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Justice Dept. Staffers Warn T-Mobile/Sprint Merger Unlikely to Win Approval as Structured

Justice Department staffers have told T-Mobile and Sprint that their $26 billion merger is unlikely to win approval as presently structured, according to a report in the Wall Street Journal.

Unnamed sources familiar with the deal told the newspaper the Justice Department’s Antitrust Division is among the most skeptical of those reviewing the deal, questioning claims from the companies that the merger will create synergy and increased efficiency that could free up resources to dramatically expand the combined company’s wireless business.

At the core of the concern is the impact of combining the nation’s third and fourth largest wireless carriers, reducing competition to just three national postpaid companies — AT&T, Verizon Wireless, and T-Mobile. That could present an unacceptable threat to competition.

The Justice Department is not alone expressing concern over the merger deal. Multiple state attorneys general are still reviewing the deal and several have announced they are prepared to sue the companies involved to stop the merger if it manages to win approval on the federal level. The Federal Communications Commission is also said to be questioning some of the claims of the company about the merits of its promised 5G home broadband service and exactly how much consumers could save should they subscribe.

The Financial Times also published a story this afternoon essentially confirming the Journal story.

John Legere, CEO of T-Mobile USA, denied the premise of the Journal’s story in a tweet late this afternoon, calling it “simply untrue,” but refused further comment.

Any decision about the merger is not expected for several weeks, and any recommendations from the staff report on the deal can be overruled by the political appointees that run the Justice Department. The Times reports that the final decision will likely rest with Makan Delrahim, President Trump’s pick as chief of the antitrust division. With staff objections now leaked to the press, Delrahim could be in a politically difficult situation overruling his staff’s recommendations. In the meantime, company officials can offer concessions, such as selling off certain assets to overcome regulator objections.

Many Wall Street analysts feel the chances of the merger winning approval are reduced the longer the merger review remains underway in Washington. Many have placed the odds at less than 50% that the deal will ultimately be approved. If it is rejected, T-Mobile is expected to continue its business without any significant financial hurdles. Sprint may be a different matter, as its Japanese backer SoftBank has soured on the merits of pouring additional money into Sprint’s wireless business.

Comcast and Charter’s Mobile Service a Money Loser; Verizon Set Wholesale Rates Too High

Comcast and Charter Communications are losing money on their cell service plans because their partner, Verizon Wireless, sets its wholesale rates too high, making certain the two companies cannot cannibalize Verizon’s own customers for long.

MoffettNathanson analyst Craig Moffett claims the cable industry’s 2012 $3.9 billion sale of wireless spectrum to Verizon Wireless, which included an agreement allowing the two cable operators to resell Verizon Wireless service, turned out to benefit Verizon more than Comcast and Charter.

The problem is Verizon set its own price for service high enough to guarantee the two cable operators will have a hard time outcompeting Verizon Wireless. Moffett estimates Verizon is currently charging the two operators about $5/GB and around $5/month per customer for unlimited voice and texting. According to Moffett’s calculations, only the pay-per-gigabyte plans have any chance of marginal profitability. Comcast charges $12/GB for its pay-per-usage mobile plan; Charter charges $14/GB for essentially the same service. Both plans include unlimited voice and texting.

Things quickly get unprofitable when a customer signs up for Spectrum Mobile’s or Xfinity Mobile’s Unlimited plan (both $45/mo). Once a customer uses more than 8GB of 4G LTE data per month, Verizon’s wholesale price, including the cost of voice and texting, reaches the same amount those companies are charging customers for service. That does not include any of the ancillary costs Comcast and Charter have to pay to support and market their wireless plans.

Moffett believes the two companies overestimated how often subscribers would offload traffic to Wi-Fi, and the future potential for more solid Wi-Fi coverage “looks cloudy.” The problem, as Moffett sees it, appears to be the cable industry’s loss of interest building out their metro Wi-Fi networks. Moffett called the joint CableWiFi project between Comcast, Charter, Cox, and Altice USA “a bust” because the members of the coalition have largely stopped investing in new hotspot installations. That leaves about 500,000 working hotspots around the country, a number that has remained unchanged for two years. Only in-business Wi-Fi continues to grow, as business cable broadband customers are offered the opportunity to provide Wi-Fi service for their customers. But those hotspots don’t typically offer outdoor coverage.

