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WOW Goes Public; At High Risk of Acquisition as Cable Industry Consolidates

Phillip Dampier May 16, 2017 Broadband Speed, Competition, Consumer News, WOW! 1 Comment

WideOpenWest, better known to subscribers as WOW!, has filed with the Securities and Exchange Commission to become a publicly traded company as it seeks to raise funding and make itself an attractive proposition for investors and potential buyers.

The company will initially remain under the control of Avista Capital Partners (44%), which has been an investor in WOW! from the beginning, joined by Crestview Partners (29%), which invested $125 million in the cable company in 2015.

WOW! is currently the sixth largest cable operator in the United States and an attractive takeover target for cable operators like Altice USA, Charter Communications or Comcast. In fact, WOW! provides direct cable competition for Charter and Comcast in the midwest and southeastern United States. Should either of those operators acquire WOW!, that competition will cease. The most likely buyer, however, is Altice USA, which is expected to offer its own IPO to raise funds specifically to acquire American cable companies. Altice currently owns Cablevision and Suddenlink.

WOW! has 772,300 subscribers, but is available to up to three million homes.

The cable company has also ditched its traditional logo and adopted a new one:

Old Logo

Old Logo

New Logo

WOW! is known for high quality customer service and aggressive service plans. Here is their current broadband offer:

FCC’s Mike O’Rielly Tells ALEC FCC Should Ban State Laws on Broadband Privacy, Consumer Protection

O’Rielly

Republican FCC Commissioner Mike O’Rielly wants the FCC to prohibit states from attempting an end run around the current majority’s broad-based deregulation of ISPs, likening it to a war of socialist forces vs. free market capitalism.

Speaking at the American Legislative Exchange Council’s Spring Task Force Summit Annual Summit in Charlotte, N.C. on May 5, O’Rielly made it clear he intends to stop states from writing broadband privacy rules to replace those killed by the Republican majority in Congress and also wants to restrict states from enacting new rules impacting Voice over IP and broadband. O’Rielly told the audience he had already spoken to Chairman Ajit Pai about his ideas, potentially giving his agenda a majority vote on the Commission. Currently, the FCC has just three commissioners – Ajit Pai, Mike O’Rielly, and Democrat Mignon Clyburn.

In earlier remarks, Pai rejected allowing states to make their own decisions about broadband privacy policies.

“It is both impractical and very harmful for each state to enact differing and conflicting privacy burdens on broadband providers, many of which serve multiple states, if not the entire country,” said Pai. “If necessary, the FCC should be willing to issue the requisite decision to clarify the jurisdictional aspects of this issue.”

FCC action could potentially pre-empt any state laws from at least 10 states that have either passed ISP privacy laws or are planning to.

O’Rielly declared he intends to move broadband regulation away from the agenda favored by the Obama Administration’s FCC chairman Thomas Wheeler and return to hands-off policies allowing cable and phone companies to manage their businesses without government interference. O’Rielly told a cheering audience at the corporate-funded conference that under Chairman Pai’s watch, the FCC will return to “its previous approach to broadband that enabled staggering innovation, creativity, competition, disruption and consumer benefit.”

O’Rielly characterized groups fighting for consumer legislation banning zero rating/data caps, rate regulation, oversight, and consumer protection laws as part of a nefarious “progressive agenda to vanquish capitalism and economic liberty.” Like ALEC, O’Rielly claimed, the FCC has been unfairly attacked by progressive groups that call out both Chairman Pai’s agenda at the FCC and ALEC itself for ghostwritten legislation actually written by large corporate interests and passed for their welfare.

“Like ALEC, the new commission is facing its share of unwarranted and inappropriate criticism,” O’Rielly complained.

O’Rielly’s speech declared war on three hot issues broadband companies and consumers are concerned with: Net Neutrality, community-owned broadband networks, and state regulators seen as meddling with the free market.

  • Net Neutrality: “All of the propaganda in the world cannot paper over the fact that these new burdens were not in response to actual marketplace events but hypothetical concerns dreamed up by radical activists.”
  • Regulation of Voice over IP Phone Service in Minnesota to assure quality of service: “Such inappropriate jurisdictional overreaches by states should be nipped in the bud.”
  • Municipal Broadband: “It would be easy, as some have done, to blindly support any means necessary to get more and faster broadband to people they represent.”

O’Rielly sought a tighter partnership with ALEC to stop consumer groups from enacting new laws that protect an open internet:

“The members of ALEC can serve an important role as the new Commission seeks to restore free market principles to broadband offerings. Many of you know all too well of the pressure on us to buckle and acquiesce to the whims of the misinformed screaming for Net Neutrality. You likely face it at your respective statehouses as you debate the various matters before you. The ‘progressive agenda’ being pushed in so many settings is really an effort to use government as a means to redistribute hard earned assets from one group of people to favored interests. Do not let your voices go unheard as Net Neutrality advocates slowly, but surely, seek to drag the U.S. economy toward socialism.”

