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Streaming Flop Quibi Closing Down After Burning Through $1.75 Billion of Investors’ Money

Phillip Dampier October 21, 2020 Consumer News, Online Video No Comments

Quibi is closing down its streaming service in the next several weeks, sources told the Wall Street Journal this afternoon, after spending $1.75 billion of investors’ money and attracting few subscribers and a lawsuit.

The service, founded by Hollywood mogul Jeffrey Katzenberg, never found a footing in the highly competitive streaming business, and has been plagued with problems since its April debut. Katzenberg envisioned the service as a home for short-form video entertainment — typically 5-10 minute chapters of professionally produced shows, designed to be watched by people on the go. Quibi was specifically developed for smartphone viewing, which meant producers had to create shows specifically for small screens. For technical reasons, Quibi was difficult to view in-home.

Katzenberg argued the service would fill a streaming niche for people looking for short video fixes instead of long form programming, arguing highly produced shows would attract a different audience than amateur short-form clips from services like YouTube.

Then the COVID-19 pandemic hit in March, forcing most would-be Quibi subscribers into home lockdown for school and work. It could not have come at a worse time for Quibi. Soon after debuting, scathing reviews about the quality of some Quibi productions were also published, further deterring would-be customers.

Quibi’s advertising partners, which included Pepsi and Walmart, were patient with the service, but after six months of low viewer numbers, many advertisers began deferring payments on their combined commitment of $150 million in advertising.

Also in early March, a patent infringement lawsuit over Quibi’s Turnstyle feature, which lets viewers watch video horizontally or vertically on their devices and rotate between those positions without disrupting the experience, was filed by Eko, which claimed it invented and patented the technology and saw its work stolen by Quibi employees. Although Quibi won a motion to limit the lawsuit, litigation was expected to continue in a California court.

Over the summer, media reports noted 90% of free trial subscribers canceled their subscription before charges began, revealing Quibi had just 72,000 paid subscribers willing to spend $4.99 a month, a fraction of the tens of millions of subscribers other streaming platforms have attracted.

The Journal reported on Wednesday that Quibi founder Jeffrey Katzenberg called investors to tell them he is shutting the service down. A restructuring firm hired to examine options for the streaming platform reportedly made several recommendations to Quibi’s board of directors, but it seems a complete shutdown was chosen as the best option.

FCC Considering 18-24 Month Delay of $9 Billion Rural 5G Subsidy Until Accurate Coverage Maps Appear

The FCC is likely to delay for up to two years a massive $9 billion subsidy program that will provide 5G wireless service in rural America because the agency’s broadband coverage maps are too flawed to credibly determine where the money is needed.

The delay is just the latest in a series of speed bumps that have slowed down rural wireless service expansion, hampered mostly by service coverage maps that typically over-promise service that just doesn’t exist in many areas.

A revised subsidy program would double the funds available for rural wireless service, but delay projects at least 18-24 months, with the first awards granted sometime in late 2022.

The wireless subsidy program is designed to enhance rural wireless/mobile coverage across the United States. The FCC estimates about 83% of rural America is currently covered by 4G LTE service providing an average of 10/3 Mbps. In urban and suburban communities, 97% of areas have 4G coverage and often at faster speeds. Small, independent wireless carriers have popped up to serve rural states and regions that have been ignored by AT&T, Verizon, and T-Mobile, but coverage gaps still remain far from well-traveled interstate highways or in mountainous regions. Carriers have typically considered those areas unprofitable to serve, failing Return On Investment formulas that expect investments to pay off within a certain number of years. Wireless subsidies cover a portion of the cost to build and operate unprofitable rural cell towers, coaxing wireless companies to be more willing to expand coverage.

The ongoing problem of wireless coverage accuracy has had a direct impact on rural funding programs that have rules forbidding spending in areas that already have coverage. Wireless companies with overeager marketing departments have routinely issued coverage maps claiming solid 4G LTE coverage in areas where many claim it doesn’t exist. The conflict over accurate coverage maps became so contentious, the FCC canceled plans to spend billions on wireless subsidies in late 2019 until more accurate coverage maps could be created.

Next week the FCC plans a vote to authorize the new $9 billion subsidy program, but funds will likely be held until wireless companies can prove their coverage claims and update coverage information so the FCC can pinpoint areas that can qualify for the funds.

“This approach won’t be the fastest possible path,” FCC Chairman Ajit Pai wrote. “But it will allow us to identify with greater precision those areas of the country where support is most needed.”

No Means No: Cogeco Rejects Sweetened Altice USA Offer – ‘We Aren’t Selling,’ Audet Family Insists

Phillip Dampier October 19, 2020 Altice USA, Canada, Cogeco, Competition, Consumer News, Reuters, Rogers No Comments

(Reuters) – Altice USA Inc’s C$11.1 billion ($8.43 billion U.S.) revised offer to acquire Cogeco was rejected on Sunday by the Canadian cable company’s top investor, the Audet family.

