Cable Company Speed Claims

I don’t know if it’s just me, but my perception of ISP and cellular advertising is that the big ISPs and cellular carriers push the envelope more every year in trying to make claims that can give them a marketing edge over the competition.

The advertising for 5G cellular has repeatedly made claims over the years that are far in excess of the ability of the technology to deliver. If your only view of the state of broadband technology is ads seen on TV during sporting events, you would be fully convinced that we live in a completely wireless world and that 5G is the end-all-and-be-all of the broadband world.

What’s funny about many ads is that carriers try to differentiate themselves from their competitors, even though their peers are delivering essentially the same product to the market. There is not much difference in the cellular technology being delivered by AT&T, T-Mobile, and Verizon – although ads claim that each is by far the superior company. In real life, the biggest differentiator between the three carriers is the strength of their signal at your home, office, and other places you frequent – a strictly local difference based on the location of cell towers.

The competition between cable companies and fiber overbuilders is not based on equivalence. There is a clear technical advantage of a 300 Mbps broadband connection on fiber versus the same connection on a cable company. Fiber has a steadier signal throughout the day with lower latency and jitter, and any consumer comparing the two can quickly spot the difference. This puts cable companies in a tough spot. They know that fiber ISPs have a quality advantage for downloading and a huge advantage for upload speeds. Fiber networks tend to also have fewer glitches and outages.

Cable companies know when a fiber network shows up in a market that they will lose customers who care about signal quality. Since cable company prices are normally higher than the prices of fiber ISPs, the cable companies have to scramble and lower prices drastically with special prices to try to hang on to customers and lure new ones.

But cable company marketers never stop trying to make a pitch that makes them sound better than fiber. One of the latest examples comes from Comcast, which has started to advertise itself as the 10G ISP. The company now refers to its broadband network as the ‘Xfinity 10G Network’. This is based on the CableLabs 10G standard that lays out a future upgrade path for cable companies to eventually achieve an overall speed as fast as 10 Gbps download and 6 Mbps upload.

Verizon took exception to Comcast’s advertising and asked the National Advertising Division (NAD) of BBB National Programs to get Comcast to stop using the term 10G. The NAD program is something that many of the big ISPs voluntarily participate in to avoid expensive lawsuits between each other over advertising claims. NAD ruled that the 10G term was not factual and said Comcast should stop using it. The participants in the NAD generally comply with NAD rulings, but this time, Comcast is appealing the ruling. An interesting sidebar of the NAD ruling is that it also felt that consumers would interpret 10G as some advanced version of cellular 5G.

As an outsider, it’s pretty easy to agree with Verizon in this case. The 10G term was based on some theoretical future upgrade to meet the CableLabs 10G specifications, and Comcast’s coaxial networks today cannot achieve that speed. The only example of where Comcast has a 10 Gbps capability today is where it has upgraded to a 10 Gbps fiber platform – a tiny portion of the overall Comcast network. Comcast’s advertising implies to consumers that the future upgrades are already in place.

In a similar dispute, AT&T took exception to Cox ads that claim that Cox cable broadband is ‘powered by fiber’. NAD agreed with AT&T and ruled that Cox could not imply in advertising that its coaxial network is fiber-to-the-home. Again, it’s easy to agree with NAD on this ruling. Having fiber somewhere in a network does not mean that the network can deliver the same quality of broadband as an all-fiber network. Many DSL fiber nodes are fed with fiber, and I don’t recall any telcos making the claim that their DSL is “powered by fiber”.

More aggressive cable marketing is inevitable in a market where cable companies have stopped growing. There has to be a lot of angst in cable company board rooms about finding ways for the companies to claim fast broadband speeds and stop losing customers.

Cable Customer Losses in 2Q 2023

Leichtman Research Group recently released the cable customer counts for the largest providers of traditional cable service in the second quarter of 2023. LRG compiles most of these numbers from the statistics provided to stockholders, except for Cox and Mediacom – they now combine an estimate for both companies. Leichtman says this group of companies represents 96% of all traditional U.S. cable customers.

The traditional cable providers continue to lose customers at a torrid pace, losing over 1.6 million customers in the second quarter, slightly fewer losses than the second quarter of 2022. Overall, the traditional cable providers lost over 17,700 customers every day during the quarter. The overall penetration of traditional cable TV is now around 46% of all households, down from 73% at the end of 2017.

