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Time Warner Cable’s New Ad Campaign Advertises “No Data Caps”

nocapsTime Warner Cable has introduced a new marketing message to potential customers, promoting the fact its broadband service has “no data caps.”

The new ads, appearing for the first time earlier this month, break from the usual tradition of avoiding telling customers they can use broadband service as much as they like. The cable industry advertised “unlimited access” in its broadband offer for years to compete against dial-up Internet. More recently some have redefined the term to mean “you can use the service anytime day or night,” but not consume unlimited amounts of data.

Of course, with Comcast attempting to claim they have “no data caps” either, only “data thresholds,” Time Warner Cable still has some wiggle room should it impose usage-based billing. Technically, under that scheme users don’t have a “data cap,” just a usage allowance above which they will face overlimit penalties.

Still, it is a nice change for at least one major cable company to be willing to market service without data caps. Time Warner’s most likely intended target for the campaign is AT&T U-verse, which has increasingly cracked down on customers exceeding its own usage caps — 150GB a month for DSL, 250GB a month for U-verse. Customers pay a overlimit penalty of $10 for each 50GB allotment above those allowances.

 

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Comcast Awarded Golden Poo as Consumerist’s Worst Company in America for 2014

Comcast is 2014's Golden Poo award winner. (Image: Knight725)

Comcast is 2014′s Golden Poo award winner. (Image: Knight725)

Comcast eked out a narrow victory against Monsanto — the litigious-happy, genetically modified-seed company — to win top honors in the 2014 Consumerist “Worst Company in America” contest.

Comcast is a past recipient of the pro-consumer website’s Golden Poo award given to the company that most alienates its customers, winning first place in 2010 after implementing usage caps on its broadband customers, as well as runner-up status in 2008 and 2009 and third place in 2011 and 2013.

“Comcast’s win makes it only the second company to claim multiple Poos. Last year, video game biggie EA was both the first two-time winner and its first repeat champ,” reports Consumerist.

The nation’s largest cable company, Comcast managed to irritate more than any other with an arbitrary usage cap it now wants to call a “data threshold,” shoddy service, service calls that never happen, incompetent technicians that set customer homes on fire, billing errors, and inventing new profit-padding fees for almost everything.

Getting larger with the acquisition of NBC Universal did little to improve matters for customers, and one high executive cynically delayed a planned low-income discount Internet access offer to use as a carrot with the FCC to win approval of its NBC merger deal. To this day, Comcast goes out of its way to impose a number of qualifications for its Internet Essentials program to protect profits potentially harmed by customers switching to cheaper service to save money.

finaldeathmatch2014

Now Comcast wants to buy Time Warner Cable, the country’s second largest operator. Despite the fact there is little love from subscribers for Time Warner, many suspect Comcast will prove much worse. A merger brings the threat of a 300GB usage limit on broadband, an even higher modem rental fee, and cable television packages that are often more expensive than those from Time Warner.

Comcast’s greatest defense for its merger is that it doesn’t compete with Time Warner Cable so there are no antitrust concerns. But since the cable industry has borrowed from New York’s Five Families‘ playbook, they almost never compete anywhere in the country, preferring to divide up territories and avoid head-to-head competition.

“By Comcast’s logic, it would then be perfectly okay for Comcast to be the only cable and Internet provider in the country, since there isn’t really any competition among the players in this marketplace to begin with,” writes the Consumerist.

We say don’t give them any ideas.

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Google Fiber Threat Cited in Cincinnati Bell’s Decision to Sell Wireless Division to Verizon Wireless

cincinnati bellCincinnati Bell threw in the towel on its wireless mobile business Monday when it decided to sell its wireless spectrum licenses, network, and 340,000 customers for $210 million to its larger rival Verizon Wireless.

While most analysts say the transaction is the inevitable outcome of a wireless industry now dedicated to consolidation, at least one analyst said the threat of Google Fiber eventually entering the Cincinnati market may have also contributed to the decision to sell.

The future of Cincinnati Bell’s wireless division had been questioned for more than a year, ever since the arrival of the company’s newest CEO Ted Torbeck in January 2013. Cincinnati Bell, one of the last independent holdouts of the Bell System breakup that have not been reabsorbed by AT&T or Verizon, had struggled since Torbeck’s predecessor made some bad bets on acquisitions, including an investment in microwave communications provider Broadwing that left the company with more than $2 billion in debt in 2004. Another $526 million acquisition of data center Cyrus One left the company further in debt.

