Tag: Cox Communications

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The Industry

Cable Company Cellular Growing

Cable companies are starting to quietly build a significant cellular business to bundle with broadband and other products. Consider the most recent customer count from the eight largest U.S. cellular carriers:

Verizon 143.0 M
T-Mobile 110.2 M
AT&T 101.6 M
Dish 8.5 M
US Cellular 4.9 M
Comcast 4.6 M
Charter 4.3 M
C-Spire 1.2 M

It’s worth noting that AT&T has over 200 million cellular customers worldwide, which makes them the eleventh largest cellular carrier in the world, with China Mobile first with over 851 million customers.

Comcast’s Xfinity Mobile added 317,000 customers in the second quarter of this year to bring the company to a total of 4.6 million customers. Comcast mostly uses the Verizon network to complete calls. However, Comcast demonstrates the major benefit of a cable company being in the cellular business since the company is able to offload a large portion of its outgoing mobile traffic to its WiFi network. Comcast has been experimenting with the use of 600 MHz spectrum to carry some of its cellular traffic. The company purchased $1.7 billion of spectrum in the 2017 incentive auction that freed up spectrum formerly used by television channels. Comcast also purchased $458 million of CBRS spectrum in 2020. The company says it may selectively offload traffic onto licensed spectrum in places where that is cheaper than buying wholesale minutes.

Charter’s Spectrum Mobile added 344,000 mobile customers in the second quarter of the year to bring the company to 4.3 million customers. Spectrum also uses the Verizon network. Charter purchased $464 million of PAL licenses in the CBRS spectrum in 2020. Charter says it intends to place its own radios in high-traffic areas where that will save money. Charter’s CEO Brian Roberts said a few months ago that Charter saw $700 million in new revenues from cellular over the past twelve months.

Altice has been selling mobile services branded as Optimum Mobile for several years and added 33,000 customers in the second quarter, bringing the company to 231,000 total mobile customers. Altice uses the T-Mobile network.

Cox announced the launch of a mobile pilot program on August 29, launching Cox Mobile in Hampton Roads, Virginia, Omaha, Nebraska, and Las Vegas.

All of these companies have a huge potential upside. For example, the mobile customer penetration rate for both Comcast and Charter is under 10%, and both companies believe they can become major mobile players in their markets.

The cable companies face an unusual marketing challenge since each cable company is only in selected urban markets, meaning that a lot of nationwide advertising goes to waste.

The primary reason that Comcast first entered the mobile market was to develop another product that would create a stickier bundle. Comcast figured it would be hard for a customer to leave if that meant finding a new cellular carrier along with a new ISP. Cable companies are still only selling to their own broadband customers, which is a good indication bundling is still a key reason for doing this. It’s also less costly to sell cellular to households that can offload cellular traffic to the cable company broadband network.

The big three cellular carriers have continued to grow in recent years, but the cable companies have definitely made a dent in the market with almost ten million retail mobile customers. The real test for the cellular industry is going to come when Dish finally gets its act together and offers low-cost mobile service in most markets. That’s going to put price pressure on everybody else. If Dish starts a price war, as promised, we’re going to see a real shake-up.

 

 

Categories
The Industry

Who is the Fastest ISP?

I regularly run across articles that ask which major ISP is the fastest. Most of these articles get their speed data from Ookla, which publishes comparative median broadband speeds for mobile and landline ISPs each quarter, like in this report for the second quarter of 2022.

Americans love a horse race – we like to rank things, and articles that rank ISPs grab readers. But we have to take articles based upon the Ookla rankings with a grain of salt. Ookla doesn’t make any claims about its numbers – it just presents the data.

There are a few things to note about the Ookla numbers. First, the results come from the many speed tests reported to Ookla. We know that a significant number of speed tests aren’t perfect due to issues at the customer end, such as an old WiFi router or taking the speed test at the far end of the house away from the WiFi router. Most importantly, Ookla reports median speeds – meaning half of all speed tests for a given ISP are faster, and half are slower than the value shown. Median speeds don’t seem to be a great metric for comparing ISPs.

