February 2010

NBC Affiliates Seek Clear, Enforceable Conditions On Comcast/NBCU

NBC affiliates say they are cautiously optimistic that the merger of Comcast and NBCU can "strengthen and extend" their ability to serve up free services to the public, but not without clear and enforceable conditions that define and enforce Comcast's stated commitment to them.

One of those, they said, needs to be strong, structural separation between affiliate relations and retransmission consent negotiations, so that the combined company would not be able to force the affiliates to "accept unfavorable affiliation agreement provisions to obtain market-based retransmission consent payments."

Michael Fiorile, chair of the NBC TV Affiliates Board, will testify at a House hearing Thursday and he's likely to highlight the following concerns:

1) The migration of NBC network content to cable properties or the under-nourishing of NBC network programming in favor of investments in cable channel fare: "The disappearance of popular news, sports, and entertainment programming from the NBC network would be unacceptably harmful."

2) Comcast could bypass the affiliates via a cable or Internet VOD model.

3) The combined company could use its leverage to "undermine affiliates' ability to negotiate fair retransmission consent agreements." On that score, Fiorile had a condition to propose: "We tentatively believe that a strong set of structural separation requirements for the subsidiaries of Comcast that will negotiate retransmission consent agreements and those that will administer the network's relations with affiliates can permit the combination to go forward."

ACA: New Stimulus Rules Are Not Fair and Balanced

Small and mid-sized cable operators are not happy with the new guidelines in the second round of bidding for broadband stimulus bucks, with the American Cable Association arguing that the guidelines essentially cut them out of meaningful participation in the stimulus project.

In a letter to the heads of the National Telecommunications & Information Administration and Rural Utilities Service, which are handing out the billions in broadband bucks, ACA President Matt Polka said that the new guidelines "extinguish any hope for small cable operators to use broadband stimulus funds to build out last-mile facilities." Of the 80 ACA members (less than 10% of membership) who applied in the first round of funding, only one received it, according to Polka, suggesting the odds for success could be worse, not better, this time around.

Campaign Legal Center Wants FCC to Insure Access to Airwaves by Candidates

In advance of Tuesday's (Feb. 2) hearing on the Supreme Court's decision in the Citizen's United vs. Federal Election Commission case, the Campaign Legal Center has recommended some legislative responses, including getting the Federal Communications Commission to insure access to airwaves by candidates as part of the public interest obligations of the digital age.

The hearing is in the Senate Rules Committee, which is chaired by Senator Charles Schumer (D-NY), who was fiercely critical of the decision two weeks ago in which the Supreme Court ruled that corporations and unions can use direct treasury funds to pay for campaign ads on cable, broadcast or satellite. In a letter to Schumer, the group, which supported the FEC with two amicus briefs, said it was critical that Congress move swiftly to "mitigate the damage." Among its suggestions are to strengthen the definition of coordinated vs. independent expenditures and give candidates more access to the "publicly-owned airwaves" by making the lowest unit rate provision "meaningful."

Kerry Calls For Constitutional Amendment To Reverse Supremes

Senate Communications Subcommittee Chairman John Kerry (D-MA) says there needs to be a constitutional amendment indicating that corporations don't have the same free speech rights as individuals.

That came in a Senate Rules Committee hearing Tuesday (Feb. 2) with the rather loaded title: "Corporate America vs. The Voter: Examining the Supreme Court's Decision to Allow Unlimited Corporate Spending In Elections." At the hearing, committee Chairman Charles Schumer (D-NY) launched an effort to stem a potential new flood of corporate campaign ad money to broadcast and cable outlets.

Sen Kerry said it would take some time to craft that amendment, and in the meantime the committee should pass various bills that have been introduced to tighten up disclosure and disclaimer rules and give shareholders more say in corporate campaign speech. Kerry's call for a constitutional amendment was seconded by Senator Tom Udall (D-NM), who also said he planned to introduce legislation in the Senate calling for a complete overhaul of the campaign finance system. Sen Kerry also put in a request for free airtime for candidates, and a number of Senators brought up the issue of lowest unit rates.

VoIP Gaining Ground, So Where Will Legacy Voice Make Its Last Stand?

[Commentary] Voice over Internet Protocol penetration among U.S. businesses will increase rapidly over the next few years, reaching 79 percent by 2013, compared to 42 percent at the end of 2009, according to research out today from analyst firm In-Stat. At this point I wonder what market demographic represents the last stand for legacy circuit switched voice. Will it be consumer landlines or will it be mobile voice over 3G networks?

Current telephone networks are gradually being phased out as the world moves to IP communications. Right now in the U.S. only 78 percent of consumer homes have a landline and only 22 percent rely on them exclusively. In the next three years I imagine both numbers will be much lower, which is why the FCC is looking at how to support broadband access (which is necessary for IP telephony) for all. In the mobile world, legacy voice will stick around for a while longer. Even though the next-generation Long Term Evolution networks will support voice, it's still unclear how carriers will manage voice calls over the all-IP LTE network. Plus, the existing 3G and even 2G networks will still be around delivering voice calls, so legacy voice is still going to rule on mobile phones.

