Broadband

by Karl Bode


Filed Under:
broadband, cable, competition, fcc, monopoly



Cable's Broadband Monopoly Is Becoming Stronger Than Ever

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

Despite ample lip service to the subject of broadband, huge swaths of United States' broadband markets are becoming less competitive than ever before. Companies like AT&T and Verizon have proven completely disinterested in upgrading huge swaths of their networks, instead pivoting toward content and advertising, as evident by AT&T's $155 billion acquisitions of DirecTV and Time Warner, and Verizon's acquisitions of AOL and Yahoo. CenturyLink and Windstream are following suit, shifting their focus from residential broadband to enterprise service with their respective acquisitions of Level 3 and Earthlink.

That's not to say that telcos aren't upgrading their networks at all. Many selectively upgrade customers in markets where fiber is already in the ground and deployment costs are minimal (developments, college campuses), then use marketing magic to pretend these deployments are much larger than they actually are. But in reality most telco execs are now shifting their attention to higher-growth markets like content and advertising, well aware of Wall Street's outright refusal to wait on a return on broadband investment.

As a result, not only are these "broadband" companies incapable of technically offering millions of their customers the FCC definition of broadband (25 Mbps), they're quite actively trying to drive these unwanted customers away with the one-two punch of outright apathy or price hikes for 2003-era speeds.

As a result, phone companies have seen broadband subscriber net losses in five of the last six quarters. In fact, in the first three quarters of 2016, cable companies added about 2,440,000 broadband subscribers, while Telcos lost about 475,000. Last quarter alone the top cable providers added about 775,000 net broadband customers, compared to a net loss of 150,000 broadband subscribers for the nation's telcos:
Cable's faster broadband speeds and telco apathy also mean cord cutting is hitting telcos much harder. Leichtman Research states that pay TV overall lost about 255,000 subscribers last quarter (other estimates from folks like SNL Kagan peg that number at closer to 430,000). But whereas cable providers lost just 90,000 net pay TV customers last quarter, the telcos lost 375,000 net pay TV customers. In short, customers frustrated with slow DSL are fleeing to cable, then signing up for cable TV bundles they may not even want, usually because they're priced more cheaply on promotion than cable broadband alone.

Obviously this is all wonderful news if you're a cable broadband provider. As telcos back away from the residential broadband markets they don't want to upgrade, cable's monopoly becomes stronger than ever. As a result, cable providers can implement their weapon-du-jour against streaming video providers (usage caps and overage fees), without fear of the competitive repercussions you'd see in a healthy market. There's also less incentive than ever to lower prices, or to shore up what has historically been some of the worst customer service in any U.S. industry.

While some (including AT&T and Verizon) like to claim that fifth-generation wireless will come in and save us from this more powerful cable monopoly, there's absolutely no indication these services will be uniformly available -- or cheap. While 5G technically does provide significantly faster broadband with lower latency, usage caps and overage fees will ensure these services are priced out of the range of many households. And again, with the only competition being either expensive and capped satellite broadband, or expensive and capped cable broadband, the end result won't so much be competition as it will be competition theater.

Keep in mind cable providers are being allowed to consolidate at a faster rate than ever before, at the same time we seem intent on turning a blind eye to letting incumbent ISPs quite literally write awful protectionist state laws that hamstring broadband competition and creative solutions to spotty coverage. Combine that with the early signs that a Trump Presidency will likely focus on gutting net neutrality and other consumer protections, and the writing on the wall for U.S. broadband markets should start to come into focus.

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  • identicon
    Anonymous Coward, 22 Nov 2016 @ 6:43am

    Soon after the TWC merger with Charter our cable bill went up by $5/month (surcharge) and the bill of someone I know more recently went up by much more than that. It is to be expected that more increases will occur on our bill soon.

    The only thing that results from these mergers is less innovation and higher prices. It's not acceptable that the government prevents newcomers from entering the market while letting the incumbents keep merging. Absolutely nothing good comes out of this.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Nov 2016 @ 6:50am

    What ever happened to the Sherman Anti Trust Act?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 Nov 2016 @ 6:54am

      Re:

      The Telco lobbyists pay Sherman a lot of money to look the other way.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 Nov 2016 @ 6:57am

      Re:

      Yea, the thing about that...