Here are the median speeds for the second quarter from Ookla for the largest landline ISPs.

Download Upload
Cox 196.73 10.60
Xfinity 184.08 18.88
Spectrum 183.84 11.70
Verizon 171.01 112.36
AT&T Internet 146.64 112.27
Frontier 136.99 113.21
CenturyLink 41.29 12.02

What do these numbers tell us (and not tell us)?

  • The results are only from customers who took speed tests. I have to think that customers who have blazingly fast Internet don’t take a speed test as often as customers who are seeing sluggish performance. Summarizing the speeds for only those who take a speed test is very different than measuring the average speed being delivered to all customers by an ISP.
  • One of the factors that likely has a big impact on the median speed is the mix of broadband speed products offered by each ISP. An ISP that sells a lot of 50 Mbps or 100 Mbps download products is likely to have a lower median speed than an ISP that has a minimum speed of 200 Mbps. The numbers above include ISPs with widely different speed products and prices.
  • This list only includes the largest ISPs. Smaller ISPs that offer fast products, like Ting, Sonic, US Internet, and many others, would blow away these median speeds.
  • I saw two articles that declared that Cox is now the fastest ISP in the country. Is it really? Just two quarters ago, at the end of 2021, Verizon had a median download speed of 201 while Cox was at 172. This variability from quarter to quarter is a good indication that you can’t make any serious judgment about an ISP based on median speeds. I can’t imagine that Verizon got slower – there was just a different mix of Verizon customers who took the Ookla speed test in the fourth quarter and the second quarter.
  • It’s interesting that none of the median upload speeds for cable companies is at the proposed 20 Mbps definition of broadband being considered by the FCC. This suggests more than half of all customers of the cable companies have upload speeds of less than 20 Mbps – and it’s likely that far more than half don’t achieve the 20 Mbps upload threshold. Is Cox really the fastest ISP when it doesn’t seem to meet the FCC’s proposed definition of broadband?
  • It’s clear that the measurements for CenturyLink include DSL. I’ve seen individual speed test results from CenturyLink Fiber customers that show symmetrical speeds – and far faster speeds than these numbers. By comparison, it looks like the Frontier, AT&T, and Verizon speeds are for fiber customers and don’t include DSL.

I like ranking as much as anybody, but I am unable to draw too many conclusions from the Ookla numbers. Perhaps the most you can say is that both fiber and cable companies are delivering decent download speeds – at least to the top 50% of customers. But these numbers are another example of the paltry upload speeds being delivered by the cable companies. I can’t pick the fastest ISP from this table – if I was forced to choose, I’d say Verizon. But that’s a pretty weak pick using median speeds. All of these ISPs offer a gigabit download product, and from that perspective, they are all the fastest – except for the ISPs not on this list that now offer a residential 10 Gbps broadband product.

Categories
The Industry

Pushback Against Hidden Fees

Cable companies have become notorious for billing hidden fees – fees that are not clearly identified when new customers sign for service. Hidden fees have been around for a long time, but in recent years have exploded. The motivation for having hidden fees is clear – it lets a cable company advertise the base fees that don’t include the hidden fees. But it’s an odd shell game since customers find out about all of the hidden fees when they get the first bill.

There is interesting pushback against Cox Communications where multiple customers are taking Cox to arbitration and claiming they were not told about the hidden fees when they subscribed for service. I wrote a blog about arbitration recently and described how over 100,000 customers have taken Intuit to arbitration because the company advertised free tax filing, which isn’t available. Intuit tried to reach a settlement with customers, but a court ruled that they were stuck with the binding arbitration rules they had forced onto customers. Intuit offered a settlement of $40 million to customers, but if they lose the arbitration cases and have to pay court fees, it could cost the company $175 million.

Something similar is happening with Cox. The Hattis and Lukacs law firm from Belleview, Washington, has assisted 295 Cox customers to file a binding arbitration complaint against the Cox hidden fees. The law firm says it plans to bring many more thousands of suits.

