A look back and forward

20-years after the Telecom Act of 1996, cable and wireline telecom providers seem to be retreating from their enthusiastic entries into each other’s markets.  Verizon’s FiOS is available in highly-populated areas in just 9-states.  AT&T U-Verse is in 21 states, but with its 2015 purchase of the satellite-provider, DirecTV, it seems to be pivoting away from a commitment to wireline technology. (See #s below).  Meanwhile, cable providers’ ability to sign-up telecommunications subscribers (even in bundles) lags behind its other offerings. 

But, by providing consumers with a choice of alternative access technologies, wireline vs. mobile, cable and telecom firms may compete more effectively in broadband in significantly more markets than they ever did before. 

Pay-TV	1Q2014	1Q2015	1Q2016	2015-2014	2015-2016
Cable	50,418,063	49,220,333	49,113,576	(1,197,730)	(106,757)
Satellite	34,362,000	34,256,000	33,986,000	(106,000)	(270,000)
Verizon FiOS	5,319,000	5,739,000	5,863,000	420,000	124,000
AT&T U-verse	5,661,000	5,993,000	5,260,000	332,000	(733,000)
TOTAL	95,760,063	95,208,333	94,222,576	(551,730)	(985,757)
Broadband	1Q2014	1Q2015	1Q2016	2015-2014	2015-2016
Cable	50,310,968	52,963,179	56,334,724	2,652,211	3,371,545
Verizon FiOS	9,031,000	9,246,000	9,218,000	215,000	(28,000)
AT&T U-verse	16,503,000	16,097,000	15,764,000	(406,000)	(333,000)
Other Telco	9,701,938	10,199,978	10,220,323	498,040	20,345
TOTAL	85,546,906	88,506,157	91,537,047	2,959,251	3,030,890
Source: Leichtman Research Group
http://www.leichtmanresearch.com/press/pr_archives.html

The Game of Negotiating Retransmission Agreements

It’s been nearly 6-weeks since DISH blacked-out Tribune Broadcasting’s WGN America network and its 42 owned or operated stations to its 5-million subscribers in 33 markets because of the inability of the two parties to agree to new pricing terms for retransmission. 

First move was by Tribune which launched a media blitz (with website) “informing” subscribers of the impasse and suggesting they take action, such as switching to another satellite/cable provider.  

DISH countered in two ways.  On June 16^th, it requested that Tribune agree to binding baseball-style arbitration to resolve the dispute.  A few days later, on June 20^th, it filed a lawsuit against Tribune in the U.S. District Court in Colorado seeking monetary damages associated with increased expenditures, drop in revenue, and loss in goodwill and reputation. https://consumermediallc.files.wordpress.com/2016/06/1-main.pdf

Tribune moved next by offering to extend the terms of the old contract to August 31^st while requesting the FCC to monitor “good faith” negotiations.  It moved again, this time on July 20^th, with an offer to extend the termination date to September 15^th, with no true-up or retroactive payments required as long as access was restored immediately.

On an investor call on July 22^nd, however, Charles Ergen, DISH CEO, stated that the satellite provider was “prepared to live without Tribune and WGN America”.   What about its dispute with the NFL Network too?  With 281,000 (2%) lost subscribers in the second quarter and football season fast approaching, what makes a strategic negotiating bluff turn into a huge mistake for the firm?  

What can be said for high-speed broadband availability in Pennsylvania?

With the exception of the highlighted high density counties which have no or very little rural parts to them, households in rural areas of Pennsylvania are disproportionately underserved by high-speed broadband access.  Could this be holding us back?

“Pennsylvania prohibits municipalities from providing broadband services to the public for a fee unless such services are not provided by the local telephone company and the local telephone company refuses to provide such services within 14 months of a request by the political subdivision. In determining whether the local telephone company is providing, or will provide, broadband service in the community, the only relevant consideration is data speed. That is, if the company is willing to provide the data speed that the community seeks, no other factor can be considered, including price, quality of service, coverage, mobility, etc. (66 Pa. Cons. Stat. Ann. § 3014(h)) http://www.ftthcouncil.org/p/cm/ld/fid=151

	Density: Persons/ Square Mile	Population  Without Access	% of Total Population in the County w/o Access	% w/o Access Living in Rural Areas of the County
Adams County	199.4	10,551	10%	79%
Allegheny County	1647.6	11,280	1%	4%
Armstrong County	101.2	4,122	6%	76%
Beaver County	382.4	4,342	3%	57%
Bedford County	46.5	12,132	26%	95%
Berks County	496.6	15,376	4%	29%
Blair County	238.7	8,848	7%	41%
Bradford County	53.0	23,982	39%	99%
Bucks County	1062.7	12,115	2%	3%
Butler County	239.1	7,730	4%	65%
Cambria County	199.6	13,860	10%	60%
Cameron County	11.3	313	7%	92%
Carbon County	177.8	2,098	3%	36%
Centre County	144.0	24,551	15%	80%
Chester County	711.6	7,071	1%	35%
Clarion County	63.0	8,909	24%	79%
Clearfield County	67.2	18,679	24%	68%
Clinton County	43.4	3,676	10%	84%
Columbia County	138.1	19,509	29%	60%
Crawford County	85.2	20,772	24%	83%
Cumberland County	449.1	21,116	9%	58%
Dauphin County	516.3	5,011	2%	48%
Delaware County	3096.6	8,189	1%	0%
Elk County	36.8	1,010	3%	99%
Erie County	354.0	28,296	10%	74%
Fayette County	165.2	15,787	12%	52%
Forest County	18.8	2,480	31%	100%
Franklin County	209.1	18,600	12%	82%
Fulton County	34.3	8,948	60%	100%
Greene County	63.4	4,316	12%	54%
Huntingdon County	50.8	11,389	26%	81%
Indiana County	104.8	19,861	23%	93%
Jefferson County	67.0	4,304	10%	98%
Juniata County	62.7	12,862	52%	86%
Lackawanna County	469.7	30,119	14%	34%
Lancaster County	583.4	20,206	4%	65%
Lawrence County	246.4	4,119	5%	61%
Lebanon County	382.2	6,122	4%	45%
Lehigh County	1040.8	278	0%	100%
Luzerne County	360.1	17,578	5%	62%
Lycoming County	90.9	12,575	11%	91%
McKean County	43.2	4,939	12%	94%
Mercer County	168.2	15,798	14%	75%
Mifflin County	113.9	14,441	31%	92%
Monroe County	281.9	1,487	1%	79%
Montgomery County	1694.3	12,139	1%	2%
Montour County	134.0	5,585	32%	83%
Northampton County	834.2	37	0%	11%
Northumberland County	200.2	18,122	20%	57%
Perry County	84.3	12,648	27%	100%
Philadelphia County	11713.2	13,309	1%	0%
Pike County	110.6	625	1%	100%
Potter County	13.8	4,409	30%	100%
Schuylkill County	190.4	26,060	18%	46%
Snyder County	116.5	17,142	45%	85%
Somerset County	69.2	13,474	18%	96%
Sullivan County	12.5	3,855	69%	100%
Susquehanna County	49.9	27,228	66%	88%
Tioga County	35.7	11,692	29%	100%
Union County	143.4	9,503	21%	12%
Venango County	79.0	7,566	14%	95%
Warren County	45.4	15,182	38%	78%
Washington County	244.4	19,554	9%	64%
Wayne County	74.6	24,504	45%	98%
Westmoreland County	352.6	12,673	3%	43%
Wyoming County	70.4	3,400	12%	96%
York County	512.5	25,191	5%	41%

 Source:  2016 FCC Broadband Report