Cable Giant Charter Fined $19 Million For Lying About Competitors Going Out Of Business

from the just-another-day-in-US-telecom dept

When last we checked in on cable giant Charter Communications (Spectrum), the company was busy using the Boys and Girl's Club of America as a prop to try and kill helpful conditions affixed to its megamerger with Time Warner Cable. This week, the company's under fire after it circulated advertising telling customers (falsely) that one of its competitors (Windstream Communications) was going out of business. While Windstream had filed for Chapter 11 bankruptcy protection, it very much remains in business. Yet Charter's advertising to customers informed them the company would likely be shuttering its doors soon.

This week Judge Robert Drain of US Bankruptcy Court for the Southern District of New York ruled (pdf) that Charter must now pay Windstream $19 million for spreading false claims about the company:

"Charter's goal with the mailings "was to induce the Debtors' customers to terminate their contracts and switch to Charter by sending them literally false and intentionally misleading information about the Debtors' bankruptcy cases and financial wherewithal," the ruling said. Charter premised its ad campaign "on false assertions regarding the Debtors' bankruptcy cases," the ruling said."

Charter's lawyers had, as they do every time they're in court, tried to argue that lying about a competitor was protected speech, something the Judge didn't look to kindly on:

"Charter claimed that punishment for its "literally false and intentionally misleading advertising campaign would violate their First Amendment right to free speech," the judge wrote. But First Amendment rights are not absolute and do not protect Charter's false statements about Windstream's bankruptcy proceedings and financial wherewithal, he wrote. "Such commercial speech is properly curtailed by precluding such wrongful conduct," he wrote."

All of that said, Charter, hand in hand with Comcast, is securing itself an ever larger monopoly over broadband access in countless US markets, especially at faster speeds. Cable giants now enjoy a 70% market share and growing over fixed broadband access, thanks in large part to regional phone companies that were too lazy, cheap, or heavily indebted (usually from "growth for growth's sake" megamergers) to actually upgrade aging DSL lines. In fact, many of these companies are literally just letting their networks fall apart and refusing to repair customer lines on a timely basis.

As such the irony is that Charter didn't really even need to lie, since most frustrated telco DSL subscribers likely would have eventually headed their direction anyway. But when you're a natural monopoly in a market that's neither competitive nor competently or consistently regulated, you tend to operate as if there's no repercussions for your actions -- because there usually aren't.

Filed Under: broadband, competition, false advertising, truth in advertising
Companies: charter communications, charter spectrum, windstream

Shockingly, Cable TV and Broadband Customer Satisfaction Is Still The Worst In America

from the ill-communication dept

Every few years or so, giant cable and broadband companies like Comcast will proclaim that they've finally seen the light, and will be spending time shoring up their terrible customer service. Like a few years ago, when Comcast proclaimed it had hired a "Customer Experience VP" who would finally make addressing the company's historically terrible customer service a top priority. CEO Brian Roberts also can be found at least once a year claiming that the company is going to finally address the problem by hiring better people, improving support systems, and generally revisiting the company's policies.

But year after year, big cable and broadband companies fail to deliver. Case in point: the latest American Consumer Satisfaction Index was recently released, and ISPs and cable providers continue to see the worst customer satisfaction scores in America. These companies are so bad at what they do, they're routinely bested by even everybody's favorite punching bag: the IRS. When it comes to broadband service on a scale of 100, both Comcast and Charter (Spectrum) continue to see the worst scores in an already terrible sector:

"Internet Service Providers didn’t fare any better than cable companies with the overall industry ratings at the same 62. The only three ISPs with rankings above the average are Verizon FiOS (70), AT&T Internet (69) and Altice (63). At the bottom of the rankings are Frontier (55), MediaCom (56), and Windstream (57). The big cable companies don’t fare well as ISPs – Charter (59) and Comcast (61)."

Things are equally bad on the cable TV front, where despite the rise of competition from streaming providers, incumbent cable ops still can't seem to figure out this whole "treating customers with respect" thing. While most hated industries (airlines) rank in the 70s and more popular brands (Amazon) reach the 80s, cable TV remains struggling in the 50s and 60s:

In the TV sector, the emergence of streaming video has offered consumers some reprieve. Streaming providers like Netflix, Hulu, and Amazon routinely rate much higher in customer satisfaction because they give consumers what they've been screaming for for years: lower prices and more flexible channel bundles. Ultimately, cable operators will be forced to actually compete on price, but they're apparently waiting until countless millions of their paying customers have fled to greener pastures before actually seriously overhauling their business models. Still, competition in the TV space is rising either way.