The Cox customers seem to have a legitimate complaint. I looked at the Cox website the basic Cox Contour cable package is advertised as low as $53 per month. You have to dig deep into the small print to understand that charges can be a lot higher. The Cox hidden fees are not insignificant. Consider the following:

  • The broadcast fee is $19.00 per month. This is a fee where the cable companies have diverted increases in programming costs into the fee rather than raise the basic price of cable.
  • The regional sports fee can be as much as $12.50 per month – the fee varies by market depending upon the local sports networks that Cox carriers. Again, the company has pushed rate increases into this fee to hold down the advertised price of cable TV.
  • Cox also charges from $6 to $10 extra for a settop box – a fee that is not included in the advertised price.

A customer buying the $53 basic cable product could get the first bill over $90 – a startling difference to somebody who thinks they purchased a $53 product.

Cox also has what most in the industry consider hidden fees for broadband. The company charges $12 per month for a WiFi modem. The biggest surprise for broadband customers might be the Cox data caps that charge $10 per 50 GB of data for any customer exceeding the monthly data cap – with the maximum monthly data cap surcharge at $100.

It’s no wonder that customers dislike ISPs when the first transaction with them smacks of deception. New customers often sign a one or two-year contract for service and are then locked into paying the higher fees.

Cox is not unique, and all of the big cable companies and most of the big telcos also have hidden fees. The Cox fees are on the high side compared to most cable companies, but not by much.

The FCC proposes to expose the practice of hidden fees for broadband by requiring ISPs to disclose all of their charges on a broadband label. Unfortunately, the FCC label doesn’t include the cable product, which has the highest hidden fees.

It will be interesting to see if this kind of lawsuit will change ISP practices. With Cox’s 3.4 million cable customers, there are a lot of folks who could join in the binding arbitration effort to get a refund. One would think that this is going to make all big cable companies pause because they all use the same tactic of forcing customers to use binding arbitration. My prediction is this will lead big ISPs to drop the arbitration requirement rather than change the way they charge customers.

Categories
The Industry

Pushing Back Against Municipal Broadband

As a cautionary tale to any city that provides broadband, the incumbent ISPs are always going to push back on city initiatives. The following is a story from the summer that slipped off my radar. The city of Tucson, Arizona, launched a free wireless network to bring broadband to students in homes without broadband. As would be expected, the incumbent cable company, Cox Communications, fought against the city-provided broadband.

The city recognized the need for the network when it got requests for over 7,000 wireless access points from students during the pandemic. The city decided that the best long-term solution to the large numbers of unserved students was to create a private network using CBRS spectrum. We tend to think of municipal wireless networks as slow, but the city’s network rivals the broadband speeds offered by other cellular carriers in the city.

The city is using 4G LTE technology, which provides for the same indoor coverage as received by cell phones. The city identified 20 square miles of the city with the greatest number of students without home broadband. The initial network consisted of 40 small cell sites, and there are plans to add more. Broadband is received in the home through a typical cellular receiver and a SIM card that identifies the network. Broadband speeds are more than adequate to support a single student with download speeds over 50 Mbps and upload speeds over 3 Mbps. This network avoids the problem of having multiple students in a household sharing the network because it provides a receiver for each student.

The network has some interesting features. It supports basic network slicing which gives the school board the ability to prioritize school broadband traffic over other uses by students. The city is now looking at how to use this network for smart city purposes since the network provides broadband everywhere. The city is considering using the technology for monitoring the water system (critical infrastructure in arid Tucson), for providing ubiquitous broadband in parks, for connecting to all firefighters and other first responders, and for controlling traffic lights.

As might be expected, Cox Communications, the incumbent cable company, pushed back against the city network. When the wireless network was first discussed publicly, Cox made a proposal to provide 10 Mbps broadband to students in some selected parts of the city. When told that the wireless network would be delivering speeds of at least 50 Mbps, Cox countered that it would also be able to match the higher speed. But the first Cox offer is typical of most cable company low-income broadband programs – the speeds offered are far slower than what is delivered to a basic broadband customer.

