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FCC Chairman Confirms Agency Cannot Revoke Licenses Over News Coverage

Phillip Dampier October 19, 2017 Public Policy & Gov't No Comments

Pai

WASHINGTON (Reuters) – The U.S. Federal Communications Commission’s chairman said Tuesday the agency does not have authority to revoke broadcast licenses, despite suggestions from President Donald Trump.

Ajit Pai, a Republican who was named chairman of the telecommunications regulator in January, broke days of silence by rejecting Trump’s tweet that the FCC could challenge the license of NBC after stories Trump declared were not true.

“Under the law, the FCC does not have the authority to revoke a license of a broadcast station based on the content,” Pai said at a forum. “The FCC under my leadership will stand for the First Amendment.”

The First Amendment of the U.S. Constitution guarantees freedom of speech and freedom of the press.

Democrats had been pushing Pai to denounce Trump’s suggestion that broadcast licenses could be threatened following reports by NBC News that his secretary of state, Rex Tillerson, had called him a “moron” after a discussion of the U.S. nuclear arsenal.

“With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!” Trump tweeted last Wednesday.

Trump and his supporters have repeatedly used the term “fake news” to cast doubt on media reports critical of his administration, often without providing any evidence to support their case that the reports were untrue.

Any move to challenge media companies’ licenses, however, would likely face significant hurdles.

The FCC, an independent federal agency, does not license broadcast networks, but issues them to individual broadcast stations that are renewed on a staggered basis for eight-year periods.

Comcast Corp, which owns NBC Universal, also owns 11 broadcast stations, including outlets in New York, Washington, Los Angeles, San Francisco, Boston, Dallas and Chicago.

When reviewing licenses the FCC must determine if a renewal is in the public interest. Courts have held that a station exercising its First Amendment rights is not adequate grounds to challenge a license.

The agency does not issue similar licenses for cable networks such as CNN and MSNBC, or regulate internet news or other websites.

In the early 1970s, then-President Richard Nixon and his top aides discussed using the FCC’s license renewal process as a way of punishing The Washington Post for its coverage of the Watergate burglary that ultimately brought down his presidency.

Reporting by David Shepardson; Editing by Jonathan Oatis

Cable Listens to Wall Street: Standalone Broadband Pricing Heading for $80/Month

Phillip Dampier October 18, 2017 Competition, Consumer News 10 Comments

Cable operators that have watched their stocks get pounded after warning their third quarter earnings would reflect an undeniable trend towards cord-cutting are considering dramatically raising broadband-only pricing to $80 or more to protect profits.

Comcast is among the largest cable companies responding to repeated calls from Wall Street analysts to boost broadband pricing, hiking broadband-only rates to around $65 a month after a customer’s $40 promotional pricing offer expires. Charter Communications also hiked prices earlier this year to $65 a month for its entry-level 60 or 100Mbps package, with further rate increases expected in early 2018. But those incremental rate hikes are not enough to satisfy analysts who fear cable’s video earnings losses are already higher than the revenue gained from charging more for broadband service.

In a note to investors, Morgan Stanley said the cable industry’s efforts to jack up prices for those dropping video service have made some progress, noting most companies raised prices by 12% in 2017, establishing a new beachhead rate of $65 a month — the rate broadband-only customers should now expect to pay.

“As video revenue growth is increasingly pressured, leaning on data pricing is tempting to sustain earnings,” said Benjamin Swinburne, a Morgan Stanley analyst in a report.

But recent rate hikes don’t go far enough for some. Prices must rise at least another $15 a month to satisfy Jeffries analyst Mike McCormack and restore industry profits lost from cord-cutting. McCormack notes customers who have not canceled cable television are being insulated from the most dramatic rate hikes impacting cord-cutters, pointing out the average customer with a bundle of services now pays around $49 a month for broadband service — $16 less.

