Tag Archives: comcast

Comcast ready to build a channel line-up of home automation platforms

The home automation space is a fragmented mix of apps, platforms, gateways and products, not unlike the video content business. Comcast just purchased Stringify, a meta-platform that talks to dozens of other platforms, aggregates hundreds of products and services, and delivers them to a single smartphone app. Not unlike a cable company.

Stringify was my pick for most likely to disrupt the home automation business at the 2016 Consumer Electronics Show. Funded by a $6.3 million seed funding round, led by ARTIS Ventures, it’s ripened to the point where it’s ready for harvest. That’s a good job all around.

The big question will be whether home automation companies will continue to be as friendly to Comcast as they have been to Stringify. Its cloud-to-cloud communication depends on access to application programming interfaces (APIs) that are written and managed by each, individual platform. It’s one thing to support a wonky little app that makes it easier for your customers to do business with you. It’s quite another to feed Comcast’s [suck ’em dry and sell the skins]() approach to revenue maximisation, without also getting a cut of the money. And without some level of comfort that Comcast won’t try to capture their users and shift them to in-house products and platforms.

There’s nothing wrong with Comcast buying Stringify and using it to extend its channel aggregation and bundling business model to home automation. But it only has a right to try, not to succeed. Home automation manufacturers and platforms should take a hard look at how they can benefit from that model right now, and plan ahead.

The cable industry got its start by retransmitting other people’s content for free, a lesson Comcast seems to remember. Both TV stations and cable operators benefited because, in the early days, they weren’t fighting over each others’ revenue streams. But Comcast is already in the home automation space, and its competitors are now also its content suppliers. They’ll have to decide for themselves how to play this new game.

Bad telecoms regulatory decisions won’t be saved by non-existent good will

The game isn’t over when the California Public Utilities Commission votes to impose conditions on big mergers. Telecoms companies will immediately challenge decisions, administratively and in court, and try to wriggle out of obligations by any means possible.

Comcast is doing that now in Vermont, where that state’s public utilities commission required it to build out 550 miles of line extensions into rural areas. According to an article by Jon Brodkin in Ars Technica

The company’s court complaint says that Vermont is exceeding its authority under the federal Cable Act while also violating state law and Comcast’s constitutional rights…

Comcast’s complaint also objected to several other requirements in the permit, including “unreasonable demands” for upgrades to local public, educational, and governmental (PEG) access channels and the building of “institutional networks (“I-Nets”) to local governmental and educational entities upon request and on non-market based terms”…

Comcast often refuses to extend its network to customers outside its existing service area unless the customers pay for Comcast’s construction costs, which can be tens of thousands of dollars.

When faced with demands for conditions or concessions, Comcast is particularly stroppy – rather than negotiate, it mounted a smash mouth campaign against opposition to its failed bid to do a massive three-way merger/market swap deal with Charter and Time Warner in 2015.

Other companies, that are all sweetness and light while trying to convince regulators to okay their deals, can also turn nasty once the ink has dried. For example, Frontier Communications was represented by friendly, knowledgable telecoms professionals while it sought, and received, CPUC permission to buy Verizon’s wireline telephone systems in California. But within a few months of the sale closing, those key frontline people disappeared from public view, either fired as the company downsized or relegated to back rooms. They were replaced by litigious lobbyists who engage in scorched earth opposition to any project, program or requirement that doesn’t suit their business model.

Likewise, CenturyLink is spinning a handful of feeble promises into epic concessions as it seeks CPUC permission to buy Level 3 Communications. But the actual agreement is stuffed with weasel words and CenturyLink has consistently played hardball with both opponents and the commission. There’s no reason to think it’ll be any less aggressive in pursuing its interests if and when it’s a done deal. That’s a fact of life that the CPUC would do well to consider as it grinds its way through its review.

Comcast has to defend its bill at will tactics in court


Customer service.

A federal judge in San Francisco said that two northern California men have a legitimate case to make against Comcast, as they pursue a class action suit aimed at stopping Comcast from piling fees on subscribers anytime it feels like it. Dan Adkins and Christopher Robertson say they signed up for an advertised deal, and Comcast can’t change it without their consent.