Cox also sent a letter to the Tucson city council that warned about the problems that would be caused by broadband competition from the city. The letter included the same refrains we have seen elsewhere. The city shouldn’t be competing against the public sector. Cox warned that the city would have a hard time maintaining its new network. Cox also offered to partner with the city to build broadband in parts of the city not reached by Cox (with the city paying for the expansion).

I’m not sure that we should expect incumbents to act differently. As the cable company, Cox has a virtual monopoly on broadband since Cox largely competes only against DSL – and monopolies always fight to maintain monopoly power. Cable companies fight against all competition. They try every trick in the book to delay new commercial ISPs from building networks. But cable companies roll out a full press against city initiatives because they hope there is a political pressure point that will cause the city to reconsider. They know it’s a smart tactic because there are many cities that have canceled broadband plans after heavy lobbying by the incumbents.

In this case, the city didn’t back down and has launched the first phase of the wireless network. This became much easier for the city to finance after it received ARPA money from Congress that can be used to pay for broadband infrastructure. I am positive that the city will derive huge benefits from this network far past the day when the pandemic is behind us.

Categories
The Industry

Who’s Chasing RDOF Grants?

There is a veritable Who’s Who of big companies that have registered for the upcoming RDOF auction. All of the hundreds of small potential bidders to the auction have to be a bit nervous seeing the list of companies they could end up bidding against.

As a reminder, RDOF stands for Rural Digital Opportunity Fund and is an auction that starts in October that will award up to $16.4 billion in broadband funding. The money will be awarded by reverse auction in a process that favors faster technologies, but also favors those willing to take the lowest amount of grant per customer. The areas that are eligible for the funding are among the most remote places in the country, which is why the list of potential large bidders is puzzling.

There are some big cable companies on the list: Altice, Charter Communications, Cox Communications, Atlantic Broadband, Midco, and Mediacom Communications. These companies serve many of the county seats or other nearby towns to many of the RDOF areas. One has to wonder what these companies have in mind. The only one that has chased any significant federal grants in the past is Midco in Minnesota and North Dakota. Midco has been using grant money to extend fiber backhaul to connect its smallest markets, to build last-mile broadband in some tiny towns, and to build fixed wireless in rural areas surrounding its cable markets.

One has to wonder if the other cable companies have a similar plan. It’s incredibly inefficient to build traditional hybrid coaxial-fiber networks in rural areas, so it’s unlikely that the cable companies will be extending their existing networks. The RDOF auction is being done by Census blocks, which in rural areas can cover a large area. The winner of the auction for a given Census block must offer service to everybody in that block. I also have a hard time envisioning all of these big cable companies getting into the wireless business like Midco is doing, so their presence in the auction is a bit of a mystery.

Then there are the traditional large telcos including Frontier, Windstream, Consolidated Communications, and CenturyLink. These companies already serve many of the areas that are covered by the reverse auction. These are the rural areas where these companies have largely neglected the old copper wiring and either offer no broadband or dreadfully slow DSL. The minimum technology allowed to enter the auction must deliver 25/3 Mbps broadband. It’s almost painful to think that these companies would chase the funding and promise to upgrade DSL to 25/3 Mbps after these companies largely botched an upgrade to 10/1 Mbps DSL in the just-ending CAF II grants. The cynic in me says they are willing to pretend to upgrade DSL all over again if that means substantial grant money. I have to think that some of these companies are considering deploying fixed wireless. To the extent any of these companies is willing to take on new debt or use equity, they could also build fiber. None of these companies has built a substantial amount of fiber to truly rural places, but may these grants are the inducement they were waiting for.

Verizon and U.S. Cellular have registered for the auction. You have to think the cellular carriers will be deploying fixed cellular broadband like the 4G FWA product that Verizon just announced recently. These companies already have equipment on towers in many of the RDOF grant areas and would love to grab a subsidy to roll out a product they might be selling in these areas anyway.

