Tag Archives: Comcast

Cord Cutting Continues in 2023

Leichtman Research Group recently released the cable customer counts for the largest providers of traditional cable service at the end 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.

I suspect there are regular blog readers who wonder why I post these statistics every quarter. There are several reasons.

  • I find it fascinating to watch the slow train wreck of the implosion of the cable TV industry. Recall that the big cable companies like Comcast and Charter got so large through selling only cable TV and no other products. Technology let them compete and then beat telcos for broadband customers, but they already had a huge number of customers in 2000 when broadband competition kicked off in earnest.
  • I’m fascinated to see that there are still over 55 million household buying cable TV from the largest companies. A lot of folks have completely written off cable TV as irrelevant, and a thing of the past, but 42% of households are still buying a traditional cable TV package. Roughly 30 million homes have cut the cord since 2018, but there are still 55 million more homes that might someday migrate all of their video to broadband networks.

The traditional cable providers continue to lose customers at a torrid pace, losing 1.7 million customers in the third quarter. Overall, traditional cable providers lost over 18,700 customers every day during the quarter. The overall penetration of traditional cable TV is now down to 42% of all households, down from 73% at the end of 2017.In the fourth quarter, Comcast dropped from being the large cable provider and fell below Charter. Losses were big across the board, and only Charter, Verizon, and Breezeline lost less than 10% of the cable customer base for the year. The traditional cable providers lost over 6.9 million cable customers for the year – with only a fourth of those customers choosing an online cable substitute.

In the fourth quarter, online cable substitutes like YouTube and Hulu Live picked up 1,476,000 customers, almost all by YouTube. For the year, these providers added almost 1.9 million customers.

First Look at Broadband Labels

The FCC’s Broadband Labels were implemented by ISPs with more than 100,000 customers on or before April 10. Not surprisingly, many ISPs waited until the last day. I think the FCC hoped that the labels would create “clear, easy-to-understand, and accurate information about the cost and performance of high-speed internet services.” I looked at a lot of the labels this past week. As you might expect, the actual labels often fall far short of the FCC’s goal. I’m not going to use this single blog to try to rate and rank the various labels but will highlight a few of the things I found.

The first observation is that the labels are generally hard to find – they are not prominently displayed on ISP websites. This is because the FCC rules say that ISPs only have to display the labels at ‘points of sale’. ISPs have interpreted this to mean that a customer must first submit a valid address to the ISP website, and then typically navigate through several more links to find the labels. Even after entering an address, the links to broadband labels are often not clearly identified, and it was a challenge to find the labels for some ISPs. I thought one of the purposes of the labels was to make it easier for the public to comparison-shop between ISPs – but finding the labels usually takes a lot of work, especially for somebody who isn’t familiar with navigating ISP websites.

The one big benefit of the labels for most ISPs is that they make it easier to find broadband prices. Over the last few years, it’s grown increasingly difficult to find the list price for broadband on big ISP websites – the price that customers pay at the end of a special promotion rate. ISPs are now disclosing the full list price on the labels.

One exception to showing list prices is Comcast. The company is showing the promotional rates in bold for many broadband products and only shows the list price in fine print. Comcast is also deceptive about the cost of its broadband modem. All they say is that it’s optional, without mentioning that their price for a modem rental is $15. They also don’t mention that to get some features a Comcast modem is mandatory. I rate the Comcast labels as still being as deceptive as their website was before the labels. But Comcast isn’t the only one not being open and clear about the modem rental. I’m guessing that big ISPs are rationalizing that WiFi and the modem are not a broadband product as a way to keep them off the label. Any ISP not disclosing modem prices and policies is creating a hidden fee.

One of the features of the labels is that an ISP is supposed to provide a plain English description if its technology and network practices. Most ISPs failed at this, and a customer trying to understand two competing ISPs is not going to understand the technology difference using the broadband labels.

Consider Verizon. It has a network management section of the label that mixes in descriptions of its wide range of different technologies rather than describing each separately. There are a few things that a shopper for FWA service ought to be told: 1) that the FWA product is delivered over the same network delivering bandwidth to cellphones, 2) that the key factor that determines the speed for a customer at a given tower is the distance between the customer and the tower, and 3) that broadband can be throttled if the cell site gets busy. They disclose the third item, but overall, they fail at describing how FWA works.

The labels are not going to tell the public much about speeds. A few ISPs, like Verizon FWA and T-Mobile FWA, are honest and report a range of speeds. Cox is relatively honest and says that speeds are ‘up-to’ the cited marketing speed for a given product. But most big ISPs are claiming they deliver speeds in excess of advertised rates. Charter says speeds are at the advertised speed or faster. Comcast, CenturyLink, Mediacom, and Sparklight all cite ‘typical speeds’ which are all faster than the advertised speed – some significantly faster. This is the first time I’ve seen the term ‘typical speed’, and I have no idea what ISPs mean by it.

