Disgusted With Charter Spectrum Merger, Lexington To Build Entirely New Fiber Network

from the busting-the-duopoly-logjam dept

When Charter Spectrum acquired Time Warner Cable and Bright House Networks in a blockbuster $69 billion merger last year, the company promised the deal would result in all manner of "synergies" and consumer benefits. But as is the case with most telecom megamergers, most of these acquired users say the deal only resulted in significantly higher prices -- and somehow even worse customer service than the historically awful service the company was already known for. In many areas, users say they've been socked with price hikes up to 40% for the exact same service.

Charter CEO Tom Rutledge, the highest paid executive in America last year, stated that customers were "mispriced" and were simply being shoved in the "right direction."

Things got so bad, that Lexington was forced to hold a town hearing last summer to address overwhelmingly negative public sentiment toward Charter's dysfunction. Like many American cities, consumers in Lexington often only have the choice of one cable broadband provider, since the local phone companies have failed to seriously upgrade their fiber networks. Also like in many American cities, locals tell a tale of a company that faces so little competition in its market, it simply doesn't have to give much of a damn:

"Following a brief presentation where provider representatives highlighted the company's expanding network, workforce, and investments in infrastructure, customers stood up one by one to tell a different story. Among the themes: unpredictable bills, questionable internet speeds, and poor customer service. One customer, Christian Torp, complained that the company repeatedly charged him for his own equipment.

"I've probably over the years spent 30 or 40 hours on it," he told WUKY. "I'm a father and an attorney. I don't have the time to spend dealing with their fraud."

It should be noted that Kentucky is one of 23 states that have let incumbent ISPs quite literally write state telecom law protecting towns and cities from building their own networks or striking public/private partnerships for better broadband. Fortunately for Lexington residents, city leaders were able to convince private operator MetroNet to come to town and build a $70 to $100 million network to try and ease the local duopoly logjam. Construction of the network will begin in January, and should start offering some real, gigabit-capable fiber competition by next summer:

"Just in time for Christmas, Santa Claus is coming to town," (Lexington Mayor Jim) Gray said at a news conference officially announcing that Indiana-based MetroNet plans to spend as much as $100 million building a fiber-optic network that covers the city’s entire urban service area.

MetroNet pledged Tuesday to spend at least $70 million to build the network over the next three to four years if it receives a cable franchise from the city. Gigabit speed is equivalent to moving data at 1,000 megabits per second. Lexington’s average internet speed is 16.2 megabits per second, according to some studies.

Lexington was fortunate to be attractive enough to private companies to strike such a deal. But in countless less developed cities and rural American markets, private ISPs simply don't think the slower return on their investment is worth their time. As a result, many towns and cities have struggled for years with substandard service and sky-high prices. In turn, many have considered building their own networks or striking partnerships with companies like Google Fiber, only to discover that ISPs like Charter have quite literally purchased laws making that impossible.

So while Lexington was lucky enough to attract a private investor, there's countless U.S. broadband markets that don't get to see this kind of happy ending.


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • identicon
    Anonymous Coward, 20 Nov 2017 @ 4:48am

    Internet is infrastructure

    Until communities realize that internet is just as important as water or electricity, ISPs will continue to screw them over. My children have internet required homework and they are less than 8 years old. Being treated as a commodity instead of a paying customer is frustrating yet the state actor status that the government has effectively provided the ISPs in return for access to the records is sickening.

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

    • identicon
      Anonymous Coward, 20 Nov 2017 @ 5:00am

      Re: Internet is infrastructure

      It's not just infrastructure, it's critical infrastructure. Every aspect of society increasingly depends on it, and it's much too important to be left in the hands of companies that will mess with it any time they want to increase profits.

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

  • icon
    Steve Swafford (profile), 20 Nov 2017 @ 4:51am

    We have spectrum...but

    We have a new Allo doing directional boring all over town. Everyone I talked to the last year says they just can't wait for Allo to turn on the gig service so they can jump the spectrum ship. Heard stories of Allow guys being at the house installing and spectrum calling the customer getting the new gig service and spectrum talking shit about allow, then putting the allo guy on the phone and getting hung up on immediately. I can't wait to join them as well. I can't help but think that spectrum will lose such a huge chunk of their customers they will be forced to do something. One guy told me that he thinks they will offer half the speed of Allow but at a contract lol. I just feel it's the death rattle for spectrum around here.