2Q 2022 Change Change
Comcast 14,985,000 (543,000) -3.5%
Charter 14,706,000 (200,000) -1.3%
DirecTV 12,350,000 (400,000) -3.1%
Dish Network 6,901,000 (197,000) -2.8%
Cox & Mediacom 3,340,000 (100,000) -2.9%
Verizon 3,155,000 (70,000) -2.2%
Altice 2,405,900 (69,900) -2.8%
Breezeline 296,952 (3,732) -1.2%
Frontier 267,000 (21,000) -7.3%
Cable ONE 158,100 (8,900) -5.3%
   Total 58,564,952 (1,613,532) -2.7%
YouTube 5,900,000 200,000 3.5%
Hulu Live 4,300,000 (100,000) -2.3%
Sling TV 2,003,000 (97,000) -4.6%
FuboTV 1,167,000 (118,000) -9.2%
Total Cable Company 35,733,852 (916,632) -2.5%
Total Telco / Satellite 22,673,000 (688,000) -2.9%
Total vMvPD 13,370,000 (115,000) -0.9%

It doesn’t look like people are replacing traditional cable with an online alternative like YouTube and Hulu Live – which collectively lost 115,000 customers in the quarter.

Charter is still losing customers at a slower rate than other traditional cable companies. At current trends, Charter ought to have the most cable customers soon – something that could not have been imagined only three or four years ago.

The biggest news is that Comcast is one of the biggest percentage losers, and the biggest overall loser, down 543,000 cable customers in the quarter. The biggest percentage losers continue to be Frontier and Cable ONE.

A Tale of Two Markets

I wrote a blog the other day that got me thinking about the huge disparity in regulating two distinct but highly intertwined industries – broadband and voice. Before you stop reading because you might think voice is no longer relevant, voice regulation includes the cellular business, and in terms of revenue, the voice market is larger than broadband. JD Powers reported in April of this year that the average household is spending $144 for cellular per month.

I call these industries intertwined because the players at the top of both industries are the same. The big ISPs are Comcast, Charter, AT&T, and Verizon. The biggest voice players are AT&T, Verizon, and T-Mobile. Comcast and Charter are making aggressive moves to develop a wireless business, and T-Mobile is aggressively selling broadband.

The two markets are intertwined in a household. Most people connect their cell phones directly to landline broadband when they are home. The primary use for cell phones is to connect to the Internet. My twenty-something daughter is amazed that I predominantly use my cell phone to actually talk to people.

This handful of giant companies control the lion’s shares of both the voice and broadband industries. Yet we’ve decided to regulate the two business lines completely differently. You must admit that this it’s an odd national decision to regulate AT&T’s voice business but not its broadband business, particularly considering how intertwined the two businesses are. Comcast and Charter are proof of the link between the two industries since the companies will only sell cellular plans to customers who are buying broadband.

A regulatory expert from another country would look at the U.S. regulatory environment with incredulity. They would instantly wonder how we can treat the two industries so differently since they engage in such similar business lines, particularly since the same companies lead both markets.

The average American has no idea of how differently we treat the two industries and would be just as confused as a foreign regulator expert. It’s really hard to explain the difference in regulations since that quickly devolves into a discussion of things like Title II regulation, and the average person listening will quickly have no idea what you are talking about.

The easiest way to explain the difference in regulation is that we don’t regulate according to common sense but base regulation on the original legislation that established regulations for each industry. Voice is still regulated because, in the past, various pieces of federal legislation, like the Telecommunications Act of 1996, specifically mention voice. There were also laws that specifically defined how to regulate cable TV – but there has never been a definitive legislative declaration that broadband must be regulated.

This all started when interest in home broadband mushroomed. AOL, CompuServe, and others created a robust ISP industry that took off rapidly when DSL and cable modems increased speed to the point that people could do useful things with broadband. In those early days, there was a lot of discussion about regulating broadband, but the consensus among legislators was that regulators should leave the fledgling new broadband industry alone until it grew large enough. No doubt, this hands-off approach was whispered into the ears of legislators by lobbyists for the big ISPs.

With no direction from Congress, the FCC and various States tried to find ways to regulate broadband over the last few decades. But as hard as it is to believe, we weren’t even able to define what broadband is without legislative direction – is broadband a telecommunications service or an information service? All of the wrangling about regulating broadband ultimately comes down to this simple designation.