Altice USA Inc said it had sweetened its unsolicited offer to acquire Cogeco by adding a premium for shares held by the Audet family, which had rejected the previous offer.

“As we did on September 2nd, 2020, following the announcement of their first unsolicited proposal, members of the Audet family unanimously reject this further proposal,” Louis Audet, president of Gestion Audem said in a statement. “We repeat today that this is not a negotiating strategy, but a definitive refusal. We are not interested in selling our shares.”

Gestion Audem is the holding company of the Audet family that holds 69% of the voting share of Cogeco.

Altice offered C$11.1 billion to acquire Cogeco, up from the C$10.3 billion bid that was rejected by the Audet family last month.

New York-based Altice said the revised offer included C$900 million to the Audet family for their ownership interests, from C$800 million previously.

It also revised its offer to Cogeco’s second-largest shareholder, Rogers Communications Inc, to sell it all of Cogeco’s Canadian assets for C$5.2 billion.

Upon completion of the overall transaction, Altice USA would own all the U.S. assets of Cogeco and Rogers would own the Canadian assets, Altice said in a statement.

Altice said it would withdraw its revised offer if a deal was not reached by Nov. 18.

($1 = 1.3173 Canadian dollars)

Reporting by Sabahatjahan Contractor in Bengaluru; Editing by Stephen Coates and Lincoln Feast.

Verizon Expands Both 5G “Ultra Wideband” and Nationwide Dynamic Spectrum Sharing 5G

Verizon customers in over 1,800 cities across the United States can now get a speed boost with the launch of Verizon’s nationwide Dynamic Spectrum Sharing (DSS) 5G, which runs simultaneously with existing 4G LTE on the same lower band spectrum, giving customers with 5G-capable devices faster service.

DSS technology is important to Verizon as it shares the limited amount of 4G spectrum it has in some cities with a slowly growing number of 5G customers. Now both can share the same spectrum without Verizon having to dedicate scarce low band frequencies exclusively to 5G service. The tradeoff is that low band DSS 5G service will not deliver the speed boost Verizon’s “Ultra Wideband” millimeter wave 5G service can offer.

Verizon simultaneously announced the addition of several cities now slightly covered by Verizon 5G Ultra Wideband, which can now reach up to 4 Gbps speed in some locations with the use of carrier aggregation. The rollouts are very limited, often covering just a few neighborhoods, a park, or shopping center, so check verizon.com/coverage-map for current coverage information.

Anaheim, Calif.

Where Available: West Anaheim, Downtown Anaheim (along Harbor Boulevard), Betsy Ross Park, Chaparral Park.

Baltimore, Md.

Where Available: Inner Harbor, Downtown, Power Plant Live, Camden Yards & M&T Bank Stadium, Towson University, and Cockesville.

Hartford, Conn.

Where Available: Trinity College, Frog Hollow and City Hall.

Jersey City, N.J. 

Where Available: Bayside Park, The Heights, and Journal Square.

Las Vegas, Nev.

Where Available: Las Vegas Strip, Mirage Volcano, Bellagio Lake, Welcome to Vegas Sign, and Paris/Eiffel Tower.

Oklahoma City, Okla.

Where Available: Quail Springs Mall, OU Medical Center, and near Hidden Trails Country Club.

Philadelphia, Pa.

Where Available: Temple University, South Philadelphia Sports Complex, Logan Circle, Broad Street, and Hawthorne.

Raleigh, N.C.

Where Available: Triangle Town Center, outside Duke Raleigh Hospital, and Crabtree Valley Mall.

Richmond, Va.

Where Available:  Scott’s Addiction, near VCU, and Church Hill.

San Francisco, Calif.

Where Available: Mission Bay, Yerba Buena Gardens, Marina Green Park, outside Oracle Park, Palace of Fine Arts, and Huntington Park (Nob Hill area).

Sarasota, Fla.

Where Available: Burns Square, along N Lemon Ave, and Rosemary District.

Syracuse, N.Y.

Where Available: In the Northside Neighborhood, near Schiller Park, outside St. Joseph’s Health Center.

Tucson, Ariz.

Where Available: Downtown, Historic Fourth Avenue and University of Arizona.

Gov. Cuomo’s “Broadband for All” Under Audit by Comptroller; Angry NY’ers Still Waiting

Phillip Dampier October 13, 2020 Consumer News, Public Policy & Gov't, Rural Broadband, Video 1 Comment

Gov. Andrew Cuomo discusses his rural broadband initiative in New York.

Despite repeated assurances that 98% of New Yorkers now have access to high-speed internet, rural New Yorkers from the state’s border with Massachusetts to farm country outside of Niagara Falls don’t believe it. Now New York’s Comptroller, Thomas P. DiNapoli, is auditing the half-billion dollar program to determine where the money went and where broadband service is now available.

