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Staking the Heart of the Power-Sucking Vampire Cable Box

vampire-power-1-10964134Two years after energy conservation groups revealed many television set-top boxes use almost as much electricity as a typical refrigerator, a voluntary agreement has been reached to cut the energy use of the devices 10-45 percent by 2017.

The Department of Energy, the Natural Resources Defense Council, the American Council for an Energy-Efficient Economy, the Appliance Standards Awareness Project, the Consumer Electronics Association, and the National Cable & Telecommunications Association agreed to new energy efficiency standards for cable boxes expected to save more than $1 billion in electricity annually, once the new equipment is widely deployed in American homes. That represents enough energy to power 700,000 homes and cut five million tons of CO2 emissions each year.

“These energy efficiency standards reflect a collaborative approach among the Energy Department, the pay-TV industry and energy efficiency groups – building on more than three decades of common-sense efficiency standards that are saving American families and businesses hundreds of billions of dollars,” said Energy Secretary Ernest Moniz. “The set-top box efficiency standards will save families money by saving energy, while delivering high quality appliances for consumers that keep pace with technological innovation.”

DVR boxes are the biggest culprits. American DVRs typically use up to 50W regardless of whether someone is watching the TV or not. Most contain hard drives that are either powered on continuously or are shifted into an idle state that does more to protect the life of the drive than cut a consumer’s energy bill. A combination of a DVR and an extra HD set-top box together consume more electricity than an ENERGY STAR-qualified refrigerator-freezer, even when using the remote control to switch the boxes off.

NRDC Set-Top Boxes  Other Appliances-thumb-500x548-3135

Manufacturers were never pressed to produce more energy-efficient equipment by the cable and satellite television industry. Current generation boxes often require lengthy start-up cycles to configure channel lineups, load channel listings, receive authorization data and update software. As a result, any overnight power-down would inconvenience customers the following morning — waiting up to five or more minutes to begin watching television as equipment was switched back on. As a compromise, many cable operators instruct their DVR boxes to power down internal hard drives when not recording or playing back programming, minimizing subscriber inconvenience, but also the possible power savings.

In Europe, many set-top boxes are configured with three levels of power consumption — 22.5W while in use, 13.2W while in standby, and 0.65W when in “Deep Sleep” mode. More data is stored in non-volatile memory within the box, meaning channel data, program listings, and authorization information need not be re-downloaded each time the box is powered on, resulting in much faster recovery from power-saving modes.

The new agreement, which runs through 2017, covers all types of set-top boxes from pay-TV providers, including cable, satellite and telephone companies. The agreement also requires the pay-TV industry to publicly report model-specific set-top box energy use and requires an annual audit of service providers by an independent auditor to make sure boxes are performing at the efficiency levels specified in the agreement. The Energy Department also retains its authority to test set-top boxes under the ENERGY STAR verification program, which provides another verification tool to measure the efficiency of set-top boxes.

Comcast, DirecTV, DISH Network, Time Warner Cable, AT&T, Verizon, Cox Communications, Charter Communications, Cablevision, Bright House Networks and CenturyLink will begin deploying new energy-efficient equipment during service calls. Some customers may be able to eventually swap equipment earlier, depending on the company.

http://www.phillipdampier.com/video/WCCO Minneapolis Check Your Cable Box 6-27-11.mp4

WCCO in Minneapolis reported in 2011 cable operators like Comcast may make subscribers wait 30 minutes or more for set-top box features to become fully available for use after plugging the box in. (1:50)

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Intrigue at Chapter 11 LightSquared: Dish’s Charlie Ergen vs. Harbinger’s Phil Falcone

Failure, Squared

LightSquared, the ill-fated venture to bring nationwide 4G wireless broadband to the masses may be all but gone and forgotten in bankruptcy reorganization proceedings, but the wireless spectrum it controls and the drama surrounding it is not.

A battle between billionaires and the hedge funds they support has broken out over who will ultimately control the failed venture — a hedge fund manager deep in LightSquared debt or the richest man in Colorado that often finds a way to get his way.

Harbinger Capital Partners’ Phil Falcone

Falcone

Falcone

Phil Falcone earned his first fortune trading junk bonds in the 1980s. In 2001, he launched Harbinger Capital Partners and by 2007, Falcone and his investors were well-positioned for a blizzard of cash betting against sub-prime mortgages just before the housing collapse and credit crisis that followed. Falcone took home $1.7 billion in compensation that year while an epidemic of foreclosures and upside down mortgages was just getting started.

In late 2008, when the economy was in free-fall, Falcone suspended or limited withdrawals from his largest funds, upsetting investors who couldn’t get their money out. But Falcone reportedly gave special treatment to certain large investors (sources say Goldman Sachs is among them) who were able to clear out their exposed accounts before the losses piled up.

By 2009, Falcone was again making money — so much he vastly underestimated his federal and state tax bills. What’s a cash-strapped billionaire to do? Quietly loan himself $113.2 million from one of his investment funds at a favorable interest rate and keep it a secret from investors for five months. When they eventually found out, they were understandably disturbed. Falcone had barred those same investors from cashing out of the fund he borrowed from.

The Securities and Exchange Commission was not happy either and filed charges against Falcone.

“Today’s charges read like the final exam in a graduate school course in how to operate a hedge fund unlawfully,” Robert Khuzami, director of the S.E.C.’s division of enforcement, said in a statement. “Clients and market participants alike were victimized as Falcone unscrupulously used fund assets to pay his personal taxes, manipulated the market for certain bonds, favored some clients at the expense of others, and violated trading rules intended to prohibit manipulative short sales.”

Despite the publicity generated by the SEC, investors who appreciated Falcone’s ability to earn them money allowed them turn a blind eye to the ethics questions and pour money into Falcone’s latest venture — a wireless network known as LightSquared.

