Tag Archives: charter

Consumers say they’re paying too much for poor Internet service

by Steve Blum • , , ,

Big Internet service providers hit all time low in customer satisfaction ratings, according to the latest American Customer Satisfaction Index (ACSI) telecommunications company rankings. The survey ranks telecoms companies and service offerings on a 100-point scale. ISPs dropped from an overall industry average of 64 out of 100 in 2017 to 62 this year, and overall the broadband industry is making people very unhappy.

According to ACSI, it’s a case of the bad just getting worse…

Internet service providers (ISPs) are down 3.1% to 62—an all-time low for the industry that along with subscription TV already had the poorest customer satisfaction among all industries tracked by the ACSI.

Customers are unhappy with the high price of poor service, but many households have limited alternatives as more than half of all Americans have only one choice for high speed broadband. Every major ISP deteriorates this year except for Comcast’s Xfinity, which is unchanged.

Verizon’s FiOS fiber to the home service is still top rated with a score of 70, and AT&T wasn’t far behind with 68. Charter Communications and Comcast are below the industry already dismal customer satisfaction average – both scored 60. Suddenlink wasn’t much better at 61, both it and Charter saw a year over year decrease of 5 points.

Frontier Communications and Cox Communications bring up the rear among major California ISPs, with customer satisfaction ratings of 54 and 59, respectively.

As a group, small ISPs did better than average, but still not great, getting a combined score of 63.

On specific aspects of service, call centers are the biggest pain point for consumers, getting a 59 out of 100 rating, while bricks and mortar store staff are well regarding, topping the benchmarks at 76. But all customer experience ratings are down from last year’s…

Internet service is less reliable (69), more prone to outages (68), and performance during peak hours is worse (68). Video streaming quality is unchanged (68), but overall data transfer speed is lagging compared with a year ago (–3% to 67), as is the quality of email, storage, and security (–3% to 69).

The rankings are based on an email survey conducted this past March and April. More than 45,000 customers responded.

Cable, telcos hit rock bottom in consumer satisfaction rankings

by Steve Blum • , , ,

The broadband industry is pissing off its customers. According to the latest American Customer Satisfaction Index (ACSI) telecommunications company rankings, the consumer businesses at the very bottom of the list are subscription television service (a rating of 62 out of 100), Internet service (also 62), video-on-demand service (68) and fixed line telephone service (70).

In other words, the misery caused by your local telco is only exceeded by the pain inflicted by your cable company. Both do a worse job of keeping you happy than the U.S. post office, airlines and health insurance companies (but not by much – they’re tied with social media platforms for fifth worst with a score of 73).

Mobile phone service isn’t much better. It rates a 74. Just above it at 75 are video streaming services and both investor-owned and municipal utilities.

Over-the-top (OTT) video providers like Netflix offer consumers better and friendlier service than cable and telcos, with devastating effect according to ACSI…

OTT operators have raised the bar by providing greater personalization, lower prices, more mobility—and much better customer service. As a result, cable and satellite television customers think they are paying higher prices for lesser value and receiving poor service to boot.

The effect is widespread. The entire sector faces repercussions as many of the same large companies offer service for internet, television, and voice via bundling. Subscription television and internet service providers rank last among all industries tracked by the ACSI. The implication is clear: moving in on the video streaming market won’t be enough to keep TV subscribers unless customer satisfaction improves as well.

Consumer electronics companies do the best, topping the list at 85 out of 100. Of course, there’s nothing like a cold drink to go along with a binge watching session, so breweries and soft drink makers are in second place with an 84. Online retailers and credit unions round out the top five with a score of 82.

Charter’s franchise “should be revoked”, New York state says

by Steve Blum • , , ,

Charter Communications is one step closer to losing its license to operate in New York City, if not New York state as a whole. Earlier this year, the state of New York’s Public Service Commission – its equivalent to the California Public Utilities Commission – slapped a $1 million fine on Charter and said it would “investigate Charter’s compliance with its New York City franchise agreements”.

That investigation seems to have led to legal action. Speaking on behalf of New Governor Andrew Cuomo, a spokesman for the commission said the gloves are off

The New York State Public Service Commission has commenced legal action against Spectrum Media Company for potential violations of its franchise agreement. The State approved Spectrum’s acquisition and its ability to operate in New York based on the fulfillment of certain obligations, including providing broadband access to underserved parts of the State and preserving a qualified workforce.

