Both sides agree Time Warner Cable needs to add a new music channel, one owned by MSG parent Cablevision Industries, to your cable lineup.

Some suspicious Buffalo hockey fans suspect the real reason for the sudden focus towards a weekend resolution of a nearly two month dispute that kept MSG off Time Warner Cable customers’ screens since Jan. 1 is the fact the New York (City) Knicks are winning some basketball games and player Jeremy Lin is enjoying his “15 minutes of fame” in the national media spotlight.  Both companies announced the latest round of negotiations, held in New York City, have brought an end to the dispute.

Now that MSG is back on Time Warner Cable, neither company is getting a round of applause for finally reaching a deal.  In fact, a key provision of the settlement requires that the cable company add a new network — Fuse — to the cable lineup.  That means Time Warner Cable customers will eventually pay for a music channel they never asked to receive.

The New York Daily News is just the latest newspaper to put fans’ frustrations into print:

[MSG and Time Warner Cable] don’t give a damn about you.

[…] Fans once apathetic over the blackout and the lethargic Knicks are now fired up and vocal. They are calling TWC and MSG. They are making their feelings known inside the Valley of the Stupid, too.

At this point they are having little impact. The two sides said they recently met. How long? Five minutes? The response from the suits at both companies is the same. Their propaganda never changes. They are more interested in gift-wrapping their problem.

Instead of locking itself in a room for around-the-clock negotiating, TWC is taking fans to a Knicks game in Charlotte. Or MSG, catering to the Asian market it suddenly discovered, is throwing a Knicks viewing party at a Chinatown restaurant. This is known as manipulation. These are nothing more than visuals. They don’t change a damn thing.

The song remains the same: TWC says MSG is looking for a 53% increase in subscriber fees, which now, according to industry analysts, average just over $2.63 per customer. MSG responds by saying TWC is lying. TWC says in September MSG agreed to a 6.5% increase. MSG says that’s a lie, too.

Someone is lying. Everyone is lying. That’s part of the spin. Instead of taking it out on both sides for shafting you, they want you to choose sides, identify a bad guy. Don’t. When two lying swines are fighting in the slop, only a sucker would try to intervene.

After nearly two months of cable subscribers complaining they were paying for a sports channel they were not getting, everyone –and– the governor got involved.  But perhaps nothing motivated a resolution more than the sudden media spotlight on Knicks’ player Jeremy Lin, dubbed Linsanity.

“Linsanity helped,” Chris Marangi, a portfolio manager at Gamco Investors told Bloomberg News.  The investment firm owns about 5 million MSG shares and 500,000 Time Warner Cable shares. “Time Warner Cable realistically couldn’t have dropped MSG — it’s too important to too many fans in New York to not be carried. Both sides probably gave a little.”

While state politicians thanked each other for a “job well done,” Time Warner Cable subscribers won’t be getting a refund for a channel missing from their lineup for eight weeks.  But they will likely face a higher rate increase in 2013, in part to pay for a music channel few knew existed and even fewer wanted.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WIVB Buffalo Fans React to MSG Deal 2-19-12.mp4[/flv]

WIVB in Buffalo explores the fallout of Time Warner Cable and MSG’s near-two-month dispute.  (2 minutes)

Not a problem

Who knew America’s largest cable and phone companies were in the broadband shortage business?

Broadband evangelist Craig Settles has been as outraged about this year’s crop of anti-broadband legislation as we have here at Stop the Cap!

He wrote about the implications of allowing state laws to be changed in favor of the big cable and phone companies in a piece published by GigaOM that details where these anti-community Internet bills are coming from:

This push is brought to you by the American Legislative Exchange Council (ALEC), a group of corporate lobbyists who ghostwrite state bills behind closed doors that their pocket legislators then push on the floor. This “model” of anti-muni broadband legislation contains wording that is replicated in these latest bills and newspaper op-eds that attack community broadband.

Many of the nation’s largest phone and cable companies funnel funds into ALEC, and even sponsor wine-and-dine trips for state legislators and their families as part of a comprehensive effort to get their foot (and later proposed legislation) in the door.

Download this archive of ALEC-written and sponsored state legislation/policies affecting telecommunications and IT.  (16mb .zip file)

Few state legislators fully realize the implications of some of these measures, which can hamstring their state’s broadband networks into “good enough for you” broadband, as determined by Comcast, AT&T, Time Warner Cable, Verizon, and others.