LightSquared was preparing to launch a unique nationwide 4G LTE mobile broadband network powered by satellites and ground-based cell towers, selling wholesale access to third-party wireless companies able to market the service under their own brand. Falcone’s funds poured nearly $3 billion dollars into the venture while getting a waiver from the government to operate high-powered transmitters on the “L” band — 1525-1559 MHz. LightSquared’s plans alarmed the next door neighbors — GPS satellites facing interference issues that would hurt the accuracy of precise location information provided to millions of tracking devices on the “L1″ band — 1559 to 1610 MHz.

Initial testing showed that significant interference from the prototype ground-based transmitters would occur and potentially could cripple aviation and public safety GPS users. The FCC eventually withdrew permission for LightSquared to run its network as planned, a potential death-blow to the venture.

Creditors grew anxious wondering how LightSquared would be in a position to repay its loans when it was unable to launch its wireless network.

In May 2012, creditors forced the issue and LightSquared filed for bankruptcy protection, listing assets of $4.48 billion and debts of $2.29 billion. Falcone claimed the bankruptcy filing would give the company more time to overcome the FCC’s objections to its network operations plan. Falcone estimated it would take two years to secure a resolution. Analysts familiar with the FCC suggested Falcone might die of old age before the agency gave way.

Falcone’s subsequent efforts to win back control of the venture have been made more difficult because one man has been quietly buying up large amounts of LightSquared’s debt with designs on the venture’s spectrum.

Dish Networks’ Charles Ergen

dish logoWith LightSquared’s debt trading at around 50 cents on the dollar, Charlie Ergen went shopping.

Ergen has been involved in the satellite business for decades. Today, he controls and runs Dish Network, a satellite television provider that has seen the back of high customer growth. Dish and DirecTV are both locked out of the “triple play” business most cable and phone companies offer customers. Neither company can offer broadband or telephone service without partnering with another provider. As cord-cutting continues to take hold, customers willing to pay for increasingly expensive television packages are in decline. That likely explains Ergen’s interest in acquiring wireless spectrum — to build Dish into a broadband, television, and telephone service provider.

In May, Dish publicly bid $2.2 billion for certain spectrum assets from LightSquared. But for more than a year earlier, Ergen was quietly buying up LightSquared’s debt through holding companies and hedge funds.

Ergen created an opaque investment entity named “SP Special Opportunites, LLC” a/k/a “Sound Point” to buy LightSquared debt. Separately, Ergen asked Stephen Ketchum, a former investment banker with close ties to Ergen, to buy over $1 billion in LightSquared debt securities through Ketchum’s hedge fund. From April 2012 until May 2013, Sound Point allegedly spent $1,013,082,326.30 to purchase secured debt for Ergen’s personal benefit and without the knowledge of Dish or its board of directors. Secured debt held by creditors is paid first in a bankruptcy proceeding, and Ergen quietly because LightSquared’s largest single secured creditor.

That puts Charlie Ergen in a major ethical dilemma.

The more Dish offers to pay for LightSquared, the more money Ergen will be paid to cover the shares of LightSquared’s secure debt. Ergen has a controlling interest in Dish, which means he can order Dish to overpay for LightSquared, personally pocketing the proceeds.

Bloomberg’s Matt Levine explains the shady deal:

“An executive going around and buying up an asset for cheap, then convincing his company to buy all of that asset for a higher price – doesn’t come up a lot because it’s so obviously shady,” Levine wrote. “If you’re supposed to be devoting your time and energy to finding opportunities for your company, it looks pretty bad to steal those opportunities for yourself.”

Falcone was outraged when he learned of Ergen’s stealthy acquisitions.

Ergen

Ergen

In July, Harbinger accused Ergen of “fraudulently” becoming a creditor to block efforts by LightSquared to reorganize and emerge intact from bankruptcy. Instead, Harbinger accused Ergen of seeking to acquire the company’s assets “on the cheap.” Harbinger also points to provisions in a LightSquared debt agreement that forbids certain competitors from buying the company’s debt.

Also upset are several major Dish Network shareholders who are not pleased Ergen’s private deal could make him a lot of money while costing shareholders plenty should Dish overpay for LightSquard’s assets or worse, end up with everything but the spectrum Dish covets.

At least five lawsuits have been filed since August, accusing Ergen and other board members of casting their fiduciary duties to the wind and wasting money along the way. They are also upset Ergen and his connections purchased $1 billion in LightSquared debt at a substantial discount and will likely be repaid the full face value of those debts with Dish Network’s money. That means nearly $300 million in personal profits for Ergen.

The latest shareholder lawsuit was filed by the Louisiana Municipal Police Employees’ Retirement System. It along with the suit filed by the City of Daytona Beach Police Officers’ and Firefighters’ Retirement System claim Ergen’s near-total control of Dish’s board of directors makes it impossible for the board to meet its obligation of representing shareholder interests first.

“Ergen’s control over the company and the board is highlighted by the numerous transactions he has caused Dish to enter into with members of his family,” the lawsuit states.

Ergen and Dish’s efforts to insulate themselves from charges of conflict of interest didn’t fly with many investors.

One lawsuit noted Tom Ortolf, one of the directors on the supposedly independent committee reviewing Dish’s bid, has a daughter that works at Dish; the other, George Brokaw, chose Mr. Ergen’s wife, Cantey Ergen—a Dish director named in the shareholder suit—to be the godmother of his son.

The discomfort level at Dish reached high enough to prompt one board member, Gary Howard, to suddenly resign in early September. Howard was also on the committee formed to vet the LightSquared deal because of the potential conflict of interest on Ergen’s part.