“The Governor believes it is essential that corporations doing business with the State uphold their commitments, and we will not tolerate abusive corporate practices or a failure to deliver service to the people.

”Large and powerful companies will be held to the same standard as all other businesses in New York. The Spectrum franchise is not a matter of right, but is a license with legal obligations and if those are not fulfilled, that license should be revoked."

It’s not clear if the New York commission is specifically going after Charter’s New York City franchise, or its ability to operate statewide. Either way, it will put a giant hole in Charter’s balance sheet if it’s successful. That’s a strong incentive to negotiate a settlement.

Charter also has obligations in California, that likewise stem from its purchase of Time Warner Cable in 2016. Among other things, by November – thirty months after the deal closed – Charter must “convert all households in its California service territory to an all-digital platform with download speeds of not less than 60 Mbps”. That includes all its analog systems in Kern, Kings, Modoc, Monterey, San Bernardino and Tulare counties.

Charter’s numbers don’t add up, so New York adds a $1 million fine

by Steve Blum • , , ,

Charter Communications is playing numbers games with its build out obligations and the State of New York’s Public Service Commission is blowing the whistle. Not just stopping the game, but also assessing a $1 million penalty.

As in California, conditions were attached to New York’s approval of Charter’s purchase of Time Warner Cable. Those obligations include “the extension of Charter’s network to pass an additional 145,000 homes and businesses across the State”. Charter has four years to complete that build out and must steadily complete 25% of the job each year.

In January, Charter reported mission accomplished for 2017. But the New York PSC went out and ground truthed Charter’s claims of new homes passed, and found the numbers were inflated. Of the 43,000 homes that Charter said it reached with the required “line extensions”, 12,000 were in New York City which, according to the PSC, was already 100% covered…

In addition to the fact that these addresses have pre-existing network already serving their locations, supported by the lack of pole applications associated with any of these passings…the Commission explicitly stated in the Approval Order that Charter’s buildout was required to occur in “less densely populated and/or line extension areas.” New York City is not such an area.

Even in those less densely populated areas, Charter padded its claims, according to the PSC…

Staff advises that many of these claimed newly completed passings actually consisted of cable and equipment upgrades to existing cable plant. In other words, Charter replaced older cabling and equipment on a pole with newer cabling and equipment, but the location had already been passed by the cable network, oftentimes having been originally passed with cable network for years.

So the PSC crossed another 2,000 homes off the list. As a result, Charter was 8,000 homes short of its 37,000 home obligation and got whacked with a $1 million fine. And faces the threat of losing its New York cable franchises completely if it blows it again. As you might expect, Charter begs to differ, calling the PSC’s conclusions “baseless and legally suspect” and promising to fight the order.

State of New York Public Service Commission, Order to Show Cause, Joint Petition of Charter Communications and Time Warner Cable, 19 March 2018.

Cable’s broadband monopoly profile sharpens with 2017 results

by Steve Blum • , , , ,

Share of U.S. broadband households, as of 31 December 2017. Source: Leichtman Research Group.

Comcast and Charter own half of U.S. residential broadband subscribers, and their share of the market – if you want to call it that – is growing. That’s one of the conclusions gleaned from a tabulation of year-end 2017 financial reports by Leichtman Research Group. As with a similar count by FierceTelecom, the numbers show telcos continue to bleed subscribers profusely, while cable – and the overall broadband universe – keep on growing.

Leichtman’s report was published before Wow cable released its final 2017 financial results, so I added those into the totals. Over the course of 2017, the top cable companies added 2.7 million broadband subscribers, while the top telcos lost 626,000 subs. Big cable’s share of the, um, market was up a point to 61%, while the largest telcos lost a point, dropping to 34%.

Overall, the race for broadband customers is down to a two and a half horses. Comcast has 26% and Charter is behind by a nose at 24%. Their combined 50% share (after rounding) is up from 48% at the end of 2016.