Regulation gets really bizarre the deeper you go into the details. Cell phones calls are regulated for voice, but the broadband on a cellphone is considered to be an information service. What is the regulatory regime of a cell phone call that is handed off to a broadband network through WiFi but then eventually reconnected with the cellular network? The average cell phone user regularly bounces between regulated and unregulated functions.

The title of the blog refers to A Tale of Two Cities, which opened with, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”. That’s as good of a description of our odd regulatory environment as anything else I can think of.

DOCSIS 4.0 vs. Fiber

Comcast and Charter previously announced that they intend to upgrade cable networks to DOCSIS 4.0 to be able to better compete against fiber networks. The goal is to be able to offer faster download speeds and drastically improve upload speeds to level the playing field with fiber in terms of advertised speeds. It’s anybody’s guess if these upgrades will make cable broadband equivalent to fiber in consumers’ eyes.

From a marketing perspective, there are plenty of people who see no difference between symmetrical gigabit broadband offered by a cable company or a fiber overbuilder. However, a lot of the public has already become convinced that fiber is superior. AT&T and a few other big telcos say they quickly get a 30% market share when they bring fiber to a neighborhood, and telcos claim aspirations of reaching a 50% market share within 3-4 years.

At least a few big cable companies believe fiber is better. Cox is in the process of overbuilding fiber in some of its largest markets. Altice has built fiber in about a third of its markets. What’s not talked about much is that cable companies have the same ability to overlash fiber on existing coaxial cables in the same way that telcos can overlash onto copper cables. It costs Cox a lot less to bring fiber to a neighborhood than a fiber overbuilder that can’t overlash onto existing wires.

From a technical perspective, engineers and broadband purists will tell you that fiber delivers a better broadband signal. A few years back, I witnessed a side-by-side comparison of fiber and coaxial broadband delivered by ISPs. Although the subscribed download speeds being delivered were the same, the fiber connection felt cleaner and faster to the eye. There are several technical reasons for the difference.

  • The fiber signal has far less latency. Latency is a delay in getting bits delivered on a broadband signal. Higher latency means that a smaller percentage of bits get delivered on the first attempt. The impact of latency is most noticeable when viewing live sporting events where the signal is sent to be viewed without having received all of the transmitted bits – and this is seen to the eye as pixelation or less clarity of picture.
  • Fiber also has much less jitter. This is the variability of the signal from second to second. A fiber system generally delivers broadband signals on time, while the nuances of a copper network cause minor delay and glitches. As one example, a coaxial copper network acts like a giant radio antenna and as such, picks up stray signals that enter the network and can disrupt the broadband signal. Disruptions inside a fiber network are comparatively minor and usually come from small flaws in the fiber caused during installation or later damage.

The real question that will have to be answered in the marketplace is if cable companies can reverse years of public perception that fiber is better. They have their work cut out for them. Fiber overbuilders today tell me that they rarely lose a customer who returns to the cable company competitor. Even if the cable networks get much better, people are going to remember when they used to struggle on cable holding a zoom call.

Before the cable companies can make the upgrade to DOCSIS 4.0, which is still a few years away, the big cable companies are planning to upgrade upload speeds in some markets using a technology referred to as a mid-split. This will allocate more broadband to the upload path. It will be interesting to see if that is enough of an upgrade to stop people from leaving for fiber. I think cable companies are scared of seeing a mass migration to fiber in some neighborhoods because they understand how hard it will be to win people back. Faster upload speeds may fix the primary issue that people don’t like about cable broadband, but will it be enough to compete with fiber? It’s going to be an interesting marketing battle.

Cable Companies and BEAD Grants

The BEAD grant establishes a clear definition of areas that are eligible for grants as any place where broadband speeds are less than 100/20 Mbps. During the lobbying of creating the IIJA legislation that created the BEAD grants, the cable companies and WISPs lobbied hard to get that speed definition when there were pro-broadband members of Congress wanting to set that definition at 100/100 Mbps.

I’ve been wondering lately how State Broadband offices are going to deal with cable companies that don’t meet that speed today. In working around the country, I keep encountering cable networks that don’t meet that definition.

Some of the areas served by cable companies are clearly grant eligible. While the big cable companies have all said that they’ve upgraded all of their networks to be fast, there are still tiny systems owned by the big cable companies that are using older technologies. We were recently working in a county in New Mexico where Comcast was still reporting 50 Mbps speeds for a cable network in the county seat. This system was still operating at DOCSIS 2.0, but to Comcast’s credit, it is finally upgrading the technology to the latest DOCSIS 3.1. If Comcast didn’t make this upgrade, this network would be eligible for BEAD funding.