Windstream took an interesting approach to broadband labels and only created labels for fiber customers and not for older DSL. I don’t know if that meets the FCC requirements, but Windstream is reporting 100 Mbps capability for DSL in some markets on the FCC map, and this feels like something that should have a label.

All of the labels must disclose latency, and many of the latency numbers cited seem significantly low. I think that the ISPs are citing the latency between their headend and the customer, not the latency that a customer can expect in getting to the Internet. If so, this also feels deceptive to me.

Overall, the Broadband Labels do not fulfill the FCC’s goals of making it easier for customers to understand broadband products. It is a relief to see most ISPs disclose prices – but if Comcast gets away with highlighting marketing promotional rates, the labels for other ISPs might change soon to match. Disclosures on speeds are mostly a joke – and most customers are going to be surprised to find that their ISP is bringing them faster speeds than what they are paying for (sarcasm alert). For the most part, the descriptions of network practices are not written in plain English to help a potential customer understand the technology being used. The carefully crafted lawyer language in these sections makes it hard for even experienced industry folks to understand network management policies.

Are There Two Broadband Markets?

In a recent survey of 8,000 broadband customers nationwide, Parks Associates found that FWA cellular wireless customers feel better about the price they pay for broadband than subscribers of other technologies.

The survey asked broadband customers to react to the following statement: “I receive Internet service at a fair cost / good price”. The response by technology was as follows:

  • 61% of FWA cellular customers reacted positively to the question.
  • 51% of fiber customers feel they are paying a fair price.
  • 40% of DSL customers responded positively.
  • Only 35% of cable customers think they are paying a fair price.

These responses are measuring two things – the way customers feel about broadband performance of each technology combined with how they feel about the price.

These survey results have to be troubling to cable companies. Cable companies have been raising rates regularly for years. For example, Comcast already has rates far higher than FWA, and yet the company still raised rates by $3 in December 2023. There is no mystery why customers like FWA pricing more than cable company pricing. Comcast has a list price of $86 for a 200/5 Mbps broadband connection, and most customers also are charged $15 for a modem. This contrasts with Verizon FWA, which has a list price of $60 for speeds between 100 – 300 Mbps, with addition savings for using autopay or for bundling with Verizon cellular. T-Mobile FWA has a list price of $65 with a small discount for autopay.

However, the list price isn’t everything since a lot of customers are paying less than list price. Verizon had a recent promotion for FWA home broadband at $40 for new customers and $25 for existing cellular customers. T-Mobile has been advertising a price for home broadband for $30 for existing T-Mobile cellular customers. Comcast also has heavily discounted special prices. There are current web deals for buying the 200/5 Mbps plan for $30 ($45 with the modem). But every customer buying a low-price Comcast product knows the prices will eventually skyrocket when the promotion is over.

The customer reactions to fiber are more puzzling where 50% of customers don’t think they are paying a fair price. Many fiber providers have prices that aren’t that different than FWA wireless. AT&T sells 300 Mbps fiber for $65. CenturyLink sells 500 Mbps fiber for $50. Frontier sells 500 Mbps for $50.

My consulting firm conducts surveys, and we’ve been seeing similar results. I’ve recently come to the conclusion that there are two different broadband markets in the country – a market of customers who care about price and one where customers care about speed.

There has been a huge migration of customers upgrading to gigabit broadband. OpenVault reported that at the end of 2023 that one-third of all broadband customers are now subscribed to gigabit speeds. These are clearly the customers who care about speed, and these households are likely not interested in the slower speeds being delivered by FWA cellular wireless.

Eight million customers have elected to buy FWA home broadband that delivers top speeds between 100 and 300 Mbps. Some of these customers live in rural areas where this is the only fast option, but many of these customers are in towns and cities and are switching from cable companies and fiber ISPs. These are the customers for whom price is more important that broadband speeds. These customers find the FWA speeds to be good enough, at least in relation to the price they pay.

This creates a real dilemma for cable companies. They have lowered the promotional prices to the lowest level I’ve seen in many years to compete with FWA prices. At the same time, cable companies are seeing many customers migrate to the fastest speeds and higher-priced products – but these customers hate the prices. It’s easy to understand customer dissatisfaction when some customers are getting promotional prices at $30 while many other customers are pay far more than $100. It’s virtually impossible for a cable company to satisfy both sets of customers. The attempt to deal with the two drastically different market segments might be a major part of the reason why Comcast and Charter have stopped growing.

