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Comcast's Contradictory Conundrum: Title II Tightrope
Comcast must continue to prove growth is a breeze to satisfy stockholders while simultaneously arguing that, gadzooks FCC! how do you expect us to grow under Title II?! As DSL Reports points out, contradicting itself just doesn't work:
At the time [of the FCC's proposal to implement Title II regulations], Comcast CFO Michael Angelakis proclaimed the switch to Title II introduced "higher uncertainty" into the company's broadband investment strategy. Meanwhile, top lobbyist David Cohen was quick to insist in a blog post that we'd see an immediate investment hit should the FCC proceed with its plans:
"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."
DSL Reports points out that the change has not slowed down Comcast's desire to invest or innovate:
So what are we to make of Comcast's announcement that it's making a major investment to push 2 gigabit fiber to 18 million homes before the end of the year, followed by a major DOCSIS 3.1 push in 2016? While more speed to more people is a welcome announcement by any measure, Comcast's pretty clearly interested in charming the regulators currently considering the company's $45 billion acquisition play for Time Warner Cable.
Comcast must perform a tightrope act to rival the Flying Wallendas to keep everybody happy and achieve its goal of world domination.
Oddly enough, we believe Comcast is lying about both things! Its supposed upgrade to 2 Gbps is smoke and mirrors AND there continues to be no evidence that outlawing paid prioritization will reduce investment beyond the status quo.
Bar Harbor, Maine, Studies Muni Fiber to Replace Time Warner Cable Franchise
For the past several months, Maine communities have been a hotbed of broadband activity. Bar Harbor, located midway along the state's Atlantic coast, is another community looking at fiber as a necessary investment.
According to a February article in the Mount Desert Islander, the town of 5,200 has decided to move forward with a feasibility study. The town received Internet access at no additional cost as part of its previous franchise agreement with Time Warner Cable. That agreement expired about a year ago and, as we have seen in other communities, the cable giant now appears to be holding out in order to charge for the same service. From the article:
“The guidance that we’ve received from the lawyers helping us … is that the cable company really doesn’t want to give us anything, and may in fact want to start charging us for the fiber network that we get today as part of that franchise agreement,” said Brian Booher. He is a member of the communications technology task force, which has studied the issue of broadband availability in Bar Harbor.
A similar situation in Martin County, Florida, inspired that community to build its own network. It is now saving millions, with no need to contend with typical Time Warner Cable hassles, price hikes, and poor service. Read more in our case study on Martin County [PDF].
Bar Harbor seems to be adopting the same attitude as the rest of the state. They see that economic development success rests on connectivity and that entities like Time Warner Cable are not in business to boost local economic development. Booher went on:
“If the only way to get there is to do it ourselves, that’s the Maine mentality right there. So, my attitude is, let’s look at this and see what it would take.”
Islesboro, Maine, Will Vote to Bond for Municipal Network in May
Islesboro, the Maine island community of 566, will decide in May whether or not they want to bond to build a municipal fiber network, reports The Working Waterfront. The network will be owned by the town who plans to partner with GWI to operate and manage it.
Currently, about 2/3 of residents on the island use DSL from Fairpoint. While a few locations can reach 15 Mbps download, most residents pay from $20 - $70 for around 3 Mbps download. Upload speeds are much less. GWI also offers point-to-point wireless from the mainland and one side of the island has cellphone.
The firm estimated costs to cover the island to be between $2.5 and $3 million, which would include construction and leasing of poles from Central Maine Power (CMP). Community leaders will ask voters to approve a municipal bond to fund the project:
The $3 million bond would raise property taxes on a house assessed at $300,000 by about $13.77 per month ($164.25 per year). As a per-month cost, with both the pay-back on the bond and the standard service fee for Internet, the resident of a house valued at $300,000 would pay $48.77, according to [Arch] Gillies, [chairman of the Board of Selectmen]. (This appears to be for the lowest level of service.)
After reviewing the recommendations, community leaders decided it was in the community's best interest to deploy a network that would be owned by the public. They then engaged in a Request for Information process and received responses from three vendors. Eventually, they chose to work with GWI, in part because it is a local company. Fairpont and Time Warner Cable also responded, but their proposals did not stipulate that the infrastructure would belong to the town. There were other inferiorities in their proposals.
Remembering David Carr, and His Writing on Monopoly Power
Stacy Mitchell, Co-Director of ILSR and Director of the Community-Scaled Economy Initiative, took a few moments to look back over the work of David Carr. Carr's work included investigating monopolies in the telecommunications space. Stacy's story, re-posted here, originally ran on ILSR.org.
What will we do without David Carr, the brilliant media columnist at the New York Times who died last week? At ILSR, we will especially miss his writing on monopoly power, Amazon, and the book business. Below we’ve excerpted and linked to a few of his best recent pieces on those subjects.