Torbeck

Torbeck

Torbeck promised a frank evaluation of Cincinnati Bell’s operations last year and keeping its declining wireless division no longer made sense with Torbeck’s focus on replacing the company’s aging copper wire network with fiber optics.

For years, Cincinnati Bell’s biggest competitor has been Time Warner Cable, which has taken away many of its landline customers. Cincinnati Bell’s mobile phone division was created to protect its core business, picking up wireless subscribers as customers dropped their landlines. But the cable company’s bundled service packages made landline service much less expensive than sticking with the phone company, and many wireless customers prefer a national wireless phone company offering better coverage and a wider selection of devices.

Rampant wireless industry consolidation has concentrated most of the cell phone market in the hands of AT&T and Verizon Wireless, giving those two companies access to the most advanced and hottest devices while regional carriers made do offering customers less capable smartphones. Its competitors’ march towards 4G LTE network upgrades also challenged Cincinnati Bell with costly capital investments in a 4G HSPA+ network that Torbeck recently decided no longer made economic sense.

Cincinnati Bell’s wireless revenue for 2013 was $202 million, a decrease of 17 percent from 2012. The company also lost 58,000 subscribers last year, an unsustainable drop that showed few signs of stopping.

610px-Verizon-Wireless-Logo_svg“Our business has been in decline for five or six years,” Torbeck told the Cincinnati Business Courier. “This is absolutely the right time to make this deal. It was probably the highest value we could get at this point in time.”

Torbeck believes Cincinnati Bell’s best chance for a future lies with with fiber optics, capable of delivering phone service along with a robust broadband and television offering that can effectively compete with Time Warner Cable.

“We’ve got to grow market share in Cincinnati and fiber optics is the way to do it,” Torbeck said in 2013. ”We have about 25 percent of the city covered and we think from a financial perspective we can get to 65 or 70 percent so we’ve got significant growth opportunity there.”

fiopticsLast year, Cincinnati Bell had passed 184,000 homes with fiber optics – a 28 percent market share. But only 52,000 homes subscribed to Fioptics — Cincinnati Bell’s fiber brand. Time Warner Cable had managed to keep many of its wavering 446,000 customers loyal to the cable company with aggressive discounting and customer retention offers. But now that many of those discounts have since expired, Torbeck wants to reach 650,000-700,000 homes in its service area covering southwestern Ohio and northern Kentucky and convince 50% of those customers to switch to fiber optics.

Torbeck isn’t interested in limiting his business to just greater Cincinnati either.

“At some point in time, we’d like to expand regionally into Indianapolis, Columbus,” Torbeck said. “Louisville is another opportunity. But that’s probably a little down the road. From a fiber standpoint, we could look at acquisitions and get into metro fiber. These are things we’re looking at, but these are things that are down the road. We got a lot of room for growth just here in Cincinnati.”

But financial analysts warned Cincinnati Bell’s enormous debt load limits the company’s potential to invest in expansion. Torbeck’s decision to sell off the company’s wireless unit is another step in reducing that debt and further investing in fiber optics expansion.

google fiberThe company’s unique position as the last remaining independent phone company that still bears the name of the telephone’s inventor may make the company a target for a takeover before Torbeck’s vision is realized. One analyst thinks Cincinnati Bell would be a natural target for Google, which has a recent record of repurposing fiber networks built by other companies as a cost-saving measure to further deploy Google Fiber.

“They are a small and cheap company with the infrastructure that Google could use,” said Brian Nichols. “My theory is that Google will buy undervalued companies like Cincy Bell to save on the mounting costs of buildouts, which could top $30 billion,“ Nichols wrote in an email to WCPO-TV.

Google did exactly that in Provo, Utah, acquiring struggling iProvo from the city government for $1 in return for agreeing to expand the fiber network to more homes.

Cincinnati’s local phone company would sell for considerably more than that, but it would still prove affordable for Google, which has a market value of $361 billion, about 470 times that of Cincinnati Bell.

cincCincinnati Bell has already spent about $300 million on Fioptics and plans to spend an extra $80 million this year on expansion. Before the network is complete, the phone company is likely to spend as much as $600 million on fiber upgrades. But the payoff has been higher revenue — $100 million last year alone, and a stabilizing business model that has reduced losses from landline cord-cutting. Telecom analyst Nicholas Puncer offers support for the investment, something rare for most Wall Street advisers.

