December 2010

The cable industry -- notably Cablevision and the National Cable & Telecommunications Association -- continues to fight the Federal Communications Commission's order closing the terrestrial exemption for competitor's access to an operator's co-owned programming.

The exemption had excluded terrestrially delivered cable networks, like many regional sports nets (RSNs), from the FCC's rule mandating access to competing distributors of networks in which a distributor has a financial interest. The FCC ruled back in January that cable operators who do not share their owned terrestrially-delivered regional sports networks with their competitors will be presumed to be in violation of FCC rules against unfair acts or practices.

After the Dec 21 vote on network neutrality, expect a flurry of commentary and insights as lobbyists, businesses and the media weigh in on the details. It’s pretty depressing that simple efforts to ensure that lawful content has a chance to make it unimpeded to the user have become a circus of policy efforts designed to entrench the monopoly enjoyed by last-mile providers. The rules so far seem to enable paid prioritization and usage-based billing while also determining that wireless networks shouldn't have to abide by open Internet principles. If the rules indeed reflect all of that, it may be better not to have them.

EarthLink will acquire One Communications Corp. (One Comm) for $370 million, which includes payment of approximately $285 million of One Comm net debt. One Comm stockholders have the right to elect to receive the net merger consideration in the form of cash or EarthLink common stock. The transaction purchase price represents a multiple of approximately 3.7x Adjusted EBITDA (a non-GAAP measure, see definition in "Non-GAAP Information for One Communications Corp.") for the twelve months ended September 30, 2010, including $20 million in expected cost synergies and excluding one-time transaction costs. One Comm's shareholders will retain liability for all costs relating to One Comm's pending litigation with Verizon. The merger has been approved by the Boards of Directors of both companies and the stockholders of One Comm.

The acquisition will provide EarthLink with:

• a strong IP network footprint in the Northeast, Midwest, and Mid Atlantic regions;
• overlapping connection cities with EarthLink Business (formerly Deltacom) long-haul routes in major markets including Washington, D.C., Baltimore, Philadelphia and New York City;
• geographical expansion and scale for managed IP services product strategy supported by a talented One Comm employee base; and
• a solid foundation for potential future acquisitions of revenue bases in the region.

AT&T, the second-largest U.S. mobile-phone carrier, agreed to buy wireless spectrum from Qualcomm for $1.93 billion as customers increasingly use bandwidth-hogging services such as video downloads.

The spectrum, in the lower 700 megahertz frequency band, covers 300 million people in the US. AT&T gets about 12 MHz spectrum of Lower 700 MHz D and E block spectrum in – New York, San Francisco, Boston, Los Angeles and Philadelphia and 6 MHz of Lower 700 MHz D block spectrum in rest of the country. Chipmaker Qualcomm had acquired the spectrum for its mobile-TV service, which it plans to shut down in March. AT&T is upgrading its third-generation network to allow for higher speeds while it works on building out its fourth- generation network to debut next year. Larger rival Verizon Wireless turned on 4G service earlier this month.