In Modern Media Realm, Big Mergers Are a Bulwark Against Rivals — July 16, 2014
Comcast’s bold strategy of acquisition kicked off a wave of defensive consolidation, fueled by a combination of fear and abundant capital in the media realm.
I talked to the head of one company that creates television and movies, who expressed a common sentiment. “When Comcast decided to get bigger,” he said, “we all had to ask ourselves, Are we big enough? We all have to think about getting bigger.”
And why not? No one is stopping them.
With big data, a Big Brother government and now big media, size creates its own prerogatives. When Amazon used its market dominance to limit access to Hachette books over a price dispute, regulators yawned. When AT&T and DirecTV propose a tie-up in response to Comcast, the market issues are just another deal point. Cable companies slowed down content from clients (which are also competitors) like Netflix, and it was treated as a business dispute.
For the most part, the current government has [no-glossary]passed[/no-glossary] on regulating potential monopolies, and as citizens, we have become inured to the consequences of bigness.
Time Warner Cable Successfully Blocks Funds for Community Network in Maine; Project to Continue
Time Warner Cable recently fought to prevent a collaborative project in Maine from receiving $125,000 in state broadband funding, reported the Bangor Daily News.
We reported in December that Old Town, Orono, the University of Maine, and GWI had been awarded ConnectME funds. The collaborators earmarked the funding for a stretch of about 4 miles of fiber which could serve about 320 subscribers and would ultimately be integrated into a much larger network for businesses and residents. The network would connect to Maine's Three Ring Binder network.
Old Town and Orono want to establish gigabit connectivity to a nearby industrial area to transform it into a technology park for economic development purposes. Several businesses, including a health clinic that, have expressed interest in setting up shop in the planned development.
Old Town and Orono formed OTO Fiber, an independent entity to have authority to design, install, maintain, and manage an open access network. In typical fashion, TWC took action prevent local citizens and businesses from ever capitalizing on a gigabit, rather than work with the municipalities to deliver TWC services over the publicly owned infrastructure.
The ConnectME Authority voted in TWC's favor, based on the arguments as presented in an earlier Daily News article:
The company argues that the agency only has the ability to give grants in areas it deems “underserved” or “unserved,” and that projects getting grants should overlap with less than 20 percent of the customers of an existing provider.
Comcast Ghostwrites Letters From Elected Officials to FCC
It is common knowledge that Comcast and a number of political leaders enjoy special relationships. Nevertheless, it was still a [no-glossary]bit[/no-glossary] shocking to see the level at which Comcast's army has infiltrated the political process as uncovered in a recent Verge article.
Comcast, Time Warner Cable, AT&T, and CenturyLink lawyers and lobbyists often write legislation for lawmakers to introduce. This past summer, the puppetry went one step further when Comcast crafted letters supporting the Comcast/Time Warner Cable merger. Those letters were then submitted to the FCC from the offices of a number of politicians known to receive support from the cable giant. We applaud both Comcast and their pet lawmakers for their efficiency!
The Verge was also able to obtain email threads that document how lobbyists drafted letters of support and sent them on to local elected officials, who then made insignificant changes in the signature line or transferred the exact language on to official stationery before sending it on to the FCC.
We have taken the liberty of presenting some of the letters below. You can see a few email exchanges that detail the conversation between Comcast lobbyists and political staff.
The Verge spoke with Michal Copps, former FCC Chairman, who now advises at Common Cause:
"When a mayor of a town or a town councilman or a legislator writes in — we look at that, and if someone is of a mind already to approve something like this they might say: ‘ah-ha, see!’" says Copps, who is now an advisor at Common Cause and opposes the merger. "These letters can be consequential, there’s no question about that."
The comment process has been tainted because Comcast has also used gentle nudging to obtain support from organizations benefitting from its charitable foundation. Columbia Professor Tim Wu has studied the potential merger:
"I think they have failed to meet their burden of persuasion that this will make life better for the average American consumer…What does the average American consumer care about? They care about prices being too high. Comcast could have said this merger will lower prices and committed itself to lower prices but it has made no sign that it will do this."
Time Warner Cable Takes Maine Lawmakers to Exclusive Hotel for Lobbying Tryst
Time Warner Cable began lobbying Maine legislators at the dawn of the legislative session, reports the Maine Center for Public Interest Reporting. In January, the cable gargantuan hosted a "Winter Policy Conference" for state lawmakers at the exclusive Inn by the Sea resort. As Maine state leaders contemplate how they can boost connectivity, the incumbents are fueling up the anti-muni misinformation machine.
The Center did not have exact numbers of legislators who chose to accept the invitation to stay overnight, attend the opening dinner, or sit in on the "information sessions" which were all paid for by TWC. Reports range from "about a dozen" attendees at the evening dinner to "30 or 35" attending the information sessions the next day.
