Connolly said. “It’s people consuming something they haven’t paid for. The more the practice is viewed with a shrug, the more it creates a dynamic where people believe it’s acceptable. And it’s not.”

The TV Everywhere “authenticated subscriber” concept has traditionally required pay television customers to re-enter their username and password for each authorized device at least once each year, although some cable operators require subscribers to re-enter their credentials monthly, and actively discontinue access as quickly as possible when a customer downgrades or cancels their cable television service.

Many cable providers offer their own live streaming apps and on-demand streaming service showcasing the cable TV lineup for in-home and out of home viewing on desktops, tablets, and portable devices. Some limit the number of channels that can be viewed outside of the home and do not allow multiple users to concurrently stream programming. But most cable TV networks that support authentication do not limit concurrent streams or offer generous limits on how many services can be streamed at the same time over a single account.

(Source: Consumer Reports)

Charter is now taking the lead on demanding cable TV network owners tighten up their apps and online viewing to limit password sharing. Some of the toughest negotiations took place this past fall between Charter and Viacom, owner of Comedy Central, MTV, and Nickelodeon. Viacom pushed hard for Charter to restore its basic cable networks to Spectrum’s entry-level “Select” cable television package. In 2016, many Viacom networks were pushed to the much more expensive Gold package, which meant significant losses in audience as Time Warner Cable and Bright House customers switched to Spectrum’s TV plans. Time Warner Cable included Viacom-owned networks in all the company’s popular TV tiers, but most customers lost access to those networks when they switched to a Spectrum TV plan.

Viacom successfully negotiated the transition of its networks back to the Select TV plan beginning in late January, 2018. But those networks’ online viewing platforms and apps will now include stream limitations to keep simultaneous viewing and password sharing to a minimum.

ESPN, which has been dropped from the lineup in a number of slimmed-down cable TV packages, has also experienced plenty of password sharing, and has begun limiting the number of simultaneous streams allowed per customer. Originally, one account could launch 10 concurrent streams. That number has now been cut in half to five and the sports network is currently considering further reducing the stream limit to three simultaneous sessions.

One research group, Park Associates, estimates almost one-third of internet-only customers are streaming cable television networks and programming using someone else’s subscriber credentials. They estimate the cable TV industry will lose $3.5 billion from unauthorized viewing this year, rising to $9.9 billion by 2021.

Companies like Adobe Systems have begun selling services to cable TV providers that track the use of usernames and passwords and the location of those accessing online streams. They suggest cord-cutting is fueling unauthorized viewing as customers seek access to cable programming for free.

Much of the password sharing seems to be occurring among friends and relatives, especially children away from home. For now, most cable TV executives are fine with in-family sharing. What concerns most is when those passwords are further shared with friends or sold to strangers. It is uncertain if customers are always aware that their user credentials are being sold or traded by third parties. When an account that saw no streaming activity before suddenly generates 50 simultaneous streams in multiple states, hacking by an unknown party is usually suspected.

The cable industry remains undecided about exactly how many concurrent streams are appropriate for consumers. Netflix allows between one and four streams, depending on the plan chosen. HBO permits three simultaneous streams, DirecTV Now allows two while DirecTV’s satellite customers get up to five streams.

Charter Communications has been quietly testing a streaming video lineup of services on selected college campuses in its service area — so quiet very few students know or care about the service.

In Rochester, N.Y., Charter this year introduced SpectrumU at two suburban colleges – St. John Fisher and Nazareth College. The 50+ channel service at St. John Fisher includes five local network stations, but not the low-powered MyNetworkTV or secondary CW affiliate that are found on the traditional local cable lineup. According to Nazareth’s channel list, SpectrumU at the college comes from Spectrum Enterprise’s Fiber Connect service and lists six network affiliates on the lineup imported from Buffalo, a city 70 miles away. The service is accessible around each campus on the schools’ Wi-Fi networks.

Charter wants participating colleges to set aside a 1Gbps connection to manage Wi-Fi streaming for every 5,000 students on campus. Stop the Cap! found anecdotal evidence Charter may be dramatically overestimating how many students actually use the service. A recent visit to both campuses and guest participation in online college forums found almost zero interest in SpectrumU at either college. Students, it seems, have mostly moved on from linear, live television and do much of their viewing on-demand from other streaming services and apps.

Charter Communications kept publicity and expectations low for the service, setting the monthly subscription price for SpectrumU at $0.00. No password or authentication is required to use the service, and logging into the campus network is simple at schools like Nazareth, where the Wi-Fi password GoldenFlyers was easy to come by on and off campus. While driving around, we could easily access SpectrumU from Wi-Fi on streets surrounding St. John Fisher, although Nazareth’s wireless network was tougher to reach on a tree-lined campus set further back from the main road.