But the issue that is more normal is cable networks that don’t meet the 20 Mbps upload speed test. I’m seeing a lot of networks, particularly in county seats in smaller counties where the upload speeds can’t deliver 20 Mbps. Should an area where the cable network is only delivering 10 Mbps or 15 Mbps upload be eligible for BEAD grants?

In most cases, the cable companies report the upload speed as exactly 20 Mbps in the FCC maps. But speed tests often show that few households meet that speed. I’m working with a few communities that are up in arms over this because many of the homes and businesses struggle with the restrictions that come with slow upload speeds.

Businesses have embraced functions that need upload speeds. They might want to allow multiple employees to conduct separate Zoom calls at the same time. Businesses have embraced software that operates in the cloud that requires constant upload connections. Businesses have converted to VoIP and need upload bandwidth to maintain telephone calls. Businesses use security systems that upload videos from security cameras to the cloud. I’ve interviewed dozens of businesses that say that they feel restricted by problems with upload speeds – particularly on older networks with a lot of jitter and latency.

Communities are confused about how to deal with this issue. I’ve not heard of any communities served by a cable company that got reclassified as underserved in the flurry of map challenges over the last six months – if readers know of any such reclassifications, I’d love to hear about it. Many communities are hoping that State Grant offices will be open to allowing for BEAD grants in these communities – but that feels like a big uphill battle.

The reality is that when an ISP declares in the FCC broadband maps that it is exactly meeting one of the speed thresholds of either 100 Mbps download or 20 Mbps upload, there should be an opportunity for a community to challenge the FCC maps.

Clearly, a local cable network delivering 10 or 12 Mbps upload speeds does not meet the definition of being served. But I have to wonder about the practical chances of somebody getting a BEAD grant to overbuild such a community.

Disclosing Hidden Fees

The FCC recently proposed a requirement that companies that sell traditional cable TV must disclose the full cost of video to customers. I’ve written about hidden fees many times over the years, and the fees have grown to become a big issue for customers.

Hidden fees are those that a cable provider doesn’t disclose when they advertise to attract new customers. At best, these fees are mentioned vaguely in the small print but are often difficult or impossible to find.

Consider the hidden fees that Comcast charges (I can make a similar list for any of the big cable companies). Comcast’s hidden fees differ by market, and the following is from a market we recently studied.

  • The broadcast fee is $28.70 per month. This is a fee where Comcast accumulates increases in programming costs each year instead of billing the cost increases into the price of cable.
  • The regional sports fee in the market we looked at is $6.10 per month – the fee varies depending upon the local sports networks carried. This fee accumulates increases in sports programming fees that Comcast has chosen not to include in the advertised price of cable TV.
  • Comcast charges $9.00 extra for each settop box – a fee that is not mentioned in advertised prices.

For Comcast, these fees are almost $43 per month in this market for a customer with one settop box. A customer that signs up for a $40 special promotion for video on the web will be shocked when the first bill shows up at $83.

The FCC is the federal regulator for cable TV, and it has always had the full authority to require cable companies to do disclose honest rates. What I find disappointing is that they’ve done nothing until now. This announcement is clearly in response to President Biden criticism of hidden fees in many industries, including airline and online ticket prices. Why hasn’t the FCC tackled hidden fees for cable TV until now? In this example, the hidden fees are greater than the advertised special price for the cable service. I think the average person would think that hidden fees probably mean paying a few extra bucks – not a fee that is more than the advertised price of the purchased service.

This topic has been taken on a few times at the state level. In 2018, Lori Swanson, the Attorney General of Minnesota, sued Comcast and asked for refunds for all cable customers who were billed hidden fees, retroactive to 2014, in violation of the states Prevention of Consumer Fraud Act and Uniform Deceptive Trade Practices Act. The suit concentrated on the Broadcast TV fee and the regional sports fee. In January 2020, Comcast settled with the Minnesota Attorney General’s Office and agreed to pay $1.4 million in refunds to 15,600 Minnesota customers. That’s a pretty small penalty for a practice that must net the company a huge cash flow nationwide.

To be fair to Comcast and the other cable providers, there are underlying costs that are covered by these fees, so the fees are not extra profit. Local television stations, nationwide TV networks, and sports programming have continued to increase the cost of programming at a much faster pace than inflation. Comcast has no choice but to pass on these costs to subscribers. What the FCC is finally criticizing is that cable companies sign new customers to a year-long contract based on advertised low rates and then surprise them with these giant hidden fees.