The broadband space is less promising. With no meaningful regulatory oversight and little competition, there's really no incentive to improve customer service or offer a better product in most markets. The focus remains on growth for growth's sake (megamergers) and scale, without scaling customer service in symmetry. The end result should be fairly obvious, given the broadband sector ranks worse than a long list of widely despised sectors like the airline, banking, and insurance industries. That kind of accomplishment requires some serious, sustained elbow grease and the kind of monopoly myopia money simply can't buy.

Filed Under: broadband, cable tv, customer satisfaction
Companies: at&t, charter, comcast, frontier, spectrum, verizon, windstream

US Telcos Teeter Toward Bankruptcy As Comcast's Broadband Monopoly Grows

from the dysfunction-junction dept

We've noted time and time again how the US broadband industry's biggest problem is a lack of healthy competition. In countless markets consumers either have the choice of a terrible phone company or a cable giant. The nation's phone companies have spent the last decade refusing to upgrade (or in some cases even repair) their aging DSL lines, because they don't see residential broadband as worth their while. That in turn is giving giants like Comcast and Spectrum an ever greater monopoly in many markets, reducing the already muted incentive to compete on price or shore up historically terrible customer service.

It's a weird problem that's widely ignored by both parties, and it just keeps getting worse. This week, US telco Windstream filed for bankruptcy protection, partially thanks to a dispute with one of the company's creditors, netting a $310 million settlement Windstream couldn't swallow. More specifically, hedge fund Aurelius Capital Management had argued that a two-year-old spinoff of the company's fiber-optic cable network violated the covenants on one of its bonds, prohibiting "sale-leaseback transactions." The court agreed.

Windstream, for its part, issued a statement insisting that none of this was the company's fault, and that the bankruptcy protection wouldn't impact customers:

"Windstream did not arrive in Chapter 11 due to operational failures and currently does not anticipate the need to restructure material operations,” Thomas said. “While it is unfortunate that Aurelius engaged in these tactics to advance its returns at the expense of Windstream, we look forward to working through the financial restructuring process to secure a sustainable capital structure so we can maintain our strong operational performance and continue serving our customers for many years to come."

But Windstream's inability to swallow the court ruling comes directly from the company's already shaky footing.

Windstream was already $5.6 billion in debt and, like many US telcos, stuck in a cycle of dysfunction. Customers continue to flee to cable competitors at an alarming rate, because the telco often refuses to seriously upgrade its DSL lines to fiber at any real scale. And it can't upgrade its DSL lines to fiber at any scale because customers are leaving at an alarming rate, draining their coffers. Watching these companies (and a few oddly bullish investors) pretend this ends well for anybody involved has often been a comedy of errors.

Windstream isn't alone; telco giant Frontier has also been perched precariously on this cliff for the last few years. Our collective bipartisan reaction to this has been to throw a few million in subsidies at the problem and hope the regulatory capture and other obvious sector problems just magically fix themselves. The problem is so bad, many towns and cities have been forced to build their own broadband networks, something that's immediately vilified as "socialistic" by the same industry whose greed, apathy, and incompetence caused the problem in the first place.

None of this stuff sees much interest in the broader tech sector, but it should.

As vertically-integrated cable giants like Comcast and Spectrum enjoy even greater monopolies over internet access at modern speeds, it has a trickle down impact on the internet ecosystem as a whole, especially in the wake of the death of net neutrality. Comcast's growing power opens the door to broader anti-competitive behavior unchecked by neither regulatory oversight nor healthy competition, impacting all of the smaller businesses hoping to compete for mindshare. Some like to claim that 5G will be some magical panacea that comes in and provides a competitive counterbalance to this dysfunction, but we've noted how that's not likely for a wide variety of reasons.

Natural monopolies dominating the on ramp to the internet and much of the content doesn't end well for anybody in the ecosystem, especially given America's comic inability to enforce antitrust. The broadband industry's issues are a problem that exponentially impacts everything on the internet, yet it's a problem we continue to turn a blind eye to in the hopes it will all just magically sort itself out.

Filed Under: bankruptcy, broadband, cable, competition, dsl
Companies: comcast, windstream

The Nation's Telcos Are Hemorrhaging Customers Because They Refuse To Upgrade Their Networks

from the don't-build-it-and-they-won't-come dept

So we've noted for a while how despite all the hype surrounding next-gen wireless and gigabit fiber builds like Google Fiber, vast swaths of this country are actually facing less broadband competition than ever before. That's in large part thanks to the nation's phone companies, which have effectively given up on upgrading their lagging DSL networks at any real scale. One net result is millions of customers paying an arm and a leg for sub 6 Mbps DSL service that doesn't even technically meet the FCC's new standard 25 Mbps definition of broadband.