Judge Vince Chhabria (no typo, that’s how he spells it) said that, depending on the facts, they have a makable case and Comcast will have to fight it out in court

It is plausible to infer from the complaint that, by clicking “Submit Your Order,” Adkins and Robertson agreed to pay Comcast’s advertised price, plus taxes and government-related fees, in exchange for the services Comcast offered them. It is also plausible to infer from the complaint that Comcast breached its agreements with the plaintiffs when it sent them bills charging them Broadcast TV and/or Regional Sports Fees (alleged to be neither taxes nor government-related fees) in excess of the agreed-upon price, and when it subsequently sought to raise the amount of the fees.

Comcast’s first line of defence was that it’s entitled to add pretty much anything it wants to monthly bills, since subscribers agree to its terms – that no one ever reads – which reference a second set of terms, that no one ever sees. Chhabria wasn’t buying it…

The “Pricing & Other Info” disclosure tells the customer they will be charged the “extra” fees and that such fees are “subject to change,” but Comcast subsequently tells customers that the advertised price is the “base monthly total of all recurring charges.” These statements point in different directions.

Robertson and Adkins, and the millions of Comcast customers who might be pulled along as part of the class action, haven’t won anything yet. All the judge is saying that there’s enough on the table to justify going to trial, and that’s where it’s headed.

Cable gains subs as consumers flee DSL

Cable companies own the residential wireline broadband market and are increasing their lead over telephone companies, at least where the major players are involved. An analysis piece by Sean Buckley in FierceTelecom breaks out the subscriber numbers for the 15 biggest Internet service providers in the U.S., ranked by total subscriber count as of 30 June 2017. It shows big cable with a 64% to 36% market share advantage and positive net subscriber growth, while big telco is stuck in reverse.

In the second quarter, the seven largest cable ISPs netted 430,000 new subscribers, while the eight biggest telcos lost 16,000 subs. The reason, according to Buckley, is consumers dumping outdated DSL-based service…

The effect of cable’s DOCSIS 3.1 drive was clearly felt by traditional telcos, which lost 233,260 more wireline broadband users, a slight improvement compared to the 360,783 this group lost during the same period in 2016. A big piece of this for large telcos such as AT&T and Verizon was the decline of DSL subscribers. AT&T and Verizon lost 104,000 and 72,000 legacy DSL subscribers during the quarter. But the biggest loser was Frontier Communications, which bled an additional 101,000 wireline broadband users. CenturyLink followed closely behind, losing 77,000 in the second quarter.

Comcast and Charter alone account for more than half of the market, with 27% and 24% shares respectively. Together, the two biggest telco ISPs – AT&T and Verizon – can’t even match Charter’s market share, let alone Comcast’s. AT&T has 16% of the total and Verizon has 8%, when added together and rounded, their total is 23%.

These latest numbers are good and bad news for big cable companies. Good, because sub count is the name of the game, and they’re winning hands down. Bad, because it’s one more data point that highlights a continually growing concentration of market power into a very few hands. When you take into account the fact that cable companies deliberately don’t compete with each other, on a market by market basis their dominance is increasingly indistinguishable from a true monopoly.

Cable companies will double broadband prices because they can

Source: New Street Research, via *FierceCable*

In a competitive market, pricing is dynamic – you can’t reliably plan more than one or two moves ahead. But in a de facto monopoly – either a single seller or a duopoly with a weak second banana – you can lay out a long term roadmap and follow it relentlessly.

That’s what one noted financial analyst thinks the two big U.S. cable companies are doing. According to a story in FierceCable, Jonathan Chaplin, an analyst at New Street Research, thinks cable broadband prices will double in the coming years…

“Comcast and Charter have given up on usage-based pricing for now; however, we expect them to continue annual price increases,” Chaplin said. “As the primary source of value to households shifts increasingly from pay-TV to broadband, we would expect the Cable companies to reflect more of the annual rate increases they push through on their bundles to be reflected in broadband than in the past. Interestingly, Comcast is now pricing standalone broadband at $85 for their flagship product, which is a $20 premium to the rack rate bundled price.”

Chaplin estimates that cable companies have 65% of U.S. broadband customers now, and that share will grow to 72% over the next three years.

That kind of market dominance is something that cable companies want to keep out of the public eye. It’s why they push back hard against raising broadband standards: if, say, California adopted the Federal Communication Commission’s 25 Mbps download/3 Mbps upload speed standard as the minimum necessary to participate fully in the digital economy, then cable companies would have an effective, and easily documented, monopoly on broadband service. That would invite regulation, which is something that cable companies aggressively – and rationally – lobby to avoid.

