Rutledge

Charter Communications is using the benefits of the Republican-promoted tax cut to buy back its own stock, because the only other option under consideration was using the money to buy up other cable operators.

“From a [mergers and acquisitions] perspective, I think cable is a great business. If there were assets for sale that we could do more of, we would do that,” said Charter Communications CEO Thomas Rutledge at this week’s UBS Global Media & Communications Conference. “We’ve been buying a lot of our own stock back. Why? Because we think the cable business is a great business and we haven’t been able to buy other cable assets.”

Charter is not using the company’s lower tax rate to benefit Spectrum customers with lower bills or more extravagant upgrades. Instead, it is accelerating efforts to please shareholders and executives with efforts to boost its share price — something key to top executives’ performance bonuses.

With digital and broadband upgrades nearly complete in areas formerly served by Time Warner Cable and Bright House Networks — the cable companies Charter acquired in 2016 — Rutledge told investors he can initiate additional upgrades without spending huge sums on infrastructure buildouts.

Gigabit speed is now available in most markets, and the company has doubled its lowest internet download speeds in areas where it faces significant competition from AT&T from 100 to 200 Mbps, boosting sales of Spectrum broadband service, according to Rutledge.

Today, about 60% of Spectrum customers are offered 100 Mbps, while the other 40% — mostly in AT&T service areas — are getting 200 Mbps.

Rutledge told investors he does not see much threat from Verizon FiOS or its newly launched 5G offerings, and has no immediate plans to upgrade service in Verizon service areas because neither offering seems that compelling.

“I saw that Verizon had some passings that they could do 800 Mbps in,” Rutledge said. “We have 51 million passings that we can do 1 gigabit in and we can go to 10 gigabits relatively inexpensively and I think we will because I think the world will go to 10 gigabits.”

Analysts are uncertain whether Rutledge’s comments are naïve or brave.

“We see 5G fixed wireless broadband [like that offered by Verizon] as the largest existential threat to broadband providers, by far,” wrote analysts at Cowen. Until now, most broadband competition for cable operators came from phone companies pitching DSL. Verizon retrenched on its FiOS offering several years ago. But AT&T has been more aggressive upgrading urban areas to fiber service, which has forced Charter to respond with higher speeds and better promotions.

Rutledge does not see Verizon’s 5G being a significant competitive threat for several years, and suspects Wall Street may once again punish Verizon for spending money on a wireless network less capable than what the cable industry offers today. Shareholders may also dislike watching Verizon distracted by the home broadband market when portable wireless revenues are much more important to the company.

Verizon officials claim about half of those signing up for its 5G service plan were not current Verizon customers. But the company would not say whether their new fixed wireless customers were coming largely from cable or DSL disconnects, which would prove marketplace disruption.

Forty companies, including hedge funds, phone companies, and wireless carriers have collectively bid $336,265,480 so far for about 2,500 28 GHz licenses (out of 3,072 available) that will be a part of the buildout of 5G millimeter wave wireless service.

The FCC is currently auctioning off spectrum in the 27.5–28.35 GHz (28 GHz) band — a very large chunk of frequencies which can offer bidders the opportunity to launch a wide bandwidth cellular data service capable of very fast internet speed. But because the frequencies involved are line-of-sight, the winning bidders will have to invest in large networks of small cell antennas that will be required to reach customers.

Citigroup analysts reviewing the auction results so far told clients they suspect there are “two outsized bidders” winning many of the available licenses, including Verizon. This is not a surprise, considering Verizon already has significant spectrum holdings in the 28 GHz band. Verizon’s current 5G service relies on this millimeter wave spectrum, but is available so far only in a handful of markets. The identity of the second major bidder remains a mystery. The spectrum licenses getting no bids are mostly in rural areas with low population density.

All the other major wireless operators — AT&T, T-Mobile, and U.S. Cellular — are also bidders. Only Sprint, currently in a merger deal with T-Mobile, is missing. AT&T has not shown much interest in offering its customers millimeter wave 5G service, and T-Mobile is planning to use 5G’s technology upgrade to bolster its existing network with more capacity and speed. Dish Network, which already controls a substantial portfolio of unused spectrum, is also a bidder and could be seeking to stockpile 5G spectrum for a future venture or sales deal with one of the other wireless companies.

