September 2013

After facing numerous complaints from residents of Fire Island, Verizon has backed away from its plan to use a wireless device to replace traditional phone service in areas where it would rather not repair its old copper wires.

After Hurricane Sandy, Verizon asked state regulators in New York for permission to substitute Voice Link, a home phone service that carries calls on a cellular network, for what it refers to as “plain old telephone service.” The first place in the state it tried broad use of Voice Link was on the west end of Fire Island, a resort community on the Atlantic Ocean that incurred heavy damage in the late October storm. Verizon had hoped to use Fire Island as an example of how Voice Link could be installed in other areas of the state where its network of copper wires was damaged by storms or deemed too costly to repair or maintain. The regulators said they would monitor the results and decide later this year. But Verizon did not wait for the final results. It conceded defeat this week and said it would start laying fiber-optic cable that would restore home phone service and Internet access. The company also withdrew its request to the state Public Service Commission for permission to use Voice Link as a permanent substitute for traditional home phone service elsewhere in the state.

Investor opposition to the terms of Gannett’s $1.5 billion takeover offer for TV station-owner Belo is intensifying, two weeks before Belo shareholders are due to vote—putting a spotlight on the question of whether Belo should have put itself up for a broader auction.

Pine River Capital Management, a Minnesota-based hedge fund that disclosed a 6.6% stake in Belo, said it planned to vote against the deal, as currently structured, arguing that the $13.75-a-share Gannett agreed in June to pay is less than Belo is worth. Taking into account supervoting shares owned by others, Pine River's voting stake is equivalent to 3.6%. Pine River is one of a number of hedge funds that bought up Belo's stock largely after the deal and plan to vote against the transaction or have significant concerns about its terms, according to people familiar with the matter. The amount of opposition isn't clear. Belo shareholders representing 42.5% of the company's voting power have committed to support the deal. Two-thirds of all shares outstanding have to vote in favor—votes not cast count against, according to Belo's filing. Additionally, Fairpointe Capital, which owns 6.1% of Belo's shares and has 3.3% of its voting power, owns both Belo and Gannett shares and is happy with the deal, according to Thyra Zerhusen, manager at Fairpointe.

Apparently, Verizon is having conversations with major programmers about how to bring its FiOS programming service to a national audience.

Such a move would ape similar attempts by Comcast and Dish to gain control over TV channel rights that go beyond their existing footprint in the event the business goes through a radical shift. The radical shift would mainly be a change in how customers access their pay TV — away from a locally connected fiber-optic network toward a broadband service. “They’ve had exploratory talks about how to become a virtual [multiple-system operator],” one person close to the conversations said. “It’s a question of how to get there.” CEO Lowell McAdam and his executive team also needs to figure out which branch of government controls oversight of broadband, sources said. It is also noodling whether it needs programmer deals first before it goes to market, and whether it should first market its TV Everywhere product and then open it up to consumers beyond its base of five million subscribers. Verizon already has a streaming service that it operates in concert with Redbox.

Washington (DC) was the land of dueling press conferences on Sept 12.

The American Television Alliance held a conference call to say that there was a critical mass of congressional support for fixing the broken retransmission consent regime and that the question now was not whether but when. The National Association of Broadcasters countered with their own press conference. One suggestion on the call was that "when" would likely be when Congress weighs in on the re-authorization of the Satellite Television Extension and Localism Act at the end of 2014. Michael Calabrese of the New America Foundation, which was among the petitioners to the Federal Communications Commission for retransmission reform, said broadcasters should not be able to black out viewers and "hold viewers hostage for higher retransmission fees." He said it was not a contract dispute between equally evil--he amended that to "equally greedy" industries. He said that difference was broadcasters public interest obligation "that is paid for by the public already in free spectrum." John Breyault, VP of public policy at National Consumer League, who was also on the ATVA call, said the focus should be on consumers, not broadcasters or cable operators.