And it's not changing anytime soon. Verizon has all but frozen next-gen upgrades as it shifts its focus to gobbling up failed 90s internet brands to help it sling video advertisements at Millennials (poorly, we might add). But smaller telcos like Frontier, CenturyLink and Windstream have similarly been losing broadband customers hand over foot as they flee to faster cable competitors. Even Wall Street, which has historically and myopically disliked putting any money back into broadband networks, has started to take notice, resulting in the nation's telco stocks taking a precipitous dive in recent months:

"Shares in the wireline ILEC/RLEC space (CenturyLink, Frontier, Windstream) have endured the worst three consecutive quarters in industry history, with shares plummeting an average of -20% in 4Q16, -21% in 1Q17, and -24% in 2Q17 (we note another -5% in 3Q17 thus far), mostly from Frontier and Windstream as CenturyLink shares are being supported by the Level 3 acquisition,” Cowen said in a research note."

It has gotten to the point where some Wall Street analysts have even gone so far as to *gasp* recommend that some of these companies actually upgrade their networks if they want to remain relevant. Ironic, since it was Wall Street's relentless focus on short-term gains and avoiding these necessary network upgrades that help put these companies in this position to begin with:

"Jennifer Fritzsche, senior analyst for telecommunications services at Wells Fargo, doesn't think Frontier can actually right said ship without offering consumers a better broadband product.

"It is hard to fix a problem just by cutting costs when your competition (cable) is only pressing its foot heavier on the capex and fiber pedal," Fritzsche said.

But instead of upgrading the networks they already have, many telcos are trying to please Wall Street by focusing on growth for growth's sake. Frontier recently gobbled up Verizon's unwanted DSL customers in California, Texas and Florida in the belief that bigger automatically means better. But Frontier not only saddled itself with massive additional debt and outdated copper landlines Verizon had neglected for years, but it bungled the acquisition so badly it actually forced many of these subscribers to flee to cable even faster. Focusing on growth for growth's sake now has Frontier teetering on the verge of bankruptcy.

But the more problematic impact of all this is that across countless markets, consumers looking for current-generation broadband often only have one option: cable providers. These cable providers are on the cusp of enjoying a greater broadband monopoly than ever before, resulting in less incentive than ever to shore up their historically awful customer service, and only encouraging their slow but steady deployment of arbitrary and unnecessary usage caps. Combine that with the Trump administration's intense focus on eliminating all consumer protections in the telecom space, and it shouldn't take a tea leaf reader to see how this could potentially end very badly for consumers and competitors alike.

Filed Under: broadband, competition, dsl, investment, telcos, wall street
Companies: centurtylink, frontier, verizon, windstream

DSL Users Still Can't Get Advertised Speeds They Pay For, Nation's Telcos Couldn't Care Less

from the underwhelming-you-is-our-forte dept

Every year the FCC is mandated by Congress to release a report detailing the status of the U.S. broadband industry. The good news? This year's edition of the creatively-named "Measuring Broadband America Fixed Broadband Report" (pdf) notes that speeds have by and large tripled since 2011. The bad news? That's really only for those who have cable broadband (where DOCSIS upgrades are relatively inexpensive) and the few people living in an area getting wired with fiber to the home. If you're a phone company customer with a DSL connection, unfortunately, many of you are still lucky to get 12 Mbps downstream:

" Largely spurred by the deployment of enabling technologies such as DOCSIS 3, the maximum advertised download speeds offered by ISPs using cable systems increased from 12-20 Mbps in March 2011 to 50-105 Mbps in September 2014. However, popular maximum DSL speed offerings have not kept up with that growth. While average DSL consumer speeds have increased, popular maximum DSL speed offerings have stayed largely stagnant since 2011, with most DSL providers offering maximum download rates of 12 Mbps or less."

And that 12 Mbps mark is rather generous. There are tens of millions of DSL customers who are lucky to nab 3 Mbps downstream on a good day, thanks to phone companies that face no serious competitive incentive to upgrade. Worse, some of these companies (like AT&T and Verizon) are actively trying to drive these unwanted customers away with apathy and price hikes so they can focus on more-profitable wireless. Others, (like Frontier, Windstream and CenturyLink) are buying these aging assets up, but wind up being so saddled with debt meaningful upgrades aren't possible (assuming they had competitive incentive to do so).

