With covid–19 pandemic lockdowns continuing in most states, albeit with gradual loosening underway, democrats in the house of representatives in Washington, D.C. want to pump $5.5 billion into broadband access subsidies to ensure that people and institutions can remain connected to the online resources they will be depending on, likely for months to come. It’s one of the opening shots in the negotiations over what might be a second stimulus bill in the trillion dollar range to keep the U.S. economy afloat.
It’s a big leap from the $375 million for broadband that was included in the first, $2 trillion pandemic stimulus bill approved by congress in March. But it’s also broadband funding of a different sort. In March, the money went to supply-side uses, such as $100 million for broadband infrastructure via the federal agriculture department’s ReConnect program. This time around, house democrats want the money to feed the demand side – $4 billion is earmarked to subsidise monthly Internet bills for low income families, up to $50 per month per household. The remaining $1.5 billion would go to school and libraries to pay for mobile network-enabled WiFi devices and service, and other expenses necessary for keeping kids connected to school lessons.
Ultimately, that money will hit the bottom lines of major, monopoly model incumbent Internet service providers like AT&T, Comcast, Charter and the rest. If the bill sets a de facto base price of $50 per month for Internet service, then that’s what those companies will charge. It’s a lot easier to up sell customers from what are, in effect, low income loss leader promotions such as the $10 per month Comcast Internet Essentials or Access from AT&T packages, and move them into expensive long term contracts when someone else is picking up the tab. But $4 billion only lasts so long. When the subsidies run out, those households will be stuck with higher bills for a long time.
The odds of this latest proposal making it into law as is are pretty slim, though. What house democrats seem to doing is setting up for negotiations with U.S. senate republicans and the white house. The D.C. beltway sausage machine is about to crank into high gear.
The covid–19 emergency is turning into a windfall for broadband companies, particularly Comcast and Charter Communications. As lockdowns came into effect in mid-March, people turned to broadband to stay connected, and for many that meant subscribing to service for the first time. It also meant running the gauntlet of high pressure sales pitches that steered many away from low cost standalone Internet deals and into expensive video packages that start billing immediately.
In its first quarter financial report, Comcast said it gained 509,000 new broadband subscribers between January and March, including 32,000 who signed up for the $10 per month standalone Internet service that the company offers to low income households, and that currently carries a first two months free promotion. The remaining 477,000 landed in market rate packages with payment due. It was the biggest quarterly broadband subscriber gain that Comcast booked in the past 12 years.
Charter had a more expansive first two months free promotion, applying it to all of its Internet packages for households with students. It did even better than Comcast, picking up 580,000 net new broadband subscribers. Of those, 120,000 came in during the promotion period and opted for the free introductory offer. Charter’s aggressive up selling paid off, according to the Seeking Alpha transcript of CEO Tom Rutledge’s first quarter earnings call with financial analysts…
Interestingly, and uniquely, about 50% of the customers who participated in the offer in March chose to order additional products with immediate billing. The vast majority of these customers are taking our flagship Internet product at 200 megabits per second or 100 megabits per second, and a small minority subscribe to our low-income offer or our ultra and 1 gigabit premium offerings.
Although both companies try to score political points by spinning their covid–19 offers as acts of good corporate citizenship, when they speak to Wall Street, they tell the truth: trolling free and/or discounted broadband service past low income households and then shamelessly up selling them is good business.
The future, if you want to call it that, of traditional, linear subscription television services will depend on customers who don’t understand, and consequently fear, online video services. Martin Peers, a reporter for The Information, looked at his mother-in-law’s Comcast bill and discovered a stack of add on fees and increasing monthly rates for services that can be had for less money via over-the-top video platforms.
The reason she’s writing unnecessarily high checks each month? “She’s nervous of changing what she’s got”, Peers writes, and that fear is at the base of the profit-maximising strategies adopted by Comcast, Charter Communications, DirecTv and DISH…
[Comcast chief financial officer Michael] Cavanagh acknowledged that recent price rises imposed by Comcast will drive an increased rate of subscriber losses this year. Comcast’s average customer bill rose 3.6% this year, a little more than last year…
Comcast is not alone in focusing more on customers willing to pony up for cable and letting others in search of budget solutions cancel. DirecTV’s owner, AT&T, has had fewer price promotions for the satellite TV service as it focuses on high-value customers. Charter, the third biggest cable service, has a similar philosophy. Comcast, Charter, DirecTV and Dish lost a combined 5.1 million subscribers in 2019, 71% higher than the losses of 2018.