Television services at St. John Fisher College, located near Rochester, N.Y.

Charter dictates the terms and availability of the service, which requires participating schools to subscribe to Charter Spectrum’s Enterprise Fiber Connect service, which supports campus internet and video services. Schools must offer:

• Charter Clear QAM or fiber video services
• Charter fiber internet services (preferred)
• 1Gbps dedicated bandwidth per 5,000 students (~500 concurrent users) recommended
• Wi-Fi network utilizes WPA or WPA2 encryption
• Public IP addresses/ranges for whitelisting
• PAT IPs are supported
• IP requirements: IPv4: /24 – IPv6: /48
• AP’s consistent with current fifth generation Wi-Fi technology, 802.11ac (no older than fourth generation 802.11n)

SpectrumU is designed to work exclusively over Wi-Fi, and only with portable smartphones and tablets:

• iPhone, iPad, or iPod touch running iOS 8 or above
• All major Android smartphones and tablets running Android 4.2 or above
• Kindle Fire Phone, all Kindle Fire models except for the 1st generation model

There is no support for streaming set-top boxes like Roku or Apple TV and SpectrumU works differently from the QAM cable TV service available in many dorm rooms. Casting isn’t supported either. The Android version of the app only attracted 69 mixed reviews as of the date of this article.

Charter seems convinced SpectrumU will soon replace traditional internet video streaming, telling campus managers that the service will have “minimal impact if the school’s internet service is robust today, as SpectrumU usage will replace usage of other streaming apps.”

Students doubt it.

“I have never heard of SpectrumU and don’t care,” said Cody, a student we ran into in the parking lot at Nazareth. “I have Amazon Prime and Netflix and I’m good with that.”

Hobart and William Smith Colleges in Geneva, N.Y., are also an early adopter of SpectrumU.

Zephyr, a freshman at St. John Fisher who lives on campus said she doesn’t know anything about the service either, although a roommate in her friend’s dorm room brought their QAM-equipped television to school and can watch the campus TV lineup on it.

“Her boyfriend is a Buffalo Bills fan so he watches the games on her TV, but we really don’t watch it ourselves,” she told us. “Everyone has their own phone or tablet and most people are sharing  passwords from home to watch HBO, Hulu, or Amazon stuff.”

Dylan’s password trading brings him access to Hulu, Amazon, Netflix, CBS, and Sling TV. Even with SpectrumU available for free with no password required, he doesn’t care, preferring to watch on-demand content on his tablet or the PlayStation he brought to school.

“I don’t know anyone who watches Spectrum TV and their company sucks anyway,” said Dylan. “I hate ads and I pretty much only binge watch stuff now, so this is useless for me.”

A few students told us they did bring televisions to campus to watch live television, but many just use an antenna. Nazareth and St. John Fisher are only a short distance from Pinnacle Hill, the location for most Rochester television transmitters, and reception is easy.

“Televisions are what our parents watch,” Serena at Nazareth told us. “I don’t know anyone my age with cable.”

Stop the Cap! tested the Android version of the app at both colleges. It reminds us of Spectrum’s streaming TV app, only less capable. The app does not support DVR-type recording, pause and rewind, or on-demand services — things college students would probably look for the most. We experienced occasional buffering watching CNN in a parking lot, but note Wi-Fi signal strength was not ideal. We also found, despite warnings in student handbooks, a number of student-run hotspots and wireless access points. At one dorm at St. John Fisher, we found over 60 Wi-Fi signals competing with the college’s own wireless network.

Cable companies believe by offering cable services to college students, they will get hooked on those services and subscribe after they leave college. But evidence suggests those under 30 are increasingly unlikely to pay for a cable television subscription and are dubbed “cable-nevers” for having no interest in subscription television. They are, however, avid users of streaming services like Netflix and Hulu.

NEW YORK (Reuters) – Discovery Communications Inc is acquiring Scripps Networks Interactive Inc for $11.9 billion in a deal expected to boost the company’s negotiating leverage as it seeks new audiences.

The acquisition, announced on Monday, brings together Scripps’ largely female-focused lifestyle channels such as HGTV, Travel Channel and Food Network with Discovery’s Animal Planet and Discovery Channel, whose viewers are primarily male.

Despite expectations of $350 million in total cost synergies, many analysts questioned how the combined company would compete long term as viewers cut cords to cable providers and as advertising and ratings decline.

Discovery shares ended regular trading down 8.2 percent at $24.60 while those of Scripps finished up 0.6 percent at $87.41.

Discovery is paying 70 percent cash and 30 percent stock for Scripps. The total price of the deal is $14.6 billion including debt.