Before Falcone could claim the high road at Ergen’s expense, this week New York’s top financial regulator banned Falcone from managing Fidelity & Guaranty Life Insurance Company of New York for seven years. Harbinger Group bought Fidelity & Guaranty, the U.S. life and annuity unit of London-based Old Mutual Plc, for $350 million in 2011.

http://www.phillipdampier.com/video/Bloomberg LightSquared 9-5-13.flv

Bloomberg News discusses the high drama between LightSquared and Dish Network. (4 minutes)

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Another Programming Dispute: Media General TV Stations Off DISH Network

Phillip Dampier October 1, 2013 Consumer News, Dish Network, Video No Comments

media generalMedia General today issued a statement saying they have failed to reach a retransmission consent agreement with DISH Network and 18 local stations in the eastern half of the country are off the satellite provider’s lineup as a result.

The stations:

  • Alabama: WVTM-NBC in Birmingham, and WKRG-TV in Mobile
  • Florida: WFLA-NBC in Tampa
  • dish logoGeorgia: WJBF-ABC in Augusta, WRBL-CBS in Columbus and WSAV-NBC in Savannah
  • Mississippi: WHLT-CBS in Hattiesburg and WJTV-CBS in Jackson
  • North Carolina: WNCT-CBS in Greenville, WNCN-NBC in Raleigh-Durham and WYCW-CW in Asheville
  • Ohio: WCNH-NBC in Columbus
  • Rhode Island: WJAR-NBC in Providence
  • South Carolina: WCBD-NBC in Charleston, WBTW-CBS in Florence-Myrtle Beach and WSPA-CBS in Greenville-Spartanburg
  • Tennessee: WJHL-CBS in Tri-Cities
  • Virginia: WSLS-NBC in Roanoke-Lynchburg

“Our highly rated television station is an important asset to our local community and it is unfortunate that DISH does not recognize our fair market value,” said WNCN general manager Douglas Hamilton. “Although we have successfully completed agreements with other cable and satellite operators, DISH has refused to reach a similar agreement.”

Media General has been approving extensions of DISH’s retransmission contract since it expired in June, but the broadcast station group owner denied an extra extension of the contract that expired Sept. 30.

Media General is in the process of merging with Young Broadcasting — a deal that was also originally announced in June. DISH already has a retransmission agreement with Young and hoped to bundle the extension into that agreement, but Media General refused.

“The only reason for Media General to reject that offer is to try to squeeze consumers for more money, to the tune of five times what DISH currently pays,” said Sruta Vootukuru, DISH’s director of programming. “We’re working on behalf of our customers to keep the programming at a fair price.”

Affected Media General-owned TV stations are telling viewers to use a traditional antenna or switch to one of DISH’s competitors.

http://www.phillipdampier.com/video/WNCN Raleigh WNCN Agreement With DISH Expires 10-1-13.mp4

WNCN’s general manager Doug Hamilton explained to viewers why the station was no longer on DISH Network’s service in Raleigh, N.C. (1 minute)

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Earth-Shattering News: You Still Hate Your Cable Company

Despite efforts to improve their reputation, cable companies are hated so much the industry now scores lower than any other according to the American Customer Satisfaction Index (ACSI).

The only reason the industry’s average score or 68 out of 100 ticked higher are some new competitors, especially Verizon’s FiOS fiber optic network, which scores higher than any other provider.

acsi tv

The cable companies you grew up with still stink, ACSI reports, with Comcast (63) and Time Warner Cable (60) near the bottom of the barrel.

At fault for the dreadful ratings are constant rate increases and poor customer service. As a whole, consumers reported highest satisfaction with fiber optic providers, closely followed by satellite television services. Cable television scored the worst. Despite the poor ratings, every cable operator measured except Time Warner Cable managed to gain a slight increase in more satisfied customers. Time Warner Cable’s score for television service dropped five percent.

Customers are even less happy with broadband service. Verizon FiOS again scored the highest with a 71% approval rating. Time Warner Cable (63) and Comcast (62) scored the lowest. Customers complained about overpriced service plans, speed and reliability issues. Customers were unhappy with their plan options as well, including the fact many providers now place arbitrary usage limits on their access.

The best word to describe customer feelings about their broadband options: frustration, according to ACSI chair Claes Fornell. “In a market even less competitive than subscription TV, there is little incentive for companies to improve.”

acsi broadband

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Dish Network Offers $25.5 Billion for Sprint, Topping Softbank’s Bid; Will Keep Unlimited Data Plans

Dish Network holds MVDDS licenses to serve more than three dozen communities across the country.

Satellite television provider Dish Network today offered $25.5 billion for Sprint Nextel Corp., in an unsolicited bid that surprised the wireless industry.

The bid, announced by CEO Charles Ergen, is $5.5 billion higher than that offered by Japan’s Softbank, which already had a pending deal to take a 70 percent stake in the third largest wireless carrier.

The bidding may not yet be over if Softbank decides to counter with a higher offer or if other bidders emerge in the coming weeks.

Ergen has signaled his interest in entering wireless markets to compensate for slowing earnings in the satellite television business.

“He is trying to transform his own business,” Vijay Jayant, an analyst at International Strategy & Investment Group in New York told Bloomberg News. “He’s trying to reinvent himself, moving from satellite to wireless.”

sprintnextelErgen’s vision would include a bundled package of satellite television, broadband wireless Internet and cellular telephone service. Providing suitable wireless broadband Internet in rural areas may be the biggest challenge because of Sprint’s more limited network coverage, but a marketing deal combining satellite television from Dish and Sprint cell phone service would be easier to carry out.

Ergen’s offer includes $8.2 billion in stock and $17.3 billion in cash. Ergen’s company has stockpiled at least $10 billion from selling bonds over the last year. He intends to borrow the rest.

Ergen earlier had attempted to disrupt a deal that would have consolidated Clearwire into Sprint. Ergen offered $3.30 a share for Clearwire, 33 cents higher than the $2.97 per share offer from Sprint. Ergen also reportedly approached both MetroPCS and Deutsche Telekom’s T-Mobile USA looking for a deal to no avail.