A source told WGRZ-TV in Buffalo that an audit of Gov. Andrew Cuomo’s “Broadband for All” program was initiated by the Comptroller’s office back in March 2020 after rural residents and the lawmakers that represent them began complaining the program never delivered on its commitments. WGRZ Reporter Nate Benson notes that what may have started as a routine audit may now be under additional scrutiny because of the impact of the COVID-19 pandemic, which forced many New Yorkers online for work and learning from home.

The broadband program, introduced with great fanfare by the governor in 2015, promised that every New Yorker that wanted high speed internet (at least 25 Mbps in rural areas, 100 Mbps in urban communities) would have access by the end of 2018. The governor claimed the state earmarked $500 million — mostly proceeds from legal settlements with large New York City banks accused of criminal activity surrounding the Great Recession — towards the program, with dollar for dollar matching from companies awarded grants to expand internet access in specific areas.

Benson noted that publicly available data on the N.Y. Broadband Program Office website found a significant shortfall in private investment dollars, with only four out of 53 internet service providers awarded grants matching or exceeding the amounts they received from the state broadband fund. In short, they accepted generous subsidies without being equally generous with their own money.

DiNapoli

The program used a reverse auction approach to award state broadband funding. Phone, cable, and wireless providers bid to serve one or more of the 256,000 “census blocks” the state identified as lacking access to high-speed internet. Most companies chose the most densely populated census blocks next to their existing service areas, assuring higher profits while the state paid a significant amount of the construction costs. In the end, 76,000 census blocks in very rural, sparsely populated areas least likely to get broadband service attracted no bids at all. To achieve the state’s vaunted “98% served,” officials signed a contract with a satellite internet provider to service the remaining 30% of rural New Yorkers left behind, despite the fact satellite internet providers had a reputation for not meeting subscriber expectations and rarely guaranteed consistent minimum broadband speeds of 25 Mbps. Hughes Satellite provides the service, but our readers using the service warn it comes with a stingy data cap inadequate for today’s average household usage. Speeds are wildly inconsistent as well, often way below 25 Mbps.

Even with satellite internet as an option, New Yorkers continue to tell Stop the Cap! they are still without access, including satellite, even in communities just a few miles outside of major cities like Albany, the state capital. The true scope of the problem became apparent last spring as the coronavirus pandemic emerged, forcing employers to send workers home and schools switched to online learning.

Westerlo, N.Y.

The Berne Knox Westerlo School District, located in the hill towns of Albany County, quickly realized there was a wide gap between the state’s “98% covered” claim and reality.

“We had about 28-30% of our student population without internet access or with very poor internet access.” Superintendent Dr. Timothy Mundell told WRGB News. The district tried stop-gap measures like parking Wi-Fi enabled school buses around the district and handing out Wi-Fi hotspot devices, which proved to work unevenly. Mundell says the only real solution to this problem is ubiquitous fiber to the home internet access, and that is a long way off.

“It concerns me because every day we’re without, my students have the potential of falling behind their peers down in the suburbs and the urban areas,” Mundell said. “So this is a real equity issue for us and we want to make sure rural areas get served.”

Two Republican lawmakers from Western New York also introduced a bill this year to repeal a 2019 state tax on optical fiber cable projects. Senators George Borrello and Pam Helming believe the tax will discourage fiber optic buildouts, especially in higher cost rural areas.

“The reality is that broadband is no longer a luxury this is a basic infrastructure need just like water sewer electric and roads, and without it we’re not going to be able to expand.” Sen. Borrello said.

Dundee, N.Y.

But the biggest proponent of the law’s repeal, Verizon Communications, is also one of the telecommunications companies showing the least interest in expanding its fiber internet service in rural New York. Verizon is fighting the tax so it can save money on expanding its mobile 4G and 5G wireless networks, which are connected with fiber optic cables, not because it wants to expand FiOS fiber to the home service.

Meanwhile, New Yorkers without broadband remain stuck.

“It’s all a lot of empty promises with no sign of service,” Katy tells Stop the Cap! from her home near Dundee, in the Finger Lakes region of the state. “I’ve lived here since the days when the only phone line you could get was a party line shared with four other homes and I still have my rotary dial phone New York Telephone installed in 1965. These companies don’t want me to forget I am living in the past.”

Katy lives about 500 feet from the nearest address able to subscribe to Charter Spectrum and was quoted $9,000 to extend cable to her home, set far back from the main road. Verizon has never offered DSL in her neighborhood, because she is located too far away from the central office. Her property is set in a small forest, so satellite internet is not a possibility either.

“I can watch two channels over the air from Syracuse with my outdoor antenna, but that is all. I guess I prefer reading anyway,” she tells us.

WGRZ in Buffalo reports the New York State’s Comptroller’s Office is auditing Gov. Andrew Cuomo’s Broadband for All program, which guaranteed 98% of New Yorkers high-speed internet. (3:06)

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