Despite Claims Title II Will Kill Investment, Comcast Launches Major New 2 Gigabit Deployment

from the watch-what-we-do,-not-what-we-say dept

While broadband ISPs have repeatedly claimed that being reclassified as common carriers under Title II will crush sector innovation, investment, and destroy the Internet as we know it — they simultaneously continue to do a bang up job highlighting how these claims are complete and utter nonsense. For example, while Verizon was busy proclaiming that Title II would ruin, well, everything, it’s been using Title II to reap massive tax benefits. Similarly, despite the fact wireless voice has been classified under Title II for years, that didn’t stop the industry from investing massive amounts during that period or spending record amounts at the FCC’s latest spectrum auction.

Comcast has similarly proclaimed that if the FCC moved toward Title II it would have a devastating impact on network investment. In fact Comcast’s top lobbyist David Cohen had this to say the day the FCC voted to approve Title II rules:

“To attempt to impose a full-blown Title II regime now, when the classification of cable broadband has always been as an information service, would reverse nearly a decade of precedent, including findings by the Supreme Court that this classification was proper. This would be a radical reversal that would harm investment and innovation, as today’s immediate stock market reaction demonstrates.”

Of course on the day in question telecom stocks actually rallied, suggesting Wall Street wasn’t all that worried about the FCC’s new rules. Meanwhile, this sudden freeze in investment is nowhere to be found on the news this week that Comcast is going to deploy symmetrical 2 gigabit per second service to an estimated 18 million homes. From the Comcast blog post:

“We?ll first offer this service in Atlanta and roll it out in additional cities soon with the goal to have it available across the country and available to about 18 million homes by the end of the year. Gigabit Pro is a professional-grade residential fiber-to-the-home solution that leverages our fiber network to deliver 2 Gbps upload and download speeds…

Gigabit Pro isn?t the only way we plan to bring gigabit speeds to customers? homes. We are currently testing DOCSIS 3.1, a scalable, national, next generation 1 Gbps technology solution. We hope to begin rolling out DOCSIS 3.1 in early 2016, and when fully deployed, it will mean almost every customer in our footprint will be able to receive gigabit speeds over our existing network (a combination of both fiber and coax).”

Before people get too excited, remember that Comcast is trying to get its acquisition of Time Warner Cable approved, and as such is probably willing to make any number of promises it may or may not keep. ISPs also often like to conflate homes “passed” with fiber with homes served, so we’ll have to see if Comcast actually gets anywhere near that 18 million mark. It’s also worth noting that the company’s current top-shelf tier of 505 Mbps runs users $400 a month, has a $1000 early termination fee, a $250 installation fee, and a $250 administrative fee. As such, if pricing for the new tier is similar Comcast knows most users won’t take the option, with the possible exception of markets where Google Fiber creates downward pricing pressure.

Still, which is it? Does classifying ISPs as common carriers under Title II create telecommunications Armageddon, or do things generally just proceed as normal, the only exception being an FCC equipped to police the most egregious examples anti-competitive behavior? Because increasingly, all signs are pointing to the latter.

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Comments on “Despite Claims Title II Will Kill Investment, Comcast Launches Major New 2 Gigabit Deployment”

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49 Comments
Richard Bennett (profile) says:

Telecom stocks are down since Feb. 25

Since the day before the FCC’s Title II freakout, CMCSA stock is down from 59.62 to 57.87; VZ is up from 49.20 to 49.57; and AT&T is down from 34.21 to 33.10.

No, the market didn’t rally after Title II was imposed. In fact, the day of the announcement all the telecom stocks were down.

VZ was the least affected by the Title II freakout since it is already under some common carrier regs in 700 Mhz.

And no, the mobile networks didn’t bid $41B for AWS-3 in order to roll out some tricky new voice service, they bought spectrum for this thing called an Internet.

Chronno S. Trigger (profile) says:

Re: Telecom stocks are down since Feb. 25

A quick Google search can confirm that stocks dropped after the Title II announcement, but it didn’t happen on Feb. 25th, it happened on March 2nd (or 3rd, or 9th depending on who you look at). Unless you’re trying to tell me that it took a few days for stock traders to notice the news and the rise in stock prices after was just a delayed affect from something else. But I think that the general drop in prices (and eventual climb back for two of the three) was related to something else.

Or it could be what I’ve been thinking for a vary long time while watching the stock market: Stock prices are bullshit and should not be used as evidence for anything.

Karl Bode (profile) says:

Re: Telecom stocks are down since Feb. 25

AT&T and Comcast are also seeking merger approvals that are highly uncertain, and Verizon is not. Also — we’re talking $1 to $2 declines? Surely the resounding devastation that was supposed to take place would see a more substantive reflection in stock performance?