Some analysts question whether Ergen has enough experience to manage a major wireless company with only his past involvement selling satellite TV subscriptions. But he arrives with more than just cash and stock options. Ergen has acquired mobile spectrum from bankrupt TerreStar Networks and DBSD North America. Ergen says he has no interest in building his own wireless network, but a combined Sprint/Dish could manage the spectrum through Sprint’s existing operations.

Ergen told Bloomberg News combining the spectrum Dish owns with the spectrum owned by Sprint and Clearwire would assure Americans of a robust wireless data platform that will not have capacity constraints or require individual device fees. That is in keeping with Sprint’s existing marketing as a provider of truly unlimited wireless data plans.

Several Wall Street analysts told CNBC and Bloomberg News the deal with Softbank may be more ideal for shareholders and consumers, because it would strengthen Sprint’s leverage with equipment manufacturers to offer cheaper and more robust devices.

Consumer advocates have mixed feelings. Dish has no prior association to the wireless industry so the deal does not represent direct, competitive consolidation. It also would boost Sprint as a more formidable competitor to AT&T and Verizon Wireless. But it could also further orphan T-Mobile USA.

“Right now, we have two giants and two also-rans, and now you’re getting potentially three giants dividing up the American market place, with T-Mobile lagging far behind,” Susan Crawford told the New York Times.

http://www.phillipdampier.com/video/Bloomberg What Does Dish See in Sprint Thats Worth 25B 4-15-13.flv

Bloomberg News explores what Dish sees in Sprint that is worth a bid of $25.5 billion to acquire the country’s third largest mobile company.  (2 minutes)

http://www.phillipdampier.com/video/Bloomberg Dish Bids 25-5 Billion for Sprint to Challenge Softbank 4-15-13.flv

Bloomberg says Dish has been stockpiling $10 billion in cash for new acquisitions to transform its business away from a satellite TV-only company.  (2 minutes)

http://www.phillipdampier.com/video/Bloomberg All Things Are on the Table for Sprint 4-15-13.flv

Christopher Marangi, of Gabelli Asset Fund talks with Bloomberg’s Erik Schatzker about Dish Network’s unsolicited $25.5 billion offer for Sprint and what options are available to Sprint with the offers it has on the table. (2 minutes)

http://www.phillipdampier.com/video/Bloomberg Dish Bid for Sprint Lacks Capital Chaplin Says 4-15-13.flv

Jonathan Chaplin, an analyst with New Street Research LLP, thinks Softbank’s original offer is superior to the one from Dish.  (6 minutes)

http://www.phillipdampier.com/video/Bloomberg Bidding for Sprint Is Not Over Fritzshe 4-15-13.flv

Jennifer Fritzsche, Managing Director of Equity Research at Wells Fargo Securities, discusses the likelihood of other players making bids. (2 minutes)

http://www.phillipdampier.com/video/Bloomberg What Did Dish CEO Ergen Say About Sprint Bid 4-15-13.flv

A Bloomberg News reporter interviewed Charlie Ergen about why he wants to enter the wireless business.  Ergen’s vision includes no nickel and diming customers with monthly device fees and usage charges. (4 minutes)

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FCC Orders Deregulated Rates for Ohio and Calif. Time Warner Cable Customers

timewarner twcThe Federal Communications Commission has opened the door for Time Warner Cable to raise basic cable rates in several parts of Ohio and California after ruling the company faces effective competition from Dish Networks and DirecTV.

Under FCC rules cable rates for the broadcast basic tier, which includes local television stations and a handful of basic cable networks, remain regulated by the government until a cable operator can prove at least 50 percent of their service area is covered by a competing provider and 15 percent of its would-be customers are signed up with a competitor.

Cable companies have requested rate deregulation in countless communities as satellite and television service from phone companies penetrates their markets. Once rates are deregulated, cable operators can raise them to whatever price they believe the marketplace will bear.

In several affected communities, Time Warner Cable’s service is so uncompelling, almost half of the households have signed up for satellite service instead.

The communities affected in Ohio:

  • City of Bellefontaine
  • Howard Township
  • Village of Huntsville
  • Village of Lakeview
  • McArthur Township
  • North Bloomfield Township
  • Village of Russells Point
  • Stokes Township
  • Washington Township
  • Village of Zanesville

In California:

  • Bradford
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CNET’s Editorial Independence Questioned After Parent Company Blocks Award for DVR CBS Hates

Phillip Dampier January 14, 2013 Competition, Consumer News, Dish Network 1 Comment

hopperCNET was forced to withdraw a planned award for Dish Network’s ad-skipping “Hopper” DVR because the website’s owner, CBS, is suing the satellite dish company over the device.

The rift has led to questions about the editorial independence at CNET, and as of this afternoon, a senior writer has quit over the controversy.

Greg Sandoval, who formerly reported for the Washington Post and Los Angeles Times resigned in protest less than one hour after reports surfaced CNET was ordered to disqualify Dish Network from consideration at the Best of C.E.S. Awards in Las Vegas last Thursday.

The well-advertised Dish Hopper DVR allows viewers to seamlessly skip past advertising on recorded major network primetime programming. CNET disclosed that regardless of the product’s merits, it could not be considered at the awards event because the website’s owner was actively engaged in litigation that argues the device violates U.S. copyright laws.

“We are saddened that CNET’s staff is being denied its editorial independence because of CBS’s heavy-handed tactics,” said Dish Network CEO Joseph P. Clayton. “This action has nothing to do with the merits of our new product. Hopper with Sling is all about consumer choice and control over the TV experience. That CBS, which owns CNET.com, would censor that message is insulting to consumers.”