The qualified bidders:

Bidding starts at $200 per available county, and many rural licenses could be won for precisely that amount, with only one interested bidder offering the minimum bid.

The highest bids are just over $10,000,000 each for two licenses in the Honolulu, Hawaii market. Bids in excess of $2 million are currently on the table in these counties:

California: Kern
Colorado: El Paso
Florida: Volusia
Illinois: Winnebago
Iowa: Linn
Louisiana: East Baton Rouge
Maine: Cumberland
Missouri: Greene
Nebraska: Lancaster
Nevada: Washoe
Oregon: Jackson
Pennsylvania: Lancaster, Berks, York, Lehigh, Luzerne, Northampton, Dauphin
Texas: Cameron, Hidalgo
Wisconsin: Dane

“Charter Spectrum has been kicked out of the state of New York and has a 60 day transition period to allow those customers time to find a new provider,” a sales representative told a Charter customer in New York recently. “[She] would love to be the first to put together a proposal.”

That sales pitch was part of two exhibits offered by Charter Communications to back its claims it is being treated unfairly in New York because regulators have asked the company to make preparations to leave the state and competitors are taking full advantage.

“Although highly sophisticated entities familiar with regulatory litigation may understand that there will be legal proceedings regarding the Revocation Order and that it may ultimately never take effect, the potential for confusion among other current and prospective customers who lack such experience with the legal and regulatory process is significant,” company officials argued. “Charter’s competitors have already attempted to take advantage of the Revocation Order. For example, Verizon has already begun reaching out to several of Charter’s significant customers, including residential management companies in New York City. Verizon representatives have asserted that Charter will no longer be permitted to operate in New York State as a result of the Revocation Order, and have offered Verizon’s services as a substitute.”

Charter also claimed Verizon representatives were suggesting Charter was leaving the New York market and that customers had to (falsely) disconnect their Charter service.

“Such exploitation by Charter’s competitors is likely to increase and be amplified if Charter is required to file a public wind-down plan for exiting the state,” the company added.

Pai

FCC Chairman Ajit Pai is leading the charge to define text messaging (SMS, MMS) as an “information service,” allowing phone companies a clear right to censor or block messages they do not like.

On Tuesday, Pai proposed a Declaratory Ruling that would deny a petition from consumer group Public Knowledge asking the FCC to once and for all affirm text messaging as a telecommunications service. The request goes all the way back to a 2007 dispute between NARAL — a reproductive rights group and Verizon Wireless. The wireless carrier blocked a text message campaign from NARAL, claiming it had the right to block “controversial or unsavory” text messages. It was the only wireless company to reject NARAL’s text-message program, which invited consumers to sign up for alerts and other information.

Legal experts told the New York Times private companies like Verizon probably had the legal right to decide which messages to carry, because text messaging was never defined as a “common carrier” service. Verizon Wireless at the time insisted it did not accept text messaging programs from any group “that seeks to promote an agenda or distribute content that, in its discretion, may be seen as controversial or unsavory to any of our users.”

Verizon claimed it was neutral on the subject of abortion, but the topic itself was forbidden to be discussed or raised in text messaging campaigns directed to customers.

That 2007 claim irritated then-NARAL president Nancy Keenan, who claimed Verizon was interfering with free speech and activism.

“No company should be allowed to censor the message we want to send to people who have asked us to send it to them,” Ms. Keenan told the newspaper in 2007. “Regardless of people’s political views, Verizon customers should decide what action to take on their phones. Why does Verizon get to make that choice for them?”

Pai says giving companies like Verizon the permanent right to manage the kinds of text messages allowed on their networks is a good way to stop texting spam.

“The spam rate for text messages is estimated at 2.8%, compared to a rate of over 50% for email. That’s not by accident,” Pai claimed. “Today’s wireless messaging providers apply filtering to prevent large volumes of unwanted messages from ever reaching your phone.”