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

  • identicon
    David, 20 Nov 2017 @ 5:22am

    Merger "synergies"

    I can't hear that myth anymore. At the company sizes we are talking about, there are no synergies. All significant costs including customer support and networking capacities scale up with customer counts. If there was significant potential for infrastructure synergies (like sharing underused backbones), cross-usage deals would already have been struck.

    So when they say $x billions can be "saved", this rather means that they can decrease value to the customer without repercussion or bill more without providing more value.

    The one thing where it may help is to have fewer bidders for limited resources like mobile frequencies which does _nothing_ to increase the resources, namely the available bandwidth. It just means that the taxpayer will have to pay more taxes to offset the cheaper auctions instead of being able to pick a provider matching his price-per-congestion ideas. Which would be competition. Instead we'll get net neutrality removed and a single provider will pretend to have "competing" offerings where they are free to reduce your level of service until the pain makes you pay more.

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

    • icon
      JoeCool (profile), 20 Nov 2017 @ 7:25am

      Re: Merger "synergies"

      Exactly. It's easy to see why customer service usually gets worse - execs see two customer service departments as overlap that can be eliminated. The problem is that the customer service department is often understaffed for the number of customers they have already, and getting rid of one of them just doubles (or more) the workload. Add onto that the fact that "customer service" very often is required to do sales as well, and right after a merger the execs want a sales blitz to scoop up more customers based on all that non-existent synergy.

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

  • icon
    TheResidentSkeptic (profile), 20 Nov 2017 @ 6:04am

    So what does it say...

    ... when government can do a better job providing a service than the business designed to provide that service?

    Isn't that called "Failure" ??? A government granted monopoly can be revoked for cause. *if* anyone in the government wasn't owned, that is.

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

    • identicon
      Anonymous Coward, 20 Nov 2017 @ 6:27am

      Re: So what does it say...

      The government isn't going to provide the network or service. Metronet is a private company.

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

  • icon
    crade (profile), 20 Nov 2017 @ 6:31am

    "according to some studies" should be banned from all forms of communication.

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

    • identicon
      ryuugami, 20 Nov 2017 @ 10:07pm

      Re:

      > "according to some studies" should be banned from all forms of communication.

      You're just not well-versed in scientist-speak. Here are some translations:

      "It has been long known"... I didn't look up the original reference.
      "A definite trend is evident"... These data are practically meaningless.
      "While it has not been possible to provide definite answers to the questions"... An unsuccessful experiment, but I still hope to get it published.
      "Three of the samples where chosen for detailed study"... The other results didn't make any sense.
      "Typical results are shown"... This is the prettiest graph.
      "These results will be in a subsequent report"... I might get around to this sometime, if pushed/funded.
      "In my experience"... Once
      "In case after case"... Twice
      "In a series of cases"... Thrice
      "It is believed that"... I think.
      "It is generally believed that"... A couple of others think so, too.
      "Correct within an order of magnitude"... Wrong.
      "According to statistical analysis"... Rumor has it.
      "A statistically-oriented projection of the significance of these findings"... A wild guess.
      "A careful analysis of obtainable data"... Three pages of notes were obliterated when I knocked over a glass of beer.
      "It is clear that much additional work will be required before a complete understanding of this phenomenon occurs"... I don't understand it
      "After additional study by my colleagues"... They don't understand it either.
      "It is hoped that this study will stimulate further investigation in this field"... cause I quit.

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

  • icon
    techturf (profile), 20 Nov 2017 @ 12:37pm

    I live in a dense upscale suburb of Atlanta and I have a choice of expensive and slow Comcast with a data cap or less expensive very slow 12M AT&T DSL with a smaller data cap. I am looking to move and this is one of the reasons why, and will not even consider moving to another area where there is not community broadband or broadband competition. To me, poor internet choices like I have now is about as undesirable as a high crime rate. If everyone were like me, property values would soon reflect the "internet standard of living" and politicians and community leaders would more quickly remedy the problem of broadband monopolies.