“Cable companies are likely to raise stand-alone broadband pricing in order to combat the EBITDA declines from downsizing,” said McCormack in a report. “This practice is already evident and justified given the lack of a bundling discount. Based on our analysis, we estimate Comcast would need to raise stand-alone pricing to roughly $80 in order to break even from a profitability perspective.”

Swinburne

Jonathan Chaplin, an analyst for New Street Research who has called on the cable industry to double broadband pricing for more than a year, thinks the marketplace is ripe for sweeping rate increases.

“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street said. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 (including modem), paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable.”

Wall Street analysts typically use code language that avoids portraying the marketplace as a monopoly or barely-competitive duopoly, instead preferring to note there is little risk or headwind to prevent operators from boosting prices or using their large market share to their advantage. Chaplin argues that cable television is no longer to profit center it used to be — broadband is.

“In fact, the [free cash flow] lost from subs dropping pay-TV is generally recovered through higher [broadband] pricing,” said Chaplin.

Many analysts also argue that most of the proceeds collected from charging higher broadband prices should be used to buy back shares of stock or returned to shareholders, not used to upgrade or expand service. In fact, Wall Street is currently punishing Altice USA, sending its initial stock price from $30 a share to just $24.49 this week. One of the reasons for the fall is the money its Cablevision unit is spending to replace its coaxial cable network with fiber optics. AT&T’s stock has also suffered as the company continues to spend money on expanding its AT&T Fiber service while combating cord cutting with its U-verse and DirecTV services.

A Month After Maria Hammered Puerto Rico, Most Utilities Still Down

As Puerto Rico approaches the first month anniversary of Hurricane Maria, only small amounts of incremental progress have been made restoring the island’s telecommunications networks badly damaged by the storm.

Wireless Service

According to the Federal Communications Commission, 75.3% of Puerto Rico’s cell towers are still out of commission and many of those restored to service are functioning on generator backup, often using portable cell tower infrastructure that offers a fraction of the coverage area normal service used to provide. The majority of restored towers are in the immediate vicinity of San Juan, while many other parts of the island remain totally without service. Claro, a Mexican-owned cell company that used to offer the best coverage across Puerto Rico still remains the most reliable after the storm. All four wireless companies operating in Puerto Rico are offering free roaming to customers so as towers are restored to service, the companies can provide coverage to as many residents as possible.

Satellite Cells on Light Trucks (COLTs) have been deployed in Aguadilla, Arecibo, Cayey, Caomo Sur, Fajardo, Guayama, Manati, Mayaguez Mesa, San German, Vega Baja, and Yauco and Terrestrial Cells on Wheels (COWs)/COLTs in Humacao, Quebradillas, Rio Grande, and Utuado.

The FCC believes approximately 61% — one percent higher than last week — of the population can now get some cell signal. But that figure is slightly misleading because the largest percentage of the population lives around or in San Juan, the city with the best service restoration so far.

In contrast, most cell sites in Texas, Louisiana, Mississippi, Alabama, Georgia, and the Florida Panhandle affected by two earlier hurricanes were restored to service within two weeks. Cellular providers point out the reason for the difference is the availability of commercial power and reliable backup generators, both not widely available in Puerto Rico even now.

The U.S. Virgin Islands, also devastated by Hurricane Marie, are also struggling with repair efforts. At least 55.4% of cell towers are out of service on those Caribbean islands, with 88.9% still down on St. John, the smallest of the three islands that make up the U.S. territory. Because repair efforts have been more effective on the other two islands, about 88% of the territory can now get a cell signal.

Electricity

NBC News reported today that 17.7% of Puerto Rico now has electricity, but it is very unreliable and there are daily outages that sometimes extend for hours. The Army Corps of Engineers hopes to have in place by next week — more than a month after Hurricane Maria made landfall in Puerto Rico — two 25-megawatt generators at a plant in San Juan to help stabilize electricity there. The generators arrived Oct. 13, and a target date of Oct. 25 may be missed because of ongoing inclement weather. Once installed, the generators will extend electricity to about 30% of the island — mostly in the northeastern section around San Juan — and stabilize power for those who already have it.

