Cable Industry Tells Feds to Encourage Stronger Cable Monopolies

In a move stunning only in its audacity, the National Cable & Telecommunications Association (NCTA) has demanded that the FCC be gutted and almost all cable regulation be done away with. Among the things they want killed are network neutrality, must-carry rules (which require a basic package) and a la carte channel pricing. Their claim is that increased competition has made these mandates unfair, but I can't see what competition they are referring to.

Most Americans don't have much choice beyond the cable or phone company. Many people in rural areas don't have any choices. (Even Provo, an urbanized area, is only 95% covered by either Qwest or Comcast.) It reeks of a monopolist industry trying to circle the wagons. This is an industry that has failed to understand the market. (See previous article about the industry's tanking customer satisfaction rates.) I have yet to meet anyone that wouldn't rather pick and choose their cable channels for a lower price. Some would even think about signing up as a new customer if a la carte pricing was offered.

Cable companies aren't looking out for consumers: they're looking out for cable companies. If they want something as radical as total deregulation, you can bet they have an angle they want to play to increase their monopoly power, just like with the old 1996 Telecommunications Act.

(See full articles here and here.)

Think Cable Service Stinks? You're Not Alone

A new survey of customer satisfaction by the American Consumer Satisfaction Index shows that while satellite providers top the list for TV service, the industry as a whole stinks. Cable and satellite providers scored the lowest amongst all industries covered by the ACSI including incumbent phone companies. (There isn't much love there either; landline phone companies have been sliding in customer satisfaction substantially since the 1996 Telecommunications Act.) Echostar, DirecTV, Time Warner, Comcast and Charter all showed substantial drops amongst their customers. It probably has something to do with steadily increasing rates, a lack of a la carte channel pricing, poor customer service and, at least in the case of Comcast, capricious enforcement of the terms of service.

As further evidence of the cableco's disconnect from Joe User, Comcast is talking about letting you watch a movie in your home the same day it opens in the theatres for $30-50 per screening. While it might be nice to beat the lines and put that fancy surround sound and digital projector to good use, that sounds like a whole lot of crazy to me. What can you expect from a company that charges $3.99 for a pay-per-view movie that's years old?

(See full articles here and here. Check out the ACSI scores here.)

Could FIOS Spell The End For CLECs?

Prepare to have less choice for local phone service. Thanks to FCC rules, incumbent carrier are not required to share their new fiber networks with competitors the same way they shared their copper networks. Considering that upgrading to Verizon's FIOS is a one-way street (no going back to copper for you!), competing phone companies are rightly worried that they could be entirely pushed out of the market. More than ever, municipal networks like UTOPIA make more sense for bringing true competition into the market by remaining vendor-neutral.

(See full article here.)

Cable Companies Thwart DVRs, CableCARD

In two related news stories, cable companies are clamping down further on network control by skirting around the requirements to support CableCARD and force DVR owners to watch ads. In testimony before congress, TiVo has alleged that cable companies are starting to use protocols and signaling that's incompatible with the uni-directional CableCARD standard. CableCARDs are designed to allow you to plug a digital cable signal directly into the device of your choice without a special box from the cable company, just like the old analog cable used to do. Bypassing support for "bring your own device" standards ensures that the cable company can keep you renting their equipment indefinitely, imposing significant trouble with using third-party devices such as DVRs and TV tuner cards for PCs.

Related to this is Cox Communication's recent announcement that they would no longer let customers renting their DVR to skip commercials for some content from ABC and ESPN, both Disney companies. I guess they missed the part where most people buy a DVR just for that purpose, eh? They probably also forgot to read the numerous reports that fast-forwarded ads are recognized just as much as ads played at normal speed. Boo on them for trying to force more ads down our throats.

Once networks like UTOPIA start breaking up the monopolies, maybe these companies will start to comply with interoperability requirements. 

(See full articles here, here and here.) 

Comcast Slams Subscribers With Contracts, Early Termination Fees

Want to keep that special triple-play pricing in effect for longer? Just hope you don't want to cancel anytime soon. Comcast has started trying to sucker you into a 2-year contract for the service to lock in the rate with a $150 early termination fee if you cancel OR DOWNGRADE service before it's up. They'll also retroactively charge you the regular price for all of the months you had service, making switching providers a very expensive proposition. I suspect they're looking for ways to cut down on customer churn and shut out competitors to bleed them dry. With networks like UTOPIA and a myriad of new municipal and private wireless options, they're starting to sweat.

(See full article here.) 

Companies Building Fiber Punished By Short-Sighted Investors

It's earnings report season, and it looks like the short-term thinking of investors has been ruling the day with telcos. Verizon has watched earnings tumble as they make significant investments in their FIOS system while Qwest tripled their profits by building a whole lot of nothing and cutting retirement benefits. Investors have reacted accordingly to drive Qwest stock higher while Verizon stays flat despite their significant investments in an upgraded network they are likely to use for the next fifty-plus years. Meanwhile, AT&T's second-rate U-Verse network is slow but cheap, keeping investors happy while putting on a "we do fiber too" facade for the general public. It's only a matter of time, however, before those last mile issues catch up to them and force the expensive upgrades that Verizon has already jumped on top of.

Diving deeper into Verizon's numbers, we see that the take rate for FIOS is about 13% of homes served with a jump of over 20% in the last quarter alone. Over 42% of Verizon's new broadband customers signed up for FIOS so the demand for the higher-speed connections is definitely there. Verizon has also positioned itself as a triple-play provider with this network and has been entering new markets to aggressively compete with incumbent phone and cable providers. Companies like Qwest and AT&T that refuse to make these kinds of capital investments are going to be stuck in the perpetual state of catch-up with more nimble competitors and networks.

Who knew that big, bad Verizon would end up being the company to lead the charge on making good on the industry's broadband promises? Better late than never.

(See full articles here, here and here.) 

Comcast Showing Huge Subscriber Growth, Raises Rates Anyway

Comcast recently posted an 80% increase in quarterly revenue on strong growth of triple-play services and reduced customer churn. This might also have something to do with jacking up my basic digital TV service by about $6 a month. The article also makes no mention of the bad PR they've gotten from cutting off Internet users who "use too much bandwidth" without telling them how much is "too much" or how much they've been using. Rumor has it that if you call in and threaten to cancel or downgrade services, they'll actually give you a big discount, sometimes as much as 25%. Still, I'd be much happier lowering my rates by switching to UTOPIA and saving about $30 a month.

(See full article here. Hat tip to The Consumerist for information on making Comcast give you a discount. More on Comcast shutting off high-bandwidth users found here.)

US Broadband Rankings Continue to Slip

According to a survey by the Organization for Economic Cooperation and Development, the US has a laggard rate of broadband adoption, we pay too much for it, and we're giving up a ton of economic benefits by not having it. From a high of #4 in 2001, we've dropped to #15 out of 30 industrialized nations and pay over 10 times as much per megabit as other countries in the survey. The need for next-generation broadband is now, and I doubt we can depend on the incumbents to give it to us.

(See full study here.)

Paragons of Dishonesty: The Lying and Manipulation of The Heartland Institute

About once every month or two, The Heartland Institute releases yet another paper lambasting municipal telecommunications networks. This month proves no different with more claims that municipal broadband efforts are financial black holes and renewing the call for market-based solutions. The problems with these reports lies in their blatant manipulation of the facts and complete and total ignorance of why there has been a renewed push for municipal networks in the first place.

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