“While we believe the two companies are likely better positioned together, rather than apart, the longer-term issues facing the industry still remain,” wrote John Janedis, an analyst at Jefferies, in a note on Monday.

Both Discovery and Scripps reported quarterly earnings on Monday that reflected the challenges facing U.S. media companies. Scripps missed its second quarter ad guidance and lowered its full-year estimates, and Discovery reported flat advertising and lower affiliate revenue.

U.S. television networks and cable providers are under pressure as more viewers watch shows and movies on phones and tablets. There is also increased competition for viewers from streaming services such as Netflix Inc and Amazon.com Inc.

Five of the largest U.S. pay TV providers posted subscriber losses during the second quarter.

The combined company’s larger programming slate might give it an advantage in negotiations for inclusion in skinny bundles, or economy-priced cable packages that offer fewer channels than a standard contract.

After the merger, the company will offer 300,000 hours of content and capture about a 20 percent share of ad-supported cable audiences in the United States, Discovery said on an analyst call Monday morning.

“The transaction supports and accelerates Discovery’s pivot from a linear TV-only company to a leading content provider across all screens and services around the world,” David Zaslav, Discovery’s chief executive, told investors.

The combined company would also have more muscle in negotiations with cable and other distributors when contracts come up for renewal, executives said.

By adding Scripps programming, Discovery could also launch its own “skinny bundle” of networks at a low cost, executives said.

The combined company would be home to five of the top cable networks for women with more than a 20 percent share of women prime-time viewers in the United States, according to Discovery.

Discovery will evaluate the Scripps channels, as it has its own, to figure out if any could be web-based, Zaslav said on the call.

Scripps has been considered a takeover target since the Scripps family trust, which controlled the company, was dissolved five years ago.

Under the terms of the deal, Scripps CEO Ken Lowe would join the board of the combined company.

The deal requires regulatory and shareholder approvals. Major shareholders including cable magnate John Malone, Advance/Newhouse Programming Partnership and members of the Scripps family, support the deal, the companies said.

Discovery had tried unsuccessfully twice before to buy Scripps. Discovery outbid Viacom Inc for Scripps, Reuters reported first last week.

Guggenheim Securities and Goldman Sachs served as financial advisers to Discovery. Allen & Co LLC and J.P. Morgan Securities served as financial advisers to Scripps.

Evercore Group served as financial adviser to the Scripps family.

Reporting by: Jessica Toonkel; Editing by Jeffrey Benkoe and Steve Orlofsky

If you can’t beat ’em, join ’em.

Charter Communications this week quietly announced a cord-cutters cable TV package that works on your tablet, smartphone, Xbox One, Roku, and Samsung Smart TVs.

Spectrum TV Stream ($19.95/mo) gives access to a sports-free, slimmed down basic cable TV package of popular cable networks and, rare among online streaming services, access to your local ABC, CBS, FOX, NBC, and PBS stations. You also get access to Spectrum News (where available), a 24/7 local news service carried over from the days of Time Warner Cable and Bright House Networks.

The basic cable networks covered include:

• CNN
• Bravo
• A&E
• AMC
• Discovery
• Food
• TBS
• Lifetime
• FX
• National Geographic Channel
• HGTV
• The History Channel
• Freeform
• Hallmark Channel
• Hallmark Movies
• Animal Planet
• E!
• Lifetime Movie Network
• Oxygen
• TNT
• TLC
• USA
• WGN America
• Spectrum News

Remarkably, customers can buy premium movie channels in this package for less than what they would pay with Spectrum’s traditional cable TV package. For 36 months, customers can get HBO, Showtime, Starz, Starz Encore, and The Movie Channel for $15 more per month (or $7.50 each). Oddly, Cinemax and Epix are not included.

(Image courtesy of Ian Littman)

Customers who sign up will also be able to access Spectrum TV apps and have an authenticated subscriber login to access on-demand programming from the respective websites of the networks included in the package. Spectrum also will include about 5,000 free on-demand streaming titles.

There are some restrictions with the service. You must be a Spectrum broadband customer. We are uncertain if customers still holding on to their Time Warner Cable or Bright House packages will qualify. You must not owe any past due balance to Charter Communications (or TWC or BH), and it seems likely Spectrum will charge you the Broadcast TV surcharge (usually $4-7 a month depending on the market), plus taxes and fees.

There may be availability restrictions as well. We do know the service is available in parts of California and Texas, but you may need to call to ascertain availability in your area.

To protect the cable TV industry from any undue competition, the service is only being sold in Charter/Spectrum service areas, so if you thought this would help you cancel Comcast or Cox cable TV, forget it.