McDowell

Republican FCC Commissioner Robert McDowell is questioning whether Comcast misled the federal agency when the cable company acquired wireless spectrum it now says it had no intention of ever using.

McDowell was reacting to Comcast chief financial officer Michael Angelakis, who admitted this week his company really never had any interest in competing in the wireless space.

“Were they purchased under false pretenses?” McDowell asked.

Comcast has since sold their acquired spectrum to Verizon Wireless, which in Angelakis’ view makes sense.

“We never really intended to build that spectrum, so therefore it’s a really good use of that spectrum,” Angelakis said.

That admission puts Comcast in a difficult position, because FCC rules mandate that companies acquiring scarce wireless spectrum make a good faith effort to use it.  In McDowell’s view, had Comcast never intended to put the frequencies to use, the FCC probably would have disallowed the acquisition.

Verizon Wireless also plans to pick up unused spectrum originally acquired by Time Warner Cable in a deal that would let both companies cross-promote cable and wireless products and avoid head-on competition.

Both Comcast and Time Warner Cable have warehoused unused spectrum for several years.  Neither company appeared serious about building competing wireless networks, and with the spectrum off the market, would-be competitors couldn’t launch service either.

Verizon agreed to pay $3.6 billion to acquire the cable industry-owned spectrum, which it intends to use to bolster its LTE 4G network.

The FCC is now seeking public input on whether it should approve the spectrum sale. The Justice Department is also considering its antitrust implications.

When Massena, N.Y. town supervisor Joseph D. Gray balked at Time Warner Cable’s demands for a 15-year franchise renewal agreement, especially after the cable company never bothered to show up at a hearing on the subject, he thought he could send a message by supporting a renewal expiring after just one year.

But there was a reason Time Warner never bothered to show up to defend their performance in northern New York State over the last decade of increasing rates and unwanted channels shoveled at subscribers — they did really have to answer to local officials.

Gray assumed playing some hardball with the cable company might get their attention and bring them to the table to discuss the demands of local Massena residents he hears from all the time.  At the top of the list is a-la-carte cable — paying only for channels you want.

No deal.

Gray

Mr. Gray has since admitted in conversations with the Watertown Daily Times he is frustrated by the town’s inability to effect “any real change.”

This despite the state cable franchise law which declares communities have the right to establish and negotiate “cable-related community needs” as part of the final contract with cable operators.

In fact, the cable industry has spent millions lobbying federal and state governments to deregulate their operations, even though most communities are served by just one cable operator.  While phone companies have made limited progress competing in larger urban areas, most of upstate New York is left choosing between a satellite provider or a cable company — usually Time Warner Cable.

That lobbying paid off in the 1990s when the federal government swept away considerable government oversight of cable operations.  While municipalities technically still control the basic franchising process, those dissatisfied with service from an existing provider rarely find other companies willing to take over.  That leaves Massena stuck with Time Warner Cable, who isn’t giving an inch on how they package their programming.

“We can make some gains for the community. Can we get free service for a couple of municipal buildings? Probably,” Mr. Gray told the newspaper. “They continue to say there’s nothing they can do about programming, there’s nothing they can do about bundling.  That’s from the programmer.  Until we get … a la carte, where people get the channels they want, we’re never going to satisfy people.”

Liu

While Buffalo residents fume about missing the latest matchup between the Buffalo Sabres and Edmonton Oilers, the city of New York is pressuring Time Warner Cable to start compensating their subscribers for the loss of one of the most expensive channels on the basic cable dial.

New York City Comptroller John Liu has asked the Department of Information Technology and Telecommunications, which oversees cable franchise agreements for the city, to make certain Time Warner compensates customers for the loss of MSG and MSG Plus, both removed over a contract renewal dispute.

“Consumers deserve to be compensated for what they have gone through as a result of this dispute, plain and simple,” Mike Loughran, a spokesman for Liu, told Bloomberg News in an e-mail. Loughran said the comptroller’s office would discuss compensation plans with the Department of Information Technology and Telecommunications.

Time Warner says it has already effectively compensated impacted customers, primarily in New York State, with a free month of the company’s added-cost sports programming tier.  Time Warner has also replaced the two MSG networks with NBA TV and NHL Network, which are now likely to remain part of the basic package even if Time Warner reaches an agreement with MSG.  (Sorry football fans, NFL Network is still too costly to be deemed a suitable replacement network.)