      Anti-Trust laws work against regulatory agencies, so that Anti-trust laws are essentially ignored and forgotten. The Government would rather 'regulate and control' the market, not enforce anti-trust laws.

      Seriously think about it... do you want Control or not?
      Regulatory agency = POWER!
      Anti-Trust = Little to NO POWER!

      The government WANTS CONTROL! Anti-Trust gives them little power because someone has to do something to cause that engagement. With regulation, you just get to create laws regardless of who is doing wrong or right. And when you get to just create laws without oversight...

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 Nov 2016 @ 8:20am

        Re: Re:

        You sound confused.

        reply to this | link to this | view in chronology ]

      • icon
        James Burkhardt (profile), 22 Nov 2016 @ 12:16pm

        Re: Re:

        Anti-Trust is not anti regulatory control. Its a huge government power move, in which companies abusing a monopolistic position are forced by the government into not abusing their position. Historically, this has meant breaking up large monolithic corporations into smaller organizations that in theory compete, allowing free market principles to restore a healthy market that is beneficial to consumers. The federal government has refused to address market distortions caused by territorial monopolies using the Sherman act, likely because of the concerns of Wall Street. So the second approach to Anti-Trust is regulation. Establish rules of engagement that are designed to prevent consumer harm. ignoring for now the question of whether established rules achieve their goal, one of the goals of regulation is Anti-Trust. Regulation of the early broadcast industry meant different channels had different owners. Deregulation lead directly to the current market where disputes with a single network leads to the loss of a large group of channels, sometimes numbering in the hundreds. This, combined with a lack of Anti-trust in the broadcast market, is the direct cause of skyrocketing cable fees.

        TL; DR: regulation is a form of anti-trust.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Nov 2016 @ 6:52am

    The FCC is just doing a bang up job here! Seriously, this IS the desired outcome!

    http://www.informationclearinghouse.info/article18568.htm

    It may behoove us to start throwing congress and the President under the bus. I don't remember Obama doing much to prevent this do you? I certainly don't see Trump even giving even the smallest shit either!

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 22 Nov 2016 @ 7:15am

      Re:

      Can't you at least let Trump get into office first before dumping on what he may or may not do?

      Obama sure hasn't done crap for anyone other then screw up Health Care for millions of people and dropping lots of bombs, killing a lot of innocent people in the process and really creating ISIS.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 Nov 2016 @ 8:21am

        Re: Re:

        Idiots

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 Nov 2016 @ 8:44am

        Re: Re:

        "Can't you at least let Trump get into office first before dumping on what he may or may not do?"

        All I said was I don't see Trump giving a shit and now all we can wait and do is watch and see if my prediction is correct or not.

        Trump is already backpedaling on a few things he said during the campaign. How much he backpedals is yet to be seen. On subjects like the FCC and net neutrality, I completely expect to see Trump allow for US businesses to further solidify their Government granted monopolies.

        Trump, like most Americans and people working in Government, knows little and understands even less about the Constitution and how the Government is supposed to work!

        reply to this | link to this | view in chronology ]

      • icon
        Roger Strong (profile), 22 Nov 2016 @ 8:56am

        Re: Re:

        Just so. If Rob Ford could provide qualified, dignified, professional leadership, then so can Donald Trump.

        BTW, now that Trump is president-elect, can we start declaring the Trump created ISIS? Or do we have to wait until after the inauguration? That's how it works for you, right?

        reply to this | link to this | view in chronology ]

        • identicon
          Not OP, 22 Nov 2016 @ 10:27am

          Re: Re: Re:

          "BTW, now that Trump is president-elect, can we start declaring the Trump created ISIS? Or do we have to wait until after the inauguration? That's how it works for you, right?"

          Although I think I take your point in general, we'll have to wait to see what endless war horrors Trump's administration has in store for the world. However, the fact remains that the rise of the group they're currently calling ISIS can be directly attributed to the Obama administration. ISIS (as it is currently understood) came into existence in 2012. That's Obama, not Bush, not Trump. Of course, we'll have to wait and see if the Trump admin (like Obama with Bush) simply continues a similar foreign policy.

          More to the point is that attribution of ISIS type groups to a particular administration is really a mute point. As creating/facilitating "terror" groups like this has been US (et al.) standard operating procedure for regime change for a very long time. Not only is it a completely immoral practice that goes against most peoples' values, it actually makes all of us much less safe.