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

  • icon
    MyNameHere (profile), 20 Nov 2017 @ 2:31pm

    So, let's do the math:

    100 million dollars

    318,000 people living there, average residence per address is 2.47. So, they are going to create service for at most 130,000 potential customers.

    Answer is, almost $770 per potential customer - just to build it - and that is in what is essentially a small area without too many "rural" customers, and that assumes they run it for everyone everywhere.

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

    • icon
      That One Guy (profile), 20 Nov 2017 @ 3:06pm

      Re:

      And your point is...?

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

      • icon
        MyNameHere (profile), 20 Nov 2017 @ 3:23pm

        Re: Re:

        When you consider that maybe 25% will take the service, so there is a "nut" of over $3000 per household to get run off in the bills. So you have $10 a month or so just to pay down the original installation.

        Will they ever really make their money back?

        My point is only that it's not free, and it would cost (at that level) almost 100 billion to wire the US.

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

        • identicon
          Anonymous Coward, 20 Nov 2017 @ 3:30pm

          Re: Re: Re:

          Considering we have given the telco's over 300 billion in subsidies and tax breaks, that means every house in the US should have access to three different fiber options.

          So we all have three high speed fiber internet options to choose from, right?

          No? Me either, I don't even have one, but I know my telco has received more than their share of subsidies and yet still no fiber network...

          At least spectrum was prevented from capping and charging overage fees due to their merger (which will probably expire in a year or so and their rates will triple, from the current $69.99 internet only plan they offer)...

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

          • icon
            MyNameHere (profile), 20 Nov 2017 @ 5:28pm

            Re: Re: Re: Re:

            Nice try.

            300 Billion has been given over how long, exactly? Most of it was given to get from zero to where we are now, many, many, many years ago. Much of that money was given to wire places that otherwise would have no such service as all, such as places like Montana.

            Remember this too:

            341 people per square mile
            The 2016 Lexington-Fayette Metro Area, Kentucky, population is 500,535. There are 341 people per square mile (population density). Family in Lexington-Fayette Metro Area, Kentucky.
            The median age is 35.5.

            The US national population density is less than a third of that. It's therefore very likely that the costs to wire up all of the US would be significantly higher.

            Oh, and if Spectrum triples their prices, then they will have opened the door for competition. You should be happy if they do.

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

        • icon
          That One Guy (profile), 21 Nov 2017 @ 12:14am

          Re: Re: Re:

          Pretty sure just about anyone in a similar situation would be tripping over themselves to sign up for an upgrade like they stand to get for $10 extra a month in their taxes.

          As has been noted before, towns and cities aren't building this stuff, or in this case opening up the field for someone else because they think it's fun, but because the current service they're getting is so completely abysmal that they are willing to spend the extra money to get a connection that's actually decent.

          As far as $100 billion to wire up the US at decent speed, while the number is a sizable one it's worth considering that the USG budget for 2016 was $3.9 trillion.

          Wiring up everywhere all at once is clearly not feasible, but build up in stages, perhaps over the course of a decade, would leave you with $10 billion each year, practically a drop in the bucket when it comes to overall government spending, with the end result that the country would be in a position where we could have a good connection speed across the US, and don't have to hope that this tax break, this subsidy to Comcast or Verizon will actually end up being used on what they promise, rather than just added to the year-end exec bonus.

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

          • icon
            MyNameHere (profile), 21 Nov 2017 @ 3:15am

            Re: Re: Re: Re:

            "Wiring up everywhere all at once is clearly not feasible, but build up in stages, perhaps over the course of a decade,"

            The US doesn't work that way. The old "no extremely rural dust farmer left behind" type things that the government loves gets in the way. If you want to divide it up over 10 years, you need to tell 90% of the people to wait 1 to 9 years longer than someone else. Imagine the lawsuits!

            It's why the Lexington thing is so funny. You guys are all excited about muni level broadband but it's exclusionary to the max. Gigabit in town, and if you live 1 mile outside, forget about it! Under normal circumstances, you guys would yell and scream about it. Hmmm!

            Good fun to watch the opinion change with the wind direction!