“It’s a reasonable strategy,” Puncer said. “There’s only going to be more data going through networks in the future, not less. The way we consume content is going to be a lot different 10 years from now than it is today. This is their effort to be on the right side of that, giving people more options to receive that content.”

But if Google Fiber comes to town, it may not be enough.

“Google has an unprecedented luxury,” Nichols said in his email to WCPO. “They are [attaching] fiber to existing poles owned by AT&T (and other telecom companies), and then targeting areas where consumers agree for service before the network is even built. Given this demand, and its mere ability to operate in such a manner, I do think Cincinnati Bell will have major problems once that day comes (likely sooner rather than later). In fact, I don’t think they stand a chance of competing against Google.”

Cincinnati Bell said it will continue to offer wireless service for customers for the next 8 to 12 months. The company will notify customers with further details regarding transition assistance around the time of the closing, which is expected to be in the second half of 2014.

It was not immediately clear on Monday if the sale will impact jobs. Cincinnati Bell Wireless employs about 175 people, including retail store employees.

http://www.phillipdampier.com/video/WKRC Cincinnati Cincinnati Bell selling wireless spectrum to Verizon 4-8-14.flv

WKRC in Cincinnati reports on what the sale of Cincinnati Bell Wireless to Verizon Wireless means for customers. (1:24)

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Comcast Gobbledygook: “We Don’t Have Data Caps, We Have Data Thresholds”

The Plain English Campaign's Golden Bull Award is given to companies that prefer gobbledygook over plain English.

The Plain English Campaign’s Golden Bull Award is given to companies that prefer gobbledygook over plain English.

Comcast is outraged by slanderous suggestions it has data caps on its broadband service.

In response to the scathing report from the Writers Guild of America that pleads for the FCC to block the merger of Comcast and Time Warner Cable, Comcast has accused to WGA of getting its facts wrong and being nothing more than a meddling union.

The WGA writes in their filing with the FCC:

The WGAW has also joined Public Knowledge in asking the FCC to enforce the condition that Comcast not use “caps, tiers, metering, or other usage-based pricing” to treat affiliated network traffic differently from unaffiliated traffic. Comcast has violated this condition by exempting its online video service, Xfinity Streampix, from its own data caps, while the viewing of content by other, unaffiliated video services such as Netflix or YouTube would count against a user’s data cap. The violation of this merger condition is a clear threat to competition from online video distributors, and the FCC should respond by requiring Comcast to stop exempting its Streampix service from data caps.

Comcast pounced on the WGA filing, calling it inaccurate.

Comcast-Logo“We don’t have data caps — and haven’t for about two years,” said Sena Fitzmaurice, Comcast’s vice president of government communications. “We have tested data thresholds where very heavy customers can buy more if they want more — but that only affects a very small percentage of our customers in a few markets.”

Until 2012, Comcast had a uniform usage cap of 250GB a month, above which a customer risked having their broadband service suspended. In 2013, the usage allowances were back, reset at 300GB a month and rolled out to a series of expanding “test markets” that today include Huntsville and Mobile, Ala., Atlanta, Augusta and Savannah, Ga., Central Kentucky, Maine, Jackson, Miss., Knoxville and Memphis, Tenn., and Charleston, S.C.

nonsenseCustomers who exceed this allowance won’t have their broadband service suspended, they will just get a higher bill, as Comcast charges $10 for each additional 50GB of usage.

In contrast, Time Warner Cable neither has a data cap or a data threshold. Stop the Cap! made sure that didn’t happen when Time Warner attempted to impose its own usage limits back in 2009. We successfully organized protests sufficient to get Time Warner executives to back off and shelve the idea. If Comcast takes over, Time Warner Cable customers will likely eventually face Comcast’s “data thresholds,” which are a distinction without much difference. Whatever you call it, it’s a limit on how much a customer can use Comcast’s already-expensive broadband service before bad things happen.

The WGA and Comcast get along about as well as oil and water, so the back and forth is to be expected. The Writer’s Guild also fiercely opposed Comcast’s merger with NBCUniversal. But when it comes to who is playing fast and loose with the truth, it isn’t the group that writes for a living. Comcast’s doublespeak about data caps is no better than calling The Great Recession a periodic equity retreat. It isn’t fooling anyone.

