Comcast and the Court of Public Opinion

Here’s a multiple choice question that might provide insight on the current capitalism versus socialism debate:

 Comcast excels at:

 

A)         Maximizing value for shareholders;

 

B)         Charging what the market will bear;

 

C)         Exploiting the perception of competition and regulatory forbearance; or

 

D)         Treating subscribers with contempt.

 

Yet another distasteful interaction with Comcast’s cable television/broadband subsidiary confirms an all of the above answer for me.  Here’s how.

 A)         Xfinity currently charges $70.93 for delivering 10 over-the-air broadcast television signals and a few cable television channels few consumers eagerly seek.  The company includes as “taxes and fees” an estimate of the per subscriber copyright payment to broadcasters for carriage of their programming.         

Basic Cable subscribers have to pay Xfinity $851.16 annually for the privilege of receiving broadcast signals that are free for the taking if—and this can be a big if in rural locales like mine—one can erect a receiving antenna.  In urban and suburban locations, a simple “rabbit ear” antenna would work.  In State College, I needed to install an outdoor antenna 15 feet above ground to receive all broadcast network channels.  

Okay.  Hat’s off to Comcast for extracting a remarkable profit margin by retransmitting broadcast signals to consumers unable or unwilling to engage in self-help. Of course, the Digital Natives of the nation have little interest in broadcast programming except for live sporting events. Comcast cannot expect the broadcast signal retransmission gravy train to continue as more subscribers churn out of a cable subscription, leaving Digital Immigrants and rural resident behind.  

             B)      Comcast has anticipated cable television churn, but that does not mean the company will lose all lucrative revenue streams.   The company provides broadband access to the Internet and content substitutes for linear, live television.  

Given the dearth of broadband options in my locale, discussed below, Xfinity changes a minimum monthly rate of $45.90 for 300 megabits per second service, rising to more than $82 after a 5 year lock-in. Faster bitrates exceed $100 monthly.  

Comcast charges well above rates available from the 3 facilities-based wireless carriers.  It is possible that a wireless subscriber could install a home-based “hot spot” that would use Wi-Fi or Bluetooth to connect a computer to the broadband service provided by AT&T, T-Mobile, or Verizon.  Of course, not everyone has the technical competency to try this option, and the wireless carriers now impose a surcharge on those that do.  

Simply put, broadband rates in the U.S. have some of the highest Average Revenue Per User margins in the world.  On the other hand, I acknowledge that the carriers offer a quite high, but not unlimited data allowance, so bandwidth intensive users get a bargain.  

Telecommunications is a lucrative and profitable undertaking: no ifs, ands, or buts.             

             C) Notwithstanding all the verbiage about how competitive the telecommunications market has become, there are plenty of countervailing, inconvenient facts. Pertinent to our conversation here is the reality that Xfinity still constitutes the only real broadband provider in places like rural, central Pennsylvania where I live.  Wireless options, via satellite or terrestrial towers either do not exist, or offer spotty and high-cost options.  No carriers offer a fiber optic service option.  

In the vernacular of economics, Comcast can exploit inelastic demand.  That’s how it gets away with charging $71 a month for retransmitting content otherwise free to anyone able to install Over the Air Reception antennas and $46-82 a month for rather slow 300 Mbps service.  

             D)      This option gets personal for me and the motivation for writing this lengthy piece. Xfinity has willfully violated the spirit and intent of Truth in Billing, Broadband Labeling, and consumer protection laws, regulations, and policies, with three business practices that misrepresent the actual broadband bit rates the company delivers to me.

One page of my online account summary shows service at 20 Mbps, while another page shows me receiving Internet Essentials 100 Mbps service, for which I do not qualify.  My actual delivered bit rate does not exceed 3 Mbps. Additionally, the company had reneged on its offer of free Peacock Premium service as a reward for 24 years of continuous subscribership.

 What ticked me off big time is Xfinity blames me for its inability to make good on its Peacock offer.  A representative of Xfinity’s “Executive Customer Relations” notified me that the company has “software problems” that prevent it from offering the reward to me because I have an “unsupported” broadband service, not too slow, just not included in the offer.

 The company simply does not want to make the necessary software modification. 

 Adding to the insult, the company has engaged in a classic “bait and switch” tactic by conditioning successful access to Peacock of if I agree to incur a 70% increase in my broadband subscription. 

