Allen

Citing tissue-thin evidence to prove the allegation Comcast and Time Warner Cable conspired to racially discriminate against minority-owned cable channels, a California judge dismissed a $20 billion lawsuit brought by Byron Allen’s Entertainment Studios Networks.

Allen accused Comcast and Time Warner Cable of creating minority interest cable networks that were actually owned by white ex-cable executives and hedge fund operators. Allen charged Comcast with seeking to pass the minority networks off as fulfillment of a diversity agreement Comcast had with federal officials as a condition of approving the 2010 merger of Comcast and NBCUniversal.

Allen also claimed Comcast “brazenly stated that it does not want to create any more black billionaires, such as Bob Johnson, the African-American founder of Black Entertainment Television.” Allen also referred to Sharpton as “Comcast’s least expensive negro.”

Allen widened the list of defendants to include several minority groups that have close ties to Comcast, including Al Sharpton and his National Action Network, the NAACP, and the Urban League. All of the named defendants are regular promoters of Comcast’s ventures and business interests in letters to regulators.

U.S. District Judge Terry Hatter Jr. found Allen’s case less than compelling and dismissed it outright, ruling it lacked enough verifiable facts to show his court has jurisdiction over the defendants and lacked sufficient evidence to prove liability.

The ruling did not seem to bother Allen much.

“Knowing that our lawsuit helped the FCC and the DOJ deny Comcast’s bid to buy Time Warner Cable is already a big win for us,” said Allen in a statement. “We are going to immediately appeal this decision to the 9th Circuit Court of Appeals who I believe will deliver us a favorable decision.”

Comcast and the other defendants called the lawsuit offensive, frivolous and outlandish.

Time Warner Cable is nearing the end of its $60 million “Maxx” upgrade of San Antonio, company officials said in a news release.

The Maxx upgrade most noticeably boosts broadband speeds up to six times faster than what customers used to receive, at no change in price, up to 300/20Mbps.

Time Warner Cable Maxx Broadband Speed Comparison

Earthlink customers will also get a speed boost.  The traditional EarthLink Broadband plan will become EarthLink Extreme with speed up to 50/5Mbps. EarthLink Cable Max will become EarthLink Ultimate with speed up to 100/10Mbps. Customers who want faster Internet will have to switch back to Time Warner Cable to upgrade above 100Mbps.

As part of the upgrade, Time Warner has converted its analog television signals to all-digital service. Free digital adapters are available to customers until Dec. 28, 2016. After that, each adapter will cost $2.75 a month.

Pai

Republican FCC Commissioners Ajit Pai and Michael O’Rielly are in a hurry to start the merger review clock on Charter Communications’ acquisition of Time Warner Cable while the agency contemplates how to handle access to submitted documents the two companies insist should be confidential.

“We are deeply dismayed that the FCC’s leadership seems unwilling to begin the formal review of the Charter Communications/Time Warner Cable/Bright House Networks transaction until Commissioners agree to change the FCC’s procedures for protecting confidential information,” the commissioners said. “We don’t plan to allow this maneuver to deter us from giving careful scrutiny to the important item in front of us, which if adopted, would apply not only to future transactions but all Commission proceedings. Among other things, we believe that the better course would be for the Commission to seek public input on these proposed procedures before moving ahead.”

The FCC has a responsibility to review merger proposals to decide if they are in “the public interest, convenience, and necessity.”

O’Rielly

Part of that process is reviewing proprietary information sent by the applicants, usually with the understanding the information will be kept confidential or released to the public only in redacted form. Competitors can only get a limited view of the documents the FCC reviews in making its decision about a merger, but some have successfully requested limited access to unredacted documents, including contracts the companies have with third-party programmers.

The fact those documents might be shared with competitors like Dish Networks was not acceptable to CBS, Disney, 21st Century Fox, Scripps Networks, Time Warner Inc., and Univision, all fearing competitors would learn confidential pricing information and use it to their advantage during the next round of contract renewal negotiations. Those media companies sued the FCC in the D.C. Court of Appeals and largely won their case.

Now the FCC has to craft new rules to decide what information they can share with competitors and the public. That process has slowed the start of the 180 day clock the FCC uses to review merger deals, and the two minority Republicans serving as commissioners on the FCC are annoyed.

“The agency has access to the relevant documents at issue in this matter and can continue to evaluate the proposed merger….” So let’s start the ‘aspirational’ merger review shot clock and get on with the process,” said Pai and O’Rielly.