It’s a classic case of haves and have nots. Consumers who feel comfortable navigating the online world can take advantage of competitive video pricing. Those who don’t share that awareness – a group that disproportionately includes low income and elderly people – get soaked for high monthly subscription fees that include a raft of services they don’t need or use.
That strategy is the driving motivation behind the scorched earth tactics cable companies use to defend their grasp on low income communities. Maintaining effective monopolies isn’t just about blocking competitive broadband providers. It’s also about keeping vulnerable customers fenced in.
Broadband service is too expensive for many families, but it’s a necessity nonetheless, according to a letter sent on Friday to Californian Internet service providers by California Public Utilities Commission president Marybel Batjer. Saying “not every household could or can continue to afford $50 a month for a quality, high-speed Internet connection”, Batjer asked ISPs to…
Provide service sufficient for all family members to work and learn from home: Subscription in the range of $0–15 a month, offering a minimum of 25 Mbps, and eliminate or waive data caps and overage charges.
Provide expansive program eligibility: Eligibility must be as broad as possible…
Make signing up easy: Allow customers to immediately sign-up for the plan online or over the phone before requiring eligibility verification. Eligibility can be verified at a later date.
Remove barriers: Eliminate any requirement that customers have no unpaid balances. Supply new customers with a low or no cost modem and Wi-Fi router either to own or lease.
It’s just a request. The CPUC has near zero authority over broadband service providers, even when they want something from the commission. And it can’t offer much in the way of incentives. Batjer pointed to the federal lifeline program that offers a $9.25 a month subsidy for fixed broadband service, with lots of strings attached, and she also held out hope that the CPUC’s lifeline program might also support broadband service. Some day.
Batjer wants ISPs to do two things: offer low income households 25 Mbps service for $15 or less a month with no data caps, and make it easy to sign up. The table below shows how poorly California’s major ISPs stack up against the $15/25 Mbps/no cap ask.
Suddenlink nails all three criteria, but charges $20 for installation. Comcast and Cox get price and speed right, but impose a standard 1TB cap that’s only waived for the moment. Charter meets the no cap and speed marks, but charges $23 per month (yeah, it’s $18 without WiFi but it’s also pretty useless without WiFi for most). AT&T makes it on price, but fails on speed and data caps, although it’s also waiving caps temporarily. Frontier offers unlimited data but its speed is limited by its decaying networks and for that it charges $20 a month.
Signing up is the real problem, though. Even if you can reach a customer service rep who will admit to knowing about a low income discount program – not a good bet – you will be subjected to arcane documentation demands and credit barriers on the one hand, and vicious up sell attempts on the other. Frontier, for example, has a plan with a $20 introductory rate that ties customers into a long term contract with an escalating price and Frontier’s notorious extra fees. Its reps have been known to stonewall affordable rate enquiries while offering the bait and switch rate as salvation. Customers of other ISPs have similar stories to tell.
$22.99 ($5 less with no WiFi), 30 Mbps, no cap, for qualifying low income households. During the corona virus emergency, the first 60 days is free for all plans in areas where schools are closed. 844–579–3743.
$14.95, 30 Mbps, no cap, WiFi implied but not explicitly included, for qualifying low income households. During the corona virus emergency, service is free until 30 June 2020 but installation is $20. 888–633–0030.
Update, 19 March 2020: AT&T announced today that the first two months of its Internet package for low income homes – Access from AT&T – is free to new subscribers.
The four major cable companies in California are offering free Internet access for a limited amount of time to low income households during the corona virus emergency, but not the two big telcos.
Charter, Comcast, Cox and Suddenlink seem to have figured out that what amounts to a one or two month promotional offer is a good way to attract new subscribers. Charter’s offer applies to any of their Internet access packages, while the others are limited to their low income-only plans. Unless a customer jumps through the hoops to disconnect, they’ll be billed for ongoing service after the free period ends.