It’s troubling that the FCC could have done something about this at any time and never acted until now. But even more annoying, at least to me, is that FCC has this authority for cable TV but can’t ask similar questions about broadband rates. The price for broadband from the big ISPs has been rising at a rapid pace. As an example, I looked recently at some rate research I did in 2016, and the broadband prices for Charter have more than doubled since then. Unlike cable TV programming, there are no big underlying costs that have driven the big cable companies to increase broadband rates, and those increases were far in excess of inflation.

The FCC under Chairman Ajit Pai killed the agency’s ability to do anything about broadband prices when it killed Title II regulation. The FCC recently opened an inquiry into data caps, which might be a hopeful sign that the FCC is thinking about getting back into broadband regulation. The history of the FCC tells me to be cautious with any optimism when it comes to regulating the biggest companies in the industry. We’ve watched the FCC do nothing for years about hidden cable fees while it also killed its own ability to regulate broadband – two moves that clearly favor the big monopoly providers over the public.

The FCC to Look at Data Caps

FCC Chairwoman Jessica Rosenworcel asked the other Commissioners to join her in opening an investigation into broadband data caps. According to FCC rules, a majority of Commissioners must agree to open any official proceeding. For those not familiar with the data cap concept, it’s where an ISP bills extra for using more than a defined amount of broadband in a month.

Not all ISPs use data caps. The ISP that gets the worst press about data caps is Comcast, but it doesn’t bill data caps in all markets – seemingly only where it doesn’t have a lot of competition. Charter would love to bill data caps, but it has been prohibited from doing so because of an arrangement reached with the FCC when it got approval to buy Time Warner. That agreement just lapsed on May 18 of this year. We’ll have to wait to see if Charter will impose data caps – but it seems likely it will do so since the company asked permission from the FCC to impose data caps in 2021.

AT&T imposes Data caps on DSL and on some fiber connections. Astound broadband charges data caps in Washington, Oregon, and California. Cox has data caps that kick in after a user exceeds 1.25 terabytes per month. Mediacom imposes data caps on many of its plans. All of the products of the high-orbit satellite companies, HughesNet and Viasat, have severe data caps. So do cellular hot spot data plans.

It’s an interesting request by the Chairwoman. Under current FCC rules, the FCC has no authority to do anything about data caps. This authority went away when the previous FCC under Chairman Ajit Pai eliminated the regulation of broadband by killing Title II authority. Chairman Pai went even further and pushed remaining vestiges of any broadband regulation to the Federal Trade Commission.

This makes me wonder why Chairwoman Rosenworcel would try to open this docket. I can see several possibilities. First, this could just be done to show that the FCC cares about an unpopular ISP practice. It’s clear that the public hates data caps. I saw that the press that covers the FCC immediately flooded the news after this was announced. I would hope the Chairwoman would not be so callous as to investigate something for which the FCC is powerless to make any changes.

That leads to the second possibility that Chairwoman Rosenworcel believes that adding a fifth Commissioner will provide the votes needed to reinstate Title II authority or some updated version of it. Starting the investigation into data caps now might sync up well with renewed FCC regulatory authority and let the FCC make a popular change in the future to ban or modify data caps.

I’ve written several blogs over the years that make the argument that data caps are nothing more than a way for ISPs to extract extra payments from customers. There is zero justification from a cost perspective that residential customers that use more data than average cause any significant incremental cost for an ISP. ISPs buy wholesale broadband based on the busiest times of the usage in a month. Within the pile of broadband purchased to meet that peak need, it doesn’t matter how much broadband customers use as long as it doesn’t push up the busy hour for the month.

Additionally, the big ISPs that use data caps also engage in peering arrangements where they directly hand off broadband traffic to the largest web services like Google, Netflix, Facebook, and Microsoft. While there is a cost to create the peering points, once established, the amount of data sent through peering arrangements saves a huge amount of money compared to shipping this same traffic through the Internet.

It’s harder each year for affected homes to avoid data caps. Data caps accumulate both download and upload usage, and homes are increasingly using upload bandwidth that most folks don’t even realize. According to OpenVault, the average home in the U.S. now uses over 560 megabytes of data per month, an amount that keeps climbing. The household average as recently as 2017 was only 273 megabytes per month.