But government-set standards are a poor substitute for market realities. If cable operators have gained a controlling market share by being the only option for the service levels that consumers demand, then it’s game over. They will have – do have, as Chaplin implies – the power to set rent-extracting prices without regard for troublesome competitors.

FCC wholesale word games will kill retail competition

Looked at one way, the draft decision to lighten regulation of wholesale broadband services that’s been floated by the new chair of the Federal Communications Commission isn’t a lot different from the one proposed by the old chairman. Both versions backed away from regulating prices or terms for higher speed, dedicated industrial-grade connections – those faster than 45 Mbps – while keeping some controls on slower services based on legacy copper technology.

Current chairman Ajit Pai wants to back further away than Tom Wheeler, the guy he replaced, did. That’s consistent with Pai’s ambition to be weed whacker in chief. Not surprising.

The big difference is the way that Pai’s draft starts to chip away at the common carrier designation that Wheeler’s FCC applied to broadband service. In a bit of circular logic that would be hilarious as a stand up comedy routine but profoundly disturbing coming from a regulator, Pai’s draft declares that wholesale broadband services offered by cable companies don’t fall under common carrier rules because, well, they don’t follow common carrier rules

With respect to its wholesale cellular backhaul service and E-Access service, Comcast explains that it makes individualized decisions whether it will, in fact, offer such services in a given instance or to a given customer. Comcast describes its offering of retail Ethernet Dedicated Internet Access Service (EDI) and Ethernet transport similarly, explaining that it does not hold out such services to all interested buyers. For its part, Charter explains that particularly in the case of business data services provided to enterprise customers, it makes individualized decisions whether to offer service to given customers. The case-by-case decisions about whether to offer these services to a given customer described by Comcast and Charter stand in contrast to the “quasi-public character” that is a “critical” premise of common carrier classification—and the associated heightened duties—identified by the D.C. Circuit [appeals court].

Absent common carrier obligations, Comcast, Charter and other cable companies can decide who they’ll offer services to and how much they’ll charge based on how deals will impact their business models. They can use their monopoly control of wholesale bandwidth to choke off last mile, retail competitors. Pai wants to let them do it.

It’s one thing to whack away regulatory weeds. It’s quite another to carve out exceptions and use that regulatory power to protect monopolies by mowing down competitors.

Muni broadband endorsed by Comcast, again


Comcast jumps on board.

Are you wondering whether or not you live in a place where Comcast will soon upgrade at least some of its broadband infrastructure and technology to the high speed, DOCSIS 3.1 standard? All you have to do is check to see whether there’s a municipal broadband project underway nearby. That’s a very reliable way to gauge the esteem that Comcast bestows upon your town.

According to a story by Daniel Frankel in FierceCable, Chattanooga, Tennessee is the next stop on Comcast’s DOCSIS 3.1 road trip, where it will begin offer much cheaper 1 gigabit service to homes and businesses…

Comcast had been delivering its pricey 10-gig fiber service to local Chattanooga businesses, and 2-gig fiber service to local residences. The DOCSIS 3.1 products are much cheaper, starting out at around $140 a month without contract.

Chattanooga’s publicly owned electric utility built a fiber to the premise system and began offering gigabit speeds in 2010, with faster service following in later years. The project, which was initially funded by a $100 million federal stimulus grant, has been credited with amping up Chattanooga’s economic mojo, with neighboring communities begging for the network to be extended.

Comcast’s Chattanooga announcement comes a week after it promised a DOCSIS 3.1 upgrade in Huntsville, Alabama, which also has a municipal electric utility in the process of building an FTTP system, which will be operated by Google Fiber. Huntsville and Chattanooga join a very short and select list of Comcast DOCSIS 3.1 upgrade targets, which includes two other Google Fiber cities, Nashville and Atlanta.

It’ll be interesting to see what Comcast does with its pricing. The Chattanooga muni system offers a gigabit to residential customers for $70 a month, half of Comcast’s standard rate. On the other hand, Comcast can spread costs and generate profits from a wide range of video and other services, over a nationwide footprint. There would seem to be little point for it to go head to head with a muni system if it wasn’t planning to use that market power to the max.

Competition, and something more, drives Comcast upgrade in Huntsville


Demand.

Chalk up another win for broadband competition. Comcast announced that it was expanding its next generation – DOCSIS 3.1 – cable modem footprint to Huntsville, Alabama, and would be offering gigabit-level service to at least some customers. Details on service locations, roll out schedule and prices were lacking, though.

