June 9, 2015 (Cable Consolidation and the Bundle)

WIRELESS/SPECTRUM

THE MOBILE WEB IS TURNING BIG INDUSTRIES INTO EVEN BIGGER RIVALS
[SOURCE: Washington Post, AUTHOR: Brian Fung]
[Commentary] The way we've thought about cellphone service has always been a little, well, different. Unlike cable TV and telephone service, which you'll often find bundled together, most Americans have never known anything but a world in which wireless service was sold separately. Insulated from other industries by the unique physics of wireless engineering, the cellular industry has long operated in its own little fiefdom. Not anymore. Now we're standing on the cusp of a revolution in technology use, one that has the nation's biggest media and telecommunication firms looking to claim a slice of the wireless pie. Mobile data is powering more of our voice and video consumption than ever. And that's forcing many companies to focus on the wireless sector in a way they didn't before. In short, the mobile Internet is where some of the industry's biggest battles of the near future will play out. Things are only going to get more competitive as entirely new services start relying on the mobile Web and using up wireless spectrum, the radio waves that carry voice and data over the air to their destination. The upcoming auction is just one example of what has become a high-stakes chess game in technology. Yes, the story of the Internet in 2015 is about the convergence of all media onto the Web, and the unprecedented clashes that causes. But more specifically, it's a story about the fate of our wireless future.
benton.org/headlines/mobile-web-turning-big-industries-even-bigger-rivals | Washington Post
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OWNERSHIP

[SOURCE: telecompetitor, AUTHOR: Joan Engebretson]
Consolidation in the pay-TV market isn’t limited to tier 1 companies, as an announcement from tier 2 cable operators Atlantic Broadband and MetroCast Communications illustrates. Atlantic Broadband, owned by Canada’s Cogeco Cable, said it has reached an agreement to acquire “substantially all of the assets” of MetroCast’s Connecticut operations for $200 million. According to its website, MetroCast also operates in New Hampshire, Maine, Pennsylvania, Connecticut, Maryland, and Virginia. Atlantic Broadband plans to launch new residential services such as TiVo as well as business services such as Metro Ethernet in MetroCast’s serving area. Atlantic Broadband is the 13th largest cable operator in the US, serving 224,000 television service customers in four operating regions: Western Pennsylvania, Miami Beach, Maryland/Delaware and Aiken (SC). MetroCast Connecticut’s network passes close to 70,000 homes and businesses, according to Atlantic Broadband’s press release. The Connecticut operations serve approximately 23,000 TV, 22,000 Internet and 8,000 phone customers.
benton.org/headlines/atlantic-broadband-metrocast-200-million-deal-highlights-ongoing-cable-consolidation | telecompetitor | Multichannel News
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ARE AMERICANS READY TO PAY FOR 'QUAD PLAY'?
[SOURCE: Wall Street Journal, AUTHOR: Ryan Knutson, Thomas Gryta]
A combination of T-Mobile and Dish Network would merge two companies rooted in different industries. For consumers, it would merge some of the fastest-growing bills in their budgets. American households spent more than $191 a month on average for television, Internet and phone services in 2013, according to Labor Department data. That was up 24 percent from 2007 and about what they spent on health insurance. The question is whether Americans are going to take to paying all that to one company. The prospect isn’t so far-out anymore. With satellite broadcaster Dish Network pursuing a merger with wireless carrier T-Mobile US, AT&T about to close a $49 billion acquisition of Dish rival DirecTV and cable companies experimenting with cellphone plans, many of the services that keep people entertained and in touch are moving under the same roof. Such providers are betting on so-called convergence -- the idea that they will be better off if they can bulk up, as services that used to flow via different wires and satellite dishes all start traveling on the Internet. The biggest benefit for operators is that customers who sign up for multiple services are less likely to switch providers. However, people tend to have a negative reaction to bigger bills, even if it is the same amount previously spread out over multiple providers, said telecommunications consultant Chetan Sharma. “It is a phenomenon that is top down,” he said. “Industry pushes it rather than consumers seeking it.”
benton.org/headlines/are-americans-ready-pay-quad-play | Wall Street Journal
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COMCAST COULD BE IN FOR A PERIOD OF SMALLER DEALS
[SOURCE: Philadelphia Inquirer, AUTHOR: Bob Fernandez]
Comcast's stunning decision in late April to abandon its $45 billion deal for Time Warner Cable will likely lead to a lull for the acquisitive cable company, experts say. Wall Street analysts said that federal regulators seem hostile to any new big transaction that Comcast brings to Washington and that they expect the merger-hungry Philadelphia (PA) company to lay low for a year or so, perhaps until a new President is sworn in to office in early 2017. Comcast customers, meanwhile, could see a greater focus on service as well as more options in TV packages. Comcast could be forced to lean on revenue growth from its current portfolio of TV, Internet, and entertainment assets, or expand globally, as other telecommunications companies, such as AT&T and DirecTV, frantically arrange mergers in the United States. "Comcast is likely sidelined for the time being for any material transactions. Even large content deals would be a tough sell," telecommunications analyst Craig Moffett said. "That could force them to look overseas," he said. "But for now, they don't have to do anything at all. They are performing very well, and they still have lots of organic growth opportunities to pursue."
benton.org/headlines/comcast-could-be-period-smaller-deals | Philadelphia Inquirer
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INTERNET/BROADBAND