The government is prioritizing electricity restoration for public safety and hospitals, public/government institutions including sewage and water treatment plants, schools, and then the island’s large pharmaceutical industry, which own several large drug manufacturing plants.

The order of priority the government is giving to service restoration is upsetting Claro, one of the island’s largest cell companies.

“Businesses and the government itself can hardly operate efficiently without an appropriate telecommunications structure,” said Claro representative Pedro Andrés. “For example, without telecommunication services the bank could not operate and that means that there would be no access to money for people, businesses could not handle electronic transactions, medical plans would not work and suppliers could not dispatch. That is, the country would be paralyzed.”

Andrés wants the power authority to make sure that electric service is restored to cell towers as soon as practical.

Residents are being told they can expect 95% electricity service restoration by Dec. 15.

Cable and Telephone

Liberty Cablevision of Puerto Rico is only working for about 1% of its customers, so it is focusing on offering free Wi-Fi hotspots for now.

Diesel generators are currently powering some of the island’s 911 service centers, which are now back up and running normally.

Cable service remains basically non-existent in Puerto Rico because of the lack of electricity. Liberty Cablevision of Puerto Rico has reported it has restored full service to about 1% of its customers, although a significantly higher number will have service back immediately after electricity is restored. Liberty promises automatic service credits for the duration of the outage and has told customers to ignore billing that was already in the mail when the storm hit. Liberty is currently focused on reaching and retaining the goodwill of its customers with a network of free Wi-Fi hotspots.

The island’s landline provider reports there are six central switching offices out of service on the island and there are problems connecting long distance calls.

Broadcast Media

The following TV stations are confirmed operational: WKAQ, WIPR, WIPN, WTIN, and WNJX, but these nine are still off the air: WAPA, WIPM, WTCV, WUJA, WELU, WECN, WRSV, WORO, and WRUA.

As of today, 44 AM radio stations are confirmed to be on-the-air: WA2XPA, WALO, WAPA, WBMJ, WBQN, WCMN, WCPR, WDEP, WENA, WEXS, WGDL, WI2XAC, WI2XSO, WI3XSO, WIAC, WIDA, WIPR, WISO, WJIT, WKAQ, WKFE, WKJB, WKUM, WKVM, WLEO, WLEY, WMDD, WMNT, WNEL, WNIK, WOIZ, WOLA, WPAB, WPPC, WPRA, WPRP, WQII, WSKN, WSOL, WTIL, WUKQ, WUNO, WVJP, and WXEW.

These 29 AM radio stations are confirmed out of service: WABA, WBSG, WBYM, WCGB, WCMA, WDNO, WEGA, WFAB, WGIT, WHOY, WIBS, WISA, WIVV, WLRP, WMIA, WMSW, WNVI, WOQI, WORA, WOSO, WQBS, WRRE, WRSJ, WRSS, WUPR, WVOZ, WYAC, WYEL, and WYKO.

There are 36 FM radio stations back on the air: WAEL-FM, WCMN-FM, WEGM, WERR, WFID, WIDA-FM, WIDI, WIOA, WIOA-FM1, WKAQ-FM, WLUZ, WMAA-LP, WMEG, WNVM, WODA, WORO, WOYE, WPRM-FM, WPUC-FM, WPUC-FM1, WQML, WRIO, WRRH, WRTU, WRXD. WTOK-FM, WUKQ-FM, WVDJ-LP. WVIS, WVJP-FM, WXLX, WXYX, WYQE, WZNT, WZNT-FM1, and WZOL.

But these 22 FM radio stations are still out of service: W227CV, WCAD, WCAD-FM2, WCRP, WELX, WFDT, WIOC, WIPR-FM, WJDZ, WMIO, WNRT, WNVE, WQBS-FM, WTPM, WVQR, WXHD, WYAS, WZAR, WZCA, WZET, WZMT, and WZOL-FM3.