The Verge website turned up the temperature in CNET’s offices when it reported the Dish Hopper was banned from consideration only after it became apparent it was going to win an award:

Before the winner was unveiled, CBS Interactive News senior-vice president and General Manager Mark Larkin informed CNET’s staff that the Hopper could not take the top award. The Hopper would have to be removed from consideration, and the editorial team had to re-vote and pick a new winner from the remaining choices. Sources say that Larkin was distraught while delivering the news — at one point in tears — as he told the team that he had fought CBS executives who had made the decision.

cnetThe Verge added there was clear evidence of a growing influence on the editorial decisions at the digital news subsidiaries owned by CBS, all designed to protect the parent company.

Sandoval left almost immediately after The Verge went public with its report.

CBS released a statement earlier this afternoon:

CBS has nothing but the highest regard for the editors and writers at CNET, and has managed that business with respect as part of its CBS Interactive division since it was acquired in 2008. This has been an isolated and unique incident in which a product that has been challenged as illegal, was removed from consideration for an award. The product in question is not only the subject of a lawsuit between Dish and CBS, but between Dish and nearly every other major media company as well. CBS has been consistent on this situation from the beginning, and, in terms of covering actual news, CNET maintains 100% editorial independence, and always will. We look forward to the site building on its reputation of good journalism in the years to come.

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Dish Network Planning Nationwide 5Mbps Satellite Broadband Service

Dish Network is planning to introduce 5Mbps nationwide satellite broadband service after its partner company EchoStar successfully launched the satellite that will host the new service.

Bloomberg News reports Dish will introduce the service in late September or October this year and intends to market it in areas where DSL or cable broadband has been spotty or unavailable.

Dish’s broadband service will use its new EchoStar 17 satellite launched in July. The satellite can technically support download speeds up to 15Mbps, but Dish wants to start with slower speeds to maximize the number of potential customers the satellite can accommodate, which the company estimates can be as high as two million.

With an estimated 8-10 million Americans currently bypassed by broadband, Dish may have little trouble establishing a substantial customer base, if the service works as advertised. Past satellite broadband ventures have traditionally offered slow speeds and draconian “fair usage policies” which strictly limit how much customers can use the service.  The services are not cheap either.

EchoStar’s vice president of investor relations Deepak Dutt said the newest generation of satellite broadband services offer much faster service and higher capacity by an order of magnitude. But average usage per subscriber has also risen, providing a challenge for satellite broadband providers that may lack the capacity to sustain high bandwidth content, especially streaming video.

Dish already offers up to 12Mbps satellite broadband through a marketing partnership with Carlsbad, Calif.-based ViaSat, Inc. But ViaSat’s service is limited to certain geographic regions in the United States. Dish insiders say their service with EchoStar will compliment, not replace their deal with ViaSat, and will expand coverage nationwide.

The combination of broadband and satellite television may make it possible for Dish to sell new bundled packages that can compete with phone and cable companies. Dish also claims to be waiting for Federal Communications Commission approval to use its wireless spectrum to offer mobile Internet and phone service, which could also be included in a future bundled offer.

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Special Report: The Return of Wireless Cable, Bringing Along 50Mbps Broadband

A Short History of Wireless Cable

Spectrum offered Chicago competition to larger ON-TV, selling commercial-free movies and sports on scrambled UHF channel 66 (today WGBO-TV).

Long before many Americans had access to cable television, watching premium commercial-free entertainment in the 1970s was only possible in a handful of large cities, where television stations gave up a significant chunk of their broadcast day to services like ON-TV, Spectrum, SelecTV, Prism, Starcase, Preview, VEU, and SuperTV. For around $20 a month, subscribers received a decoder box to watch the encrypted UHF broadcast programming, which consisted of sports, popular movies and adult entertainment. The channels were relatively expensive to receive, suffered from the same reception problems other UHF stations often had in large metropolitan areas, and were frequently pirated by non-paying customers with modified decoder boxes.

With the spread of cable television into large cities, the single channel over-the-air services were doomed, and between 1983-1985,virtually all of their operations closed down, converting to all-free-viewing, usually as an independent or ethnic language television outlet.

But the desire for competition for cable television persisted, and in the mid-1980s the Federal Communications Commission allocated two blocks of frequencies for entertainment video delivery. The FCC earlier allocated part of this channel space to Instructional Television Fixed Services (ITFS) for programming from schools, hospitals, and religious groups, which could use the capacity to transmit programming to different buildings and potentially to viewers at home with the necessary equipment.

Home Box Office got its start broadcasting on microwave frequencies before moving to satellite.

In practice, ITFS channels allocated during the 1970s were underutilized, because running such an operation was often beyond the budgets and technical expertise of many educational institutions. Premium movie entertainment once again drove the technology forward. After signing off at the end of the school day, Home Box Office, Showtime, and The Movie Channel signed on, using microwave technology to distribute their services to area cable systems and some subscribers. As those premium services migrated to satellite distribution beginning in 1975, reallocation for a new kind of “wireless cable TV” became a reality.

Wireless cable (technically known as “multichannel multipoint distribution service”) began in earnest in the late 1980s and early 1990s, with a package of around 32 channels — typically over the air stations, popular cable networks, and one or two premium movie channels. Some operations in smaller cities sought to beam just a channel or two of premium movies or adult entertainment to paying subscribers, the latter at a substantial price premium. Installation costs paid by providers were more affordable than traditional cable television — around $350 for wireless vs. $1,000 for cable television. That made wireless attractive in rural areas where installation costs for cable television could run even higher.

However, it was not too long before wireless cable operators ran into problems with their business models. Obtaining affordable programming was always difficult. Some cable networks, then-owned by large cable systems, either refused to do business with their wireless competitors or charged discriminatory rates to carry their networks. By the time legislative relief arrived, the wireless industry realized they now had a capacity problem. As cable television systems were being upgraded in the 1990s, the number of channels cable customers received quickly grew to 60 or more (with many more to come with the advent of “digital cable”). Wireless cable was stuck with just 32 channels and a then-analog platform. Satellite television was also becoming a larger competitive threat in rural areas, with DirecTV and Dish delivering hundreds of channels.