ALEC’s dog-and-pony show opens with its corporate backers enhancing their campaign contributions to legislators likely to support their agenda.  ALEC’s lobbyists can then provide “boilerplate” templates for legislation that can be slightly modified and introduced at the state level for consideration.

With a significant increase in campaign contributions targeting friendly legislators, community broadband suddenly becomes a hot topic at the statehouse.

Legislators do not work alone to pass these measures.  As we’ve seen in other states, industry-backed lobbying firms deliver a comprehensive set of support services for the campaign to stop community broadband competition:

1. Talking points for legislators and others opposed to municipal Internet;
2. Professionally produced mailers that can be distributed to every home in a community bashing community networks;
3. Sample letters to the editor intended for local newspapers and easy-to-send letters to legislators asking them to support anti-broadband legislation;
4. Help from seemingly “independent” outside groups that criticize such networks, without disclosing their funding comes, in part or whole, from the cable or phone company.

Settles

Being hoodwinked by the companies that want these kinds of bills passed leave your community’s broadband needs entirely in the hands of providers that have performed so poorly in some cities, local governments have decided they have to provide the service themselves.  Settles illustrates the obvious:

This isn’t about unfair competition by local government. When Wilson’s 12-person IT department can plan, build and manage a network that can deliver speeds (up to a gig) 20 times faster than the best Time Warner Cable offers, that’s competing with superior technology. When Comcast customers switch to Chattanooga’s gig network because of their public utility’s better customer service, that’s competent competition. When tiny Reedsburg, Wis. refuses to compete against the large cable company on price, but beats competitors by offering greater value such as a better selection of Internet services, they compete based on local credibility.

So U.S. communities have to ask themselves, are they going to stay stuck on the train or will they be zipping along at warp speed?

Providers and their industry friends will always argue that you don’t need gigabit broadband speed — what you get from your cable or phone company today is “fast enough.”  Some go as far as to argue current providers are equipped to deliver whatever service customers need, but the demand “just is not there.”

Big Problem.

But as we argued on GigaOM ourselves, the nation’s largest telecom companies have already proven they apparently cannot meet the demand that exists today.  That is because an increasing number of them have started to slap arbitrary usage caps and other limits on their customers’ broadband usage.  Customers don’t want these Internet Overcharging schemes, yet they persist because of what providers effectively admit is a broadband shortage on their networks.

So for a city like Chattanooga, Tenn., which of the following providers should be punished (and potentially even banned) for being in the broadband business:

1. AT&T, which delivers around 6-7Mbps DSL in suburban Chattanooga or up to 24Mbps on its U-verse platform with 150GB/250GB usage limits respectively;
2. Comcast, which delivers up to 50Mbps over cable broadband with a 250GB usage cap;
3. EPB Fiber, which delivers up to 1,000Mbps over fiber optics with no usage cap.

If you are AT&T or Comcast, clearly the provider that must be stopped is #3 — EPB Fiber.  After all, you can’t be in the broadband shortage business when the competitor next door offers a broadband free-for-all made possible from an investment in a superior network that exists to serve customers, not shareholders and investment banks.

Frontier Communications faced unhappy investors Thursday after announcing it was slashing its dividend nearly in half in an effort to raise money to sustain the company’s cash flow and reduce its debt.

The company’s earnings fell 8.1% as customers continued to leave for the competition, seeking better service and lower prices.

The poor earnings results and the dividend cuts delivered a one-two punch to Frontier stock, which slid to $4.20 a share, down 16 percent in the last three months.

Among Frontier’s biggest challenges remains the quality of its broadband service to customers.  Where competition exists, Frontier DSL continues to lose the speed battle, and recent junk fees padding customer bills, including a “High Speed Internet surcharge,” and increasing modem rental fees have alienated some customers.

Frontier’s chief operating officer and executive vice president Dan McCarthy told investors 83 percent of Frontier’s service area has access to the company’s broadband product.  However, fewer than 20% of Frontier’s customers have access to speeds as high as 20Mbps.  Only just over half can access the Internet at 6Mbps.  Many of Frontier’s customers can only access lower speed service (66% can choose 4Mbps, 76% — 3Mbps, and the rest 768kbps-3Mbps).

“We’ll be investing throughout the year to improve speed-reaching capability in all our markets,” McCarthy told investors on a conference call last week.

In the second half of 2010, Frontier is expected to increase the amount of Ethernet in its middle mile network, which McCarthy expects will allow the company to deliver faster speeds over VDSL2 and VDSL2 bonding as means of driving both speed increases in the residential and the commercial markets.