Frontier Overcharging Some Florida, Texas, and California Customers Hundreds of Dollars

Phillip Dampier October 17, 2017 Consumer News, Frontier, Video 2 Comments

Customers switched to Frontier Communications from Verizon in Florida, California and Texas continue to complain they are being overcharged for service, sometimes by hundreds of dollars a month, and they’re fed up.

Danielle Ferrari, owner of a clothing and consignment shop in Tampa, has been battling the phone company over its erroneous billing since the first day it took over service from Verizon Communications.

“The very first bill was wildly wrong,” Ferrari told WFTS Action News. “The next one wasn’t correct and the next one wasn’t correct.”

Ferrari had paid Verizon a little more than $100 a month, but Frontier sent a bill for more than $340. Calls to customer service brought broken promises the company will fix Ferrari’s bill, but the overcharges kept on coming. Subsequent calls to Frontier have accomplished nothing, and attempts to speak with a supervisor were denied.

Customers who decide to cancel their Frontier service and change providers are not out of the woods yet either. Canceling is what 79-year old Dennis Klocek from Palm Springs, Calif. tried to do, leaving him owed $127.62 for dropping his Frontier phone, TV, and internet service. Frontier claims it refunds customers not with a check, but a prepaid debit card, which the company promised to mail to his home address. It never arrived.

When Klocek called Frontier about the missing card, the company refused to reimburse him, claiming the card had been sent and was almost entirely depleted by someone who used it at several convenience stores and fast food restaurants in nearby Cathedral City. As far as Frontier was concerned, once the card was mailed, the matter was out of their hands and responsibility. Klocek is upset Frontier sent his refund in the form of a debit card, which he never authorized and obviously lacked the security features a refund check would have given him.

“These people can’t get away with this,” Klockek told KESQ-TV. “What’s going on? How many other people are getting screwed like this? I don’t like this and I am going to get to the bottom of it. I feel empty. I feel like I can’t trust anybody in big business, meaning ‘AKA’ Frontier.”

Frontier also refused Klockek’s request to speak to a supervisor, leaving him at a dead end. He took his complaint to the Palm Springs television station instead, which seems to potentially bring Frontier around.

“We empathize with our former customer and are actively helping him work with the card issuer to implement a fraud investigation, resolve the matter and receive the refund,” wrote Frontier representative Javier Mendoza.

WFTS-TV in Tampa reports multiple Florida customers are having billing problems with Frontier Communications. (1:38)

Back in Tampa, Frontier customer Christina Herrman said she’s been dealing with overcharges by Frontier Communications for years.

“Ever since Frontier took over, our bill has gotten exceedingly more each month, now up to $260,” she posted on a thread talking about the issue on Facebook. “Even charging us for a 2nd cable box/DVR for the past year that we never had.”

Requesting a supervisor can lead to punishing hold times.

“I wait on hold for 20 minutes to get one on the phone, to spend another hour and they can’t help me,” she posted. “Hours upon hours wasted trying to deal with them.”

She eventually surrendered and now just pays whatever amount Frontier bills her.

In Dallas, Tex., Beth Smith Powell also took to Frontier’s Facebook page to complain she spent almost 40 hours on the phone with Frontier representatives about their bait and switch promotions.

“I had a sales rep come to my home and give me a price on TV/internet/phone for two years,” Powell wrote. “I asked her several time was this price good for the full two years, she said yes.”

When the first bill arrived, it was nearly $500, leaving Powell aghast. After two hours with Frontier’s customer service, she was promised the bill would be adjusted. It wasn’t adjusted much because when the next bill arrived, it was over $400, forcing her to spend another two hours working with Frontier to straighten that bill out. In the meantime, she was threatened with service interruption and a collection agency if her original bill was not paid in full.

Just a few months later, Powell’s bill suddenly increased $40 a month and nobody could initially explain why.