Then there are the satellite companies SpaceX, Hughes Network Systems, and Viasat. Viasat has won federal grant money before for selling broadband from its high-altitude satellites. SpaceX is the wildcard since nobody knows anything about the pricing or real speeds they can provide. We know that Elon Musk has been lobbying the FCC to let him have a shot at the billions up for grabs in this auction.

There is another interesting wildcard with Starry. Their business plan is currently selling fixed wireless to large apartment buildings in center cities and they’ve developed a proprietary technology that’s perfect for that application. They must have something else in mind in chasing grant money in remote areas that are 180 degrees different than their normal business model. Starry founder Chet Kanojia is incredibly creative, so he probably has a new technology in mind if he wins auction funding.

There may be other big players in the auction as well since many of the registered bidders are participating under partnerships or corporations that are disguising their identity for now. I think one thing is clear and some of the rural ISPs and cooperative who think nobody else is interested in their markets will get a surprise early in the auction. These big companies didn’t register for the grant auction to sit on the sidelines.

Categories
What Customers Want

Setting Broadband Rates

One of the more interesting things about being a consultant is that I often get to work with new ISPs. One of the topics that invariably arises is how to set rates. There is no right or wrong answer and I’ve seen different pricing structures work in the marketplace. Most rate structure fit into one of these categories:

  • Simple rates with no discounts or bundling;
  • Rates that mimic the incumbent providers;
  • High rates, but with the expectation of having discounts and promotions;
  • Complex rates that cover every imaginable option.

Over the years I’ve become a fan of simple rate structure for a couple of reasons:

  • Simple rates make it easy for customer service reps and other employees.
  • It’s easy to advertise simple rates: “Our rates are the same for everybody – no gimmicks, no tricks, no hidden fees”.
  • It’s easy to bill simple rates. Nobody has to keep track of when special promotions are ending. Simple rates largely eliminate billing errors.
  • It eliminates the process of having to negotiate prices annually with customers. That’s an uncomfortable task for customer service reps. There are customers in every market who chase the cheapest rates and the latest special. Many facility-based ISPs have come to understand that such customers are not profitable if they only stay with the ISP for a year before chasing a cheaper rate elsewhere.
  • It’s easier for customers. Customers appreciate simple, understandable bills. Customers who don’t like to negotiate rates don’t get annoyed when their neighbors pay less than them. Simple rates make it easy to place online orders.

As a consumer I like simple rates. When Sling TV first entered the market they had two similar channel line-ups to choose from, with several additional options on top of each basic package. Since they were the only online provider at the time, I waded through the process of comparing the packages. But I was really annoyed that they made me do so much work to buy their product, and when a simpler provider came along I jumped ship. To this day I can’t figure out what Sling TV gained from making it so hard to compare their options.

ISPs can be just as confusing. I was looking online the other day at the packages offered by Cox. They must have fifty or sixty different triple and double play packages online and it’s virtually impossible for a customer to wade through the choices unless they know exactly what they want.

There are fiber overbuilders who are just as confusing. I remember looking at the pricing list of one of the earliest municipal providers. They had at least a hundred different speed combinations of upload and download speeds. I understand the concept of giving customers what they want, but are there really customers in the world who care about the difference between speed combinations like 35/5 Mbps, 38/5 Mbps, or 35/10 Mbps? I know several smaller ISPs who have as many options as Cox and have a different product name for each unique combination of broadband, video, and voice.

There is such a thing as being too simple. Google Fiber launched in Kansas City with a single product, $70 gigabit broadband. They were surprised to find that a lot of customers wouldn’t consider them since they didn’t offer video or telephone service. Over a few years Google Fiber introduced simple versions of those products and now also offer a 100 Mbps broadband product for $50. Even with these product additions they still have one of the simplest product lineups in the industry – and they are now attractive to a lot more homes.

I know ISPs with complicated rates that have achieved good market penetration. But I have to wonder if they would have done even better had they used simpler rates and made it easier on their staffs and the public.