American Telecasting gave up its wireless cable ventures, under such names as People’s Wireless TV and SuperView in 1997, selling out to companies including Sprint and BellSouth (today AT&T). BellSouth pulled the plug on the services in February, 2001.

Wireless providers simply could not compete with their smaller packages, and most closed down or sold their operations, often to phone companies. The few remaining systems, mostly in rural areas, have typically combined their wireless frequencies with satellite provider partners to deliver television, slow broadband, and IP-based telephone service.

Rebooting Wireless Cable for the 21st Century

By the early-2000′s the Federal Communications Commission proposed a new allocation for a “Multichannel Video and Data Distribution Service” (MVDDS). Designed to share the 12.2-12.7GHz band with Direct Broadcast Satellite (DBS) services DirecTV and Dish, MVDDS was partly envisioned as a potential way to deliver local stations to satellite subscribers over ground-based transmitters. But things have evolved well beyond that concept, especially after both satellite providers began using “spot beams” to deliver local stations to different regions from their existing fleet of orbiting satellites.

MVDDS was ultimately opened up to be either a competing cable television-like service or for wireless broadband, or both. Michael Powell, then-chairman of the FCC during the first term of George W. Bush, said the technology was free to develop as providers saw fit:

What is MVDDS? The short answer is that we do not know.  Its name, Multichannel Video Distribution and Data Service, seems to suggest everything is possible – and perhaps it is.

But the service rules the Commission has adopted do not require MVDDS to provide any particular kind of service – it could be a multichannel video, or data, or digital radio service, or any other permutation on spectrum use.

The Commission was once in the business of requiring spectrum holders to provide a certain type of service.  That approach failed because government is a very bad predictor of technology and markets – both of which move a lot faster than government.  Over the past decade or so, the Commission has adopted more flexible service rules that bound a service based largely on interference limitations and its allocation (fixed or mobile, terrestrial or satellite).  In this Order, we follow that flexible model for MVDDS.

In 2004 and 2005, licenses to operate MVDDS services were opened up for auction, and a handful of companies won the bulk of them: MDS America, which built a 700-channel wireless cable system in the United Arab Emirates, DTV Norwich, an affiliate of cable operator Cablevision, and South.com, which is really satellite provider Dish Network. Another significant winner was Mr. Bruce E. Fox, who wants to partner with other providers to finance and operate MVDDS services.

Cablevision and Fox are the two most active license recipients at the moment.

A Look at Today’s MVDDS Wireless Players

Fox launched Go Long Wireless in Baltimore as a demonstration project. Go Long transmits its signal from the roof of the World Trade Center at the Baltimore Inner Harbor to the Emerging Technology Center, a business incubator site a few miles away. Fox believes the technology is especially suited to multi-dwelling units like apartment complexes and condos. He plans to work with other service providers who will market and bill the service under their own brand names. Fox does not seem to be interested in challenging the marketplace status quo. He does not believe in using MVDDS to provide television service, for example. In Fox’s view, the real money is in broadband and Voice over IP telephone service.

Cablevision’s involvement is more direct-to-consumer. Its Clearband service– now operating under the new brand ‘OMGFAST’ — is now selling up to 50/3Mbps wireless broadband service in the Deerfield Beach, Fla. area. The company has had nothing to say about whether this service is slated to expand, and if it does, Cablevision will not be permitted to operate it in areas where they already provide cable service, due to the FCC’s cross-ownership rules.

OMGFAST originally bundled voice service in its broadband packages, which it sold at different price points: 12Mbps for $39.95 a month, 25Mbps for $59.95 a month, and 50Mbps at $79.95. The company also tested a 50Mbps promotion priced at $29.95 a month for three months, $59.95 ongoing. Today it offers a better deal: $29.95 a month for 50Mbps service as an ongoing rate. (Expect to pay $10 a month more for mandatory equipment rental, and $14.95 a month if you also want voice service.)

http://www.phillipdampier.com/video/Clearband FAST 50 Mbps Internet.flv

Here is a promotional video explaining how Clearband (now OMGFAST) wireless broadband works. (3 minutes)

MVDDS currently delivers broadband with similar constraints cable systems operate under — namely, download speeds are much faster than upload speeds. That is because upstream bandwidth relies on another transmission technology, often WiMAX, in the 3.65 GHz or 5 GHz bands.

The wireless technology is also very “line of sight,” meaning the tower must be within six miles of the subscriber and not blocked by any obstructions. Hills, buildings, even heavy foliage can all block MVDDS signals the same way satellite signals can be blocked (they share the same frequencies).

Most customers end up with an antenna that very much resembles a traditional satellite dish from DirecTV or Dish, mounted on a roof. To maximize available bandwidth, MVDDS uses a configuration similar to cellular systems, with up to 900Mbps of total bandwidth available to each 90-degree narrow beam sector.

Cablevision has MVDDS licenses to serve most large cities in the United States.

The question is, how will license holders ultimately use the technology. Although originally proposed as a competitor to traditional cable or satellite TV, deregulation has left the fate of MVDDS in the hands of the operators.

Some are considering not selling the service to consumers at all, but rather making a market out of providing backhaul connectivity for cell towers. Dish may be interested in using its licenses to offer customers a triple play package of broadband and phone service with its satellite TV package. Nobody seems particularly interested in providing television service over MVDDS, primarily because programmers’ demands for higher carriage payments would cut into revenue.

Even Cablevision isn’t completely sure what it wants to do. Although it currently is trialing broadband and phone service in Florida, the company earlier petitioned the FCC for increased power to establish a more suitable wireless backhaul service it can sell to mobile phone companies.

For the moment, reviews seem relatively positive for the Florida market test. Of course, as more customers pile on a wireless service, the less speed becomes available to each customer. OMGFAST does not appear to be currently concerned, noting it has no usage caps on its service.