HOW WASHINGTON KEEPS STATES FROM REGULATING INTERNET PROVIDERS
[SOURCE: Washington Post, AUTHOR: Brian Fung]
The US House is expected to vote June 9th on a bill that would prevent state and city governments from levying taxes on Internet access. The bill is important for a number of reasons, not least because it could help determine what you ultimately pay for service. But it also highlights an important tension between Washington and the states -- one that affects how we regulate what has become the most important connection technology of our time. The Permanent Internet Tax Freedom Act, which has the backing of House Judiciary Committee Chairman Bob Goodlatte (R-VA) and nearly 190 co-sponsors, could take some of that power away, at least on paper. The bill itself is fairly simple: It reaffirms a preexisting ban on Internet taxes. Here's why that's significant: Until now, the ban had to be renewed by Congress every so often. But if the ban becomes permanent, Congress would be heading off any attempt by states to tax Internet providers and reassert themselves over those companies. The legislation would officially make regulating Internet providers more of a federal affair, with all of the consequences that implies.
benton.org/headlines/how-washington-keeps-states-regulating-internet-providers | Washington Post
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TELEVISION

WHY DOES THE CABLE BUNDLE EXIST?
[SOURCE: Wall Street Journal, AUTHOR: Joe Flint]
Bundling scores of networks together has endured in large part because the programmers and distributors both made huge profits from new channels, rising numbers of subscribers and steadily higher cable bills. Plus, until recently, it would have been a logistical nightmare for distributors to sell channels individually. Now, pushback is building that could finally break the bundle. So why does the bundle exist in the first place? It started with John Walson, often credited as the father of the cable industry, charging $2 for three local broadcast channels in 1948 in suburban Philadelphia. For cable’s first three decades, its primary purpose was retransmitting broadcast channels to rural areas. By the late 1970s, that need was met and cable operators started investing in original programming to boost subscriptions as satellite technology allowed for mass distribution of a cable network. At the time, the idea of selling channels individually didn’t enter the equation. Tailoring packages of channels to customers was technologically challenging, and the costs and management of billing were seen as prohibitive.
benton.org/headlines/why-does-cable-tv-bundle-exist-anyway | Wall Street Journal
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GOVERNMENT & COMMUNICATIONS

NSA TARGETING FOREIGN HACKERS IS OK
[SOURCE: Washington Post, AUTHOR: Walter Pincus]
[Commentary] What better way to celebrate the two-year anniversary of Edward Snowden’s first leak about the National Security Agency’s operations than to have the latest story from his cache of stolen government documents create another misleading public understanding of an NSA program, this one aimed at catching foreign hackers. As with the initial Snowden-generated story about the NSA’s collection and storage of American telephone metadata (every call, date, time and duration) the newest story does not report any violation of law or misuse of the data that the NSA collected — only the implication that the program could be abused. There also is no evidence, only the implication, that like the metadata program, the hacker program may incidentally sweep up Americans’ private information and that data could be misused. Moreover, key lawmakers and the court that oversees such intelligence operations were aware of the program and how it worked.
benton.org/headlines/nsa-targeting-foreign-hackers-does-not-infringe-anyones-privacy | Washington Post
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FEDS PLOT COURSE TO RESUME NSA SPYING
[SOURCE: The Hill, AUTHOR: Julian Hattem]
The National Security Agency is taking steps to turn its massive collection of Americans’ phone records back on. After President Barack Obama signed legislation to end the controversial program, the Justice Department submitted a legal memorandum to the secretive federal court justifying authorization for the NSA collection for another six months, as the new law allows. “[T]he government respectfully submits that it may seek and this court may issue an order for the bulk production of tangible things” under the law, “as it did in ... prior related dockets,” the Justice Department said. The legal analysis was submitted on June 2, less than an hour after the White House announced that President Obama had signed the USA Freedom Act into law. The memo was not revealed to the public until June 8. The memo outlines the legal rationale for restarting the NSA program.
benton.org/headlines/feds-plot-course-resume-nsa-spying | Hill, The
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WHY THE NEW NSA RESTRICTIONS WON'T HARM NATIONAL SECURITY
[SOURCE: Technology Review, AUTHOR: David Talbot]
The National Security Agency lost its authority to grab the phone records of millions of Americans following recent change in legislation enacted after 9/11. But there is no evidence that the data produced actionable intelligence during the 13 years the government had access to it anyway. And besides, the NSA is still expanding its arsenal of Internet surveillance tools on American soil. The Obama Administration is allowing the NSA to tap Internet cables in US territory to look for data about computer intrusions that are coming from overseas, and that the agency does not need a warrant to do so. A report by the White House privacy and civil liberties oversight board, known as PCLOB, concluded that the value of the data collection -- which started after the September 11 terrorist attacks -- was mainly to add insight on the activities of terrorists already known to the government. Such insight could also be gained by using court orders to obtain the information. The bulk data collection did not lead to the discovery of a previously unknown terrorist or disruption of an attack, the report concluded.
benton.org/headlines/why-new-nsa-restrictions-wont-harm-national-security | Technology Review
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June 9, 2015 (Cable Consolidation and the Bundle)