Telcos Shedding Jobs

I heard a chilling story recently. AT&T apparently notified a bunch of employees in Los Angeles that their jobs are being eliminated and that they need to report to other cities like Dallas or lose their job. Many of these employees were relocated to Los Angeles in the last five or six years, and the company paid for that past relocation. Employees now must move at their own expense. I was told the same thing was happening in other AT&T markets across the country. This is a particularly callous way to eliminate employees, and AT&T is clearly trying to induce employees to resign to avoid paying severance. This is not the kind of behavior that would normally be expected from a large corporation. It certainly tells the remaining employees of the company that they are not valued.

There is rarely a month that doesn’t go by without hearing that one of the big telcos is laying off a group of employees somewhere. The story piqued my interest, and it took only a little research to see that telcos have steadily been eliminating staff while the biggest cable companies have not.

Consider the following chart that shows employment at the biggest ISPs and carriers since 2018.

2018 2023 Change
AT&T 268,220 150,500 -44%
Verizon 144,500 105,400 -27%
Lumen 45,000 28,000 -38%
T-Mobile 80,500 67,000 -17%
Comcast 184,000 186,000    1%
Charter 98,000 101,100    3%

It’s not easy to make sense of the staffing changes at the various carriers. Consider some of the big trends at each company since 2018.

Some of the staff reductions at AT&T can be justified since the company suffered from several disastrous investments. The biggest was buying Time Warner Media and spinning it off just three years later to Discovery with a huge loss. The company had another big failure from its purchase of DirectTV. While AT&T flourished from 2018 to 2023 in adding cellular customers, competition dropped the average revenue per customer over that time period. AT&T lost only 3% of its net broadband customers over that period while it has been transitioning from copper to fiber.

Verizon has a similar story of making bad investments in AOL and Yahoo. Due to the big surge of FWA cellular broadband and good sales in FiOS, Verizon has 54% more broadband customers today than it had in 2018. Verizon also thrived and grew cellular customers during this period.

Everybody has likely heard Lumen’s story. The company has struggled since it was spun off from AT&T as US West. The company divested it’s copper assets in twenty states and recently announced more layoffs.

T-Mobile is an interesting case. Cellular customer additions have been sluggish since it merged with Sprint. It recently added 4.8 million FWA broadband customers. The layoffs at T-Mobile seem to be clearly aimed at improving the bottom line – even though one of the big promises made to employees with the Sprint merger was that it would create new jobs, not lose jobs.

Comcast has thrived in everything except cable TV. Since 2018, the company added 5 million broadband customers and 6.5 million cellular customers.

Charter also did well except with cable TV. Charter added 5.3 million broadband customers since 2018 and 7.8 million cellular customers.

The bottom line of my quick analysis is that telcos have been reducing staff at a much greater pace than can be justified by looking at the overall trends of each business. I have to wonder how Comcast and Charter are going to react to the sudden slump in broadband growth? Will they now start shedding employees like the telcos have done?

Is it Time for Rate Cuts?

Comcast and Charter broadband customer growth has stagnated, and all of the cable companies are now slowly losing customers. There are a lot of reasons for the stagnation and customer losses. There is new competition from fiber overbuilders eating into the core markets of cable companies. The big customer growth in the broadband industry over the last two years has been with FWA wireless from Verizon and T-Mobile, and this also has to be eroding cable broadband customers.

One of the factors that put cable companies at such a competitive disadvantage is broadband prices. The cable companies have been regularly raising rates annually for years to levels that are far higher than all of their competitors. The high rates were sustainable in markets where the cable companies held a virtual monopoly, but an increasing number of their markets now see competition from fiber and FWA.

To be fair to the cable companies, not all customers pay the highest list rates. My firm has been doing broadband surveys throughout the country, and we find a lot of people paying the high rates. Interestingly, the customers who have been with a cable company the longest tend to pay the most, while newer customers have been offered much lower special rates.

I’ve been expecting cable companies to react to the new competition. They have a number of options for how to react to competition, and one option is to lower rates. I recently saw that Altice (Optimum) announced a major decrease in its undiscounted standalone rates. Altice has good reason to lower rates. Since the beginning of 2022, the company has lost 4% of its broadband subscribers, losing 189,000 customers on a base that was at 4.8 million at the beginning of 2022. The company had a net broadband customer loss in every quarter in the last two years.

Altice/Optimum has some of the most expensive list prices for broadband in the industry. Its list rates have ranged from $109.99 for 300 Mbps broadband to $139.99 for gigabit speeds. It has lowered those two prices to $70 and $110. The company says that it doesn’t have a lot of customers paying the list rate, but there are some.