This will be an interesting process to watch. Chairwoman Rosenworcel has created a form for folks to describe their data caps stories. I’m sure that everybody who does so will be hoping that the FCC can help them – but that remains to be seen. It means getting a fifth Commissioner who is willing to reintroduce broadband regulation – something that is going to have a lot of opposition.

The Public Loves Fiber

The latest Customer Satisfaction Index is out from ACSI, which measures the public satisfaction of a wide range of U.S. industries and institutions. The survey this year continued to show that the public has a poor opinion of ISPs. As a group, ISPs had an average ACSI annual rating of 68. The only industry with a lower rating is gas stations at 65. Subscription TV had an average rating of 69, and the U.S. Post Office had a rating of 70.

But there is some interesting good news for some ISPs. Companies serving customers with fiber rated higher with the public than other ISPs, including cable companies using coaxial networks. Consider the following table that shows the 2023 ranking for fiber and non-fiber ISPs.

Fiber Non-Fiber
Altice 58
AT&T 80 72
Cable One 71
CenturyLink 78 62
Charter 64
Comcast 73 68
Cox 64
Frontier 74 61
Google Fiber 76
Mediacom 65
T-Mobile 73
Verizon 75
Windstream 70

For companies that offer both fiber and another technology, customers served by fiber liked an ISP more than non-fiber customers. CenturyLink has the biggest difference in satisfaction (78 for fiber and 62 for non-fiber). Frontier also has a dramatic difference (74 fiber and 61 non-fiber). The only cable company ranked for both technologies also has a sizeable difference, and Comcast has a ranking of 73 for its fiber network versus 68 for the coaxial network.

Customer satisfaction involves many other factors than just technology, but the differences for the companies that offer multiple technologies have to be mostly related to fiber. However, there are other factors in play. For example, it seems likely that CenturyLink and Frontier provide better customer service and faster repairs for fiber customers than for DSL customers.

Cable companies have to be noticing this giant difference as part of any consideration of how to upgrade their networks. The big cable companies are all at the beginning of the upgrades to improve upload speeds on coaxial networks, and they must be hoping that customers like them more after the upgrades. But there is a chance that the public has come to think of fiber as a superior technology and will not rank a coaxial system as highly even after speed increases. There is still a noticeable difference in latency and jitter between cable and fiber networks, and customers who see both in action believe fiber is better.

There is still a noticeable range of ISP rankings within each list. Non-fiber customers rate T-Mobile and AT&T the highest and rank Altice and Frontier DSL as the worst ISPs. It’s interesting to see Charter near the bottom of the rankings.

Fiber customers clearly rate AT&T as the best and Comcast Fiber as the lowest. Fiber technical performance should be consistent regardless of the ISP, so the difference in rankings between fiber providers has to be related to customer service and the other non-technical aspects of being an ISP.

Subsidizing Lost Cable TV Revenue

I’ve been tracking the number of claimed broadband customers at the largest telcos and cable companies for years. When I was looking at the statistics for the first quarter of 2023, it struck me that the biggest cable companies are now making up for the loss of cable TV customers by increasing broadband rates.

For the last decade, the big cable companies have been thriving financially through big annual increases in broadband customers. This came year after year as large numbers of customers bailed on DSL, along with organic population growth – the cable companies won most new broadband households.

Every traditional cable TV provider started to lose traditional cable TV customers starting around the end of 2018. Since that time, the loss of cable TV customers has accelerated. Small ISPs will tell you that they don’t make much money from cable TV, and many of them have abandoned the business line. But this is not the case for the biggest cable companies, which still have a decent monthly margin from cable TV.

But the margins on broadband are far higher than on cable TV, and as cable TV customers dropped, cable companies continued to add broadband customers, and profits continued to increase.

Profits were further bolstered by broadband rate increases. Comcast has been increasing broadband rates by about $3 per year, while Charter’s rate increases have been closer to $5. Charter broadband rates were significantly lower than Comcast, and they seem to be in the process of closing the gap.

Over the last year, the traditional formula of covering the losses of cable TV customers with the growth of broadband customers came to a screeching halt. Consider the following table that shows the annual change in broadband and cable TV customers for Comcast and Charter since the end of the first quarter of 2019. These numbers come from the Leichtman Research Group, which publishes customers every quarter for the biggest ISPs and cable providers.