On municipal broadband, O’Rielly stretched his premise into a comparison of communities that want to have the ability to build their own networks with past offers of discounted heating oil from former Venezuelan dictator Hugo Chavez, suggesting good deeds on the surface may lead to unintended consequences later on.

Byron is on ALEC’s Communications and Technology Task Force

O’Rielly has also been infuriated with Minnesota’s Public Utilities Commission, which has been sparring with Charter Communications over its cable “digital phone” service in the U.S. District Court in St. Paul.

In March 2013, Charter Fiberlink Companies transferred 100,000 Minnesota customers to “an affiliate, Charter Advanced Services Companies, which provided VoIP phone service that was not certified” by the PUC, the Commerce Department said.

Better known as Spectrum Voice, Charter’s VoIP service had failed to collect any fees to support the state’s Telecommunications Access Minnesota program, which provides equipment for hearing-impaired and blind consumers who use the Minnesota Relay Service. Charter also refused to credit low-income consumers who would otherwise qualify for Lifeline phone service at discounted rates.

If the court determined VoIP was a “telecommunications service,” Minnesota regulators could force Charter to comply with state law. If determined to be an “information service,” federal rules exempting Charter would apply.

The week after O’Rielly delivered his speech a Minnesota federal charge ruled in favor of Charter and against the state regulator.

U.S. District Judge Susan Richard Nelson relied on arcane terminology that lets Charter avoid state regulation:

“The court agrees with Charter Advanced that Spectrum Voice engages in net protocol conversion, and that this feature renders it an ‘information service’ under applicable legal and administrative precedent,” according to the opinion. Although Judge Nelson agreed that “the frank purpose” behind Charter’s customer shuffling was to “limit the reach of state regulation, thereby enhancing Charter’s market competitiveness,” she said the service fit the qualifications of an information service.

“The touchstone of the information services inquiry is whether Spectrum Voice acts on the customer’s information — here a phone call — in such a way as to ‘transform’ that information,” the opinion said.

Regardless of the judge’s decision, O’Rielly wants to prevent a recurrence of state regulator interference in the cable industry’s phone business.

“The commission should have just declared VoIP to be an interstate information service,” O’Rielly told the audience. “Arguably, VoIP is just an application not even subject to FCC jurisdiction much less that of individual states.”

Rat’s Nest: Maine’s Governor Picks Former AT&T Lobbyist as State’s New Public Utility Advocate

Phillip Dampier May 2, 2017 Issues No Comments

Republican Gov. Paul LePage has picked a former telecom industry insider and lobbyist to serve the interests of public utility customers and consumers in Maine.

Barry Hobbins is known as an “old school” Democrat, and has been a part of Maine politics for 26 years — since 1972 — most recently as a top political fundraiser. Perceived as unlikely to rock many boats, he was appointed by the Republican governor to replace the current Public Advocate Tim Schneider, who worked on a solar energy bill the governor loathed and vetoed last year.

At the same time the governor is suing the state’s Attorney General for refusing to toe his line on the political positions of his administration, LePage insists Hobbins will serve only the interests of public utility customers and not those held by special interests. The Public Advocate is the public’s representative before the Maine Public Utilities Commission, federal regulators and the state legislature.

“That’s what the public advocate job is: to represent the ratepayer, not to represent a special interest,” LePage told reporters at a recent press conference.

Hobbins

But consumer advocates note Hobbins has already represented several special interests, most notably AT&T, where he served as a lobbyist after temporarily leaving the legislature in 1990. Hobbins is also no stranger to taking lavish gifts from the state’s largest telecom companies, including Time Warner Cable (now Charter Communications). In 2013 and 2015, Hobbins was paid $5,300 and $8,257 respectively to attend industry-sponsored events the cable company called their “winter policy conferences.”

In 2015, Stop the Cap! reported on one of these conferences held at the cushy Cape Elizabeth seaside resort Inn by the Sea, where room rates routinely hit the $500 a night mark. Hobbins was in attendance with about a dozen other legislators, enjoying the complimentary menu which included light noshing options like a herb marinated skirt steak with roasted mushrooms, chimichurri, piquillo aioli, and herbed hand cut steak fries that would cost you or I at least $26, drinks not included.

Hobbins also stayed to enjoy a full menu of lobbyist hobnobbing and “educational” attacks on community broadband, opposition to government oversight of broadband, and efforts to ensure state laws continued to favor incumbent providers:

“Welcome to Inn by the Sea, where relaxed coastal luxury comes naturally.”