AT&T was the only other broadband provider to hit double digits, with 16% of U.S. broadband households. It was also the only big telco to show growth in broadband customers – fiber-to-the-home gains offset DSL loses, producing a net increase of 114,000 subs. Cincinnati Bell, a much smaller fry, was also in the black, adding 5,500 subs. All the other big telcos – Verizon, Frontier, Windstream and FairPoint – ended 2017 with fewer broadband customers than they started it with.

The top providers – seven cable companies and seven telcos – account for 95% of U.S. broadband households, according to Leichtman. Since it’s a choice between one cable and one telephone company, at most, for any given home, it’s technically a duopoly. But one with a junior partner who is on the ropes. Factor in cable’s overwhelming superiority in the 25 Mbps down/3 Mbps up and better category – the minimum federal standard for modern broadband service – and it looks more and more like a one player game.

If it prices like a monopoly, slams and crams like a monopoly and shows a monopoly’s lack of respect to its customers, then it’s a monopoly.

FCC bases big decisions on small facts spooned out by big telecoms companies

by Steve Blum • , , ,

The Federal Communications Commission jumped in on the side of Charter Communications in a dispute with the Minnesota Public Utilities Commission. The case was bumped to a federal appeals court – the MPUC lost the first round – and now the FCC has moved in to protect its turf.

The question is whether Minnesota can regulate voice over Internet protocol (VoIP) phone service the same way it does old style analog service. There’s a great article by Jon Brodkin in ArsTechnica that goes through the details of the case, so I won’t repeat it here.

My interest is in the insight I think the FCC’s arguments give into its thinking on whether or not broadband should be classified as a common carrier service, and if not, how does it regulate it, if at all?

The FCC says it hasn’t decided once and for all if VoIP is a common carrier service, but its skidding rationalisations in the Minnesota case and its draft decision rolling back restrictions on when telcos can replace copper service with wireless indicate that it’s happy to zero in on a microscopically literal interpretation of narrow circumstances when it suits a pre-determined outcome, and wave away any annoying facts to the contrary.

In the draft decision on wireline deployment the FCC would abandon what it calls the “functional test” – the practical and overall impact – when assessing infrastructure rollbacks, in favor of a far more narrow standard based on a provider’s own service descriptions. Extending that line of reasoning to VoIP, it doesn’t matter that it’s functionally indistinguishable from legacy service. What’s important is what Charter, in this case, says it is.

It’s a leap, but not an impossible one, to take it one step further and imagine the FCC applying that logic, such as it is, to broadband service.

The core function of broadband service is to transport bits between two points, as determined by the users on both ends. Internet service providers do that “without change in the form or content of the information as sent or received”, as the statutory definition of telecommunications service puts it. It should be a clear cut decision.

But in its draft wireline decision and its court filing in the Charter appeal, the FCC prefers to ignore a common sense reading of the facts in favor of swallowing the marketing claims of big telecoms companies hook, line and sinker. If there was any doubt as to whether the FCC will scrap broadband’s status as common carrier service, it’s gone now.

New York fines Charter $13 million for stalled upgrades

by Steve Blum • , , ,

The New York State State Public Service Commission has slapped a $13 million fine on Charter Communications, as punishment for missing broadband expansion requirements attached to regulatory approval of its purchase of Time Warner Cable systems last year. According to a story by Kendra Chamberlain in FierceCable, Charter’s build out in New York fell far short…

The agreement included statewide speed upgrades reaching 100 Mbps by 2018 and 300 Mbps by 2019, and a timeline for building out its broadband network in chunks of over 36,000 new residents and businesses per year, to be completed by 2020.

Charter was able to upgrade broadband service speeds to 100 Mbps across New York ahead of the 2018 deadline set by its agreement, but has been slow to roll out service to new households and businesses. In its first year, Charter passed just over 15,000 new premises, less than half of what it promised.

Charter has similar obligations here in California, albeit without annual targets. The California Public Utilities Commission required Charter to upgrade all remaining analog systems to “an all-digital platform with download speeds of not less than 60 Mbps” within two and a half years, with a bump to 100 Mbps in three years, as well as extending lines to 80,000 new homes and, specifically, to convert its systems in the City of Gonzales and elsewhere in Monterey County to full digital capabilities.