Comcast has grown its Xfinity Mobile service to 1.2 million lines since launching in 2017 and Spectrum Mobile, which began in last September, had attracted almost 134,000 customers by the end of 2018.

YouTube TV Follows Others, Raises Subscription Price to $49.99 a Month

Phillip Dampier April 10, 2019 Competition, Consumer News, Online Video, YouTube TV 3 Comments

YouTube TV is raising rates 25-43%, depending on your existing package.

Effective today, the company is raising the price of its YouTube TV package to $49.99 a month and is notifying customers it is ending grandfathered pricing arrangements that allowed some customers to pay as low as $35 a month for service.

The price change comes at a time when many of YouTube TV’s competitors have announced or implemented rate increases to cover the rising costs of programming. To reduce the sting, YouTube TV will coincide its rate hike with the addition of eight new channels from Discovery: Animal Planet, Discovery Channel, HGTV, Food Network, ID, MotorTrend, TLC, and the Travel Channel beginning today.

All existing customers will be billed at the new $49.99 rate beginning May 13. New signups will be billed the higher rate immediately. Customers billed by Apple will be penalized the most, with a new rate of $54.99/mo.

The company argues its new package price is still a good value because it now includes more than 70 channels, including robust carriage of local stations in more than 90% of the country. YouTube TV also offers unlimited cloud DVR service and up the three simultaneous streams.

Windstream Sues Charter Over Lookalike Mailers Questioning Phone Company’s Future

Windstream Holdings filed a suit against Charter Communications (d/b/a Spectrum) on Friday, claiming the cable company is trying to poach its customers with a “despicable” false advertising campaigned designed to make people believe the phone company’s days are numbered.

“Shortly after Windstream filed for Chapter 11 protection, Charter commenced a false and misleading advertising campaign designed to cause irreparable injury and damage to Windstream’s reputation and business,” the lawsuit filed with the U.S. Bankruptcy Court for the Southern District of New York states. “Charter targeted Windstream customers in Alabama, Georgia, Kentucky, Ohio, Nebraska, and North Carolina, which are several of Windstream’s top performing states.”

“On the envelopes for the advertisement, Charter intentionally utilized Windstream’s trademark and signature color pattern to mislead Windstream customers into believing that the advertisement came directly from Windstream. Indeed, Charter’s advertisement stated that it was ‘Important Information Enclosed for Windstream Customers.’”

Inside the envelope was an ad for Charter Spectrum:

Windstream Customers,

Don’t Risk Losing Your Internet and TV Services.

Windstream has filed for Chapter 11 bankruptcy, which means uncertainty. Will they be able to provide the Internet and TV services you rely on in the future? To ensure you are not left without vital Internet and TV services, switch to Spectrum.

With a network built for the future, Spectrum is here for the long haul.

Goodbye, Windstream.
Hello, Spectrum.

Windstream’s future is unknown, but Spectrum is here to stay—delivering internet and TV services you can count on. . . .

Windstream told the Bankruptcy Court the ads were evidently effective, based on call transcripts and messages sent from customers to Windstream’s customer service department. Windstream’s attorneys attached multiple examples:

“I got a letter in the mail saying that ya’ll were going bankrupt and for me to go with Spectrum so I have gone to Spectrum and I have just called to have the services of Windstream disconnected.”

“I’ve got Spectrum over here so they go everything hooked up and so they told me not to call you until they got everything going like it’s supposed to be but I got that letter in the mail from Windstream and told me to get with you guys – to get with Spectrum so that’s what I did.”

“Oh, well I was just going there because it says hello I mean goodbye Windstream and uh..to got to Spectrum.”

“Oh lord, well I’ve been [Inaudible] on ‘em honey. I thought the letter was from you cause it said Windstream Corporation.”

The lawsuit complains Windstream had to take 160 calls regarding the Charter mailers over a 10-day period.

The phone company is demanding compensation for a number of reasons, but in part because it was forced to offer inquiring customers a better deal in order to convince them to stay with Windstream.

“As a direct result of Charter’s advertising campaign, Windstream has been forced to expend substantial time, money, and resources to combat these false claims. When distressed customers have called in, Windstream has offered upgrades, which many customers have taken,” the lawsuit states. “Windstream has also incurred costs and resources to educate its customer care associates on how to provide a comprehensive response to Charter’s false claims, which includes an explanation of the true effects of the Chapter 11 proceedings. In addition, as a direct result of Charter’s advertising campaign, Windstream has undertaken an extensive mailing and advertising campaign, at significant cost and expense, to counter Charter’s false and misleading advertising campaign. Windstream’s Legal department has also expended extensive time and effort in researching and responding to this matter.”

Windstream also complained Charter somehow disconnected service to approximately 350 Windstream customers on March 14, 2019, without notice to the phone company. The phone company also alleges Charter has told customers that Spectrum is buying out Windstream.

“When Windstream customers contacted Charter to have their services reinstated, they were told by Charter that service was not being reinstated because of Windstream’s failure to pay certain amounts due to Charter,” the lawsuit claimed. “Windstream, however, is not currently authorized to make any payments to Charter on account of prepetition debt as a result of the Chapter 11 filing.”

Keith

Windstream sent two angry letters to Charter complaining about the mailers.

“This misconduct is unacceptable and will not be tolerated,” Windstream’s deputy general counsel Carol Keith wrote. “This goes beyond a mere marketing decision made in bad taste and is clearly an illegal targeting of Windstream’s services and/or business in the marketplace using ‘false and misleading’ representations. Furthermore, when given the opportunity, Spectrum employees have been directed to double down and outright lie to Windstream customers that Spectrum has a contract to buy Windstream out.”

When Windstream took their complaints straight to Charter, their claims were rebuffed.

“On March 26, 2019, Charter responded to Windstream’s letters, contending that its advertisements were not false or misleading, and that it was proper to describe Windstream’s bankruptcy as creating an ‘uncertainty.’ According to Charter, a Chapter 11 bankruptcy filing ‘creates ‘uncertainty’ regarding Windstream’s future until the bankruptcy is resolved.’”

Charter also told Windstream it believed the confusion over a “buyout” has to do with the cable company’s long-standing offer to pay up to $500 in contract termination fees for new customers switching to Spectrum.

ATSC 3.0 TV Standard Will Launch in Multiple Cities by End of 2020; You’ll Need a New TV or Converter to Watch

Phillip Dampier April 9, 2019 Competition, Consumer News, Public Policy & Gov't 4 Comments

A new standard in over-the-air TV broadcasting could arrive as early as this year in more than 40 U.S. cities, bringing better reception and more TV channels and features to those willing to buy a new television or converter box to watch.

ATSC 3.0 comes just a decade after full power television stations in the United States ceased analog broadcasting. The ‘upgrade’ is a significant improvement over ATSC 1.0, the digital over-the-air television standard now in use in the U.S.

At the National Association of Broadcasters convention in Las Vegas, Sinclair, Fox Television Stations, Nexstar, and NBCUniversal (and a consortium group of stations owned by SpectrumCo and Pearl TV) this week announced 40 U.S. television markets would see ATSC 3.0 stations launched by the end of 2020, starting in these cities:

  • Dallas-Ft. Worth, TX
  • Houston, TX
  • San Francisco-Oakland-San Jose, CA
  • Phoenix, AZ*
  • Seattle-Tacoma, WA
  • Detroit, MI
  • Orlando-Daytona Beach-Melbourne, FL
  • Portland, OR
  • Pittsburgh, PA
  • Raleigh-Durham, NC*
  • Baltimore, MD
  • Nashville, TN
  • Salt Lake City, UT
  • San Antonio, TX
  • Kansas City, KS-MO
  • Columbus, OH
  • West Palm Beach-Ft. Pierce, FL
  • Las Vegas, NV
  • Austin, TX

To help the transition, ATSC 3.0 stations in these cities will switch off their ATSC 1.0 channels and relocate programming to one or more other local stations’ digital subchannels, allowing viewers with older sets to continue watching until a 5-year transition period ends.