Naturally, the event raised red flags:
“If we want good public policy, there’s reason for all of us to be worried,” said utilities expert Gordon Weil, the state’s first Public Advocate, who represented the interests of ratepayers before regulators. Such treatment of legislators is “obviously intended to persuade them by more than the validity of the arguments; it’s intended to persuade by the reception they’re given.”
The Center obtained copies of the information packet from the conference, which included a survey that had legislators questioning its objectivity:
“We see lots of surveys as policymakers and we have to be smart enough to look at what questions are asked,” said [DFL Rep. Sarah] Gideon.
Gideon was bothered by survey questions such as, “Should taxpayer-supported debt be used to build government-owned and operated broadband networks that sell broadband services to the public…where no broadband service currently exists…(or) broadband services are already available?”
“Nobody’s going to say ‘Yes, I want my state to incur debt,’” said Gideon.
"Stop Mega Comcast" Coalition; Philly Comcast Subscribers Speak Out in New Video
As days go by, an increasing number of organizations, companies, and individuals go on record opposing the Comcast/Time Warner Cable merger. The DOJ has already spent significant time analyzing the proposal and the FCC has been taking comments for months. On November 3rd, a new coalition, "Stop Mega Comcast," announced that it was jumping into the fray.
Engadget reports that the group includes both consumer groups and competitors, including Dish Network and Public Knowledge:
"This much power concentrated in the hands of one company would be frightening even for the most trustworthy of companies," Public Knowledge's CEO Gene Kimmelman said in a statement. "And Comcast is definitely not that."
Hannah Jane Sassaman described for us how the community is using franchise negotiations as leverage for better prices, better services, and more accountability from Comcast. Their project, CAPComcast, recently released this video wherein people straight from the Comcast service center describe their frustrations with the incumbent.
Cities in Kentucky and Massachusetts Want a Say In Comcast/Time Warner Cable Merger
As the feds continue to evaluate the wisdom of the Comcast/Time Warner Cable merger, local communities in several states are attempting to throw a wrench in the federal approval machine.
In Worcester, Massachusetts, the City Council recently refused to approve the transfer of the city's cable television license to Comcast. In order to sweet-talk the federal agencies concerned the merger may create too much market concentration, Comcast has worked out a deal with Charter Communications to transfer customers in certain geographic areas. Charter is the current incumbent in Worcester.
According to a Telegam & Gazette article, the City Council does not need to approve the transfer for it to take affect. Nevertheless, the City Council voted 8-3 on October 14 to urge City Manager, Edward M. Augustus Jr., not to approve the transfer of the license. If Augustus makes no determination, the transfer will automatically be approved.
The city can only examine the transfer based on four criteria including company management, technical experience, legal experience, and financial capabilities. Management and poor customer service are the sticking points for Worcester:
District 5 Councilor Gary Rosen said the City Council should not welcome Comcast to Worcester because of its "deplorable and substandard" customer service across the country.
"It's a terrible company," he said. "In my opinion, they should not be welcome in this city. Comcast is a wolf in wolf's clothing; it's that bad. They are awful, no doubt about it. Maybe we can't stop it, but that doesn't mean we shouldn't speak out."
A similar scenario is playing out in Lexington, Kentucky. The community is the second largest city served by Time Warner Cable in the state. They are concerned existing customer service problems will worsen if Comcast becomes their provider.
The Urban City Council drafted two resolutions denying the transfer. The resolutions had first reading on October 9. Customer service is, again, a point of contention.
Verizon CEO: LTE Cannot Replace Fiber
Verizon Wireless CEO Dan Mead is not doing any favors for Comcast as it pursues approval to acquire Time Warner Cable. In August, he came out and publicly stated that no, LTE is not equal to fiber. The Verge quoted Mead, who was refreshingly honest about technical limitations and Comcast's motivations for making such outrageous claims:
"They're trying to get deals approved, right, and I understand that... their focus is different than my focus right now, because I don't have any deals pending," Mead said, a reference to the fact that Comcast is looking for ways to justify the TWC buy. "LTE certainly can compete with broadband, but if you look at the physics and the engineering of it, we don't see LTE being as efficient as fiber coming into the home."
A number of other organizations also try to educate the general public about the fact that mobile Internet access is not on par with wireline service. For example, Public Knowledge has long argued that "4G + Data Caps = Magic Beans."
Our Wireless Internet Access Fact Sheet dispels common misconceptions, shares info about data caps, and provides comparative performance data between wireless and wired connections. While mobile Internet access is certainly practical, valuable, and a convenient complement to wired connections, it is no replacement. Wireless limitations, coupled with providers' expensive data caps enforced with overage charges, can never replace a home wired connection. Doing homework, applying for a job, or paying bills online quickly drives families over the typical 250 GB limit.