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Some Time Warner Cable Customers Getting The Design Network; Interior Design 24/7

Phillip Dampier April 2, 2014 Consumer News, Online Video, Time Warner Cable No Comments

design networkAn online-only television channel dedicated to interior design will become a traditional linear television channel available to some Time Warner Cable customers beginning today.

The Design Network, created by executives at the world’s largest furniture store — Furnitureland South — had managed to get 10,000 online subscribers since its launch in April 2013. But now the network will get a larger viewership on the lineup of some Time Warner Cable systems, starting in North Carolina.

“The Design Network was created for everyone who shares a passion for the home,” said Jason Harris, founder of The Design Network and executive vice president of Furnitureland South. “What I’m seeing on television has no correlation to the amazing home decor industry that I’ve grown up in and have been exposed to all my life.”

“We always look for opportunities to work with networks to enhance our diverse channel lineup,” said Mike Smith, area vice president of operations, Time Warner Cable. “The Design Network created a television network to engage consumers in decor and the world of interior design – we are excited to provide our customers with access to this unique source of programming.”

Furnitureland South

Furnitureland South – High Point, N.C.

In addition to The Design Network’s new television channel, the online version expands to further engage interior design professionals and home enthusiasts by allowing them to create their own channels, similar to YouTube. Viewers can upload and annotate their own videos and photos and grow their own audience. Through these channels, designers and home enthusiasts may earn commissioned, promoted series on TDN TV.

The network also exists as a self-promotion of Furnitureland South, which may limit the network’s reach. The Design Network’s programming is heavily influenced by its parent company’s furniture business.

The Design Network was created to help people become more inspired and knowledgeable about designing, decorating and living in their homes. “We are uniquely qualified to create a network featuring entertainment, inspiration and instruction for the home,” Harris commented. “With our retail business, Furnitureland South, being located in the epicenter of the home furnishings industry, we furnish more than 25,000 homes a year with clients from all over the world and work closely with the finest furniture brands and design influencers.”

It isn’t known if Furnitureland South is paying Time Warner Cable to launch the network or if cable customers will be underwriting the channel through their monthly cable bill.

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Math Problem: The Telecom Industry’s Bias Against Fiber-to-the-Home Service

Phillip "Spending $6k per cable customer is obviously a much better deal than paying half that to build a fiber to the home network" Dampier

Phillip “Spending $6k per cable customer is obviously a much better deal than paying half that to build a fiber to the home network” Dampier

Math was never my strong subject, but even I can calculate the groupthink of American cable and telephone companies and their friends on Wall Street just doesn’t add up.

This week, we learned that cable companies like Bright House Networks, Suddenlink, and Charter Communications are already lining up for a chance to acquire three million cable customers Comcast intends to sell if it wins approval of its merger with Time Warner Cable. Wall Street has already predicted Comcast will fetch as much as $18 billion for those customers and pegged the value of each at approximately $6,000.

But for less than half that price any company could build a brand new fiber to the home system capable of delivering 1,000Mbps broadband and state-of-the-art phone and television service and start banking profits long before paying off the debt from buying an inferior coaxial cable system. Yet we are told time and time again that the economics of fiber to the home service simply don’t make any sense and deploying the technology is a waste of money.

Let’s review:

Google Fiber was called a boondoggle by many of its competitors. The folks at Bernstein Research, routinely friendly to the cable business model, seemed appalled at the economics of Google’s fiber project in Kansas City. Bernstein’s Carlos Kirjner and Ram Parameswaran said Google would throw $84 million into the first phase of its fiber network, connecting 149,000 homes at a cost between $500-674 per home. The Wall Street analyst firm warned investors of the costs Google would incur reaching 20 million customers nationwide — $11 billion.

“We remain skeptical that Google will find a scalable and economically feasible model to extend its build out to a large portion of the U.S., as costs would be substantial, regulatory and competitive barriers material, and in the end the effort would have limited impact on the global trajectory of the business,” Bernstein wrote to its investor clients.

dealSo Google spending $11 billion to reach 20 million new homes is business malpractice while spending $18 billion for three million Time Warner Cable customers is confirmation of the cable industry’s robust health and valuation?

Bernstein’s firm never thought highly of Verizon FiOS either.

“If I were an auto dealer and I wanted to give people a Maserati for the price of a Volkswagen, I’d have some seriously happy customers,” Craig Moffett from Bernstein said back in 2008. “My problem would be whether I could earn a decent return doing it.”