Categories
Current News

The Newest Battle of Copyright Infringement

For years the big ISPs have paid lip service to complaints about customers who violate copyrights by sharing content on the web for music and video. Every big ISP has had a process in place that was intended to police violation of the Digital Millennium Copyright Act (DMCA).

The owners of copyrighted materials have long complained that the ISP response to violators has been weak and ineffective. And they are right in that most ISPs notify customers that they are accused of violating copyrights, but there has been little or no consequences for violators.

However, that might now be changing due to a lawsuit that’s been in the courts for a few years. Music label BMG sued Cox Communications for not providing adequate protection of it’s copyrighted music. Recently the 4th Circuit Court, on appeal, reversed the original verdict against Cox. However, in doing so the court threw out Cox’s primary defense, which was that they were protected by the ‘safe harbor’ laws that are part of DMCA.

The safe harbor rules protect ISPs like Cox against damages from customer theft of copyrighted materials. Removing the safe harbor means that the owners of copyrighted materials can seek and win damages against ISPs if they don’t take adequate steps to protect copyrights. In the specific case against Cox, the BMG issue was that Cox didn’t do anything to deter repeat offenders.

There are apparently a lot of repeat offenders – customers who share a lot of copyrighted material – so this ruling instantly got the attention of other big ISPs. Comcast responded last week by notifying customers of a new policy for repeat offenders of copyright theft. The new policy has several progressive stages of severity:

  • Customers notified of DMCA violations might be forced to log in fresh to their broadband account, and in doing so will probably have to agree to abide by the company’s DMCA policy before getting access. Customers might also have to talk to Comcast customer service before they can log into their broadband account.
  • Customer that continue to violate DMCA policies after this first stage face termination of their broadband and all other Comcast services.

This is going to have a chilling effect on those that share copyrighted materials. A majority of people live in markets where the cable company offers the best broadband, and losing the home broadband connection is drastic. I have to assume that telcos will come up with similar policies, meaning that DSL also won’t be a refuge for anybody who continues to violate copyrights.

There has always been people who share content. The old public bulletin boards were full of copyrighted songs and pictures that could be shared. Over time this morphed into Napster and other file-sharing services. Today there are still a number of sharing sites on Tor and other places on the web. And people have figured out how to use Kodi and other technologies to capture and share copyrighted video files.

Although they don’t want to play the role of policeman, I suspect the big ISPs will be forced to at least somewhat enforce policies like the one Comcast just initiated. There has always been a big tug of war between ISPs and content owners. This new response from Comcast shows that content owners now have the upper hand. It certainly means that those who continue to share copyrighted materials will face eventually losing their broadband. In today’s world that’s a severe penalty.

Smaller ISPs need to pay attention to this and watch what the big companies are doing. I wouldn’t be surprised to see BMG or some other content owner sue a smaller ISPs to make a point that this applies to everybody – and nobody wants to be that ISP. If the big ISPs really enforce this, then small ISPs need to follow suit and figure out an effective way to police and deter repeat copyright violators.

 

Categories
Regulation - What is it Good For?

ISP Liability for Customer Behavior

A few weeks ago a judge ordered Cox Communications to pay a $25 million settlement to BMG, the music rights company. This come from a trial last year where a jury decided that Cox was guilty of allowing their customers to pirate BMG music over the web. This ruling is a dangerous precedent in that it holds an ISP liable for behavior of its subscribers – something that should scare all ISPs.

The case has some unusual facts. BMG hired Rightscorp to monitor the Internet for illegal file downloads of BMG music. Rightscorps sent numeous infringement notices to Cox that it wanted forwarded on to customers. These notices told customers that they had done an illegal download of BMG copyrighted material and gave customers the ability to immediately resolve the issue by sending $30 to Rightscorp.

Cox thought these notices smacked of extortion and refused to forward the notices directly to customers. Instead Cox decided to use the same policy as most large ISPs called a three strikes test, meaning that they will disconnect a customer that has been given several notices about illegal downloads. But the suspicion has always been that the big ISPs are somewhat spotty about enforcing copyright violations and don’t want to turn off paying customers.