Charter has already upgraded some systems in San Bernardino County, ahead of a threatened fiber to the home project, and already has construction crews in the field in Monterey County. Whether it’s performing to the same level in parts of California where there’s no pressure from competitive providers or motivated local governments is an open question. The first deadline doesn’t come until next year, and the CPUC isn’t likely to begin any enforcement action – or, perhaps, even a due diligence process – on its own before then.

I assisted the City of Gonzales with its efforts at the CPUC and its negotiations with Charter. I am not a disinterested commentator. Take it for what it’s worth.

Big telecoms mergers could test Trump’s anti-trust chops

by Steve Blum • , , , ,

There’s a lot of sniffing around telecoms companies in these dog days of summer. Softbank, Japanese tech investment giant which owns Sprint, is reported to be sniffing around T-Mobile, with a merger in mind. If it happened – if regulators allow it to happen – it would take the U.S. mobile telecom sector down to three companies, from the current four.

Charter Communications is getting a lot of attention, too. Softbank first tried to engineer a merger, and when that failed began talking about buying the company outright. But if it’s really in the hunt for T-Mobile, a second mega-deal with Charter becomes unlikely.

But it has company. According to a story on CNBC, Altice is looking at adding Charter to its U.S. kennel, which so far includes Suddenlink and Cablevision. It’s not much of a powerhouse in the U.S., yet, but the France-based company is a major player in Europe. If it wants to buy Charter, it has to entice controlling owner Liberty Media and its big dog, John Malone. The question, according to CNBC, is whether Altice’s track record of boosting the value of acquired cable companies by slashing operating expenses will do the trick…

In its short time operating in the U.S. market, Altice has shown a unique ability to cut costs and generate substantially higher margins, before taxes and other costs, than predecessor managements. But Liberty is still wary of taking Altice paper in the belief that it is too early to tell whether those gains are sustainable…

Charter, with $60 billion in debt and an expected purchase price that could reach or exceed $500 a share would represent an enterprise value of almost $200 billion.

Altice’s U.S. holdings may be small enough to avoid triggering a fatal anti-trust response from the federal justice department. In past times, a T-Mobile-Sprint combination probably would set off alarm bells – similar mergers did – but things might be different now. Conventional wisdom is that the Trump administration wouldn’t be so worried about increased telecoms market concentration, concerns about its treatment of the AT&T – Time Warner deal notwithstanding. We might know soon if that’s a good assumption.

Charter moves fast where fiber competition looms

by Steve Blum • , , , ,

But is it fast enough?

If you want to steer telco and cable company capital investment toward your community, apply competitive pressure, preferably with a full scale fiber to the home project. Once again, that lesson has been learned as the simple and reliable mechanics of microeconomic theory have pushed a major cable company to accelerate spending in an area it has long ignored.

Charter Communications is required to upgrade the antique analog cable systems it has long maintained in redlined communities. That’s one of the conditions attached to the California Public Utilities Commission’s approval of its purchase of Time Warner and Bright House cable systems in the state. Charter’s deadlines for doing so range from two to three years, with most of its territory in California due for digital service within two and half years of the merger’s approval. That happened nearly a year ago, so the time remaining is more like one to two years.

So who goes to the top of Charter’s priority list? According to claims it has filed with the CPUC regarding where broadband subsidy dollars should be spent, the community on Charter’s fast track is one in San Bernardino County that’s been targeted by a competitor…

Charter agreed to rebuild its broadband footprint in both Phelan and Prunedale/Aromas/Salinas—two of the priority areas identified in the White Paper. In Phelan, Charter completed its rebuild in December 2016, revitalizing its plant and improving broadband services available in 250 census blocks identified in the White Paper as high impact. Similarly, Charter is scheduled to complete the rebuild of its plant in Prunedale/Aromas/Salinas no later than May 2019.

Phelan, where Race Communications is in the hunt for a California Advanced Services Fund subsidy for an FTTH system, was upgraded within months of the CPUC’s order taking effect. In the northern Monterey County neighborhoods around Prunedale and Aromas, Charter is happy to wait the full three years.

It’s uncertain whether Charter’s plans are enough to knock Monterey County off of the CPUC’s bang for the buck list. But it is crystal clear that the faster build happened in the community where Charter faces the bigger competitor.

Cable companies will double broadband prices because they can

by Steve Blum • , , , ,

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.