  • Moderator (Session 1): Jadz Janucik, National Cable & Telecommunication Association – The NCTA is the nation’s largest cable industry lobbying group;
  • Dave Thomas, Sheppard Mullin Richter & Hampton LLP: A corporate attorney representing cable companies, particularly when they face competitive threats;
  • Lisa Schoenthaler, National Cable & Telecommunication Association;
  • Moderator (Session 2): Charlie Williams, Time Warner Cable;
  • Charles Davidson and Michael Santorelli from the Advanced Communications Law and Policy Institute at New York Law School. Both have received direct compensation from Time Warner Cable for their  “research” reports and are very active and frequent defenders of Time Warner Cable’s public policy agenda;
  • Joe Gillan, Gillan Associates – an economist working under paid contract with the cable industry;
  • Moderator (Session 3): Tom Federle, Federle Law: Chief lobbyist for Time Warner Cable in Maine for over seven years;
  • Robin Casey, Enockever LLP: Casey is one of the nation’s pre-eminent cable industry lawyers, called by the Texas Cable Association “the authority on the telecom industry;”
  • Mary Ellen Fitzgerald, Critical Insights: A Maine pollster hired by Time Warner Cable to carry out the company’s carefully worded survey on broadband issues;
  • Moderator (Session 5): Melinda Poore, senior vice president of governmental relations, Time Warner Cable Maine.

Hobbins claimed his extensive involvement in the telecommunications industry never influenced his legislative work and won’t if he becomes public advocate. But Hobbins has kept extremely close ties with his friends in the cable industry. Tom Federle, Time Warner Cable’s former chief lobbyist also served as former treasurer of a political action committee directly controlled by Hobbins, one that raised more than $30,000 for Maine politicians from Time Warner Cable, AT&T, an industry association, and Federle’s own law firm. That fundraising committee coincidentally disbanded.

Federle promotes his close ties to legislators like Hobbins on his website:

Since 2000, Tom has been an extremely effective advocate and lobbyist for clients before the Maine Legislature. Tom has represented some of Maine’s largest businesses and associations in advancing sound public policy positions. Tom’s work experience both in the private sector and at the highest levels of state government provides him with invaluable perspective and real know-how. Tom puts this to work for his clients to influence the outcome of legislation that impacts his client’s objectives. Tom’s balanced demeanor and tenacity combine to make him a particularly effective advocate before the Maine legislature.

Federle

In recent testimony, Federle used his position and influence to blast efforts to improve community-owned broadband services in Maine, telling the legislature: “There are countless examples of government getting into the business of providing broadband, with taxpayers footing the bill, only to end in failure with mountains of debt.”

In April, Maine State Representative Nathan Wadsworth (R-Hiram) introduced a bill to revoke local authority over building internet networks needed by local businesses and residents. The one-time Maine state ALEC chair introduced HP 1040 (also cross filed as LD 1516) to attempt to block efforts to construct public broadband networks and protect incumbent providers. This, despite the fact Maine has ranked 49th out of 50 states in the quality and availability of broadband service.

“This effort joins a national trend of big cable and telephone companies, like Time Warner Cable and FairPoint, leaning heavily on state legislatures to protect themselves from competition,” says Christopher Mitchell, director of the Community Broadband Networks initiative at the Institute for Local Self-Reliance. “Communities do not make these investments when they are well served. If big cable and telephone companies want to preserve market share, they should invest in better services rather than crony capitalist laws.”

Where Hobbins stands on the issue isn’t known.

The nomination will go before a legislative confirmation hearing May 9.

FCC Gives Quick Approval of TV Station Sale That Could Speed AT&T-Time Warner Merger

REUTERS/Brendan McDermid

WASHINGTON (Reuters) – The U.S. Federal Communications Commission said on Monday it approved Time Warner Inc’s sale of a broadcast station in Atlanta to Meredith Corp, a transaction that could help speed Time Warner’s planned merger with AT&T Inc.

In January, AT&T said it expected to be able to bypass the FCC in its planned $85.4 billion acquisition of Time Warner because it would not seek to transfer any significant Time Warner licenses.

FCC Chairman Ajit Pai said previously he did not plan to use the proposed TV station license transfer as a way to examine the AT&T-Time Warner merger. About a dozen senators had urged him to review the deal.

The station that Time Warner is selling, WPCH-TV, for $70 million, is its only FCC-regulated broadcast station. It has other, more minor FCC licenses.