What clearly isn’t lacking is a competitive threat. Huntsville’s publicly owned electric utility is in the process of building a fiber to the home network that will be operated by Google Fiber and offer gigabit service at about half the price that Comcast charges in the four cities where it’s already offering it. Those cities include Nashville and Atlanta, where Google Fiber is also deploying fiber to at least some neighborhoods, Chicago, where Google-affiliate Webpass is present, and Detroit, which has neither.

Comcast similarly responded to plans in Santa Cruz to build a municipally-backed FTTH system by upgrading its plant.

AT&T previously announced that it would be offering gigabit service in Huntsville. It, too, has reliably followed Google Fiber’s lead as it prioritises the capital investments it makes in service and infrastructure improvements.

Although Comcast and AT&T are certainly playing defence and trying to prevent competitors from gaining a foothold, there’s also something like a virtuous circle effect going on. Google is – or, at least, was – identifying communities that were favorably disposed towards ultra-fast Internet service and then pumping up enthusiasm even further. For example, according to a story by Lee Roop on Al.com, Google reps spoke at a recent meeting of Huntsville entrepreneurs. One talked up the potential for small businesses and “another Google representative said homeowners can expect a $5,000 increase in their homes’ value if they add fiber optic cable”.

The more enthusiasm and awareness, the greater the market potential for high end broadband service. Competition feeds demand which draws even more competition. That’s how Huntsville is staying on the right side of the digital divide.

Cable, mobile companies fight California rural phone standards

A California Public Utilities Commission decision slamming the practices of telecoms companies in rural areas – like attaching lines to trees instead of poles – and requiring carriers to notify both the commission and the state office of emergency services when significant telephone outages occur has been met with a broadly based challenge from California cable and telephone companies.

In a filing authored by Comcast lawyers and joined by Charter, Cox, small telcos, Verizon’s fiber subsidiary and lobbying fronts for the cable and mobile industries, the CPUC’s rural call completion decision was characterised as illegal on the basis of a long list of alleged procedural mistakes.

AT&T and Frontier – the primary targets of the decision – aren’t a part of this challenge and have yet to be heard from.

The big issue is whether carriers will have to report smaller telephone service outages to the CPUC than previously required, and also quickly notify emergency officials. That’s a three part problem, in the eyes of the challengers. First, they’re not completely clear about whether “carrier” applies to all phone companies, including cable companies that offer phone service, as the plain word would imply, or just to certain ones, such as traditional rural incumbents. Second, they don’t like the idea of having to tell state emergency operations centers when lines go down, because they’re used to keeping that kind of information secret and if they tell public safety officials then someone might find out the phones are out. Hey, no one would notice otherwise.

Finally, the threshold for reporting outages to the CPUC was lowered to a level that’s more consistent with rural circumstances. The previous standard was geared for large, densely populated areas and was high enough that a small rural community could be completely cut off and no report would have to be filed. The whole point of the decision and investigation behind it was to address problems that rural communities have with phone service, which doesn’t set well with companies that provide the service and, at times, cause the problems.

Usually, these kinds of challenges amount to we don’t like the decision so it’s gotta be illegal, and are typically rejected by the commission. This one might be different, though. The challengers are correct in pointing out that the process was out of the ordinary. The decision was written by former commissioner Catherine Sandoval and it was scheduled for a vote at her final meeting. Usually, when commissioners have objections to a draft decision – as some did in this case – the matter is bumped to a later meeting so changes can be made and reviewed. Instead, the document was rewritten on the fly during the meeting, and then a vote was taken, with two commissioners – Carla Peterman and Liane Randolph – dissenting.

If the CPUC rejects the challenge, it’s not likely to end there. The tone and the substance of the arguments make it clear that Comcast, Charter, mobile carriers and the rest think they’ll win if they take it to court.

CPUC decision on rural call completion issues, 15 December 2016
Coalition application for rehearing of decision on rural call completion issues, 3 February 2017

Haven’t seen the facts about AT&T, Time Warner merger, Trump says

Translation: never mind.

Donald Trump is backing off from his stated opposition to the AT&T – Time Warner transaction. According to the Axios blog, Trump said in an interview

“I have been on the record in the past of saying it’s too big and we have to keep competition. So, but other than that, I haven’t, you know, I haven’t seen any of the facts, yet. I’m sure that will be presented to me and to the people within government.”

Wall Street’s optimism about a kinder attitude toward big mergers in Washington, DC appears to be a safer bet.