“Come to find out my two-year CONTRACT was BS — it was only a six-month discount,” Powell wrote. “I have the paperwork but […] Frontier will not honor this contract.”

It appeared Frontier walked away from the commitments their third-party door-to-door sales agents made promising 24 months of savings by only delivering six, after the billing errors were corrected.

“Shame on Frontier for being dishonest and not honoring your written sales rep contract,” Powell complains. “I’ve spent about 40 hours on the phone and chat trying to get help and no one will honor your advertised rate!”

Alan Borden, a Tampa consumer protection attorney with Debt Relief Legal Group, told WFTS Frontier’s bills are very long and hard to understand.

“They make it as convoluted as possible but theoretically, they can sneak in these overcharges where you won’t notice, or you’ll just give up,” Borden said.

Which is exactly what many customers do. Frontier has earned an “F” rating from the Better Business Bureau and has collected more than 9,400 customer complaints in the last few years.

FCC Readies $1 Billion for 1,000 TV Station Channel Changes

Phillip Dampier October 17, 2017 Consumer News, Public Policy & Gov't, T-Mobile, Video No Comments

The FCC is preparing to pay about 1,000 TV stations and cable operators $1 billion dollars to subsidize necessary expenses to change over-the-air channels to make room for cell phone companies.

The channel changes are a result of a now-complete spectrum auction that will reallocate part of the UHF TV dial for use by cell phone companies for wireless broadband. Part of the auction proceeds will be used to reimburse TV stations and cable operators for the expenses associated with changing channel positions and equipment needed to receive those signals.

The move will significantly compress the UHF TV dial, requiring viewers to rescan their local channel lineups in what the industry is calling a “repack” of stations to closer dial positions. When complete, the UHF TV band will shrink from channels 14-51 to 14-36. Channels 38-51 are being reallocated to the wireless industry (channel 37 remains reserved for radio astronomy use only).

Some stations will need to buy a new antenna or transmitter, others may require interim or larger facilities to manage the change. The National Association of Broadcasters complains the FCC is not allocating enough money to cover what it estimates will eventually cost TV station owners $2.139 billion. TV tower rigging crews, who climb antenna towers and perform installation and maintenance services, are booked well in advance and are charging prices consistent with the urgent need to prepare for the biggest TV transition since the switch to digital broadcasting.

Because nobody is certain exactly how much the free TV repack and transition will eventually cost, the FCC intends to partly reimburse commercial stations about 52% of their costs (62% for non-commercial stations) during the first round of funding. Another $750 million is expected to be allocated for the second round of funding to cover the rest.

The agency also intends to scrutinize receipts to make certain stations are not dipping into the fund to help pay for the forthcoming transition to ATSC 3.0 broadcasting, which will eventually make current TV sets and some station equipment functionally obsolete. TV stations can only recoup expenses directly related to the repack. The FCC suspects as repack deadlines near, TV tower rigging crews could raise prices further and take a bigger percentage of the fund than station owners may realize. If costs rise out of proportion to what is now deemed reasonable, some stations may face out-of-pocket expenses the FCC will not reimburse if the fund is exhausted.

The FCC did not account for cell companies stepping in and directly assisting TV stations to vacate their existing channel positions faster than the FCC initially planned. T-Mobile, which won a large number of licenses that cannot be used until certain TV stations make channel changes, is reaching agreements with stations directly, offering incentives to move faster. In New York City, an agreement between FOX and T-Mobile will save the FCC fund almost $80 million. FOX-owned stations WWOR and WNYW will move their transmitters from the Empire State Building to One World Trade Center, allowing them to switch channel positions and make room for T-Mobile more than a year ahead of schedule.

When the repack is complete, viewers watching over-the-air will need to rescan their televisions to find their local stations once again.

A Public Service Announcement from the FCC explains the “rescanning” process to keep or receive new digital over-the-air stations. (1 minute)

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