Cox ended up blocking 1.8 million notices that Rightscorp was trying to directly send to Cox customers, and Cox largely did nothing with those notices. Cox was found guilty by a jury, and the judge set the high penalty because Cox had not done enough to enforce the copyrights of BMG.

Cox was relying on a legal strategy called ‘safe harbor’ where they would have no liability as long as they were using a reasonable set of procedures to stop music piracy. But the judge quickly pierced the safe harbor protection by saying that Cox did not do as much as they should have done to protect BMG.

This case was certainly complicated by the unsavory tactics of Rightcorps. What’s to say that all of those customers actually had violated copyright? But the bottom line is that Cox was held responsible for the supposed music piracy of their customers. That ruling that has to concern every ISP, because this is bound to open up the floodgates of similar suits and similar tactics. And who knows where this stops? Customers can engage in all sorts of illegal activities other than copyright violations.

It’s really hard for an ISP to know what to do following this decision. One strategy would be to just pass on every notice of copyright infringement. The problem with that idea is there is likely to a bunch of scammers that will copy the tactics of Rightscorps but with no real claims against customers. ISPs don’t want to get into the middle of potential scams.

ISPs could also develop and enforce tighter policies against customers that repeatedly download pirated material. The danger of that approach is that the ISP could end up ‘convicting’ a customer with no real proof that they violated copyright. This has been one of the factors that have made ISPs uneasy about getting tough on this.

Finally, I guess ISPs could do deep packet inspection to see what their customers are doing. But most ISPs don’t want to do that. And even if ISPs try this, the FCC is contemplating customer privacy rules where customers can opt out of being tracked or followed by the ISP.

So Cox and other ISPs face a dilemma. We know that the biggest ISPs have all been involved in this issue. I would love to hear from any smaller ISPs who have been involved in copyright issues and that might want to share their experience.

Categories
Regulation - What is it Good For?

Regulatory Shorts – July 2016

There are some interesting things happening in courts lately that will be of concern to ISPs.

ISPs Might be Liable for Customer Piracy. In two court decisions, courts have said that ISPs can be held responsible by piracy committed by ISP customers. In the Alexandria, VA district court a jury found Cox Communications liable of copyright infringement from a lawsuit brought by BMG, the music publisher. BMG had argued that Cox should have disconnected customers who violate copyrights. There was a similar ruling in Manhattan district court against RCN, also brought by BMG. Both companies are currently vigorously fighting the rulings. This kind of ruling could have a chilling impact on ISPs. Net neutrality rules would make it hard, and maybe illegal, to block sites like BitTorrent. And yet ISPs might somehow be liable for what customers do on piracy sites.

Internet Firms Not Necessarily Liable for False Information. On May 16 the FCC handed down a narrow victory to Spokeo.com. The company had been sued by a Virginia resident who said that the site contained errors about his age, education, employment, and marital status. The court said that the plaintiff could not sue without having proven any real damage from the bad information.

The case was watched closely by Facebook, Google, and other internet firms that are worried about a negative impact from having inaccurate data. The court ruling seems to make it unlikely that class action suits could be brought against internet companies, but it did open the door to individual suits when real damage could be claimed.

Fourth Amendment Does Not Protect Home Computers. The federal district court in Virginia ruled that a criminal defendant had no ‘reasonable expectation of privacy’ for information stored on his home computer. The particular case came out of an FBI sting of Playpen – a TOR site on the dark web used to host child pornography. It’s a complicated and unprecedented case where the FBI seized the server and continued to operate the site, and to eventually arrest numerous users.

But the ruling is a bit troublesome because it implies that police have the power to remotely access the files on somebody’s computer without a warrant. That runs contrary to recent rulings about the security of information on a cell phone. Police have searched computers before of people who have been charged with crimes, but the ability to search the computers of people who have not been accused of any crime without a warrant is scary. I expect this to be appealed.

FBI says Location of Surveillance Cameras Must be Kept Secret. The FBI was successful in getting a judge to block Seattle City Light from divulging the location of FBI security cameras. City Light is part of the city government and would normally be required to respond to requests for information like this from the public.