Back then, Moffett estimated the average cost to Verizon per FiOS home passed was $3,897, a figure based on wiring up every neighborhood, but not getting every homeowner to buy the service. Costs for fiber have dropped dramatically since 2008. Dave Burstein from DSL Prime reported by the summer of 2012 Verizon told shareholders costs fell below $700/home passed and headed to $600. The total cost of running fiber, installing it in a customer’s home and providing equipment meant Verizon had to spend about $1,500 per customer when all was said and done.

Moffett concluded Verizon was throwing money away spending that much on improving service. He wasn’t impressed by AT&T U-verse either, which only ran fiber into the neighborhood, not to each home. Moffett predicted AT&T was spending $2,200 per home on U-verse back in 2008, although those costs have dropped dramatically as well.

Moffett

Moffett

Moffett’s solution for both Verizon and AT&T? Do nothing to upgrade, because the price wasn’t worth the amount of revenue returns either company could expect in the short-term.

It was a much different story if Comcast wanted to spend $45 billion to acquire Time Warner Cable however, a deal Moffett called “transformational.”

“What we’re talking about is an industry that is becoming more capital intensive,” Todd Mitchell, an analyst at Brean Capital LLC in New York told Bloomberg News. “What happens to mature, capital-intensive companies — they consolidate. So, yes, I think the cable industry is ripe for consolidation.”

Other investors agreed.

“This is definitely a bet on a positive future for high-speed access, cable and other services in an economic recovery,” said Bill Smead, chief investment officer at Smead Capital Management, whose fund owns Comcast shares.

ftth councilBut Forbes’ Peter Cohan called Google’s much less investment into fiber broadband a colossal waste of money.

“Larry Page should nip this bad idea in the bud,” Cohan wrote.

Cohan warned investors should throw water on the enthusiasm for fiber before serious money got spent.

“FTTH authority, Neal Lachman, wrote in SeekingAlpha, that it would cost as much as $500 billion and could take a decade to connect all the houses and commercial buildings in the U.S. to fiber,” Cohan added.

Cohan was concerned Google’s initial investment would take much too long to be recovered, which apparently is not an issue for buyers willing to spend $18 billion for three million disaffected Time Warner Cable customers desperately seeking alternatives.

An investment for the future, not for short term profits.

An investment for the future, not short term profits.

Municipal broadband providers have often chosen to deploy fiber to the home service because the technology offers plenty of capacity, ongoing maintenance costs are low and the networks can be upgraded at little cost indefinitely. But such broadband efforts, especially when they are owned by local government, represent a threat for cable and phone companies relying on a business model that sells less for more.

The American Legislative Exchange Council (ALEC), funded by Comcast, Time Warner, AT&T, Verizon, and other large telecom companies is at the forefront of helping friendly state legislators ban community fiber networks. Their excuse is that the fiber networks cost too much and, inexplicably, can reduce competition.

“A growing number of municipalities are [...] building their own networks and offering broadband services to their citizens,” ALEC writes on its website. “ALEC disagrees with their answer due to the negative impacts it has on free markets and limited government.  In addition, such projects could erode consumer choice by making markets less attractive to competition because of the government’s expanded role as a service provider.”

The Fiber-to-the-Home Council obviously disagrees.

“Believe it or not, there are already more than a thousand telecom network operators and service providers across North America that have upgraded to fiber to the home,” says the Council. “The vast majority of these are local incumbent telephone companies that are looking to transform themselves from voice and DSL providers into 21st century broadband companies that can deliver ultra high-speed Internet and robust video services, as well as be able to deliver other high-bandwidth digital applications and services to homes and businesses in the years ahead.”

Stephenson

Stephenson

In fact, a good many of those efforts are undertaken by member-owned co-ops and municipally owned providers that answer to local residents, not to shareholders looking for quick returns.

The only time large companies like AT&T move towards fiber to the home service is when a competitor threatens to do it themselves. That is precisely what happened in Austin. The day Google announced it was launching fiber service in Austin, AT&T suddenly announced its intention to do the same.

“In Austin we’re deploying fiber very aggressively,” said AT&T CEO Randall Stephenson. “The cost dynamics of deploying fiber have dramatically changed. The interfaces at the homes, the wiring requirements, how you get a wiring drop to a pole, and the way you splice it has totally changed the cost dynamics of deploying fiber.”

Prior to that announcement, AT&T justified its decision not to deploy fiber all the way to the home by saying it was unnecessary and too costly. With Google headed to town, that talking point is no longer operative.