Meredith has operated WPCH-TV for Time Warner since 2011. It was previously known as WTBS. The station is no longer considered a superstation in the United States, after Turner Broadcasting System created a new national network it dubbed TBS. WTBS changed its over-the-air call letters to WPCH, rebranded as “Peachtree TV,” and is considered an independent television station airing off-network sitcoms and dramas. However, WPCH is still widely seen across Canada, where it remains a “superstation” after Canadian regulators refused to allow Canadian providers to carry Turner’s TBS network.

WPCH-TV, an independent TV station in Atlanta, dubs itself as “Peachtree TV.”

In a statement on Monday, Meredith said it was pleased the FCC approved the application and that it anticipated “moving forward expeditiously to close this deal.”

The company said in February it expected to close on the sale by June 30 and that the deal would not have a material impact on its results.

Time Warner did not immediately comment on the FCC approval.

The Justice Department has to prove a proposed deal harms competition in order to block it. The FCC has broad leeway to block a merger it deems is not in the “public interest” and can impose additional conditions.

AT&T Chief Executive Randall Stephenson told CNBC in February the Justice Department review was ongoing and he thought the deal would close by the end of the year.

“It’s a clean transaction,” he said.

(Reporting by David Shepardson; Additional reporting by Stop the Cap!/Phillip Dampier.)

Wall Street Analyst: Cable Monopoly Will Double Your Broadband Bill

Thought paying $65 a month for broadband service is too much? Just wait a few years when one Wall Street analyst predicts you will be paying twice that rate for internet access, all because the cable industry is gradually achieving a high-speed broadband monopoly.

Jonathan Chaplin, New Street Research analyst, predicts as a result of cord-cutting and the retreat of phone companies from offering high-speed internet service competition, the cable industry will win as much as 72.2% of the broadband market by the year 2020. With it, they also win the power to raise prices both fast and furiously.

In a note to investors, Chapin wrote the number of Americans left to sign up for broadband service for the first time has dwindled, and most of the rest of new customer additions will come at the expense of phone companies, especially those still selling nothing better than DSL.

“Our long-term penetration forecast is predicated on cable increasing its market share, given a strong network advantage in 70% of the country (this assumes that telco fiber deployment increases from 16% of the country today to close to 30% five years from now),” Chaplin wrote.

Cable companies already control 65% of the U.S. broadband market as of late last year. Chaplin points out large cable operators have largely given up on slapping usage caps and usage pricing on broadband service to replace revenue lost from TV cord-cutting, so now they are likely going to raise general broadband pricing on everyone.

“Comcast and Charter have given up on usage-based pricing for now; however, we expect them to continue annual price increases,” Chaplin said. “As the primary source of value to households shifts increasingly from pay-TV to broadband, we would expect the cable companies to reflect more of the annual rate increases they push through on their bundles to be reflected in broadband than in the past. Interestingly, Comcast is now pricing standalone broadband at $85 for their flagship product, which is a $20 premium to the rack rate bundled price.”

Chaplin himself regularly cheerleads cable operators to do exactly as he predicts: raise prices. Back in late 2015, Chaplin pestered then CEO Robert Marcus of Time Warner Cable about why TWC was avoiding data caps, and in June of that year, Chaplin sent a note to investors claiming broadband was too cheap.

“Our analysis suggests that broadband as a product is underpriced,” Chaplin wrote. new street research“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

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  • Required: It's hard to believe people who just need entry level internet access are willing to pay $65/mo for that, alone. No wonder so many customers are fleei...
  • FredH: I keep hearing that (about trying to eliminate the 7 year no-data-cap requirement) and wonder how it's even possible. I hope the NYS AG will get invo...
  • John: It might be a problem with a person with disablities tries to pay and they charge them....
  • John: Well, time for everyone to start paying them by snail mail, then....
  • Mike D.: And for those who are planning to "cut the cord" after a promotion expires, be aware that Charter is lobbying the new administration and FCC chairman ...
  • Dylan: Huh, that's interesting regarding that Spectrum only saves 3/10 of its customers. Maybe there is something going on. And regarding my own promotion -...
  • Phillip Dampier: You were not on a promotion before which is why you got one this time. One year from now when your bill spikes and you call and complain, they will te...
  • Dylan: It's not that hard to get new customer pricing from Spectrum. I used to be a TWC customer paying $65/mo for 50 Mbps down internet. Once Spectrum came...
  • NM: Phillip, You may be interested in today's online story in Syracuse.com about what Spectrum's customers in CNY think about the merged company: http://...
  • Jim J: Dial tone is dial tone....
  • Julia: Even in life after TWC, if customer complaints remain the same or if a customer service rep claimed to have fixed a problem, but really didn't, you ca...
  • DPNY: As soon as Spectrum took over, my bill went up (a couple of dollars, but still)! I pay almost $250 a month as it is now for the package! I can think...

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