Tag Archives: cable

U.S. broadband is expensive, even more so where bundles aren’t available

by Steve Blum • , , , ,

Us ave broadband price 2feb2018

The U.S. is in the bottom half of the broadband price league table, according to a report by the Federal Communications Commission. It was published last February, but I just unearthed it and had a chance to take a hard look at the numbers. When you take both standalone and bundled Internet service packages into account, and weight it by the FCC’s market share figures of 25% standalone and 75% bundled subscriptions, the average monthly price ranges from $38 per month to $74 per month, depending on speed.

As you can see from the table above, bundled prices are noticeably cheaper than standalone rates. That implies that broadband service is significantly more expensive in rural areas, where bundle-happy cable operators do not go and expensive Internet-only wireless providers are common.

The FCC used three methods to compare broadband prices in the U.S. to other developed countries. Two were relatively straightforward comparisons, that show that broadband costs more in the U.S. than in most of the other countries studied…

For fixed broadband prices, under the first method comparing unweighted average prices, the United States ranks 18th out of 23 countries that offer fixed standalone broadband plans with download speeds of at least 25 Mbps and less than 100 Mbps, and 26th out of 28 countries that have fixed standalone plans with download speeds of 100 Mbps or greater. When taking into account fixed broadband bundled with video service, the United States ranks 10th out of 20 countries with download speeds of at least 25 Mbps and less than 100 Mbps. For the highest speed bundle plans with download speeds of 100 Mbps or greater, fixed broadband in the United States ranks 23rd out of 25 countries that offer such plans. Using the second approach, the fixed broadband price index analysis, the United States ranks 21st out of 29 countries aggregating both standalone and bundled broadband products.

The third method – a more complicated regression analysis – bumped the U.S. up the charts to number 7. It tries to account for cost differences between countries, and reckons that because customers have so much more online content available in the U.S., broadband is really cheaper because it’s worth so much. Or something like that. On a cash out of pocket basis, it’s still expensive, though.

With end of net neutrality, cable companies can put brakes on subscriber slide

by Steve Blum • , , , ,

Fewer than half of U.S. households have traditional cable television subscriptions, according to research done by PricewaterhouseCoopers (PWC). With the end of network neutrality rules, cable companies, AT&T and, to a lesser extent, other telcos will be able to fight this trend more aggressively. Even if they can’t stop or even slow it, they can use their monopoly broadband gatekeeper power to rake in a greater share of subscriber revenue.

Cable TV subscriptions have been trending downward over the five years that PWC has been running this survey. A total of 73% of homes have cable (or satellite) TV service, but that breaks down to 46% traditional, big line up subscriptions and 27% “cord trimmers”, who are people who have skinnier packages that they supplement with online – over the top (OTT) – services.

Even so, the cost of watching video keeps going up…

The number of traditional Pay TV subscribers continues to drop as more people are trimming or cutting the cord completely.

73% of our respondents subscribe to Pay TV, which is down from 76% last year and 79% the year before.

At the same time, people report they’re paying more for video today than they were last year.

53% of cord trimmers report paying more for their services in 2017 than they did in 2016; however, trimmers are still paying less than traditional subscribers overall.

Sports is the number one reason people keep paying cable TV companies. If there was another way to see live sports, 82% of sports fan would either trim back their cable subscriptions or chop them completely, according to PWC’s research.

Another interesting finding: 73% of households have Netflix, putting it dead even with cable and satellite providers on an overall basis, and way ahead of the old school, old business model subscriptions.

This accelerating shift away from linear television viewing – and subscriptions – has changed the game for broadband providers. Three years ago, when 61% of U.S. homes had traditional cable subscriptions, Google considered video to be an essential service offering on their fiber-to-the-home systems. But not any more.

As traditional video subscribers flee, cable companies and AT&T, which owns DirecTv, will be looking for ways to either bring them back, or charge more for other services. Like un-throttled, un-blocked and un-prioritised broadband service. If they continue to offer it at all.

Cable lobby argues California lawmakers should bless Internet slow lanes

by Steve Blum • , , , ,

Cable operators want to sell Internet fast lanes to those who are are willing to pay, thereby consigning those who don’t to the slow lane. That was the clear message from Carolyn McIntyre, the president of the California Cable and Telecommunications Association, which is the main lobbying front for Comcast, Charter and most other cable operators in the state. She spoke out against senate bill 460 – a network neutrality revival bill introduced by senator Kevin de Leon (D – Los Angeles) – during a senate judiciary committee hearing yesterday.

It seems telcos want that option too. AT&T published an ad in major papers yesterday supporting net neutrality, of a sort. Its definition conspicuously omitted mention of fast lanes, or paid prioritisation as the practice is called.