Pai claimed that the effort underway to classify text messaging as a telecommunications service was anti-consumer and would open customers up to a lot more unwanted messages.

“This may not seem like a big deal, but such a classification would dramatically curb the ability of wireless providers to use robotext-blocking, anti-spoofing, and other anti-spam features,” Pai said in a blog post on Medium.

Feld

“It wouldn’t be the holiday season without Chairman Pai giving a great big gift basket to corporate special interests at the expense of American consumers,” said Harold Feld, senior vice president at Public Knowledge. “Chairman Pai proposes to grant the wireless industry’s request to classify text messages as Title I ‘information services,’ stripping away vital consumer protections. Worse, Chairman Pai’s action would give carriers unlimited freedom to censor any speech they consider ‘controversial,’ as Verizon did in 2007 when it blocked NARAL and prompted the Public Knowledge 2007 Petition.”

Feld claims Pai is only telling half the story.

“As the FCC made clear in 2016 (over then-Commissioner Pai’s dissent), text messages and robocalls are both ‘calls’ under the anti-robocall statute, and this Title II designation does not prevent filtering or other technological means to block unwanted robocalls or spam texts,” Feld said. “Indeed, Chairman Pai undermines his own argument by pointing out that email, which has always been an information service, has a 50 percent spam rate whereas text messaging, which the FCC treats as a ‘phone call,’ has a 2.5 percent spam rate.”

The FCC plans to vote on the matter, and is likely to adopt Pai’s proposal, at a meeting on Dec. 12.

Homeowners in Greenhills, Ohio woke up one morning recently to discover anonymous contractors unspooling cable and planting orange-colored PVC pipes along a Hamilton County right of way on Sharon Road, straddling the communities of Greenhills and Forest Park.

Technological mysteries are uncommon in Greenhills, a planned community built in the 1930s as part of President Franklin Roosevelt’s New Deal program. Greenhills was designed to be surrounded by a “belt” of nature, drawing people out of dilapidated urban settings and into quiet, tree-filled neighborhoods. Many who were offered homes in Greenhills by the Resettlement Administration never left, and their descendents still live in the homes their parents or grandparents once did.

Considering the slow pace of change and the desire to stay a quiet enclave, it should come as no surprise that many residents are disturbed about the quiet invasion of 5G small cells that will be going up all over town, especially because the owner won’t come forward and explain the project.

That layer of secrecy has brought suspicion among neighbors, even those younger ones that understand how much faster 5G service could be over 4G service available today.

“For me, I’d rather not be the guinea pig,” Andrew Steele told WCPO-TV. “That would be terrible,” Anna Steele, Andrew’s wife, added. “That would be horrible. Also, do we really even need it?”

A closer inspection of the infrastructure being installed shows Verizon is the most likely silent operator, which makes the prospect of millimeter wave 5G service for the community of 3,600 very likely. That could mean a new home broadband competitor in the area. But many residents do not want an option that includes small cell antennas.

Monique Maisenhalter told the TV station she was concerned about cell tower radiation causing damage to health and the environment, although such evidence is open to debate.

She and nearly 50 of her neighbors have signed a petition asking for the construction to cease until “more is known.”

Some believe there is no need for 5G service when 4G works well enough. Others are concerned about property values being lowered by the presence of multitudes of small cell antennas. Others object to the fact the equipment is being installed without full disclosure about exactly who is behind it. Even town leaders are flummoxed, as WCPO reports:

The mayor of Greenhills, David Moore, said he has no say over the fiber line installation because the lines are actually going up across the border in Forest Park, on a Hamilton county right-of-way on Sharon Road.

So we went to Hamilton County engineer Ted Hubbard, who said he, too, is struggling to find out who is laying the fiber and what their plan might be.

“The ownership is a big question,” Hubbard said. “And I have asked that. We are having a hard time finding out who actually owns it.”

Hubbard said several small contractors have received permits to install the lines but won’t tell the county who is behind the whole project.

“Who’s going to operate it?” Hubbard asked. “And who do we contact if there is an issue?’

WCPO in Cincinnati investigates mysterious new 5G infrastructure appearing in northern suburbs of Cincinnati (3:19)