Time Warner says there is no way they would pay MSG’s asking price for a renewed carriage contract, which the cable company says represented a 53% rate increase.

As Stop the Cap! reported earlier, the dispute is renewing rumblings about how pay television providers handle expensive sports programming.  An increasing number of cable executives are considering breaking sports networks out of the basic cable package and forcing interested sports fans to pay extra to receive them.  But sports remains a lightning rod issue for many pay TV companies, both among subscribers and politicians.  Disrupt a major sporting event at your peril — something Cablevision learned from an earlier dispute with Fox.

In Buffalo, some customers are dropping Time Warner Cable for Verizon FiOS, at least where that fiber to the home service is available.  Residents served by Frontier Communications or Verizon’s DSL have fewer choices — one of two satellite TV companies.

Verizon already carries a standard definition feed of MSG Networks.  AT&T announced this week it was adding MSG in HD to its U-verse lineup in Connecticut.  MSG has spent this week rubbing salt in Time Warner’s wounds, throwing MSG viewing parties in both Buffalo and New York City.  Now that the city of New York is pressuring Time Warner to cough up refunds as much as $4 or more a month for the loss of MSG, the dispute could prove increasingly expensive.  Some customers tell Stop the Cap! they are already receiving informal compensation for the loss of MSG after contacting the cable company by phone or e-mail to complain.

“I wrote Time Warner on their web contact form and a representative gave me a $5 courtesy credit for the loss of the channels after I explained I was shopping around for another provider,” writes Neil Thomowski who lives in Cheektowaga, near Buffalo.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WNLO Buffalo Sabres fans dismayed by cable dispute 1-3-12.mp4[/flv]

Buffalo Sabres fans who have Time Warner Cable were left in the dark Tuesday night and couldn’t watch the match-up between the Sabres and the Edmonton Oilers.  WNLO in Buffalo has the story.  (2 minutes)

Payday for Rutledge

Cablevision’s former chief operating officer Tom Rutledge has hit executive pay Powerball, scoring a compensation package worth more than $90 million dollars as the incoming CEO of formerly-bankrupt Charter Communications.

Documents filed with the Securities and Exchange Commission reveal why Rutledge abruptly resigned from his position at Cablevision on Dec. 15.  Just four days later, Charter announced Rutledge would become its new CEO this February, replacing Mike Lovett who earlier announced his departure plans.

Rutledge will be extremely well compensated in his new position, scoring $8,000 a week in walk-around money until February when the executive suite opens up.  After that, his base salary will amount to $2 million annually, with yearly increases possible.  But the real money will come from Rutledge’s bonus and incentives package.  In addition to an annual bonus worth up to $3.5 million annually, Rutledge will also get more than one million shares of Charter stock, worth more than $70 million at present.  If Rutledge focuses on boosting that stock price, he could earn considerably more.

That’s a remarkable pay package for a cable company that declared bankruptcy just two years ago.  It’s also a lot more money for Rutledge, who collected just over $28 million at his old job at Cablevision.

In 2010, soon-to-be-former Charter CEO Mike Lovett earned just under $11 million in total compensation.

Argentine President Cristina Fernández de Kirchner

The Argentine government has a solution to stop the skyrocketing of cable television rates in the country: it regulates them.  Now the country’s Secretary of Commerce Guillermo Moreno has ordered Cablevision SA, one of the country’s largest media companies, to freeze basic cable rates at 116 Argentine pesos ($27US) for 2012.

The cable company won a 7 pesos rate hike last September, but there were indications further rate hikes were forthcoming.  Argentine President Cristina Kirchner has engaged in a long-running feud with several large Argentine conglomerates over what she feels is their abuse of market power.

Kirchner has specifically targeted super-sized Grupo Clarín, Cablevision’s parent company, for its relentless rate hikes.  The conglomerate now earns close to two-thirds of its revenue from selling cable TV and broadband Internet.

Kirchner considers corporate monopoly control of broadband to be especially dangerous for the Argentine economy, and her administration is seeking to force Grupo Clarín to divest itself of its broadband business with the passage of several media laws.

Cablevision defends its rate increases, noting Argentina’s inflation rate is currently as high as 25%.  But government officials have the power to suspend or rollback rate increases it determines are unfair or come as a result of Cablevision’s market power.

The $27 a month Cablevision subscribers currently pay for basic cable buys a comparably-sized cable package that North Americans pay more than double that amount to receive: