Negotiations between Scripps and Cablevision continue to drag on in the northeast as New York, Connecticut, and New Jersey Cablevision cable subscribers go without their HGTV and Food Network.

Progress has been incremental at best as Cablevision continues to refuse to accept paying the increased fees Scripps wants.  Cablevision’s declaration that is expects to never carry Scripps programming again doesn’t help.

Meanwhile, Food Network president Brooke Johnson has been running from one news channel to another to talk about Scripps’ position on the dispute, and that “hundreds of thousands” of viewers have complained about the loss of their two networks, a number Cablevision disputes.

Pali Research analyst Richard Greenfield, who covers the cable industry, defended Cablevision, giving credit to the Dolan family that owns Cablevision for standing up to Scripps’ rate increase request.

Greenfield accused Comcast and Time Warner Cable of “essentially rolling over” in their negotiations with Scripps, agreeing to price hikes for their networks, an allusion to Time Warner Cable’s campaign to fight back against programmer price increases.

If those cable companies “had taken a far harder stance with Scripps, Cablevision’s pushback may actually have forced Scripps’ hand,” Greenfield wrote.

Still, most viewers could care less about the power plays between cable and the programmers.  They just want their HGTV and Food Network back.

[flv]http://www.phillipdampier.com/video/WCBS New York Cablevision Scripps Dispute 1-4-10.flv[/flv]

WCBS-TV New York ran these two reports during their 6pm and 11pm newscasts describing the battle between Scripps and Cablevision, and consumer reaction.  (4 minutes)

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WTNH New Haven Cablevision Dispute 1-7-10.flv[/flv]

Same story, different city as WTNH-TV viewers in New Haven, Connecticut share their views on the dispute.  (2 minutes)

[flv]http://www.phillipdampier.com/video/CNBC Brooke Johnson Cablevision Scripps Dispute 1-4-10.flv[/flv]

Food Network president Brooke Johnson appeared on CNBC to take questions about the dispute and changing business model of cable TV and programmers.  (5 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Fox Business News Scripps Dispute With Cablevision 1-10.flv[/flv]

Johnson also turned up on Fox Business News to discuss the dispute, how negotiations are going, and how viewers are reacting.  (6 minutes)

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Brooke Johnson Cablevision Dispute 1-4-10.flv[/flv]

…And Johnson also appeared on Bloomberg News accusing Cablevision of paying themselves top dollar for AMC, a network they own, while refusing to negotiate over a price increase for the “more popular” HGTV and Food Network amounting “to pennies per subscriber.”  (6 minutes)

Phillip "Doesn't Worship Wall Street" Dampier

Bray Cary, president and CEO of a group of West Virginia television stations enjoying advertising revenue from Frontier Communications, was back on his Decision Makers program to allow an opposing viewpoint to the puff piece interview he held earlier with Frontier’s Ken Arndt, Frontier’s Southeast region chief.  This time, he invited Ron Collins, vice-president of the Communications Workers of America to give the CWA side.  Cary’s Tea-‘N-Cookies Breakfast Club With Ken this was not.  Cary decided to play hardball with Collins, leaving no viewer in doubt where Cary stood on the question of Frontier’s proposed purchase of West Virginia’s phone lines from Verizon.

Unfortunately, Collins was not completely prepared to rebut Cary’s pro-Wall Street, pro-deal propaganda and looked ill at ease at times during the interview.  We’re not, and Cary’s “facts” deserve some investigation.  After all, how hard should it be to rebut a guy who believes Wall Street and the banks have all the right answers for West Virginians’ phone service?

• Video No Longer Available.

Right from the outset, Cary wants to play “devil’s advocate” with Collins, asking why in the world the CWA is opposed to this deal.  That was a major departure from his cheerleading session with Arndt.

Bray Cary, Host of Decision Makers

“I’ve looked at this […] their stock has been extremely stable.  Wall Street appears to be signaling their financial viability is okay.  Why is the stock market not reacting negatively?  If it’s good for stockholders, how can it be bad for their financial stability.  Stockholders want financial stability,” Cary said in a series of statements about the deal, including mentioning a Moody’s report on the deal.

The Moody’s report Cary talks about is for shareholders who will reap the rewards or suffer the losses based on the success or failure of the deal.  Moody doesn’t rate the deal’s impact on consumers who have to live with the results.  What’s good for Wall Street is not necessarily what’s best for customers.

“What you don’t have is anyone in the financial community suggesting this is a bad financial deal,” Cary said December 13th.

Wrong.  Almost a week earlier, on December 7th, D.A. Davidson, a respected Wall Street analyst said the opposite.  In a story published in Barron’s: “Frontier Communications’ Shares Not Wired for Success,” the analyst firm argued the regional telecom’s acquisition of Verizon’s rural lines will be… wait for it… bad for the stock.

Cary’s claim that Wall Street is concerned with the long term viability of companies belies the growing reality that much of the investment culture in America has a long term obsession with short term results.  Your company is only as good as your last quarter’s financial earnings statement, and several bad ones in a row are usually enough to bring a recommendation to dump shares.  Frontier has kept its stock value stable largely as a result of their steady dividend payment.  Collins claims Frontier has gone beyond reason, paying 125% of earnings in dividends.  That may make the stock a popular choice for income investors, but is also eerily familiar.

FairPoint Communications also enjoyed a healthy stock price because of its high dividend payout.  Wall Street only got concerned when they thought that deal might not go through.  Morgan Stanley issued a report in 2007 suggesting the deal between FairPoint and Verizon to take control of landline customers in Vermont, New Hampshire, and Maine, was itself helping to prop up the stock’s value.  We saw how far that got FairPoint when the company declared bankruptcy a few months ago.

Ron Collins, CWA's vice president

Indeed, smaller independent phone companies commonly use high dividends to remain attractive to investors and stay viable in a tough market.  Windstream is another such company and even CNBC’s Jim Cramer gave due diligence to the fact high dividends and stock value by themselves don’t necessarily predict the company’s long term success or failure.

Make no mistake, Frontier has sold this deal to investors based on dividend payouts, claimed cost savings, and a safe bet that any broadband in rural America will earn them increased revenue, especially where consumers have no other place to go for service.

Frontier will take on massive additional debt to finance the deal, but on paper it actually appears to reduce their debt ratio.  That’s because when you add millions of new customers, the debt doesn’t look so big next to the increased revenue those additional customers will bring, assuming they stay with Frontier.  Should Frontier’s performance underwhelm customers, they’ll drop service if they can.  If mobile phone networks do a better job of reaching these rural customers, many will drop landline service anyway.  When wireless broadband service becomes a more realistic option, customers might toss Frontier’s slow speed DSL overboard.

AT&T and Verizon have read the writing on the wall — an ongoing decline in landline service and the eventual death of the kind of service Frontier is providing its customers on its legacy network.  Would you be better off with a company that recognizes the truth about the future of wired basic phone service, or the one that wants to buy up obsolete networks and hang on until the last customer leaves?

Cary’s concern starts and stops with shareholder value, not the individual long term needs of consumers across West Virginia.

“All of the bankers and all of Wall Street are saying financially this is a good deal financially for Frontier,” Cary argued.

“Good for Wall Street, bad for West Virginia,” Collins replied.

“Well, see I disagree… that has been a myth put out there, and the reason we don’t have any jobs in this state is companies don’t want to come here just because of that mentality.  People need to make money.  You look at where companies are flourishing, the workers flourish when they do,” Cary said.

Really.  Then why are several of these telecommunications companies awash in revenue also continuing to reduce their workforce in their relentless effort to obtain “cost savings.”  Someone is making money, just not the average employee.  Every state has pro-business acolytes claiming businesses don’t want to come to their state because of regulation and a hostile business climate, even those with the fewest regulations, lowest taxes, and little protection for employees and consumers.

Cary does make one valid point: Verizon wants out of West Virginia and refuses to invest a dime in the state as it looks for a quick exit.  Instead the company has diverted resources from serving smaller states’ phone service needs into its larger city FiOS fiber to the home system where it believes it can reap more revenue.  Whether that disinvestment should be permitted in the first place is a question that needs to be asked.

Verizon is a regulated utility that is required to meet certain performance standards, and the company’s long history of operations under that framework, under which it profited handsomely, does require consideration.  But the state can also provide additional incentives to make it more attractive for Verizon to commit more resources in the state, ranging from tax credits, public-private investment, rewards for performance and service improvements, etc.  It can also find someone else to provide the service, or let local communities band together into cooperatives to run their own networks, should customers find that could deliver better service.

At the very minimum, Frontier should he held to strict conditions that require a fiscally responsible transaction for ratepayers, not just for shareholders and management.  Verizon’s workforce, already cut to the bone, should not bear the brunt of “cost savings” either, both now and into the future.  If Frontier wants to deliver broadband, they should commit to offering 21st century speed (not the 1-3Mbps service typical for their smaller service areas) without their draconian 5GB usage limit in their Acceptable Use Policy.

Cary doesn’t concern himself with those kinds of details, but consumers and small businesses in his state sure do.

Cary wants more jobs and more earnings for West Virginia.  In the changing digital economy, high speed broadband isn’t an option — it’s a necessity.  Verizon has a proven track record of being able to provide 21st century broadband — Frontier does not (sorry, 1-3Mbps DSL is more 1999, not 2010).

Cary makes an astonishing statement in the third segment of the interview which makes me question his ability to grasp the reality-based community most Americans live in today.

“I have great faith in the banking system in America, in Wall Street, to evaluate these things.”

That stunned Collins, who asked, “even after the 2008 crash?”

Cary seems to think “everything is back to normal.”  Unfortunately, after the bailouts and big lobbying dollars being spent in Washington to preserve the status quo as much as possible, everything is back to normal… for Wall Street and the banks.  The rest of the country, including West Virginia, is another matter.

FairPoint's Stock Price from 2007, when it announced the deal with Verizon, to late 2009 when the company declared bankruptcy. By late 2008/early 2009, what seemed like a great deal for investors was apparently not, as the panicked rushed for the exits.

I’ll put my trust in the wisdom of West Virginians who want good service and reasonable prices.  If Cary wants to read from the Good Book of the “paragons of virtue” like AIG, Bear-Stearns and Goldman Sachs, let him sell his TV stations to help finance the bailouts.  Remember that when we went through this before with Hawaii Telecom and FairPoint Communications, the cheerleading session on Wall Street lasted only as long as the quarterly balance sheets looked good.  At the first sign of trouble, they bailed on the stock and both companies ended up in bankruptcy.

For them, it represented just another roll of the dice in the giant financial casino we call Wall Street.

For the rural residents of states like West Virginia who ultimately have to live with the results, this is their phone and broadband service we are talking about.  Before all bets are placed and the dice are thrown, isn’t it worth considering them?

Just like the credit card companies, once a broadband provider wedges its foot in the door with Internet Overcharging schemes like consumption billing and usage allowances, they can push it open further and further, allowing your money to fly out the door into their pocket.

Rogers Communications, the dominant cable broadband provider in eastern Canada has quietly planned to double the maximum overlimit penalty customers pay for exceeding their usage allowance.  Effective this March, Rogers will confiscate up to $50 from you for daring to cross their arbitrary allowances, which range from a piddly 2GB on their “Ultra-Lite” plan to 175GB on their $100 “Ultimate” plan.  That’s double the old maximum penalty of $25 a month.

It appears many Canadian broadband customers simply took it for granted that unlimited broadband, regardless of the tier they selected, would cost an additional $25 a month.  Many begrudgingly paid it, knowing in many areas all of the alternatives had Internet Overcharging schemes of their own.

Broadband Providers Limbo Dance: Lowering Your Value With Internet Overcharging Schemes

As Stop the Cap! has warned repeatedly, once broadband providers establish such schemes, they can begin a limbo dance with their customers, reducing the value of the service they receive by either increasing the penalties for exceeding usage limits, or simply reducing usage allowances to expose more customers to profit-padding fees and surcharges.

Rogers is taking a page from companies like Time Warner Cable that wanted to implement their own Internet Overcharging scheme in April 2009 with a maximum overlimit penalty of $100.  For broadband providers in Canada like Rogers who double such fees, there is plenty of room to grow them further.

Rogers charges customers trying to keep to a broadband budget some stunning overlimit fees as it is.  Their Ultra-Lite plan exposes customers to a future bill up to $76.00 a month, all for 500kbps service, and that’s before taxes and surcharges.  That’s because Rogers charges customers exceeding 2GB per month a whopping $5 for each additional gigabyte of usage.

Most Rogers customers end up on plans like “Express” which charges $46.99 a month for 10Mbps/512kbps service, with a 60GB usage allowance.  But with Rogers’ new overlimit penalty fee, customers opening their bills could find that service costing them $97 a month instead.  That’s a bill only a credit card company could love.

All this, when Rogers’ costs to provide broadband service continue to decline.  Rationing broadband is profitable and and shareholders love it.  Considering the  regulatory agency that is supposed to watch out for Canadians, the Canadian Radio-television Telecommunications Commission (CRTC), more closely resembles a cable and telephone industry lobbying group, there is nothing to stand in the way of even greater fee increases in the future.

Oh, and they get to throttle your broadband speed down… way down, for any online application they feel consumes too many resources on their network, so customers can’t even use the service they pay good money to receive.

Nadir Mohamed, president and chief operating officer of Rogers Communications Inc., admits it’s all about the money.  In June 2008, he told the Canadian Telecom Summit, “Usage-based billing is a reality for wired and wireless network,” he said. “The capacity is exploding, and we need to be able to monetize some of that.”

A person representing themselves as a Rogers social networking rep, “RogersMary” told customers Rogers had increased the value of their broadband service:

We always want to offer our customers great quality of service for the best value. In the last year, we have made network and technology investments that include improvements in download speeds, expanding our network in other parts of Canada and launching Rogers On Demand Online free to all customers that subscribe to any Rogers product. In terms of pricing, we have reduced higher tier services such as Extreme Plus ($69.99 from $99.95) and Ultimate ($99.99 from $149.99). Based on our research, the vast majority (90%) of Rogers Internet customers do not go over their usage limits each month and will not be impacted by changes to overage charges. If you do, I would suggest calling Care to discuss which plan best suits your Internet use.

If you call, ask Rogers which plan doesn’t include an Internet Overcharging scheme.

Liberally borrowing from ABC’s Extreme Makeover: Home Edition, and those home improvement shows on HGTV, Verizon has been producing their own “home technology makeovers” for infomercials airing in different Verizon service areas, designed to pitch their fiber to the home FiOS product line. It’s a non-threatening introduction for those not so technology-inclined, but love the premise of home makeovers.

The Reyes family of Clearwater, Florida is the latest to receive a Verizon-inspired makeover this March, which will air later as an infomercial in the Tampa Bay area.

The family was chosen from those who auditioned for the role during the past two months.

Verizon traditionally sets up each show by illustrating the challenges busy families face when trying to work with outdated electronics.  It’s also a great chance to bash the competition, suggesting their cable reception isn’t so great, their calls to 911 are broken up and unclear, and their Internet is slow and generally lousy.  At this point, Bright House Networks, Tampa’s predominate cable company, is supposed to be squirming, because you can bet these families aren’t complaining about Verizon phone service or Verizon DSL.

After the family leaves the home, a bandwagon of Verizon workers and self-described “Design,” “Tech,” and “FiOS”-Gurus show up and replace their obsolete equipment with Verizon’s family of products, ranging from FiOS for their television, phone, and broadband needs, and some extra goodies thrown in from Verizon Wireless for mobility.  Add some new electronics and some room makeovers and the job is complete.

When the family returns, they are suitably impressed with Verizon’s products (which they presumably obtain for free, at least for awhile), the company throws a block party for the entire neighborhood, and everyone goes away with a positive feeling about the company.

“I like the concept of the show, how one company can bring so much happiness to a family just by changing their home technology,” said Jessica Reyes. “It may seem simple to some people, but I know this will have a huge impact on our family.”

See?

Actually, it’s a brilliant execution of marketing to those who don’t suddenly start drooling at the mere mention of FiOS in their neighborhood.  For plenty of Americans, a decidedly non-technical demonstration of the technology products Verizon sells is a much better way to sell service to those who think fiber is a matter of diet, not home entertainment.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon MyHome 2.0.mp4[/flv]

Verizon’s promotional reel for My Home 2.0 shows home technology makeovers, and can’t resist taking a few pokes at the competition’s service. (1 minute)

Just six months after the transition to digital television in the United States, proponents for the wireless mobile industry are back before the Federal Communications Commission asking the agency to “free up” additional frequencies by forcing major changes to local television stations.

The CTIA – The Wireless Association, a trade group representing big mobile providers like Verizon, Sprint, and AT&T, and the Consumer Electronics Association have suggested high power television broadcasting should be replaced with networks of lower powered regional relay transmitters serving smaller areas.  With considerably reduced power and antenna height, the groups argue, stations can be compacted into a smaller range of available channels, opening up new opportunities for wireless broadband services.

The number of available channels for television broadcasts has been shrinking since the early 1980s, when UHF channels 70-83 were largely reassigned for mobile phone use.  Today’s UHF band ends at channel 51, as channels 52-69 are reassigned to several interests, including first responders and other public safety uses.  With further compacting of the UHF band, up to 100-180 MHz of spectrum may be freed for mobile broadband use across the country.

How can this be done when the FCC believes many large urban regions of the country have used every available channel?  By reducing the coverage area of individual transmitters.  The wireless association claims interference problems come from high powered transmitters using soaring television antennas to give most television stations 30-40 miles of coverage area from a single transmitter site.  By dramatically reducing both the power and antenna height, and instead using a network of relay transmitters serving smaller areas, television stations can cover their local communities and reduce distant signal reception.  It’s these distant signals, and their capacity to interfere with other stations which requires the FCC to keep stations occupying the same or nearby channels far apart.

KATV-TV Little Rock's transmission tower

The CTIA suggests that with proper engineering of a low-powered network of transmitters, the Commission could reallocate UHF channels 28-51 for wireless communications instead, leaving UHF stations sharing channels 14-27.

The wireless lobby is selling this plan as a “win” for broadcasters, even though they will need to construct a network of lower powered transmitters and antennas to serve essentially every town in their existing service areas.  For most, that would involve constructing 15-20 new transmitter sites.  The wireless group says a more localized ‘cell-tower’ like approach to television transmission would serve areas currently not able to receive reception because of obstacles between the main high powered transmitter and a viewer’s set.  Proper placement of transmission antennas would maximize reception for each transmitter.  The wireless industry is even willing to bear the expense of purchasing transmitters, estimated at up to $1.8 billion dollars nationwide, to help broadcasters make the transition.  That’s actually a cheap price to pay considering the frequencies converted for their use are worth tens of billions more.

The plan got a boost of sorts from the Justice Department, who filed their own comments with the FCC suggesting adding frequency spectrum for wireless-based broadband should be a top priority for the Commission.

“Given the potential of wireless services to reach underserved areas and to provide an alternative to wireline broadband providers in other areas, the Commission’s primary tool for promoting broadband competition should be freeing up spectrum,” Justice officials wrote.

The Justice Department believes handing over additional frequency spectrum will promote competition, increase wireless broadband speeds, and lower prices, despite no evidence that wireless broadband competition would suddenly appear on the scene, or that the prevailing wireless carriers would actually reduce pricing and relax usage limits.

Broadcasters are not thrilled with the wireless industry plan.

The National Association of Broadcasters, to paraphrase, knocked the wireless industry for getting too greedy with its spectrum requests.  The NAB believes wireless providers like Verizon, AT&T, Sprint and T-Mobile are sitting on frequencies already allocated, but not yet used, for mobile communications networks, and they should use them before they come knocking looking for more.

Even more concerning to the NAB is the disruption the CTIA plan would cause for Americans still watching over-the-air free television.  Channel numbers would almost certainly have to be reassigned… again, at least for UHF stations.  That created significant confusion for viewers on the final date of the DTV transition in June when many stations either moved their digital signal back to their original analog channel number or relocated somewhere else on the dial.  Many Americans lost reception until they were taught to re-scan their televisions or converters to find the channels gone missing.

The NAB also questions the reception improvement a network of low power television transmitters could provide, particularly for those just on the edge of one relay transmitter and another.  Anyone trying to watch a low power television station today more than a few miles from the transmitter site can testify it’s not a pleasant experience.  Even greater concerns impact those “distant viewers” who may live between two or more cities, each with their own local stations.  Those viewers, using external antennas, can often watch television from several cities depending which direction their rooftop antenna is pointed, but could end up receiving no signals at all if CTIA’s plan is approved.

Broadcasters are also concerned about the impact lower powered transmitters will have on the forthcoming Mobile DTV service, which will bring programming to devices on-the-go.

The war over frequencies continues, as the broadcasters and mobile providers fight over who ultimately controls airwave real estate estimated to be worth $36-65 billion dollars.