The Middletown Press (Middletown, CT)
With rising broadband rates come questions
It was an eye-popping hike that Altice USA dropped into its January Optimum bill for one tier of internet broadband — which failed to pop off the page at first glance, given an accompanying customer credit that wiped out the 50 percent increase and then some.
But as new rates took effect entering 2020, Connecticut customers have been teeing off online about Altice, but with little recourse to force the company to limit how it sets its broadband rates.
With households and businesses having access to multiple options statewide for cable TV and telephone service, Connecticut has left those rates unregulated on the theory that providers will compete for customers through the prices they offer.
But for many neighborhoods in Connecticut, Frontier Communications and the local cable company are the only two broadband service options
with the speeds and capacity to allow people to plug in additional devices such as smart TVs, laptops, tablets, cameras and other internetenabled devices.
That raises a larger question: Left to their own devices, can cable carriers be counted on to charge a fair rate for the costs they incur, plus reasonable profits?
In response to a query, Altice furnished its December notification to the Connecticut Public Utilities Regulatory Authority of new rates for Optimum TV packages that took effect this month, which included increases for varying tiers of station bundles, as well as extra fees for broadcast TV stations available for free over the airwaves and regional sports networks.
That notification made no mention of broadband rates, however, with one Altice tier seeing a 50 percent increase this month, though more than offset by a customer credit listed as a “special discount.”
‘A customer would not normally notice’
An Altice spokesperson said the company capped individual bill increases at $14.50 for any single bill, while not providing an explanation for why the company increased the base rate for the broadband tier in question
with an offsetting credit.
“We are communicating exact rate changes to our customers directly on their bills,” stated Altice spokesperson Lisa Anselmo, in an email. “We continue to invest in our network and services to bring more value to our customers, including launching faster broadband speeds and making enhancements to our Altice One platform, and we offer a variety of broadband and video packages to meet all needs and budgets.”
State Sen. Bob Duff, DNorwalk, and several fellow senators called Altice to task last spring over what they described as hidden fees that, in the aggregate, amounted to significant increases in monthly bills, depending on the services
to which customers subscribe. The Connecticut Public Utilities Regulatory Authority does not exercise power to approve or amend rates as PURA does with electricity and water rates.
“The manner in which they raise their rates ... are not in line with traditional types of rate increases,” Duff said this week. “These are fees and charges and other ways that a consumer would not normally notice.”
While cable TV customers nationally have already demonstrated a willingness to “cut the cord” in favor of streaming services like Netflix, Hulu and YouTube TV, in Connecticut cutting the broadband cord leaves most residents with only debt-heavy, Norwalk-based Frontier as an alternative. Bloomberg cited unnamed sources last month who said Frontier has discussed the possibility of a bankruptcy
filing with lenders with the goal of staying in business.
Even under the scenario of a financially healthy Frontier, the U.S. government has repeatedly intervened in markets where pricing is controlled by two entities, including this month when the Federal Trade Commission moved to block Shelton-based Edgewell Personal Care’s proposed takeover of Harry’s. The FTC stated the razor startup had proven to be the only competitor wielding sufficient market appeal to force price cuts for Schick razors sold by Edgewell, and Gillette blades from Procter & Gamble.
Five years to 5G?
Altice USA is one of four national cable broadband carriers with franchise rights to municipal territories in Connecticut, along with Stamford-based Charter
Communications, Comcast and Cox Communications. All reported increased customer counts for broadband last year, even as their cable TV subscriber bases dwindled.
“Broadband continues to be the main driver of residential revenue growth with customers consistently using more data and paying for higher speeds,” said Altice CEO Dexter Goei, speaking in mid-February to investment analysts. “We have significantly more runway on broadband revenue upside, with all the new streaming video offerings being one of the main drivers of greater usage . ... As usage increases, this creates an untapped and compelling opportunity for us to ‘up tier’ our broadband customers.”
Comcast, Charter and Altice have created mobile telephone services in the
past few years which have been successful in signing up subscribers, possibly in time representing significant new sources of revenue. But it is another wireless technology that could ward off any move toward broadband internet inflation, as AT&T, T-Mobile, Verizon Communications — and in all likelihood other market entrants — roll out 5G systems that offer the promise of broadband-like speeds for home devices.
But that will take time. Cable carriers in the meantime are empowered to charge what the market will bear for the pipe to the home, with Frontier the only major alternative in their Connecticut territories.
Duff is now leading an effort in the General Assembly for the state to adopt “net neutrality” rules that would prevent internet carriers from awarding preferred rates to the biggest producers of content, on the heels of the Federal Communications Commission dropping the ban last year.
Duff said he has no plans to push for a study of how carriers charge households for broadband this spring, while expressing frustration at the complaints brought to him by some subscribers.
“With ... our efforts to address net neutrality, broadband (rates) may be something that we take a look at eventually,” Duff said. “5G will be a game changer and I believe will be the equalizer . ... In cities like Norwalk, probably in the next five years — statewide, it’s probably going to be longer.”