To offset the rate decreases, Altice is raising its Network Enhancement Fee to $6 per month, a fee that applies to all customers. This had a list price of $4.50, but a lot of customers were paying as little as $1.50. This is the type of hidden junk fee that the FCC has been highlighting because it is nothing more than a way to bill customers extra money. It’s possible that what is being dressed up as a rate decrease could end up costing customers more in the short run.

Not every cable company is taking the same tactic. In December 2023, Comcast announced an average rate hike of $3 per Xfinity broadband customer. The company raised rates even though it has been seeing a small overall broadband customer decrease and an even larger erosion of cable TV customers.

Cable companies are under tremendous pressure from Wall Street to increase earnings, and that’s extremely challenging in an industry where they are losing customers to multiple aggressive competitors. Comcast reported to investors at the end of 2023 that its revenue per customer has been climbing. It’s likely that the company has been cutting back on the discounts given to customers and that more customers are paying the list rates. Raising rates or cutting back on giving discounts is the only way to increase revenues when competitors are taking customers. It’s going to be interesting to see what the other big cable companies do this year.

What’s Up With Comcast and Charter?

The two biggest cable companies in the country have clearly bogged down. In the third quarter of 2023, Comcast lost 18,000 broadband customers while Charter gained 63,000. To contrast the extent of the slowdown, Charter gained over 1.3 million customers in 2021 while Charter gained 1.2 million. The growth during the pandemic was not extraordinary, and both companies added 1.4 million customers in 2019 before the pandemic.

The two companies are still the largest ISPs. Comcast had 32.3 million broadband customers at the end of the third quarter of 2023, while Charter had over 30.6 million. Third in size is AT&T at 15.3 million.

Charter is still slowly adding customers due to its strategy of building broadband in rural markets. In the third quarter, half of its growth came from rural areas. Charter won a significant amount of rural subsidy in the RDOF reverse auction in 2020 and has been aggressively pursuing state broadband grants since then. Comcast has also been chasing state grants, and analysts expect that both companies will pursue the upcoming BEAD grants.

There are a number of reasons for the sudden slowdown. At the top of the list is probably prices. The following are the current list prices for the most common broadband products. For both companies, the prices and speeds vary in some markets.

  Download Upload Price
Charter 300 Mbps 10 Mbps $84.99
500 Mbps 20 Mbps $104.99
1 Gbps 35 Mbps $124.99
Comcast 200 Mbps 10 Mbps $90 + $15 for router
400 Mbps 10 Mbps $105 + $15 for router
800 Mbps 20 Mbps $110 + $15 for router
1 Gbps 20 Mbps $115 + $15 for router
1.2 Gbps 35 Mbps $120 + $15 for router

These prices are significantly higher than the prices being charged by fiber competitors:

  Download Upload Price
AT&T 100 Mbps 100 Mbps $60
300 Mbps 300 Mbps $65
1 Gbps 1 Gbps $80
2 Gbps 2 Gbps $110
Frontier 500 Mbps 500 Mbps $59.99
1 Gbps 1 Gbps $79.99
2 Gbps 2 Gbps $109.99
Windstream 500 Mbps 500 Mbps $60
1 Gbps 1 Gbps $85
Verizon 300 Mbps 300 Mbps $49.99
500 Mbps 500 Mbps $69.99
1 Gbps 1 Gbps $89.99

To offset the big price difference with competitors, both companies offer substantial discounts for new customers. Charter tends to continue to renew special pricing while a customer has to work harder to get the discounts at Comcast. Both companies are pushing bundles that include discounted cellular.

As the two charts demonstrate, another big difference is the upload speeds. Both cable companies are upgrading upload speeds to speeds between 100 Mbps and 300 Mbps using mid-split technology upgrades. Both have been talking about upgrading to DOCSIS 4.0 to get symmetrical speeds.

The other new competitor is FWA Cellular Wireless from T-Mobile and Verizon. We don’t know how much traction these companies have in competing against cable companies, but the two companies have added over 7 million customers in the last two years, while Comcast and Charter have stagnated.

  Download Upload Price
T-Mobile 100 Mbps Best Effort $65
100 Mbps Best Effort $60 with Autopay
Verizon 300 Mbps Best Effort $45 with Verizon Cell Plan
300 Mbps Best Effort $60
  300 Mbps Best Effort $50 with Autopay

It’s going to be interesting to see if the two cable companies increase rates in 2024. If they don’t, then the only path to higher earnings would be to cut back on customer or slash expenses.

Both companies have thrived on the combination of customer growth and revenue growth from rate increases. Both companies face a serious earnings challenge in the next few years as competitors chip away at customers.

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.