For a few years now the FCC has taken to naming and shaming ISPs that fail to deliver advertised speeds as part of the report. And for a while, it paid dividends. Cable companies singled out in the report one year for poor performance (like Cablevision) would return the next having notably upgraded provisioned speeds for fear of bad PR. Even notoriously awful satellite providers, motivated by 4G wireless, have been improving things with new Ka-band deployments. But proudly, consistently, the nation's DSL providers continue to under-deliver in terms of both overall speed......and also how close they get to their advertised speeds:And this won't be changing any time soon. With no competition to speak of, most of these telcos intend to cherry pick only the most profitable areas over the next decade (housing developments, university dorms), then pretend these deployments are much broader than they actually are (aka "fiber to the press release"). Simultaneously, most of these underperforming telcos (CenturyLink & AT&T especially) have been busy lobbying, buying and quite-literally writing state laws preventing towns and cities from upgrading their own broadband, or from getting outside help in the form of public/private partnerships.

The result (despite a lot of hype surrounding gigabit deployments) is a huge swath of the country that will likely be stuck on last-generation DSL for the better part of the next decade. And while a lack of real broadband competition is the obvious culprit, these same companies will be sure to blame everything from net neutrality to rogue yeti for their miserable failure to provide even the barest semblance of mediocre service.

Filed Under: broadband, broadband speeds, cable, competition, dsl, fcc
Companies: at&t, centurylink, frontier, verizon, windstream

Windstream To Farmer: Sure, We'll Give You Fiber Broadband -- For $383,500

from the do-not-pass-go,-do-not-collect-$200 dept

According to the FCC's most recent Broadband Deployment Report, 55 million Americans -- 17 percent of the population -- lack access to advanced broadband, and over half of all Americans lack access to broadband at speeds of 25 Mbps down, 3 Mbps up. When these underserved communities try to do something about it, they usually run into state protectionist laws written by ISP lawyers to protect regional duopolies. And when these duopolies are willing to connect them, it's often at an absurdly steep premium.

The latest example of this comes via Ars Technica, which tells the tale of a Nebraska farmer who simply wanted something better than the 1.5 Mbps connection he received from Windstream. That line often struggled to deliver him even 512 kbps, so he asked Windstream how much it would cost to connect him with pure fiber to Windstream's core network. According to Windstream's own fiber map, he lived about a quarter mile from the ISP's core network, but Windstream claimed the distance was more like 3.5 miles -- and the price tag to do the work was a rock bottom $383,500.

Mysteriously, when Schneider turned to a smaller local competitor, it was willing to do the same work for a mere fraction of the cost:

"Fortunately, it looks like Schneider will get fiber service for a fraction of that price from a second network provider called Northeast Nebraska Telephone Company (NNTC). Even though the Schneider farm is completely outside NNTC’s service area, even for copper, NNTC told him it would build the fiber line for a more reasonable $41,915.88. While nearly $42,000 is still a lot, Schneider noted that “it is a one-time investment that will enhance my quality of life and property value significantly."

When pressed by Ars as to why Windstream wanted to charge eight times as much to connect the farmer, the ISP didn't much want to talk about it:

"What isn’t clear is why Windstream would charge nine times as much as NNTC. Ars contacted Windstream, which confirmed the $383,500 price, saying “the total quoted was for 36 months of dedicated Internet service." We also asked Windstream how it calculated the estimate but did not receive an answer.

That's because these totals are often pulled entirely out of an ISP's ass, and are usually artificially inflated to deter customers from signing up for service -- since they don't like the slow ROI showing up on their quarterly results -- even if the line is profitable in the long term. Only in the broadband sector do you so consistently see companies that don't actually appear to even want to be in the business they're in, with such an obvious disdain for the customers they "serve."

Of course even if the farmer had been able to afford Windstream's steep price tag, there's no indication the Windstream network would have performed. A recent FCC study on which ISPs deliver advertised speeds ranked Windstream as the very worst U.S. ISP when it comes to delivering the bandwidth they advertise and users pay for. The ISP was also fined $600,000 by the Atlanta AG last year for false advertising, after state leaders were flooded with complaints about under-performing broadband connections and its congested core network.

This is all of course thanks to the fact that Windstream sees so little broadband competition that there's absolutely nothing requiring it to upgrade networks or give much of a damn. We've also consistently deregulated the broadband industry to the point where most regional regulatory agencies are utterly toothless, something we were told was supposed to free the industry from restrictions and result in a broadband free market Utopia. In reality, the end result has been an endless flood of charming anecdotes like this one, worth remembering the next time an industry lobbyist is busy arguing that U.S. consumers are simply awash in robust market competition.

Filed Under: access, broadband, deployment, farm, fiber, nebraska
Companies: nntc, northeast nebraska telephone company, windstream