Want to know which provider may be coming to your area? See below the jump for a list of the top-three bid winners and the cities they are now licensed to serve, in order of market size.

… Continue Reading

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Special Report — Retransmission Consent Wars 2012: Disputes Becoming Daily Nuisance

Customers sitting down to watch the local news in Louisville, Ky. on Time Warner Cable (formerly Insight) now get to see stories about ongoing bankruptcy woes at Eastman Kodak, house fires in Irondequoit, road work in Greece, and Scott Hetsko’s local forecast… for Rochester, N.Y.

http://www.phillipdampier.com/video/WLKY Louisville WLKY Remains Off the Air 7-16-12.flv

WLKY in Louisville is no longer seen on former Insight cable systems (now owned by Time Warner Cable). In its place, Louisville viewers are watching WROC-TV in Rochester, N.Y.  Here is why. (3 minutes)

No, it is not some weird sunspot reception and nobody transported you from Kentucky to western New York while you were sleeping. It’s simply another epic battle waged in:

RETRANSMISSION CARRIAGE CONSENT WARS: 2012

“Not getting the channels you are paying for does not necessarily entitle you to a refund, but does require you to pay more when a deal is eventually struck.”

WESH-TV in Daytona Beach/Orlando, Fla. is one of the Hearst-owned stations affected in the dispute with Insight/Time Warner Cable/Bright House Networks.

These skirmishes used to be commonplace around the end of the year, when carriage agreements between cable, satellite, and telephone companies with cable networks and local stations came up for renewal. When the programmer passed a figure written on a folded up piece of paper across the table to your pay television provider, the shock and awe of that number, occasionally 100-300 percent more than the year before, was the opening shot in a battle that now increasingly leads to favorite local stations or cable channels being stripped from your lineup.

In Louisville, that is precisely what happened to WLKY-TV, one of 15 stations owned by Hearst Television, taken off the lineup when Time Warner Cable/Insight/Bright House Networks could not successfully negotiate a renewal agreement. Time Warner complained Hearst wanted 300% more for each of the affected stations, an increase sure to be passed along to cable customers already long weary of endless annual rate increases. That was the same story told in other cities affected by what is now a week-long blackout. In Greensboro/Winston-Salem, N.C., Time Warner customers are doing without WXII-TV. Kansas City customers lost two local stations owned by Hearst – KMBC and KCWE. Two stations are also missing from Bright House’s lineup in Orlando: WESH and WKCF.

Hearst Television’s general manager and president of WLKY has stopped referring to those watching the station simply as “viewers.” Glenn Haygood now calls them “subscribers.” Haygood talks with WHAS Radio about the dispute and what he thinks about Insight/Time Warner Cable. (10 minutes)

Insight/Time Warner Cable customers in Louisville, Ky. are now watching CBS shows on WROC-TV from Rochester, N.Y.

But why are Louisville viewers now watching the boating forecast for Lake Ontario, several hundred miles away? Because Time Warner Cable thinks it has a signed contract with Nexstar Broadcasting Group that lets them turn several Nexstar-owned stations into “superstations,” importing them in cities where contract disputes have knocked the local station off the cable lineup. In Louisville, WLKY, a CBS affiliate, has been replaced by WROC, the CBS affiliate in Rochester. In Greensboro and several other cities, WXII, an NBC affiliate, has been replaced with WBRE in Wilkes Barre, Penn. Some other Time Warner customers are instead watching WTWO out of Terre Haute, Ind., for NBC shows.

It represents a half-measure that Time Warner Cable’s Jeff Simmermon tells Stop the Cap! is “making the best of a tough situation.”

Viewers are naturally outraged.

“I’ve always wanted to know the weather and news in Rochester, Buffalo, Ontario and Caribou,” Kelly Grether teased. “Louisville did make [WROC's weather] map believe it or not.”

Others are simply confused and engaged in must-flee TV.

“I saw the news coming on,” Greensboro resident Mona Wright told the News & Record. “It didn’t take me but one minute to figure out that these counties were nowhere around us; I changed the channel.”

Some Louisville viewers are even assuming the sales and discounts being advertised on WROC are good in Kentucky as well (often, they are not).

For now, it is difficult for Kentucky viewers to know what WROC is airing because the local on-screen program guide has not been updated to include listings for the Rochester station. Time Warner is pushing a lot of viewers to WROC’s website for program information.

Viewers hoping to practice their Jeopardy and Wheel of Fortune skills during the dinner hour lost that opportunity altogether in some cities, while in the Triad of North Carolina, viewers discovered the two shows on two different channels at the same time.

For now, WROC has completely ignored its new Kentucky audience, but WBRE’s morning anchors now regularly acknowledge and welcome their viewers from several states away.

http://www.phillipdampier.com/video/WFTV Orlando WESH Disappears from Bright House 7-10-12.flv

WFTV in Orlando reports on Bright House Networks’ customers being shut out of WESH-TV in Daytona Beach after the cable operator failed to meet Hearst Television’s demands for an increase in carriage payments.  (2 minutes)

The dispute has since enlarged to bring in side players who are unimpressed with Time Warner’s creative problem-solving:

  • Impacted stations now off Time Warner’s lineup think the “new” stations on the lineup are about as honorable as employing scab workers during a union strike;
  • Nexstar, for the second time, declares Time Warner is illegally importing their stations to unauthorized places. They are threatening to complain to the FCC and possibly sue to stop the practice. Nexstar earlier complained about a similar dispute in upstate New York which left viewers in northern New York watching WBRE in Wilkes-Barre. But the carriage dispute was settled quickly enough for WBRE to go back to being  viewable only in Pennsylvania, ending the dispute;
  • Syndicated program owners sell shows like Wheel of Fortune on a “market exclusive” basis, which means competing local stations already paying for syndicated shows do not want out of area stations also carrying those shows to local audiences, diluting their audience.
  • Advertisers on stations now off the lineup paid ad rates based on tens of thousands of cable viewers who are now probably watching another station. Some are demanding “make goods” or outright refunds to get the value for money they were originally promised.