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Tricky TV Antics: Wyoming, Nevada TV Stations Moving to Delaware, New Jersey

Phillip Dampier March 31, 2014 Consumer News, Public Policy & Gov't No Comments
KJWY-TV was a station in Jackson, Wyo. But now it serves Philadelphia, Pa.

KJWY-TV was a station in Jackson, Wyo. But now it serves Philadelphia, Pa.

Two small television stations in Wyoming and Nevada with audiences in the thousands have packed up and are moving to bigger cities after exploiting a loophole in FCC rules.

KJWY, Channel 2 in Jackson, Wyo. used to relay television programs from a Casper station for the benefit of the 9,500 people living in the Teton County community. The station operated with just 178 watts — the lowest powered digital VHF station in the country. KVNV, Channel 3 in Ely, Nev., originally relayed Las Vegas’ NBC affiliate for the benefit of 4,200 locals. Both stations were purchased at a very low-cost by a mysterious partnership of buyers back east.

Today, KJWY has a new call sign – KJWP. It’s still on Channel 2, but the station is now licensed to operate from Wilmington, Del, with its transmitter located just across the border in Philadelphia. It’s one of the rare few television stations in the eastern half of the country that have “K” call letters usually assigned to stations west of the Mississippi River. KVNV is expected to follow to its new home in Middletown Township, Monmouth County, N.J., later this year. Its transmitter will have nothing but open water between northern New Jersey and nearby New York City — its intended target.

The two stations’ original combined audiences likely never exceeded 10,000, because both stations had very limited range for their transmitters which served two very small communities. But in the big cities of New York and Philadelphia, the stations can now reach a potential audience north of ten million and collect advertising revenue the stations in Wyoming and Nevada could only dream about.

PMCM, LLC., obviously had this in mind when it acquired the two stations in 2009. The principals behind PMCM already own six Jersey Shore radio stations in Monmouth and Ocean County under the name Press Communications, LLC.

How Congress and the FCC Opened the Door

wor PMCM discovered a little-known law that was originally introduced to help spur the launch of VHF television stations serving small Mid-Atlantic states shadowed by nearby large cities. In 1982, New Jersey Sen. Bill Bradley attached an amendment to an unrelated tax bill that required the FCC to automatically renew the license of any commercial VHF station that agrees to move to a state without one. The new law superseded nearly all the FCC’s other licensing regulations. At the time the law was passed, the only two states that were without any commercial VHF stations were Delaware and New Jersey.

That summer, RKO General, embroiled in a major scandal over illegal billing irregularities and deceiving regulators, thought it could save its New York station – WOR-TV – from threatened license revocation by agreeing to move from New York City to Secaucus, N.J. In agreeing to move the station, WOR would also expand much-needed coverage of New Jersey news and current affairs. But viewers barely noticed and by 1987 RKO General’s bad behavior got them booted out of the broadcasting business altogether after what FCC administrative law judge Edward Kuhlmann called a pattern of the worst case of dishonesty in FCC history. WOR’s new owners changed the call sign to WWOR-TV and the station’s home remains in Secaucus.

Two things happened after the mess with WOR. Bradley’s law remained on the books and America’s adoption of digital over the air television for full power stations meant channel number changes for many stations by the time the transition was complete in 2009. WWOR-TV relocated to UHF channel 38 (while still promoting itself as Channel 9) and Delaware’s only remaining VHF station is non-commercial WHYY Channel 12, a PBS station better known as hailing from Philadelphia. Once again, New Jersey and Delaware were without commercial VHF stations, a fact that did not escape the notice of PMCM.

Me-TV Launches in Philadelphia and New York

KJWP_LogoAfter a lengthy court battle with the FCC, PMCM successfully moved and relaunched KJWP, Channel 2, on March 1 as Philadelphia’s Me-TV affiliate. Although the transmitter power was raised, the station’s digital VHF signal still doesn’t reach very far, so its owners invoked “must-carry” with area cable systems, which means cable systems must carry the channel so long as the station does not ask for any payment.

The station’s reach is defined by the FCC far beyond its actual broadcast signal. Officially, the station can demand cable carriage as far south as Dover, Del., as far west as Lancaster, Pa., almost all of southern New Jersey and into northern New Jersey. Today, Comcast and other cable systems carry KJWP across Philadelphia and the Delaware Valley. Verizon FiOS is adding the station by this weekend and it is also available via satellite TV local station packages. Unlike larger stations fighting to be paid by cable systems, KJWP is happy to be carried by all without charge because it can sell advertising to a much larger potential audience. It plans to produce local programming, including news, which opens up even more advertising opportunities.