AT&T and Frontier have discounted packages for qualifying low income households, but no free offer. A summary of the offers and contact information is below.
All six companies have also signed on to the Federal Communications Commission’s “Keep Americans Connected” pledge, which calls for them to open up their WiFi hotspots to everyone, not disconnect customers who don’t pay and waive late frees.
Local independent Internet service providers are stepping up too. In Santa Cruz County, Cruzio is offering free service for three months to customers who qualify for its low income service, which otherwise costs $14.95 per month.
A major difference between cable and telephone companies is the availability of video service. Cable companies can – and typically do – try to up sell people who enquire about discounted Internet service into pricey video bundles. That’ll be a particularly attractive pitch to people who are stuck in their homes for the duration. Frontier and AT&T have some video service available, but only in limited parts of their service territory.
Access from AT&T
$10 per month for qualifying low income households.
Spectrum Internet Assist
$17.99 per month ($22.99 with WiFi capability) for qualifying low income households. During the corona virus emergency, the first 60 days is free for all plans in areas where schools are closed.
$9.95 per month for qualifying low income households. Until April 30,2020 the first 60 days is free.
$9.95 per month, During the corona virus emergency, the first 30 days is free.
$19.99 per month for qualifying low income households. No free service is available
Altice Advantage Internet
$14.95 per month for qualifying low income households. During the corona virus emergency, the first 60 days is free.
The traditional, linear subscription TV business is in a nose dive. In the fourth quarter of 2019, AT&T shed 945,000 subscribers, mostly from DirecTv but also from its legacy Uverse service and its new AT&T TV platform. Add in the 219,000 subscribers who dumped its AT&T TV Now streaming service, and more than million customers walked away from AT&T’s video products.
Comcast and Charter lost TV subscribers, too. But for both companies, they each lost fewer subs over the 12 months of 2019 than AT&T lost in the last three. And both gained broadband subscribers and market share, as consumers move to higher speed service that better meets their needs than slow, DSL-based offerings from AT&T and Frontier Communications.
Google Fiber will no longer offer a linear TV product to new customers. For our current TV customers, we know you have come to rely on Google Fiber TV and we will continue to provide you with traditional TV service. And we’ll be happy to help everyone explore other options to get their favorite programming the way TV is watched now — over the Internet, with the virtually unlimited choice and control online viewing provides.
AT&T is pinning its hopes on the new HBO Max streaming service it plans to launch in May, for $15 per month. It’s beginning to look like a product that will make or break the company. With AT&T’s spending on video assets, like Time Warner, climbing and its video revenue in a nose dive, it’s betting its future on its ability to produce the same kind of instant success that Disney had with its new streaming service launch last year.
Cost of Cable Fees in an Average Monthly Cable Bill (2018). Source: Consumer Reports
It’s common practice for big, monopoly model broadband providers to promise low prices to new subscribers, then tack on arbitrary fees after they’re locked into long term contracts. AT&T was recently slammed for adding a property tax surcharge to some customers’ bills – no one has figured out yet why AT&T thinks it can do that in the first place, let alone why it more than doubled the charge – California property tax rate hikes are tightly restricted. Frontier Communications also adds fees on top of the rates customers have agreed to.
Part of being able to afford your life means knowing the full cost of what you’re getting, getting what you were promised, not being overcharged for things you didn’t ask for, and not being unfairly charged to get rid of things you didn’t ask for. But when people signed up for Comcast, that’s what happened to them…This settlement will help put money back in Comcast’s customers’ pockets where it should have been in the first place. Just as importantly, it provides millions of dollars’ worth of debt relief. And we’ve made sure that going forward, Comcast customers will know exactly how much they’ll pay for service before they sign up for it. That should put an end to unpleasant surprises.
It’s not just broadband service – arbitrary fees are added to the full range of products and services that telephone and cable companies provide. A study by Consumer Reports showed that the typical cable TV customer pays an extra $450 a year, just because. The graphic above breaks that down.
Jim Warner, who recently retired from a long career as the network engineer for the University of California, Santa Cruz and still chairs the Central Coast Broadband Consortium’s technical expert group, helped design the FCC’s program, along with several others from the academic side of the house as well as industry representatives. He says there’s a split between the two groups, with industry more concerned with selling service than delivering it…
While the research community has been continuously engaged in measurement activities as part of high performance networking, the commercial side of the business has been plodding along on its own measurement efforts. Our goals are to improve performance (or at least understand its limits). On the commercial side, the goal is more along the line of making money and, if performance got better, that was OK, too.