One thing the court process revealed is that the majority of police surveillance cameras are installed without a warrant, which raises the issue of violating the Fourth Amendment. The judge in this case did say that he thought the FBI needed warrants to install cameras.

Europe Proposes Requiring an Online ID. Officials in the European Commission have suggested that European citizens be required to use a government issued ID when online. The purpose of this is supposedly to provide a trustworthy environment online for merchants and people to be able to know who they are dealing with.

The White House had proposed a similar voluntary system a few years ago in response to cyberbullying and other online issues. They suggested that if people adopted a verified and trustworthy identity online that they could be safer by only dealing with others who did the same. There are still a few states considering trials of the idea. But that proposal was very far away from being the mandatory requirements suggested in Europe.

The Best Explanation of Network Neutrality Yet. And finally, Stephen Colbert discusses net neutrality while on a roller coaster.

 

 

 

Categories
The Industry

Metropolitan ISPs

I spend most of my time working with rural ISPs. Even my clients that work in larger cities tend to provide service to residential customers and to small and medium businesses. But there is a very competitive market for larger businesses and for businesses that operate in multiple markets.

My clients often run into this when they realize that they are unable to sell broadband to a local chain restaurant, convenience store, bank or other large nationwide or regional business. I recently poked around to see who the carriers are that are selling to metropolitan or nationwide businesses. Some of those on the list will surprise you with their success and there are carriers on the list that you’ve probably not heard of.

Since most of the ISPs in this category don’t report business revenues separate from other revenues it’s difficult to rank these companies by revenue.  Further, some of the companies on this list are almost entirely retail ISPs while others offer wholesale connections to other carriers. Probably the easiest way to compare these carriers is by looking at the number of buildings they claim to have lit with fiber. Of course, even that is not a very reliable way to compare them since there is no standard definition of what constitutes a lit building. But generally these counts are supposed to represent locations with either one very large customer, like a hospital, or else buildings with multiple business tenants. Some of these companies are also count locations like data centers or large metropolitan cell towers.

Here are the carriers that claim to provide fiber to more than 5,000 business buildings:

  • Time Warner 75,000
  • Level3 30,000
  • Cox 28,000
  • AT&T 20,000
  • Zayo 16,700
  • Charter 13,800
  • Fibertech 10,400
  • Verizon 10,000
  • Lightower   8,500
  • Sunesys   7,200
  • Cablevision   7,000
  • Frontier   6,300

Missing from this list is Comcast. I can’t find any references to the number of lit buildings they are in. They are a major provider of business broadband and reported just over 1 million business customers along with $1.3 billion in revenue for their Business Services division. Also missing from the list is CenturyLink who doesn’t seem to claim lit buildings anywhere that I could find. CenturyLink claims to be selling to more than 100,000 businesses on fiber at the end of 2015.

On the list though are both Charter and Time Warner Cable that just merged, which would put them in 88,800 buildings. Fibertech and Lightower merged in 2015 giving them a total of 18,900 lit buildings.

Level3 and Zayo provide both retail and wholesale fiber products, meaning that they will sell connections into the lit buildings directly to businesses or else to other carriers, and they derive a large portion of their revenues from wholesale sales.

The first thing that surprised me about this list is that the cable companies appear to be in a lot more buildings than AT&T and Verizon. There are two possible explanations for this. One is that each group of companies is counting lit buildings in a different way. For example, the cable companies might be counting buildings like schools while the telcos might only be counting larger multi-tenant buildings. But it’s also possible that the telcos have a strategy of only building fiber to the largest buildings in each market while the cable companies will build routinely to smaller buildings. It does raise the question if this is a reasonable side-by-side comparison.

I would also note that some of these companies are growing rapidly and that most of these counts came from 2014 or 2015. Vertical Systems Group (a research and consulting firm that tracks the metro Ethernet market) says that the percentage of the metropolitan businesses connected to fiber grew from 42% in 2014 to 46% in 2015.

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