Time Warner Cable will continue to offer customers unlimited data plans and further expand its Maxx upgrade program until it reaches the company’s entire service area or the merger with Charter Communications is approved by regulators.

CEO Robert Marcus told investors on a morning conference call the company has been “completely committed to delivering an unlimited broadband offering in connection with whatever else we do, because we know customers do place a value on the peace of mind that comes with unlimited plans.”

Marcus continued to admit his company’s experiments with voluntary usage pricing have largely failed, noting the “vast majority” of customers choose unlimited plans, and Time Warner “never had any intention of substituting the availability of unlimited with exclusively usage-based programs.”

The original goal for Time Warner’s voluntary usage pricing options “was to offer customers who use less bandwidth, who maybe just do e-mail, an opportunity to pay less and have an Internet offering that better meets their demands for both usage and price.”

Time Warner Cable goes out of its way to advertise “No Data Caps.”

Most broadband customers do not want usage-based billing or usage-capped Internet, but some providers force such usage plans on customers anyway.

“Different providers have had different philosophies on these things,” Marcus offered.

Marcus reported TWC Maxx deployment in Austin is finished, and the company is working on completing upgrades in Dallas, San Antonio, Raleigh, Charlotte, Kansas City and Hawaii by year-end. The latest markets to be upgraded — San Diego, Wilmington and Greensboro, N.C., will start this year, but speed increases will not begin until next year. The upgrades are improving customer satisfaction with a 35% drop in voluntary disconnects in Maxx service areas, but will cost an estimated $4.45 billion in spending this year by the country’s second largest cable operator.

Time Warner Cable Maxx has been very successful at bringing new customers to Time Warner, attracted by improved broadband speeds and better service, Marcus told investors. Maxx customers see broadband speed upgrades that dramatically boost speeds at no additional cost. Standard Internet speeds in non-Maxx markets are 15Mbps. In Maxx areas, customers receive 50Mbps. Customers signed up for 50Mbps “Ultimate” Internet in Maxx markets see that speed raised to 300Mbps.

Large sections of Time Warner Cable territory have yet to be upgraded, however. Marcus today said he plans to continue the Maxx upgrade effort as the Charter merger proceeds through a lengthy regulatory review process. If the merger is delayed or unsuccessful, Time Warner likely will announce additional cities targeted for upgrades in 2016, but customers should not expect speed changes until later that year or 2017. If the Charter merger is approved, areas bypassed for Maxx upgrades will likely get a more modest upgrade promised by Charter, with maximum broadband speeds of 100Mbps.

Marcus

Time Warner Cable spent the last quarter pushing lower priced promotions to attract new and returning customers. That, combined with higher programming costs, increased spending on network upgrades, and pension expenses cut into the cable company’s profits, which declined 7.2% in the last quarter.

Time Warner Cable added 66,000 residential customers overall, its best ever second quarter and its first rise in any quarter since 2008, according to Marcus. Time Warner added 172,000 new broadband customers and 252,000 voice subscribers, primarily from a promotion that allows any subscriber to add phone service to their package for $10 a month. But Time Warner is not immune to cord cutting, and lost 45,000 video customers in the second quarter.

The cable company may have stepped up promotions to be certain it can report good results as investors wait for the Charter Communications merger to win or lose regulator approval. A triple play promotion for new customers runs as low as $89 a month and despite touting an earlier philosophy the company did not see much value promoting cheap phone service, it has apparently reversed course, boosting triple play upgrades as a result of reduced pricing.

It is also continuing strong customer retention policies, a sign Time Warner Cable will continue to respond when customers threaten to cancel unless they get a better deal.

“Our whole view of retention hasn’t really changed since the middle part of 2014,” said William F. Osbourn, Jr., acting co-chief financial officer. “Our view is that we will always rather save the customer than lose the customer, but I think we’re pretty disciplined about not giving away the farm in doing that.”

Some other highlights:

• Programming costs rose 11%, a sure bet another rate increase will be forthcoming in the future;
• Marcus loves mergers: “The only thing I’d add to that is that from an industry structure perspective, in roughly a quarter of our footprint, the deal [between AT&T and DirecTV] results in two competitors becoming one. And, generally speaking, that’s a positive for all the players in the industry”;
• Time Warner Cable will continue to encourage customers to use their own set-top box devices (Roku, Apple TV, etc.) as an alternative to the traditional cable set-top box;
• Roughly 12% of customers now own their own cable modems to escape Time Warner’s rental fee;
• Despite the clamor for “skinny bundles” 82% of Time Warner Cable customers subscribed to the full video package;
• In Maxx areas, customers need set-top boxes on all of their connected televisions. Most are opting for the cheapest option, taking an average of two less-capable DTA boxes instead of more expensive set-tops. DVR subscriber numbers have remain largely unchanged after Maxx upgrades.