The ISPs – especially AT&T – were unwilling to accept the results of the program’s measurements and fought hard to get poor results removed from their totals to improve their score.
The lack of hard information about where and what kind of broadband service is available, particularly in rural areas, is sore spot in Washington, D.C. There’s bipartisan support for a couple of bills that would put more money behind broadband measurement and mapping programs, and set higher standards. Maybe, just maybe, enough support to make it into law in the coming weeks.
The fast, reliable broadband service claims endorsed by the Federal Communications Commission are based on test data that’s been doctored by California’s monopoly model Internet service providers, according to a Wall Street Journal article Shalini Ramachandran, Lillian Rizzo and Drew FitzGerald (h/t to Jim Warner for sending me the link).
Annual speed measurements taken to evaluate U.S. broadband service are “juiced” by AT&T, Comcast, Charter Communications and others, who know ahead of time where the tests are run and afterwards lobby the FCC to suppress bad results and hype good ones, the story says…
[AT&T] pushed the Federal Communications Commission to omit unflattering data on its DSL internet service…
In the end, the DSL data was left out of the report released late last year, to the chagrin of some agency officials. AT&T’s remaining speed tiers notched high marks…
Comcast a few years ago upgraded speeds in some regions without notifying the FCC, making test results look stellar, people close to the FCC program said. The FCC discovered the changes after spotting anomalous data and adjusted the numbers.
This September, amid an FCC test, Comcast rolled out speed upgrades for many customers in several states…
Charter-Time Warner Cable oversold its network to the point where 200 Mbps and 300 Mbps households “would achieve speeds that were only a half to a third of their promised speeds,” the New York attorney general alleged [in a 2017 lawsuit]. Yet Time Warner Cable’s FCC speed-test results in the two years prior averaged 100% or more of promised speeds.
Even so, the FCC’s VIP treatment isn’t good enough for AT&T. It pulled out of the testing program and will submit performance data it gathers itself.
The story also reports that measurements of Cox Communications’ broadband service showed a 37% actual-versus-promised consistency mark. It blamed the wholesale provider it chooses to work with, so the FCC relegated the results to a footnote, even though Cox – or any other last mile ISP– is responsible for properly provisioning middle mile connectivity and raw Internet protocol bandwidth.
AT&T and Comcast blew off demands for information about broadband pricing from California Public Utilities Commission staff, so now the public advocates office, which requested the data, is asking the commission to force the companies to comply and to acknowledge their legal responsibility to fully answer questions about service, safety and other issues.
The PAO sent a detailed questionnaire to Internet service providers in California, including telephone companies and cable operators, during an ongoing inquiry into the affordability of broadband and other essential utility services in California. According to the “motion to compel responses to data requests” filed by the PAO, Charter Communications and Cox answered, but Comcast and AT&T lawyered up (the filing doesn’t mention Frontier Communications, the other member of California’s Big Five ISP club).
Although AT&T and Comcast provided some information (see below), the bulk of their responses boiled down to you people don’t have any jurisdiction over broadband, but if you’re really interested, check out our website.
The jurisdiction question was answered, if not completely settled, by a ruling from Clifford Rechtschaffen, the commissioner who is leading the inquiry. He took the uncommon step of issuing a ruling that asserted “a significant role for the commission” in managing California’s broadband ecosystem.
Besides being dismissive, answering a data request with a link to a sales-focused website isn’t enlightening and could be dangerous, according to the filing…
The presentation of pricing on the AT&T website does not provide all relevant combinations of service bundles and speeds. Websites also produce selective company information that are in no way responsive to the data requests or comparable to other communication companies’ information. For instance: What is the lowest price for the user-defined combination of services at the user-defined speed across all communication companies?…
Telecommunication companies continue to frustrate the Public Advocates Office’s efforts to understand their continually evolving operational landscape and how it affects California consumers, even on safety matters.
There’s no particular timeline for when – if – action will be taken on the PAO’s motion.