It was a climb down for McIntyre, who incorrectly told senators that cable companies have promised not to engage in paid prioritisation during an earlier hearing. This time, she told the committee that the Federal Communications Commission allows paid prioritisation, so California should too…

Although the FCC questions the use of paid prioritisation, they do not ban the practice. SB 460 does. The FCC provides an ISP some flexibility to manage its network and authorises paid prioritisation that benefits the public interest. SB 460 does not.

McIntyre pushed a couple of sacred cows – education and public safety – into the road, apparently hoping to instil fear that they would be run down by SB 460. The judiciary committee analysis suggested a public interest exception that would allow paid prioritisation under particular but still undefined circumstances. That led the discussion back around to how the law would be enforced: who decides what is in the public interest and what is not?

The near-universal opposition to giving the job to the California Public Utilities Commission led to the current version of the bill, de Leon told the committee. The chair, senator Hannah-Beth Jackson (D – Santa Barbara), repeatedly asked the long line of opponents – from cable, and wired and mobile telephone companies – to suggest a different state level agency, in order to centralise enforcement and avoid having 58 county district attorneys and a horde of contingency fee-intoxicated trial lawyers decide what net neutrality means.

No one stepped up.

Concerns about who implements a Californian net neutrality law and the likelihood that it would be tossed out by federal courts were batted around by committee members. Jackson stated the clear reality faced by any solution that might be offered.

“I don’t think there’s any doubt that this is going to be litigated”, she said. “It’s probably going to be expensive, and keep a lot of lawyers busy and happy no matter what we do on this”.

The judiciary committee voted 5 to 2 along party lines to endorse SB 460 and send it on to a vote by the full senate. The deadline is next Wednesday.

UK considers making ISPs, particularly cable companies, tell customers the truth

by Steve Blum • , ,

A consumer protection proposal by the United Kingdom’s telecoms regulator does two useful things: it would require Internet service providers to state a minimum speed they’ll deliver, even under peak load conditions, and it takes a big step towards eliminating the artificial distinction between telephone and cable companies.

The U.K.’s office of communications – Ofcom – says it’s planning to do three things

  • Improve speed information at the point of sale and in contracts, by reflecting the slower speeds people can experience at ‘peak’ times; and by ensuring providers always give a minimum guaranteed speed before sale.
  • Strengthen the right to exit if speeds fall below a guaranteed minimum level. Providers would have a limited time to improve speeds before they must let customers walk away penalty-free. For the first time, this right to exit would also apply to contracts that include phone and pay-TV services bought with broadband.
  • Increase the number of customers who benefit from the codes, by expanding their scope to apply to all broadband technologies.

The last point particularly refers to plans to extend the new rules to include cable operators. Existing codes of practice “apply mostly to broadband over copper-based phone lines”, but cable has more problems according to Ofcom’s research which “showed that the variation in speeds at busy times is more notable for cable connections than for copper-based services”.

It’s similar to the regulatory distinctions made here in California. Telephone companies are regulated by the California Public Utilities Commission, at least insofar as services delivered using POTS (plain old telephone service) technology, are concerned. That includes old school DSL, but not pure Internet protocol services such as AT&T’s Uverse offerings. Cable operators sorta fall under the CPUC’s jurisdiction – it grants statewide video service franchises – but there’s no teeth to back it up.

A final decision by Ofcom is expected next year.

Cord cutters hurt cable but are killing AT&T

by Steve Blum • , , ,

AT&T’s overall television subscriber count is down, despite the strong growth of of its online video service, DirecTv Now. That’s according to a federal securities and exchange commission filing by the company. Even though it signed up 300,000 new online viewers to DirectTv Now in the third quarter of this year, its total video subscription count dropped by 90,000 according to the filing…

The video net losses were driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards.

The growth in over-the-top TV viewing is actually the major reason AT&T’s total video subscriber numbers are falling, according to an article by the Washington Post’s Brian Fung

“DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” said industry analyst Craig Moffett in a research note this week. Moffett added that while nobody expected AT&T’s pay-TV numbers to look good, hardly anyone could have predicted they would look “this bad.”

Cord cutting is also driving down cable revenues. The solution, according to an article by Daniel Frankel in FierceCable, is to raise Internet service prices…

“MSOs would need to raise standalone broadband pricing to $80, or more, in order to break even from a contribution perspective,” UBS analyst John Hodulik said.

The good news (for operators, but not consumers, that is)? Cable companies can probably get away with it, the analyst noted.

“We find that this level of pricing (non-promo) exists in some markets already, though pricing will vary,” Hodulik explained.

Cable companies have it easier than telcos. They’re losing video revenue, but are better at hanging on to subscribers. Cable companies generally offer download speeds of 100 Mbps or (sometime a lot) more for prices comparable to what telcos will charge for a tenth of that service level. A household that wants to get TV programming via the Internet is going to be more interested in those faster speeds.