Vice President Biden in Rochester, N.Y.

Vice President Joe Biden and New York Gov. Andrew Cuomo today announced Rochester, N.Y., a city notorious for its slow broadband, will be the home of the $600 million Integrated Photonics Institute for Manufacturing Innovation, a hub supporting the development of photonics — technology that powers everything from fiber optic broadband to laser surgery.

Rochester, the home of dramatically downsized household names like Eastman Kodak, Xerox, and Bausch and Lomb, could see thousands of new high technology jobs created in the western New York city to develop new products and services that depend on light waves.

“The innovation and jobs this institute will create will be a game changer for Rochester and the entire state,” said U.S. Rep. Louise Slaughter, (D-Rochester). “This is a huge win that will shape our region’s economy for decades to come.”

Slaughter reportedly spent three years working to bring the center to Rochester and helped secure $110 million from the Defense Department and another $500 million in state and private sector funding to finance its development. The project could prove transformational for a community ravaged by downsizing, most dramatically exemplified by Eastman Kodak, which had 62,000 workers in Rochester during the 1980s but employs fewer than 2,500 today.

Today, Rochester’s largest employers are no longer manufacturers. Health care service providers now lead the way, including the University of Rochester Medical Center/Strong Health (#1) and the Rochester General Health System (#3). Upscale grocery chain Wegmans calls Rochester home and is the community’s second largest employer. The bureaucracies that power the Rochester City School District and Monroe County Government are also among the area’s top-10 employers.

Despite the job shifts, the fact 24,000 workers in the region are already employed in photonics-related jobs may have been a deciding factor in selecting Rochester for the center.

“The photonics center we are now bringing to Rochester will harness the power of the Defense Department and the prowess of Rochester’s 24,000 employee-strong photonics industry and focus it like a laser beam to launch new industries, technologies and jobs,” Sen. Charles Schumer (D-N.Y.) said in a statement.

Employers, small business start-ups and workers moving into the region are likely to be considerably less impressed by Rochester’s incumbent telecommunications service providers. Although institutional and large commercial fiber networks are available to those with deep pockets, with the exception of Greenlight Networks, a local fiber to the home retail overbuilder providing fast gigabit fiber Internet to a tiny percentage of local residents, the area’s fiber future remains bleak.

Time Warner Cable, by far the largest Internet provider in the region, has left Rochester off its Maxx upgrade list, leaving the city with a maximum of 50/5Mbps Internet speed. Frontier Communications still relies on 1990s era DSL service and the anemic speeds it delivers, evident from the company’s poor average speed ranking — 11.47Mbps — less than half the minimum 25Mbps the FCC considers broadband.

Rochester is hardly a broadband speed leader in New York State, only managing to score in 332nd place. (Image: Ookla)

The performance of the two providers has dragged Rochester’s broadband speed ranking to an embarrassingly low #336 compared with other communities in New York. Suburban towns in downstate New York enjoy more than twice the speed upstate residents get, largely thanks to major upgrades from Verizon (FiOS) and Time Warner Cable (Maxx). But even compared with other upstate communities, Rochester still scores poorly, beaten by small communities like Watertown, Massena, and Waterloo. Suburban Buffalo, Syracuse, and Albany also outperform Rochester.

In contrast, in Raleigh, N.C., home to the Power America Institute — another federal manufacturing center — broadband life is better:

• Raleigh is a Google Fiber city and will receive 1,000/1,000Mbps service for $70 a month, around $20 more than what Time Warner charges for 50/5Mbps with a promotion;
• Raleigh is a Time Warner Cable Maxx city with free broadband speed upgrades ranging from 15Mbps before/50Mbps after to 50Mbps before/300Mbps after;
• Raleigh is an AT&T U-verse with GigaPower city with 1,000/1,000Mbps service for $120 70 a month.

This article was updated to correct the pricing of AT&T U-verse with GigaPower in Raleigh, N.C., with thanks to reader Darrin Evans for the corrected information.