The second, and likely larger wave of stations to switch on ATSC 3.0 will come in these cities:

  • New York, NY
  • Los Angeles, CA
  • Chicago, IL
  • Philadelphia, PA
  • Washington, DC
  • Boston, MA
  • Atlanta, GA
  • Tampa-St.Petersburg-Sarasota, FL
  • Minneapolis – St. Paul, MN
  • Miami – Ft. Lauderdale, FL
  • Denver, CO
  • Cleveland-Akron, OH*
  • Sacramento-Stockton-Modesto, CA
  • St. Louis, MO
  • Charlotte, NC
  • Indianapolis, IN
  • San Diego, CA
  • Hartford-New Haven, CT
  • Cincinnati, OH
  • Milwaukee, WI
  • Greenville-Spartanburg, SC – Asheville, NC

The third wave of stations, still expected to complete a transition to ATSC 3.0 by the end of next year, are located in:

  • Norfolk-Portsmouth-Newport News, VA
  • Oklahoma City, OK
  • Albuquerque – Santa Fe, NM
  • Grand Rapids – Kalamazoo, MI
  • Memphis, TN
  • Buffalo, NY
  • Providence – New Bedford, RI
  • Little Rock – Pine Bluff, AR
  • Mobile, AL – Pensacola, FL
  • Albany-Schenectady – Troy, NY
  • Flint-Saginaw – Bay City, MI
  • Omaha, NE
  • Charleston – Huntington, WV
  • Springfield, MO
  • Rochester, NY
  • Syracuse, NY
  • Chattanooga, TN
  • Charleston, SC
  • Burlington, VT – Plattsburgh, NY
  • Davenport, IA – Moline, IL
  • Santa Barbara – Santa Maria – San Luis Obispo, CA

*ATSC 3.0 is already running on one or more stations in these markets.

A faster transition to ATSC 3.0 may be possible in cities where station owners like Sinclair own more than one full power local station. It will make it easier for programming on one station to be temporarily shared on another, without complicated carriage contract negotiations. There is no forced transition to ATSC 3.0, so consumers can make their own choices about whether they want to invest in new televisions or converters. Broadcasters understand that, and many are planning to launch a host of new channels and networks that could benefit cord-cutters and convince them to upgrade.

Over the air viewers will need to get in the habit of remembering how to “rescan” their local channel lineup as stations occasionally disappear as they move to different channels as a result of an unrelated ongoing channel repack or from shifting around to accommodate ATSC 3.0. Some secondary networks like Retro TV, MeTV, Comet, and others may temporarily disappear in some markets if that channel space is temporarily needed for channel-sharing arrangements.

Cable, telco-TV, streaming and satellite customers should not notice a thing because any changes will be managed by your television provider. But those watching over-the-air will need to prepare for the transition either with a forthcoming TV converter or preparing to buy new television sets with ATSC 3.0 tuners. Details on both are sketchy, but free TV viewers may want to start saving money now for new equipment spending starting either late this year or more likely early next.

ATSC 3.0 promises better, more robust reception, with error correction and the capability of downgrading video quality in marginal reception areas to preserve a stable viewing experience. It also supports 4K Ultra-HD and better sound, mobile viewing on smartphones and other devices, and local features including hyper-local weather warnings, targeted advertising and some data applications.

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  • New Yorker: Sold a penny puppet-show to appease us (We The People) and then sold out for millions/billions. F**k this country already....
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  • EJ: I hope they are ready to do this all over again when Charter does basically nothing again. Hopefully they will use this extension to come up with a Pl...
  • Phillip Dampier: Public Comments: http://documents.dps.ny.gov/public/Comments/PublicComments.aspx?MatterCaseNo=15-M-0388...
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