          Here's a short clip of a news broadcast that will give you all the terminology needed to research the truth about the rise of ISIS if you're interested in finding out more:

          Reality Check: Proof U.S. Government Wanted ISIS To Emerge In Syria - Ben Swann - https://www.youtube.com/watch?v=Z1aDciHCejA

          reply to this | link to this | view in chronology ]

          • icon
            Roger Strong (profile), 22 Nov 2016 @ 10:54am

            Re: Re: Re: Re:

            They didn't "come into existence" during Obama's term; they participated in the Iraqi insurgency following the Bush II's 2003 invasion. They merely adopted the ISIS name during Obama's term. Look it up.

            Bush II & Friends created the conditions for their success. First with their bungled occupation, then with their committing the US to a timetable for pulling out.

            If Obama can be "credited" for creating ISIS - as the poster I responded to does - and as Trump himself does - then once sworn in Trump can get credit with equal honesty.

            reply to this | link to this | view in chronology ]

            • identicon
              Not OP, 22 Nov 2016 @ 11:57am

              Re: Re: Re: Re: Re:

              Come on bro, I went to all that trouble to qualify "ISIS" with - "...the group they're currently calling..." and "...(as it is currently understood)..." - and this is how you treat me? The term ISIS wasn't even in use prior to 2012.

              Anyway, what's the difference? Obama clearly continued and expanded on Bush/US-empire foreign policy (not to mention a host of other civil liberty crushing actions). Anyone defending this totalitarian war criminal by suggesting he was somehow a hapless victim of his predecessor's policy is deluding themselves. I voted for Obama twice based on his pretty words of hope and change. Face it man, his pretty words were lies. Obama simply wasn't what we thought he was. Do yourself and the rest of us a favor and stop apologizing for the catastrophe that is his legacy.

              Also, I get it, you hate Trump. The neocon Republican Party clearly does not represent the best interests of the American people. But the Clinton/Obama neoliberal menace to our society is a terrible alternative. Accept it, NEITHER party represents the best interests of the American people. They represent only the best interests of their wealthy patrons.

              Although these issues may play some role, Trump's win isn't primarily about racism or sexism or any of the other wedge issue nonsense the corporate news propaganda tries to fill our heads with. It's about the dire economic situation that most Americans are now experiencing.

              If - in the very unlikely event - you're interested in better understanding my point of view (vs. simply acting as an Obama apologist and/or arguing), take a listen to the segment in the video below of the polysci professor who provides some insight into why Trump won (spoiler, it has very little to do with Trump).

              Segment starts at about 60 sec. -

              Economist Who Predicted Brexit & Trump Brilliantly Explains Capitalism's Collapse -
              https://www.youtube.com/watch?v=-K8bf6dbYt4

              reply to this | link to this | view in chronology ]

              • icon
                The Wanderer (profile), 24 Nov 2016 @ 9:40am

                Re: Re: Re: Re: Re: Re:

                Thing is, Trump isn't even the neocon Republican Party; he's something between the alt-right Breitbart wing, and a loose cannon with no visible ties beyond the whim of the moment.

                Hillary Clinton would not have been a good President; she would have continued the country on more or less its current trajectory, rather than improving things which need to be improved. If she had won the Presidency, things would not have gotten better, but they would not have gotten actively worse very quickly.

                Donald Trump will be an actively dangerous President; we will be very lucky if he does not do catastrophic damage to our democracy, to our strength as a country, and to the world situation as a whole. With him in office, things will not get better, and will very probably get actively worse.

                Between those two choices, it seems clear to me which one is the lesser of the two evils - and it appears that a majority of voters agreed. Unfortunately, the balance of the electoral college fell out differently.

                I agree that Trump's victory has very little to do with Trump; among other things (such as the ones indicated by the link you cite), it has more to do with the years of Republican=and-so-forth demonizing of Hillary Clinton, and the long-established Republican drive towards partisan gerrymandering and "soft" voter disenfranchisement.