KVNV remains on the air in Ely for now as a My Family TV affiliate, showing a mix of family friendly and religious programs. But its days as a Nevada broadcast station are numbered. KVNV will officially sign-off in Ely for good in a few months and relaunch operations across the New York City market as New York’s official Me-TV affiliate. Like with KJWP, KVNV will keep its original call letters and invoke must-carry, which means the station is likely to appear on northern New Jersey Comcast systems, Time Warner Cable in Manhattan and other boroughs, as well as Cablevision on Long Island and across parts of Brooklyn.

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Sports Channel Sticker Shock: Your Basic Cable TV Bill Headed to $125/Month

Phillip Dampier March 31, 2014 Consumer News 7 Comments
Your cable bill is going up... a lot.

Your cable bill is going up… a lot.

Within five years, the average cable television subscription will reach $125 a month, primarily because of rapidly rising sports programming costs that are enriching already wealthy sports teams and players.

Professional and college sports are benefiting from the largesse of sports channels and networks all competing for the rights to televise games. Until a decade ago, those rights typically went to the highest paying broadcast television network. But as traditional cable sports networks like ESPN find themselves competing with more than three dozen other cable networks and regional sports channels, bidders need ever-deeper pockets to stay in the running. With cable customers footing the bill, the sky has been the limit.

Cable companies that routinely complain about runaway inflation in sports programming costs suddenly go silent when they get a piece of the action. Take Time Warner Cable, for example. A substantial amount of the company’s recently announced rate hike they blame on “increased programming costs” comes from networks they own and operate. A network dedicated to just one team – the Los Angeles Dodgers, will cost subscribers slightly less than $5 a month. SportsNet LA was created around Time Warner’s 25-year rights deal to show Dodgers games. The cable company is paying $8.3 billion for the privilege. Another network, dedicated to the Los Angeles Lakers, also costs Time Warner Cable customers $4 a month whether they watch or want the channel or not.

sportsnetOut east, the Yankees Channel YES costs subscribers around $3.50 a month — a bargain compared to the Dodgers — with prices expected to increase further in the years ahead. ESPN, by far the largest sports network, insists on more than $5 a month from every customer even if they have never watched the network.

Every year, prices are rising for sports programming, and fast. The lucrative billions in revenue are now turning up in players’ salaries, provide piles of money to “non-profit” educational institutions with college sports teams, and are inflating the overall value of the teams for their owners.

The inflation spiral is accompanied by a framework of entitlement, where owners, players, and schools now expect regular increases in payments to secure television rights. Those costs are passed on directly to every subscriber, because few sports networks will allow themselves to be sold “a-la-carte” only to those who actually want to watch.

With even more sports networks launching on the horizon, the average cable bill that now costs about $90 a month will increase by $35 a month to reach $125 a month within a few years, according to the Los Angeles Times:

The dispute over telecasts of Dodgers baseball games exemplifies the problem with the current setup. Time Warner Cable wants to charge Southern California subscribers slightly less than $5 a month to watch the games on a Dodger channel. Area TV distributors (such as DirecTV, Cox Cable and AT&T U-verse), fearing a consumer backlash, are resisting. If Time Warner and the Dodgers win, it’s a lucrative deal — for them. Not so for those who don’t care to watch. Even Dodger fans, blacked out now, aren’t really winners. The system denies all of us meaningful choices. All subscribers end up subsidizing programming we never watch.

In effect, because of the way channels are bundled, all pay-TV subscribers (roughly 100 million households) are subsidizing sports. The subsidy is substantial. The Pac-12 conference estimates it will receive $3 billion in TV revenue over a 12-year period. For ESPN, it’s much more. If roughly 90% of pay-TV households purchase the bundle that includes ESPN, that network alone will receive just short of $6 billion in revenue in a single year.

That’s a major subsidy, and, given a Cox Cable representative’s estimate that only 15% to 20% of viewers regularly watch sports programming, it’s paid mostly by viewers who neither watch nor wish to subsidize ESPN programming. These viewers swallow the bitter inflationary pill in order to watch other channels in the bundle.