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

            • identicon
              Anonymous Coward, 21 Nov 2017 @ 4:25am

              Re: Re: Re: Re: Re:

              You can sit down, nobody needs to see that Ajit Pai e-boner.

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

            • icon
              That One Guy (profile), 21 Nov 2017 @ 5:44am

              Re: Re: Re: Re: Re:

              The US doesn't work that way. The old "no extremely rural dust farmer left behind" type things that the government loves gets in the way. If you want to divide it up over 10 years, you need to tell 90% of the people to wait 1 to 9 years longer than someone else. Imagine the lawsuits!

              That was what you decided to fixate on? People wouldn't want to wait so they'd sue? I mean, I can understand why you would say that, when you give the money to Comcast, Verizon or one of those companies they start and complete the build out in under a year max, so it makes sense that people wouldn't have the patience to wait ten years(assuming it wasn't rolled out quicker in exchange for condensing how much was paid each year for construction costs).

              Nope, people just do not have the patience for infrastructure improvements, they want it right now, and they would much rather deal with the absolutely stellar service they are getting from their current providers than have to wait even the slightest bit for some government funded option.

              It's why the Lexington thing is so funny. You guys are all excited about muni level broadband but it's exclusionary to the max. Gigabit in town, and if you live 1 mile outside, forget about it! Under normal circumstances, you guys would yell and scream about it. Hmmm!

              Why yes, if they act like the companies you are so eager to defend, declare that they are wiring up a particular area and fail to do so people probably will be upset, because they went back on what they claimed. So long as they make it clear that this is the area that's being wired up and follow through there shall be no gnashing of teeth, your latest laughable attempt at a 'gotcha' aside.

              Again though I can understand why you would think people would be upset, when one of the major telecom companies promises to provide service they do an absolutely thorough job of it, and they would never refuse to wire someone up because they are just slightly beyond the correct area(and they would certainly never claim that simply being near the network counts as being served.)

              Good fun to watch the opinion change with the wind direction!

              No, just your strawman version of people's opinions, which counts for nothing to anyone but you.

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

      • identicon
        Anonymous Coward, 20 Nov 2017 @ 3:26pm

        Re: Re:

        That's less than the 'extra fees' on a typical ISP bill for the year... sounds like a good deal to me

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

  • identicon
    Ky Rez, 21 Nov 2017 @ 1:58am

    Perspective

    Having lived and worked in IT around Lexington for 50 years, this is one of the best moves the city has ever made. Lexington had failed to buy their water company some years back, and learned a hard lesson about utilities.

    I watched the large telcos lobby my state government to outlaw municipal broadband, in spite of having some real success stories to point to (Frankfort, Williamsburg, etc). Some of the small telcos to the east of Lexington have realized broadband was the only hope for them, and have rolled out fiber already (Mountain Telephone: Morgan, Wolfe, Bath, and Menifee Counties). What is plain as day is the larger telcos to the west (ATT ) will likely never roll out broadband, they want to force their customers off of modems and DSL onto the less regulated and more profitable Cell network, and abandon their copper loops. This is working to create a new poverty in some regions, an unavoidable outcome from the lack of a state sized solution.

    Having lobbied the elected in Frankfort, the state's capitol, I can say from personal experience that most of the folks working against public broadband are imports, working for the telcos. I'd gotten, in the 1990s, an Attorney General's decision that the state's educational networks were available to the public in off school hours. Seeing how the telcos and schools circled the wagons on that was a lesson- neither would embrace the notion that a publicly financed fiber net was open and rate free for the folks that had paid for it. Taking that public LAN and essentially privatizing it in off school hours was just my first lesson.

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

  • identicon
    Susan, 22 Nov 2017 @ 5:47am

    Charter /Spectrum pricing

    The 23 states of TWC bought out by Charter brand name 'Spectrum". TWC accounts bought out by Charter TWC customers are paying 40% more in services people are dropping charter because of the prices. Charter prices are not affordable internet start speed is 60 at $44.00 a month is very steep why not offer a lower speed to 30 lower pricing. If you bundle the prices are higher. Charter has a 70% outages of the internet which is there biggest problem Charter needs to lower internet and cable prices instead of dictatorship.

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


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Insider Shop - Show Your Support!

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.