                Unfortunately, regardless of what led to it, a Trump victory does not get us what the voters who picked him actually want; what it gets us is Trump, which is - at best - an incoherent mess, and which will not actually solve any of the problems which led them to vote for him.

                reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 22 Nov 2016 @ 7:27am

    Sooner or latter these companies will realize that content has no value when they cannot deliver it and/or have no customers because of their pricing. However they will blame their problems on pirates, even if they have to invent the imaginary means by which the imaginary pirates share the files.

    reply to this | link to this | view in chronology ]

  • identicon
    I.T. Guy, 22 Nov 2016 @ 8:10am

    Sick and tired of paying an arm and leg for inter/phone/tv I started looking for internet only options. Verizon doesn't even list broadband only prices in my area. Concast does. But I'd rather cut off my own arm with an emery board than use Concast.

    reply to this | link to this | view in chronology ]

    • identicon
      A. Nony Mouse, 22 Nov 2016 @ 8:47am

      Re: Comcast only

      It doesn't help if Comcast is the only available Internet access. Now they have dropped 9 "good" channels, Raised their rates, And Capped Internet to 1 TB. Thanks Comcast, I hope Lightspeed gets to my house quick!

      reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 22 Nov 2016 @ 8:50am

      Re:

      I hope you have a few spare arms and legs to pay for your internet because it seems you'll need them.

      reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 22 Nov 2016 @ 8:13am

    "I see an... E... maybe?"

    Combine that with the early signs that a Trump Presidency will likely focus on gutting net neutrality and other consumer protections, and the writing on the wall for U.S. broadband markets should start to come into focus.

    Given said writing is large enough to be readable from space it's not like it's difficult to read, unless of course you have a financial incentive not to be able to read it, in which case it just looks like a bunch of gibberish.

    reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 22 Nov 2016 @ 8:48am

    That's when you go for the shock treatment. Make it become so bad, so awful and so expensive that everybody starts supporting measures to open the market and dismantle the monopolies. Bring the chaos!

    reply to this | link to this | view in chronology ]

  • icon
    Roger Strong (profile), 22 Nov 2016 @ 8:49am

    Meanwhile in Canada

    The CRTC had mandated that by last March 1st, cable companies had to offer a so-called "skinny basic" TV package for $25 or less. Individual pick-and-pay channel deals must be available by Dec 1st. The cable companies of course responded with equipment rental fees and raised prices on add-on channels, making the minimum cost much higher.

    So now the CRTC has now published a set of "best practices", like not forcing TV subscribers to get their internet from the same company. Those "best practices" are voluntary. The CRTC typically avoids regulating such behavior.

    On the other hand the CRTC is sending a message by announcing that it's renewing most TV providers' licences for only one year rather than the typical seven-year term.

    reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 22 Nov 2016 @ 8:55am

      Re: Meanwhile in Canada

      Being a natural monopoly area, broadband must be regulated fiercely to avoid abusive practices and foster competition. Maybe Canada could force the companies to allow 'virtual' ISPs to offer services on top of their networks for starters. Separating infra-structure keeping from service providing seems to be a good solution to me.

      reply to this | link to this | view in chronology ]

      • icon
        Roger Strong (profile), 22 Nov 2016 @ 9:04am

        Re: Re: Meanwhile in Canada

        In most large cities it's usually a duopoly. MTS and Shaw here in Winnipeg, with mixes of Rogers, Shaw, Bell etc. elsewhere.

        There's even some anti-monopolistic regulation. For example the well-established MTS not being allowed to offer lower prices until its new competitors reached a certain market share.

        Canada has forced the large internet companies to allow 'virtual' ISPs to offer services on top of their networks all along.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 22 Nov 2016 @ 9:40am

        Re: Re: Meanwhile in Canada

        >Maybe Canada could force the companies to allow 'virtual' ISPs to offer services on top of their networks for starters.

        The UK allows several ISPs to offer service over the same phone lines, and put their kit in the local exchanges. I get around 2MB/s (Bytes) with no caps over DSL, and I am 5 miles out from the exchange, and 3 from the nearest roadside cabinet.

        reply to this | link to this | view in chronology ]

  • identicon
    Some Anonymous type, 22 Nov 2016 @ 12:39pm

    Competition

    I'm in a space where I can choose the over-priced "bundle" from Charter/TWC....or give them the middle finger and take the Cincinnati Bell Fioptics package for a lower price.

    Competition is a fantastic thing...and I love tearing up the weekly "specials" mailer from TWC/Charter knowing I'm getting faster internet and more channels for a lower cost.

    reply to this | link to this | view in chronology ]


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