Nowhere in the company’s terms and conditions did Xfinity state that the reward was conditioned on a specific level of service, or rate. In fact, the upselling referred to an existing, term limited broadband service at no discount. The representative also misstated that he was offering the cheapest and slowest bit rate currently available: 300 megabits per second, with a 5 year lock-in, at $50 monthly.  The Xfinity web site offers a 30 Mbps rate at $30 a month.

The representative also informed me incorrectly that my Docsis 3.0 cable modem/router would soon be disqualified from accessing any Xfinity broadband service.  Additionally, he notified me that my existing Commission certified Netgear device cannot process the bit rates of the Xfinity replacement service he offered.

The discussion with another Xfinity representative got nasty, condescending, and contemptuous.  The rep basically framed the inability of the company to make good on its off as the result of my ongoing subscription of a slow and inexpensive broadband service rate no longer offered.

It’s my fault that Xfinity cannot honor its Peacock offer. To take the bait I have to make a minimum $20 a month switch for a service tier that will surely increase after the 5 year lock-in.

The rep discounted the two bitrate misrepresentations as my fault as well.  Because I have an obsolete service, the company does not have to properly identify the service I receive!  In Comcast’s convenient reading of FCC regulations, the company has no obligation to meet Truth in Billing requirements and specification of actual commercial terms and conditions, because the company no longer offers the service . . . except to a few grandfathered subscribers.

How convenient and surely not in the spirit of the public interest motivations behind the FCC’s requirements that even largely deregulated telecommunications service providers have to deal honestly and transparently with all their customers in every instance where it provides service.  The applicable FCC orders do not exempt any company from transparency and full disclosure whenever a service is grandfathered but not available to new subscribers.

I feel demoralized and dissed . . . exactly the way the rep wanted me to feel. The Comcast Customer is always wrong.

 

  

Can Orbiting Data Centers Solve Terrestrial Deal Breakers?

Large data centers provide information processing, storage, and interconnection needed to satisfy ever increasing demand for cloud computing and artificial intelligence. These facilities use massive amounts of electric power, water, and real estate measured in gigawatts, millions of gallons, and millions of square feet respectively.

 Not long ago, data center ventures sought and received generous financial inducements to locate in mostly rural locales in great need of investment. Data centers seemed an attractive alternative to prisons, hazardous material dump sites, and temporary housing for illegal aliens.

The Court of Public Opinion on data centers has quickly pivoted from disinterest, or support to “not in my backyard,” and even “not on my planet you bastards.”   Concerns about data centers include environmental harm, real or perceived upward pressure on retail electricity, water, and residential housing prices, and likely market domination of AI markets by a few “Big Tech” incumbents. Other irritants include noise pollution, and uncertainty whether data centers support the local economy after the initial construction phase.   

Shifting data centers from earth to space has become an alternative touted as solving concerns without generating new ones.  In sun synchronous, low Earth orbit, orbiting data centers (“ODCs”) may have comparatively less environmental impact and lower operating costs in two increasingly expensive categories: the gigawatts of electricity continuously required to power components, and coolants, such as water and glycol, needed to syphon away heat generated by constant operation.

Space Commerce Exuberance

The global consulting firm McKinsey & Company estimates the global space economy will reach $1.8 trillion by 2035, up from their $630 billion estimate for 2023.    Low Earth Orbiting (“LEO”) satellite constellations have the potential to provide reliable infrastructure for widely available and affordable broadband access, even in remote, rural, and impoverished locales throughout the world.   Other developing market opportunities include development of a vibrant space launch and tourism industry, mineral extraction from asteroids, colonization of the Moon and Mars, and an expanded array of services via commercial satellites. 

Some of the world’s most innovative and wealthy entrepreneurs believe space will serve as a profitable frontier well worth the risk and expense.  On the issue of ODCs, Elon Musk made a bold prediction: “I actually think that the cost of deploying AI in space will drop below the cost of terrestrial AI much sooner than most people expect.  . . . I think it may be only two or three years.” 

Replacing terrestrial data centers (“TDCs”) largely depends on declining launch costs and the ability to tap “free” solar energy coupled with efficient radiational cooling of the heat generated from continuous operations. To achieve a comparative advantage over TDCs, ODC satellite constellations must collectively deliver services at or below the per unit cost achieved terrestrially. 

Are ODCs a Viable Extraterrestrial Solution?