Also, you’re intentionally ignoring the entire central point of the article.

Richard Bennett (profile) says:

Re: Re: Telecom stocks are down since Feb. 25

You claimed “telecom stocks actually rallied, suggesting Wall Street wasn’t all that worried about the FCC’s new rules”.

I don’t think any particular day’s stock prices reflect Wall St reaction to a change in policy; it was anticipated, so some decline was already priced in, and the details weren’t given for some weeks after Feb. 26th.

In any case, the stock performance of telecom firms has always been weak compared to the OTT firms like Google and Netflix, because broadband carrier profit margins – ROIC – are a fraction of OTT margins.

Karl Bode (profile) says:

Re: Re: Re:3 Telecom stocks are down since Feb. 25

“You made a one-day observation in an attempt to mislead and I busted you with a trend line.”

Actually you misquoted me, ignored 90% of the story, and then tried to pretend that very minor drops by two companies undergoing extensive merger reviews were linked to Title II’s impact.

“It’s actually too early to measure the impact of the White House’s regulatory overreach just yet, frankly. That’s what journalists are saying.”

Ah, I see. We’ll revisit this in a year’s time then.

nasch (profile) says:

Re: Re: Re:9 Telecom stocks are down since Feb. 25

I take the Democratic Party as an expert on all things related to the Democratic Party.

So you believe that A) the FCC is part of the Democratic Party and B) the Democratic Party can be trusted to report on its affairs honestly and accurately? I don’t believe either of those things.

Richard Bennett (profile) says:

Re: Re: Re:10 Telecom stocks are down since Feb. 25

There’s no way I would expect you to know this, but according to law the FCC must have a majority of Democratic Party-affiliated commissioners when a Democrat occupies the White House. Yes, Virginia, there is politics in Washington, DC and the Democratic National Committee is aware of the president’s support of Title II.

It’s a shock, isn’t it?

Richard Bennett (profile) says:

Re: Re: Re:2 Telecom stocks are down since Feb. 25

My POV of investment and regulation comes from comparing investment in mobile and wired broadband networks in the US vs. Europe. The picture is pretty stark.

In Europe, as in Asia, carriers are encouraged to build cable and fiber networks by deregulation. DSL is heavily regulated in those areas, but the faster networks are not. The fiber networks in Japan and Korea are effectively deregulated because unbundling requires the leasing of multiple strands of fiber at a time.

nasch (profile) says:

Re: Re: Re:5 Telecom stocks are down since Feb. 25

“Then, it called for creating fair competition in the telecom sector and facilitating fiber deployment. To this end, the Ministry of Public Management, Home Affairs, Post, and Telecommunications (MPHPT), which was then renamed to the Ministry of Internal Affairs and Communications (MIC), utilized the already-introduced asymmetric regulation, interconnection rules, and other related policies in the Telecommunications Business Act. These initiatives finally enabled Japan to achieve its target in only three, not five, years. The asymmetric regulation stipulates the owner of dominant local network (in this case, NTT-E/W) to make its network widely available for any competitors in favorable conditions and does not allow it to prioritize any partner companies; it is widely believed that this asymmetric regulation, accompanied with NTT’s own initiative for open networks made public in February 1995, paved the way for the success of competitive broadband firms, especially ADSL providers, and greatly helped Japan to achieve its goal.”

That doesn’t sound like deregulation…

Richard Bennett (profile) says:

Re: Re: Re:6 Telecom stocks are down since Feb. 25

Keep reading. The next paragraph gets to fiber:

“Since then, the primary focus of Japanese ICT strategies (e-Japan II in 2003, IT New Reform Strategy in 2006, i-Japan Strategy 2015 in 2009, New Strategy in Information and Communications Technology in 2010, and Declaration to be the World’s Most Advanced IT Nation in 2013) shifted from expanding broadband coverage to promoting its usage. Expanding broadband coverage to the nationwide market was mostly done by
private initiatives, firstly of ADSL operators and then of FTTH providers. The MIC helped their businesses through interconnection rules, reducing access fees to existing network infrastructure, settling disputes among operators, and issuing direct orders if needed. It is important to note that, since the terms of local loop unbundling of fibers could not fully satisfy the need of competing providers, competition in the FTTH deployment is far less than ADSL’s. The main concern for unbundled fiber is that competitors cannot lease a single strand; instead, they have to use a bundle of eight strands even if they need only one strand. This makes it difficult for competitors to make profits in the fiber retail market. On the other hand, competitors can lease a single metal line from NTT-E/W; thus, they can offer competitive ADSL services in the retail market.”

Like I said, if your regulator wants to move the nation from copper to fiber he regulates the hell out of copper and deregulates fiber.