However, Frontier’s preoccupation with an internal system conversion, to integrate its acquired Verizon service areas with the rest of its network, has stalled much of the company’s marketing.  Promotions, in particular, have been anemic over the last several months and will likely remain that way until later this year.  Where competition exists, cable operators have successfully been picking off Frontier’s customers.

• Broadband and satellite TV additions are down, in part due to the lack of promotions and marketing;
• FiOS video losses continue as the company shuns its fiber video service in favor of satellite TV cross-marketing;
• Line loss rates remain very high: 8.3% of Frontier’s customers disconnected their landline service in the last quarter, 5.9% in areas that were not acquired from Verizon.
• Once customers leave, they rarely return.  Churn rate of Frontier customers coming and going is at just 1.6%.

As with similar Verizon landline sales in the past, initial revenue growth from acquired customers starts out high, boosting revenue numbers and often the value of a company’s stock.  But the heavy debt load incurred from acquisitions and ongoing line losses to the competition eventually take their toll, and Frontier’s revenue now reflects the reality of a company trying to sell more services to a declining number of customers.

Morningstar notes the company’s debt problems are significant:

Frontier has struggled to bring leverage down and hasn’t successfully placed new debt since closing the Verizon transaction in 2010. Management has talked about taking care of the $580 million maturity it faces in early 2013 for the better part of a year, with no result to date. Yields on the firm’s existing debt have increased over the past year, despite the sharp decline in Treasury rates.

Standard & Poor’s Ratings Services reduced its outlook on the company from stable to negative, noting the competition is increasingly hurting Frontier’s capability to raise revenue.

The company’s decision to slash its dividend in an effort to reduce debt has created consternation for some investors who stuck with the company when the share price was above $7 and the dividend was declared safe for two years.  Neither seems to the be case any longer.

Skeptical Science produced this infographic of the Heartland Institute’s funding sources and where the money goes.

The Heartland Institute, a corporate-backed astroturf operation that has steadfastly supported cable and phone companies against the interests of consumers, has threatened legal action against activists, bloggers, and other journalists who published stories about recently-acquired documents connecting the group with major corporate donors.

Among telecommunications companies, both AT&T and Time Warner Cable show up in the alleged donor documents, which Heartland officials claim were obtained under false pretenses and, in some cases, were altered or forged.

Jim Lakely, communications director for the group, was unhappy:

We respectfully ask all activists, bloggers, and other journalists to immediately remove all of these documents and any quotations taken from them, especially the fake “climate strategy” memo and any quotations from the same, from their blogs, Web sites, and publications, and to publish retractions.

The individuals who have commented so far on these documents did not wait for Heartland to confirm or deny the authenticity of the documents. We believe their actions constitute civil and possibly criminal offenses for which we plan to pursue charges and collect payment for damages, including damages to our reputation. We ask them in particular to immediately remove these documents and all statements about them from the blogs, Web sites, and publications, and to publish retractions.

The fact the group implies it will take legal action against those who published stories not to the group’s liking will only draw added attention to the scandal.  Stop the Cap! has tangled with this group several times over the years whenever AT&T and Time Warner Cable’s corporate agendas are being challenged.

The group has steadfastly refused to release their donor lists, at one point telling us, “by not disclosing our donors, we keep the focus on the issue.”

Not really.  That’s because the first rule of politics is to “follow the money.”  Most of these groups do not sing their songs for free, and knowing who paid the songwriter can be very revealing.

The Associated Press found no evidence Heartland’s budget or fundraising documents leaked to the media were faked or altered:

Because Heartland was not specific about what was fake and what was real, The Associated Press attempted to verify independently key parts of separate budget and fundraising documents that were leaked. The federal consultant working on the classroom curriculum, the former TV weatherman, a Chicago elected official who campaigns against hidden local debt and two corporate donors all confirmed to the AP that the sections in the document that pertained to them were accurate. No one the AP contacted said the budget or fundraising documents mentioning them were incorrect.

Heartland can best salvage its reputation and put this behind them by releasing the names of their largest donors, letting consumers decide whether this organization truly represents their interests, or those of the corporations writing the big checks.  In addition to corporate contributions, Heartland’s operations rely on a single person identified only as “Anonymous Donor.” In the past six years, the man has given $14.26 million to the institute, nearly half its $33.9 million in revenue, according to the AP.

Grassroots this is not.