ODCs conceptually offer a more environmentally friendly competitive alternative to TDCs.   On the other hand, ODCs will complicate several key space management and governance issues. ODC proponents may have underestimated or refrained from acknowledging significant risks, increased by the massive increase in the number and close proximity of operational LEO satellites.  Potential launches of LEO satellites numbering the millions raise the odds for collisions, especially orbiting in the narrow sun synchronous orbital plane.

Space debris proliferation, without any significant mitigation efforts so far, contributes to congestion, higher collision risks, and the cascading effect of even more debris.  At some point, the potential for calamity reaches a tipping point where investors lose enthusiasm and confidence, particularly when one or more collisions actually occur.

Additionally, the combination of many more spacecraft launches, and deorbiting of decommissioned spacecraft, will generate toxicity and pollution having uncertain impact in space and Earth’s atmosphere.  Consequently, pro-market, regulatory forbearance and statutory interpretations may not continue, particularly if the space commerce environment becomes more risky and costly.

The Gravitational Pull from Unresolved Legal, Regulatory, and Space Governance Issues

The lack of immediate calamities, such as a multi-million dollar collision of two operational satellites, has supported bullish forecasts for space commerce. Yet even with an extraordinary expansion in the size of LEO smallsat constellations, the need to match terrestrial efficiency in information processing and other outputs, or come close, runs up against major technical challenges such as size and weight limitations in launching spacecraft, power production capability of smallsats, and processing power from miniaturized plant. 

It remains uncertain how many small LEO satellites will be needed to match the output available from a current Walmart-sized terrestrial footprint and new hyperscale centers forecasted to have an even larger footprint, with power requirements in the 1-5 Gigawatts range, equivalent to 1-5 nuclear power plants and far more solar, wind, gas, oil, and hydroelectric facilities.

Assuming space as a regulation free, or less regulated venue is highly unlikely. While nation states may appear to lack jurisdiction over spacecraft that quickly moves into and out of airspace, there are terrestrial anchors.  No one questions the legality of national regulatory authorities requiring applications to launch satellites, use radio spectrum, and operate both domestically and internationally.  Additional regulatory authorities can extend to the nation where spacecraft launches occur, gateway and backhaul earth stations operate, and intact space debris causes damage.

Vastly more LEO spacecraft and “paper satellites,” not yet launched, if ever, will test whether nations can effectively coordinate spectrum and orbital plane usage.  As ODC constellations will operate within the narrow parameters of sun synchronicity, they will have to convince regulators, legislators, and investors that potentially millions of satellites, in relatively close proximity, can avoid signal interference, collisions, and orbital coordination conflicts. 

ODC commercial prospects may trend down in the degree of exuberance to cautious optimism based on more realistic assessment of risks and rewards. A sizeable list of challenges includes increased government oversight, coordination and other timetable delays, spacecraft collision potential, whether AI will become profitable, and recognition that operating in space does not eliminate all environmental and other fears, uncertainties, and doubts.

 

Free Deep Dive Webinar on Space Commerce With Emphasis on Orbiting Data Centers

 

Dear Colleagues: Only a few days remain to register for our next webinar: Developments in Satellite Technology and the Future of Space Regulation. This not-to-be-missed event will take place on April 30. Start time is 07:30 MDT, 09:30 EDT, 15:30 CET, and 22:30 JST/KST. In this webinar, Rob Frieden, Academy and Emeritus Professor of Telecommunications and Law at Penn State University will explore the international and domestic policies shaping space law and examine how emerging frameworks are enabling today’s most exciting developments. He will discuss how regulations can support next-generation LEO/MEO applications and share insights into the rapid evolution of the commercial space sector. This online event is scheduled for one hour, with 30 minutes dedicated to Professor Frieden's presentation and 30 minutes to Q&A with participants.  Please submit questions in advance here. Complimentary registration, as well as additional details about this webinar, are available at the following link: https://www.eventbrite.ca/e/developments-in-satellite-technology-and-the-future-of-space-regulation-tickets-1986355322240?aff=oddtdtcreator Please sign-up today before it's too late.

 

New Publication: The Commercial Space Marketplace in Flux

You might have an interest in my deep dive on the promises and pitfalls in the space commerce gold rush. The paper will appear in the an edition of Telecommunications Policy celebrating its 50th year of publishing.