Mobile Industry Dances Toward Consolidation

Rumors of a tie-up between Leap Wireless and rival MetroPCS are flying again following yesterday's report in the Wall Street Journal that Leap is seeking a buyer. But will Leap strike a deal with MetroPCS before T-Mobile USA finds a partner in what looks to be a coming wave of carrier consolidation?

The U.S. wireless market has striated into first-, second- and third-tier carriers, and AT&T and Verizon Wireless continue to increase their leads over the rest of the field. The saturated market leaves little hope for Sprint and T-Mobile to turn things around in terms of subscriber adds, plus T-Mobile is in a sticky position when it comes to having enough spectrum and the funds to acquire more for next-generation wireless technologies. In the meantime, there's pressure from prepaid carriers attacking from below and high fees paid to other telecommunications players for Sprint's and T-Mobile's mobile backhaul that's cutting into profits and revenue.

Over-the-top video can be telco TV friend, not killer

Most pay TV provider won't admit that video cord-cutting has affected their business. But, for most, it has or it soon will.

Those consumers mulling cutting the cord typically have an over-the-top video service in mind as the alternative, but that's no reason for pay TV providers to fear content riding over-the-top of their networks. According to The Diffusion Group founding partner Michael Reason, pay TV providers should embrace OTC and find a way to incorporate it into their offerings. Speaking at TDG's pre-conference to the Over-the-Top Video Conference yesterday, Reason explained that pay TV providers might label cord cutting as churn, but they don't like to acknowledge it in any magnitude. And they are justified for the most part, because cord cutting is minor today, Reason said. It is, however, significant that the number of broadband households without any pay TV has doubled since early 2009. According to TDG's latest research, 13% of households do not have any pay TV service, up from only 6.9% in early 2009. TDG's also found that 8.4% of pay TV subscribers are likely to cancel their service altogether at some time in the next six months. From its surveys, TDG's identified four types of consumers replacers, supplementers, OTC optimals and non-OTC consumers. The replacers are those likely to do away with their pay TV service entirely in favor of OTC broadband. Supplementers might keep their pay TV service, but they will augment it with an OTC offering. OTC optimals could do both they are interested in replacing and supplementing their pay TV service with an OTC video service at different price points. Non-OTC consumers aren't interested in either route.

The $10 billion fight over phone lines rages on

The NoChokePoints Coalition is redelivering a message to the Federal Communications Commission: don't wait another year to change the rules governing access to telephone lines.

The coalition -- which includes Sprint Nextel, T-Mobile, universities, major banks and corporations -- been asking the FCC for years to lower "special access" charges, or the fees smaller phone companies and cell phone carriers to pay to lease access on the major backbone networks operated by AT&T, Verizon and Qwest. The coalition's members say they pay $10 billion a year--or $27 million a day--in overcharges to lease access on the major phone companies' networks. And they say they have to pass those costs onto their customers.

FCC Releases New Telephone Subscribership Report

The Federal Communications Commission released its latest report on telephone subscribership levels in the United States. The report presents subscribership statistics based on the Current Population Survey (CPS) conducted by the Census Bureau in November 2009. The report also shows subscribership levels by state, income level, race, age, household size, and employment status.

In November 2009:

The telephone subscribership penetration rate in the U.S. was 95.7%, an increase of 0.7% over the rate from November 2008. This is the highest reported rate since the CPS began collecting this data in November 1983.
The telephone penetration rate for households in income categories below $15,000 was at or below 94.0%, while the rate for households in income categories over $50,000 was at least 98.2%.
Among the states, the penetration rates ranged from a low of 90.9% to a high of 99.0%.
Penetration rates ranged from 93.1% for households headed by a person under 25 to at least 96.6% for households headed by a person over 55.
Households with one person had a penetration rate of 93.6%, compared to a rate of 96.8% for households with four or five persons.
The penetration rate for unemployed adults was 94.7%, while the rate for employed adults was 96.8%.

Newspaper Web Site Traffic Slips

Newspaper Web site traffic is falling month-over-month, according to new figures provided by the Newspaper Association of America.

The association published the latest Q4 data for newspaper Web sites provided by Nielsen Online. The number of unique users declined when comparing October (73.2 million uniques) to November (72.3 million uniques) to December (70.3 million uniques). The average time spent per person during the course of the month was mixed during the quarter. In October, the average time spent was 34 minutes and 14 seconds. In November, it was 32 minutes and 44 seconds. In December, it was 34 minutes and 52 seconds. Total sessions and page views decreased month-over-month. The NAA pointed out that on average for Q4, 72 million people visited newspaper Web sites -- more than one-third of all Internet users. That figure, however, shows that newspapers Web sites have stalled reaching new Internet users. In Q4 2008, 41% of all active Web users visited newspaper Web sites -- though there was a heavy political news cycle in Q4 2008.

Benton

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