December 2009

[Commentary] It is misguided to assume that public broadband projects hurt private enterprise. The reality is that no matter how involved any level of government gets in spurring the deployment of new broadband infrastructure, by being proactive advocates for their communities' futures government can create many opportunities for private enterprise to turn a profit. So let's not limit our thinking that public or municipal broadband is inherently flawed because it involves government playing a hands-on role. Because no matter how involved government may be, by investing in our future we're creating opportunities in the present for private enterprise.

A class-action lawsuit by consumers against AT&T for allegedly delivering slower-than-advertised broadband service can go forward, a judge in St. Louis has ruled. The consumers alleged that the telecom promised "lightning fast" speeds of at least 384 kbps and up to 1.5 Mpbs, but delivered far slower connections due to "purposeful limitation or 'capping' of the lines," "the inadequacy of the lines," and "the poor condition of the lines." AT&T allegedly "intentionally capped access to newsgroups and email for all of their customers," the lawsuit alleges. The consumers also alleged that attempts to remedy the situation by changing providers were met with hefty termination fees. The judge in the case, Judge Gary M. Gaertner, recently ruled that the case could proceed as a class-action. "There is evidence in the record supporting the claims of (the consumers)," he wrote. "Defendants concede there were DSL customers who were capped."

The omnibus appropriations bill that passed in the Senate over the weekend contains some money to help noncommercial broadcasters through a rough patch, and restores funding to the Ready To Learn/Teach program that the President's budget would have axed. But in addition, Congress has appropriated $25 million in "fiscal stabilization" funding to, in part, help preserve jobs and programs threatened by the current economy. According to a PBS spokesperson, that money will be paid out to TV and radio stations within 45 days of the bill's passage, according to the language of the law. According to PBS, Congress has also set aside $27.3 million for Ready To Learn, which targets preschoolers in low-income areas; $10.7 million for Ready To Teach; and $25 million in "fiscal stabilization" funding to, in part, help preserve jobs and programs. The bill awaits the President's signature.

Citadel Broadcasting Corp., the third-largest radio broadcaster in the U.S., is preparing to file for bankruptcy by the end of the year, according to people familiar with the matter. Citadel's long-expected move is yet another reminder of the travails facing media companies, which are up against stiff competition and shifts in consumer habits. Advertising revenues have plunged for newspapers, radio broadcasters and television stations. Under the deal presented to lenders this week, Citadel would file a "prearranged" Chapter 11 bankruptcy plan supported by many creditors. Lenders owed $2 billion would swap a substantial amount of that debt for around 99.5% of the equity in a reorganized company, these people said. The restructuring would give the group of some 90 lenders control of Citadel. Current shareholders, as in most bankruptcies, would be wiped out. Citadel landed in trouble after loading up on debt to fund its acquisition of Walt Disney Co.'s ABC Radio stations in 2006. At the time, radio was a $20 billion-a-year industry. The ABC stations, chiefly in large cities compared to the medium-sized markets in which Citadel specialized, offered the company a chance to vault onto a much bigger playing field. But 2006 turned out to be the peak, leaving Citadel saddled with debt in a business that began shrinking rapidly.