Both college and professional sports teams benefit from the subsidy. The winners include UCLA and UC Berkeley, taxpayer-supported institutions, and USC and Stanford, preeminent private, nonprofit institutions that also benefit from federal money. UCLA alone reportedly received $14.5 million in TV revenue over the last year. Americans are accustomed to college athletic programs that make money, but do we really want these revenues to be generated on the backs of angry consumers who must pay a sports subsidy every time they purchase subscription TV?

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Comcast Wants to Invest $2.5 Billion More on Stock Buybacks if Merger Deal Approved

Phillip Dampier March 31, 2014 Comcast/Xfinity, Consumer News No Comments

One of Comcast’s biggest investments of 2014 won’t pay to boost broadband speeds, improve customer service, or upgrade cable systems.

comcast-shareToday the cable company announced plans to spend an extra $2.5 billion — $5.5 billion total — this year to buy shares of its own stock in a share buyback program designed to please investors.

The extra investment will only come if shareholders approve the deal to merge Comcast and Time Warner Cable into a single company. If the merger is successful, Comcast is prepared to spend even more on share buybacks with money it plans to collect from the sale of three million current Time Warner customers that will be spun away in the merger.

Bloomberg News reports Comcast shares have fallen 10 percent since the acquisition was announced last month, reducing the value of the company’s all-stock offer. The proposal of 2.875 in Comcast stock for each Time Warner Cable share was worth $142.49 a share last week, down from $158.82 the day the transaction was made public.

By buying back shares in its own stock, Comcast will cut the number of shares outstanding, which increases earnings per share and usually boosts the stock’s price. The share repurchase will benefit shareholders and any top executives who receive bonuses based on successfully increasing the value of earnings per share. Customers get nothing.

Neither will the tax man if Comcast and Time Warner Cable structure its deals as spinoffs qualifying as tax-free transactions.

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Time Warner Cable Wins Cheap Hydropower from New York State for Its Buffalo Call Center

timewarner twcTime Warner Cable is one of three New York businesses that are the latest to be awarded almost 1 megawatt of inexpensive hydropower under the state’s ReCharge New York program.

The cable company was allocated 176 kilowatts of electricity for its new call center in Buffalo from the Power Authority’s hydroelectric plants in Lewiston and Massena, and from the open market. In return, it plans to add 152 new jobs in Buffalo.

The program is designed to encourage businesses to increase investment in New York communities. Most of the inexpensive power awarded recently went to Pratt and Whitney in Middletown in the Hudson region and to six businesses on Long Island.

“ReCharge NY is one of the strongest tools in the Empire State’s economic development arsenal,” Governor Cuomo said. “Low-cost power for businesses has helped create thousands of high-impact jobs in local communities, and its ripple effect of ReCharge NY can be felt statewide. Innovative initiatives like ReCharge NY continue to establish New York as a great place for businesses to thrive and grow.”

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  • Milan in Austin: I forgot to mention that everyone should take a minute to sign the Consumers Union anti-Comcast/TWC Merger petition today. https://secure.consumers...
  • Milan in Austin: This is encouraging! According to a local free paper, the Austin area TWC speed increase will be implemented in June. All we need now is for the Comca...
  • Loons in June: "We use an OTA antenna for FREE HDTV (21 channels total, 120 if you like religious/infomercial/homeshoppingclub/foreign channels)" You get 120 OTA ...
  • Michael Elling (@Infostack): Phil, we need to 1) push for equal/open access in layer 1 for any and all providers granted a public ROW or frequency, with a quid pro quo that end-us...
  • SmilingBob: We cut the cord on the cable companies and used DSL Extreme for our broadband, which uses Verizon or AT&T lines, depending on your area. We got t...
  • Dave Hancock: Not likely, as Verizon is not expanding. Further, cord-cutting may not work out too well on Verizon, as they do not deliver those high speeds for man...
  • John: It has been since December 17, 2014. Know one has an answer. I will never trust a word from Comcast again....
  • innovate: I will go with Verizon FiOS for TV, Internet and homephone if it was available in my area. I do not like cable slow speeds....
  • Dave Hancock: great reporting Phillip!!...
  • Duffin: Yep, Cincinnati Bell has been sending out Tweets and emails about this. 100% increase. Greedy bastards....
  • Frank: People are stealing cable, so the FCC are getting comcast and other cable companies to put a stop to it.... Plain and simple.. Get a life.. 6 cents a ...
  • Paul Houle: I don't know the last time I've seen a TV ad that wasn't for reverse mortgages or mobility aids....

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