Anonymous Coward says:

Re: Telecom stocks are down since Feb. 25

Who cares what Wall Street thinks?

Oh. Right. Wall Street cares, in that self-serving narcissistic navel-gazing manner that it cares about everything it does.

Stocks rise and fall on Wall Street all the time — often in a matter of hours — based on rumors, hunches, guesses, broken trading algorithms, mistakes, and everything else. Trying to use stock prices as a barometer of anything — except as a measure of Wall Street’s insanity — is pointless.

Darrin (profile) says:

Re: Telecom stocks are down since Feb. 25

Richard do you think neutrality will slow down investment, or is the existence of google fiber enough to keep comcast in the game? I know this 2gbps announcement is a reaction to gf, but I’m seeing all kinds of activity in the triangle area; after years of terrible customer service twc is upgrading rapidly. How will net neutrality impact this competition in your opinion?

Anonymous Coward says:

Honestly, I think it’s more along the lines of “there is going to be competition in Atlanta with Google Fiber”. Thus Comcast actually has to compete with someone offering 1Gbps connections: https://fiber.google.com/cities/atlanta/

Given that DOCSIS 3.1 was just recently displayed at CES 2015 and I still can’t find any modems for sale, I wouldn’t hold my breath waiting for the actual deployment. My guess would be push it out until it’s deemed absolutely necessary by competition.

Pronounce (profile) says:

Corporations care zero about an individual,

except where an individual can affect their bottom line. As consumers we have some power, and corporations do whatever they can to work the system to motivate us to make themselves more profitable. (If you believe otherwise you’re naive.) If you understand their motivation then you can grasp their agenda.

So the more faith you, as an individual, place in the words of a corporation the more you’re a part of their machinations to game the system.

anony@gmail.com says:

Law

If they make a pledge to do this because they want the deal done then they should be forced to sign binding agreements with sates and prove that they will make sure 18 million people have affordable 2gb internet access , cost not over double that paid for 1gb by the majority of the country which is around $70 or less and if they still cannot get 18 million people signed up they must cut the price until they can… If they go against the binding agreement then they pay google the amount needed to install and implement 18 million customers on to at least 1gb internet contracts of $70 a month.

That One Guy (profile) says:

Re: Law

Funny thing about those ‘binding agreements’, when they’ve signed them in the past and failed to live up to them, rather than face any penalty, they just buy out the legislators in the state, who argue that it would be downright unfair to hold the companies to their promises, and the cable companies end up not having to fulfill their end of the bargain, while the public has already been forced to honor their half.

jaquer0 (profile) says:

Comcast outrage

Comcast limits its Atlanta clients to a total traffic of 300MB a month before charging an additional $10 for 50 MB.

This means that customers could enjoy Comcast’s new speed of 2gbps (which equal 250 MB of traffic per second) for a little over one second before Comcast’s extortionate “data hog” charges kicked in.

Assuming only a 1% usage of Comcast’s 2gbps offering, which would be 20mbps, or 2.5 megabytes per second, in 2 minutes a user would have consumed an entire month’s bandwidth allotment. And that’s using only 1% of what Comcast claims they will deliver!

Charges for usage beyond 300MB/month are $10/50MB, or $30/minute. Again, using only 1% of the capacity Comcast claims it will be offering.

That works out to $1800/hour, $43,200 a day, which is more than the average American worker earns in a year — including multimillionaire CEO’s in the average!

Monopolists (and duopolists, in practice there is no difference) should be strictly regulated as common carriers, including –especially– for their rates.

They rely on easements (the right to use) public property to run their cables and fibers, as well as publicly-mandated easements from the owners of private property. This for the greater good of the community as a whole, not so they can engage in extortionate price-gouging.

These sorts of public announcements by public utilities should be binding on them. And when they are shown to be scams, as in this case, the corporations involved should be subject to exemplary punishment, up to and including the corporate death penalty — forfeiture of their assets without compensation.

That One Guy (profile) says:

Re: Re: Comcast outrage

How hard did you have to squint to only see the parts of that post that you wanted to?

An ‘announced’ 2 Gbps speed is worse than useless if, as the commentor notes, the data caps they impose on their customers means that using it to even a fraction of it’s potential will lead to massive overage charges.

‘Congrats on your new, much more expensive blazing fast internet connection! Oh, you actually used it? Well, let’s just add a few more zeros at the end of your bill shall we?’

Anonymous Coward says:

Am I the only person here who recognizes that Richard Bennett has also been posting on the offensive in a negative manner over on Ars Technica fairly recently about Net Neutrality? I.e. he’s been arguing against it.

Also worth pointing out he works for a think tank that shockingly does some lobbying in a not so shocking manner for the telco companies who have a dog in this fight.

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