Tag Archives: Grande Communications

A Peek Into the Latest Merger

The most recently announced merger is between GFiber and Astound. It’s an interesting merger that brings together a premium fiber overbuilder and a traditional cable company that also owns some fiber assets.

GFiber has been somewhat of a mystery in the industry since its splashy launch in 2021. Known then as Google Fiber, the company was the first to introduce the whole country to the idea of gigabit fiber. There had been a few municipalities, cooperatives, and small telcos that offered gigabit broadband before 2012, but Google Fiber made big national news when it said it was going to overbuild the Kansas City metropolitan area and offer symmetrical gigabit fiber as its only broadband product. Google Fiber believed in simplicity, and originally only offered broadband before eventually layering on Google Voice and YouTube video. The company has always guarded any discussion of customer counts, but we are learning through news of the merger that GFiber has over 2.6 million passings, which means it probably has more than 1 million fiber customers.

Astound Broadband is a conglomerate of three broadband businesses.

  • The original Astound started as a cable company in the San Francisco Bay area. The company purchased additional cable properties in Washington and Oregon and rebranded as Wave Broadband.
  • RCN was founded in 1993 and had the unique business plan of overbuilding existing cable companies using cable company technology. The company was concentrated in the northeast, with the most customers in Boston, New York City, Philadelphia, Allentown, and Washington DC.
  • Grande Communications was founded in San Marcos, Texas, in 1999. The company started by providing cable TV to campuses at Texas State University, the University of the Incarnate Word, Baylor University, and the University of Texas at Austin. The company grew to have over 1.1 million passings.

The merger announcement says that Astound covers around 4.6 million passings and has around 1 million broadband customers. The combined company would have 2 million customers and 7.1 million passings. This would make the company the seventh-largest ISP after Comcast, Charter, AT&T, Verizon, Altice, and T-Mobile. The seventh ranking recognizes the merger of Frontier with Verizon, the sale of Lumen fiber customers to AT&T, and the upcoming merger of Cox and Charter.

The merger has GFiber spinning off from Google’s Alphabet. The majority owner of the combined company will be Stonepeak, with the GFiber parent retaining a significant minority stake. The merger is supposed to close in the fourth quarter of this year. The GFiber executive team will lead the combined company.

This is an interesting merger that brings together companies using different technologies. I would have to think that the goal will be to upgrade to coaxial networks to fiber, or possibly to DOCSIS 4.0 to bring symmetrical gigabit speeds.

After this merger is completed, the only remaining large merger target is Altice, with over 4 million customers. There are no other ISPs left in the market that have more than a million broadband customers.

Copyright Infringement – a New Worry for ISPs

In decisions that should trouble every ISP, multiple Courts have ruled that ISPs are liable if they don’t disconnect customers accused of copyright infringement.

The U.S. Court of Appeals for the 5th Circuit ruled against Grande Communications, a subsidiary of Astound Broadband. The courts sided with three record companies, Universal, Warner, and Sony that Grande had failed to disconnect customers from broadband who engaged in copyright infringement by downloading illegal copies of music. Grande might have been singled out because it had a firm policy since 2010 that it wouldn’t disconnect customers over the infringement issue. The appeals court upheld a lower court ruling that Grande is liable for copyright infringement. The appeals court said it would consider lowering the original award of $46.8 million.

This is the second major lawsuit on the issue. In 2018 the major record labels sued Cox Communications over its copyright policies. The labels accused Cox of refusing to disconnect customers who repeatedly broke copyright rules by downloading music without paying for it. In 2019, a court in Virginia found Cox liable for both contributory and vicarious copyright infringement and awarded the music labels an astounding $1 billion in damages. Cox appealed, and the Fourth Circuit U.S. Court of Appeals upheld the charge of contributory infringement but reversed the charges for vicarious infringement and vacated the $1 billion in damages.

Cox asked the Supreme Court in August to decide whether the 4th Circuit erred in deciding that an ISP can be held liable for copyright infringement without proof that the company fostered or promoted copyright infringement. The record labels are asking the Supreme Court to reinstate the original $1 billion award.

This has to concern all ISP, because if these two cases are resolved in favor of the record industry, then all ISPs are vulnerable. Altice USA, Frontier Communications, Lumen, and Verizon filed a brief with the Supreme Court saying that the 4th Circuit ruling imperils the future of the Internet by making ISPs liable for huge damages if they don’t carry out mass Internet evictions.

Folks might have a visceral reaction thinking that copyright offenders should be punished. There is some needed context to fully understand the issue. Complaints of copyright infringement are rarely made directly by record companies or others who hold copyrights, There is an entire industry of companies that makes a living by issuing takedown requests for infringements of copyrighted materials. These companies get paid by issuing huge numbers of takedown requests. Social media companies are inundated with these takedown requests every day to remove posts that link to copyrighted music, movies, and other materials.

The takedown process is completely one-sided and there is no appeal for a broadband customer who is unjustly accused of bad behavior. The music companies expect ISPs to cut off subscribers after only a few claimed violations of copyright.

This is also troubling to broadband customers. Any home with teenagers will have to worry if teens will download copies of games, movies, or music. People could hit a link on social media that downloads copyrighted material without even realizing they did something wrong. The bad behavior doesn’t even have to be done by a family member. Losing an essential broadband connection because teens, roommates, or visitors violated copyright laws seems like an extreme penalty. If ISPs start cutting customers dead for violating copyrights, I have to imagine that people are going to be a lot more cautious against giving visitors or even family members the WiFi password.

Copyright holders want ISPs to act as judge, jury, and executioner and unilaterally punish customers without a trial or hearing by taking away their Internet access. Like many other problems in the industry, the only real fix for this is to have Congress update or replace the Digital Millennium Copyright Act (DMCA), which was adopted in the 1990s when we were all still using dial-up access.

The recording industry has a legitimate gripe, but their complaint is against the folks who steal copyrighted materials. They should be required to pursue a law enforcement solution, like is done for folks who violate other laws. The solution is not to turn the intermediate ISP into a policemen on the issue. This goes down an ugly and slippery slope. What’s next, forcing ISPs to turn off broadband for customers who break myriad other laws?