But nobody is more caught in the middle than consumers, especially those paying for channels they are no longer getting.

“I want my money back,” says Orlando Bright House customer Luis Fernandez. “I have lost two stations on my lineup and my bill should be going down to compensate, but Bright House is refusing to credit me.”

Time Warner Cable does not usually give refunds either, arguing that its customers pay for a package of channels and the technology that delivers those networks to customers. Giving a refund for the loss of one or two stations would be tantamount to the industry’s worst nightmare: getting customers used to the idea of paying individually for every channel.

One customer willing to make himself a major nuisance in Wauwatosa, near Milwaukee, Wis., finally wore Time Warner down and secured a $5 a month discount on his bill for the length of the dispute that knocked Milwaukee’s WISN off his lineup.

“[I called] Time Warner to voice my disgust in them putting me (the paying customer) in the middle of their negotiation failures, and after reaching a ‘supervisor,’ I was able to get a discount on my monthly bill,” the reader told the Journal-Sentinel. “It wasn’t easy, but I did it.”

Hearst is encouraging viewers to drop Time Warner like a hot potato and switch to AT&T U-verse or a satellite provider like DirecTV. Negotiations seem to be continuing on a sporadic basis, but one week later, customers heading for the door have already left or are simply watching the local news on another channel.

Satellite Showdown — DirecTV vs. Viacom: Playing Down and Dirty With Everyone

http://www.phillipdampier.com/video/Viacom Ad.mp4

Viacom turns the tables on DirecTV’s clever ads to lambaste the satellite provider for cutting off more than two dozen cable channels owned by Viacom.  (1 minute)

If a customer took Hearst’s advice, they might find themselves out of the frying pan and into the fire. Newly arriving DirecTV customers can join the Anger Party 20 million satellite customers are now throwing over a much larger, higher profile dispute between the satellite provider and Viacom. Collateral damage: the loss of networks including Palladia, Centric, Tr3s, CMT, Logo, NickToons, VH1 Classic, TeenNick, Nick Jr., Nick@Nite, Spike, BET, VH1, TV Land, Comedy Central, Nickelodeon and MTV.

Some financial analysts are calling the dispute the mother-of-all-program-fee-battles, and as they watch both sides dig in, some warn it could mean DirecTV customers won’t be watching The Daily Show with Jon Stewart until August.

DirecTV says Viacom wants a 30% rate increase to renew its contract to carry the company’s networks. That is comparatively cheap contrasted with the prices Hearst wants Time Warner Cable to now pay. Analysts expect DirecTV and Viacom will eventually settle their dispute by agreeing to a 27% rate increase, but nobody knows how long the two will battle it out before an inevitable agreement is reached.

Regardless of the timing, customers will likely pay the price. Nomura analyst Michael Nathanson informed his Wall Street clients DirecTV will end up paying Viacom $2.85 per subscriber — about 60 cents more per month than it pays today. That’s tough for DirecTV to swallow, and probably even harder to pass along to customers. Satellite TV providers have some of the country’s most-frugal pay television customers who are especially resistant to rate increases.

The dispute is so high profile, both companies are bringing out high-powered executives and show talent to argue their respective cases.

Millions of dollars are at stake, and both Viacom and DirecTV are willing to fight to the death, even leaving customers on the battlefield.

http://www.phillipdampier.com/video/DirecTV Viacom Dispute 7-12-12.mp4

Not so fast, says DirecTV CEO Michael White, seen here presenting DirecTV’s position in the Viacom dispute for the benefit of concerned customers.  (1 minute)

“All we are trying to get is a fair deal for our customers and I’m sorry our customers are being forced into the middle of this,” DirecTV’s Michael White said. “We just think we pay a half a billion dollars a year and a billion dollar increase over five years, over 30 percent, is not justified by the marketplace or fair relative to our largest competitors or by their ratings.”

Viacom CEO Philippe Dauman counters, “In the last seven years since we did the last DirecTV deal, we have successfully and peacefully concluded affiliate agreements with every major distributor in the U.S. We are prepared to move forward. It’s unfortunate consumers for the first time are not able to enjoy our channels,” said Dauman, adding, “I don’t want to negotiate in public.”

DirecTV was telling its customers it can watch many of the missing shows for free online, until Viacom reportedly began removing that direct viewing option last week. That hardball tactic could impact everyone trying to stream Viacom’s shows — DirecTV customer or not.

“We’ve temporarily slimmed down our offerings, as DirecTV markets them as an alternative to having our networks,” a Viacom spokesman told CNNMoney. “The online content is intended to serve as a complimentary marketing tool for our partners.”

“At least they were honest about the reasons why they pulled this,” said Stop the Cap! reader Dick Armlo, a DirecTV customer in Idaho. “But fortunately, you can still find a lot of the shows on Amazon’s video on demand and Hulu.”

Customers threatening to switch providers often discover the new neighborhood they move to is just as bad as the one they left.

Dish Network customers are currently enduring a long-standing dispute with Cablevision-owned AMC Networks. The result is no AMC, IFC, Sundance Channel and WeTV on Dish. AMC is telling Dish customers to turn their dish into a birdbath and head elsewhere… perhaps to AT&T U-verse which just recently averted its own blackout with AMC over the same channels. AT&T customers can expect part of their next rate increase to cover the negotiated rate hike AMC won for itself — the one AT&T agreed to on your behalf. After all, it’s your money at stake, not theirs.

http://www.phillipdampier.com/video/CNBC Viacom CEO on Dispute 7-12-12.flv

CNBC talks with Viacom CEO Philippe Dauman to get his views about the dispute with one of his best customers — DirecTV.  (2 minutes)

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