Comcast Broadband Cable TV
YE 1Q 2020 1,509,000 (1,021,000)
YE 1Q 2021 1,928,000 (1,490,000)
YE 1Q 2022 1,129,000 (1,691,000)
YE 1Q 2023 161,000 (2,136,000)
Charter Broadband Cable TV
YE 1Q 2020 1,559,000 (357,000)
YE 1Q 2021 1,988,000 (12,000)
YE 1Q 2022 1,040,000 (341,000)
YE 1Q 2023 235,000 (815,000)

In the years ended in the first quarter of 2020 and 2021, Comcast added more broadband customers than the losses of cable TV customers. That flipped in the year ended 1Q 2022 as Comcast lost 562,000 more cable TV customers than it gained broadband customers. In the year just ended 1Q 2023, the wheels have totally come off for Comcast. The company lost over 2.1 million cable TV customers while gaining only 161,000 broadband customers.

Charter’s numbers are not quite as dramatic since the company has been able to hang onto traditional cable TV customers better than the rest of the industry. But Charter’s net customer gains for broadband have slowed to only 235,000 for the year ended 1Q 2023 while traditional cable TV losses are accelerating.

It now seems like both big cable companies must make up for losses of cable TV customers through broadband rate increases. The day of broadband growth subsidizing cable TV losses is over. I wonder how folks who cut the cord from these two companies feel about having the companies make up for losing them as cable TV customers by raising broadband rates?

Taking Aim at Junk Fees

Senator Richard Blumenthal of Connecticut introduced Senate Bill S.916, which takes aim at eliminating junk fees, which are fees that are not advertised for a product but that get added on after a customer buys a product or service. These fees were attacked this year by President Biden in the State of the Union Address.

The bill language is clear: “A covered entity shall clearly and conspicuously display, in each advertisement and when a price is first shown to a consumer, the total price of the good or service provided by the covered entity, including any mandatory fees a consumer would incur during the transaction, which shall not change during the purchase process.” The legislation goes on to give authority to regulate junk fees to the Federal Trade Commission.

Telecom companies, particularly cable companies, are among the worst in having hidden junk fees that are not included in advertising but are added to a customer’s first bill. But telecom companies aren’t the only industry, and the bill is aimed at airlines, online ticket companies, and other industries that routinely advertise prices that are lower than what a consumer is ultimately charged.

It’s clear why companies use junk fees since the practice gives them the ability to advertise super-low rates to attract customers. Consider the junk fees charged by Comcast. Comcast is not unusual, and the hidden fees of other large cable companies are similar.

Comcast routinely advertises low rates to attract new cable TV customers. A customer who buys at an advertised special rate will get a first bill with a lot of hidden junk fees that are not included in the advertised price – or else hidden deep in small print footnotes.

  • Comcast has a broadcast fee of $28.70 per month. This is a fee where Comcast has accumulated annual increases in programming costs into this side fee instead of raising the basic price of cable.
  • Most markets have a regional sports fee. This fee is specific per market and can range from $4 to $8. This fee is the accumulated increases in sports programming costs that have not been added to the basic rate.
  • Comcast also charges $9.00 extra for each settop box – a fee that is not included in the advertised price.

A first-time Comcast customer buying cable at an advertised $30 special rate could get a first bill for almost $75 – a startling difference.

Comcast also has hidden fees for broadband. The company charges $15 per month for a WiFi modem. The biggest surprise for many new customers is the Comcast data cap on broadband. The company charges $10 for each 50 GB of data over the data cap limit.

Consumers hate hidden fees. Anybody who has signed with one of the giant cable companies got a big surprise when they opened their first bill. But by then, most people are locked into a contract that came along with getting the low advertised rates.

There have been almost no repercussions for the practice. Occasionally, the states will pursue a company for deceptive advertising. For example, in early 2020, Comcast settled a dispute with the Minnesota Attorney General’s Office over false advertising related to sports fees. Comcast refunded $1.4 million to customers and paid a fine of $160,000 – which is a small penalty for a Company that had 16.1 million cable customers at the end of last year – all paying similar fees.

Deceptively low special rates make it unfairly hard to compete against a cable company. A competitor could have prices that are lower than the cable company, but hidden fees let the cable company advertise an untruthfully lower price. My clients with fiber networks tell me that customers routinely compliment them for not having hidden fees. People have gotten used to signing up for a low rate but paying a lot more – they become instantly loyal to a company that doesn’t play the games. This legislation would hopefully make the big ISPs become more truthful – but I’ll believe it when I see it.