See: https://authors.elsevier.com/a/1mcHj16AgYU2H2

SpaceX Proposes a Million More Satellites on Paper

           SpaceX has filed a groundbreaking proposal to launch and operate one million small satellites as a data center in space. See https://fccprod.servicenowservices.com/icfs?id=ibfs_application_summary&number=SAT-LOA-20260108-00016. 

          My two immediate reactions: Wow! and Is There Less Than Meets the Eye?

          First the Wow!  In the spirit of moving fast and subverting conventional wisdom, SpaceX and Elon Musk have turned the AI and Data Center topography upside down.  Launch a massive constellation of small satellites in Low Earth Orbit and the gravitational pulls from water, electric power, and real estate issues, as well as many unresolved regulatory, international law, and U.S. treaty commitments evaporate. Poof!

          Is this a great country or what?

          With this filing, Space X proposes to increase the number of orbiting spacecraft from about 12,000 to 1,112,000 (European Space Agency non space data center forecast of 100,000 satellites by 2030 (see https://www.esa.int/ESA_Multimedia/Sets/Space_Debris_Is_it_a_Crisis).

LEO orbiting satellites will not deplete any scarce terrestrial resources. Surely Artificial Intelligence applications will get a boost as will U.S. competition to maintain global technological, military, and commercial space supremacy.  At least conceptually, we consumers of data center and broadband service should benefit from faster, better, smarter, cheaper, and sustainable cheaper goods and services.

          What’s not to like?

          A lot, which leads me to: Is There Less Than Meets the Eye?

          While admiring the quest to capture first mover market advantages and public imagination, I hereby throw cold water, aluminum particles and gas from vaporizing space junk, and other inconvenient, but not easily ignored issues, making the project far less than it appears from recent headlines and social network posts.

          First, consider the number of exceptions SpaceX wants the FCC to issue.  For a summary of the waiver requests, see https://www.fcc.gov/document/sb-accepts-filing-spacexs-application-orbital-data-centers. In simple English, SpaceX wants the FCC to treat the application exclusively and not in the customary filing window where other similar applications would get considered at the same time.    

            SpaceX also wants exemption from all milestone requirements and deployment obligations meaning that it has no deadlines and benchmarks to satisfy as proof of ongoing progress toward complete deployment of satellites and the start of service. Contrast that request with Elon Musk’s forecast that the data center in space will reach a critical mass in 30-36 months from now with more AI space launches than terrestrial expansion within 5 years. See https://finance.yahoo.com/news/elon-musk-getting-serious-orbital-185049655.html.

          Despite its considerable access to internal and external funding befitting a venture with an estimated value of $1 trillion, SpaceX seeks the waiver of all surety bond requirements and obligations. Lastly, SpaceX wants to work on its ambitious project without disclosing technical details such as channel plans for licensed beams, uplink and downlink beams, command beams, and orbital plane configurations.

          If the FCC were to grant such an extensive waiver wish list, SpaceX would have quite limited obligations to disclose how its space data center would operate and whether other competing satellite constellations could share that part of LEO having the right combination of solar power potential and heat discharge.

          There is a growing list of chronic and emerging issues that call into question whether space, as enormous as it is, can accommodate 1 million more LEO satellites in relatively close proximity to each other. Space tourism, asteroid mining for scare minerals, and the colonization of the Moon and Mars, also will require shared access.  A massive increase in spacecraft, coupled with an expectation that earth hostilities will have a space surveillance, military, and warfare component substantially raise the odds for collisions, as well as an increase in toxicity from spacecraft launches and vaporization when falling back to earth.

          The SpaceX grand proposal reminds me of the absolute necessity of having both full disclosure of technical, operational, radio spectrum, and orbital plane usage, coupled with a realistic timeline for starting service.  Without these requirements, and “skin the game” financial commitments, subject to forfeiture, SpaceX can, worse case, propose nothing more than a paper satellite constellation that could chill investment in competing, perhaps less ambitious but more timely and practical projects.

          It makes sense to consider the six pages of conditions imposed by the FCC for StarLink’s second generation broadband network. See https://docs.fcc.gov/public/attachments/DA-26-36A1.pdf.

          If the FCC wants to remain true to its “Open Skies,” procompetitive ethos, it has to offer flexibility in its processing of innovative service applications, but also guard against ambitious paper satellite proposals designed to preempt competition and corner a market years before the first of one million satellites reaches orbit.