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Fox Vs Time Warner Cable: More Revenues for Fox-Higher Rates for Consumers

Two giants in the telecommunications industry battle publicly over Retransmission Consent. Both Fox and Time Warner Cable have let cooler heads prevail in their war over money to be doled out in fees to Fox by extending their negotiations beyond the Dec 31, 2009 deadline.
At issue, the Fox owned broadcast networks carried by […]

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Two giants in the telecommunications industry battle publicly over Retransmission Consent. Both Fox and Time Warner Cable have let cooler heads prevail in their war over money to be doled out in fees to Fox by extending their negotiations beyond the Dec 31, 2009 deadline.

At issue, the Fox owned broadcast networks carried by the Time Warner Cable pipelines. Under Retransmission Consent broadcasters can choose (Must-Carry), where cable operators agree to carry stations throughout the consent period for free, or negotiate for (Advertising) or (Fee-Based) arrangements to solidify carriage. Obviously, Fox has chosen the latter with a proposed $1.00 per month charge per Time Warner Cable subscriber.

Keep in mind that local Fox Affiliates have agreed to terms with Time Warner Cable, which is significantly lower in compensation than the $1.00 fee proposed by Fox owned stations. Evidently Fox views its owned stations in larger markets to be worth much more than its affiliates in smaller DMA’s.

A $1.00 per sub fee to Time Warner Cable for Fox broadcast stations would mean millions of additional expense added to their bottom lines on a per month basis. How will the cost be absorbed? Traditionally, these costs are passed on to customers in increased monthly fees, and with linear programming configurations taking the heat from consumers, as paying for more than they want, Time Warner Cable does not want to take that inevitable backlash. This is evidenced by Time Warner Cable’s website asking customers where they should draw the line.

With broadcasting revenues on a continuing decline, Retransmission Consent negotiations have become a target for broadcasters like Fox to recoup falling revenues. While content is worth money, where do cable companies draw the line on preventing the rising costs? It would seem monetary negotiations should reflect program ratings on a per market basis, i.e. American Idol, and NFL Giants Games and local programming? What is market demand for this type programming?

Unfortunately, this saga has moved to the public arena with both sides trying to sway public opinion. It has become so public that both Senator John Kerry and FCC Chairman Julian Genachowski have stepped in to cool the situation, which serves to highlight the fight over revenue and costs, and consumers disdain for being caught in the middle. So much for public relations!

Len Grace is a technology industry veteran with over 18 years experience with Comcast Corporation. His insights into pertinent and relevant issues within the Broadband/Telecom/Cable/Wireless and Mobile sectors both inform and enlighten readers on current industry trends, analysis, business strategy, competitive landscape and legislative agendas. Len is the founder & editor of The Cable Pipeline, a technology blog who contributes to various technology websites including Light Reading, BroadbandBreakfast.com (Expert Opinion), SiliconAngle, Cisco Community: Service Provider Mobility, Amdocs: InTouch Community Portal, Bloomberg's bx Business Exchange, CircleID, and Sys-Con Media/Utilizer. Also see his reporting.

Expert Opinion

Adrianne Furniss: Lifeline Needs A Lifeline

The FCC should hit the pause button on a current plan to zero out support for voice-only services.

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The author of this Expert Opinion is Adrianne Furniss, Executive Director of the Benton Institute for Broadband and Society

In less than three months, nearly 800,000 low-income people who receive telephone subsidies through the Universal Service Fund’s Lifeline program will be negatively impacted by changes scheduled to go into effect at the Federal Communications Commission on December 1. That is one of the most troubling — and pressing — conclusions of an independent evaluation of the FCC’s Lifeline program conducted by Grant Thornton. As the COVID-19 pandemic rages on, the FCC must act now to ensure people can retain essential communications services.

As of June 20, 2021, approximately 6.9 million subscribers were enrolled in the Lifeline program; most (approximately 94 percent) are enrolled in supported wireless plans. Voice service remains a desired service for both Lifeline subscribers and the general American consumer. Only 1 percent of surveyed American adults live in a home with neither fixed nor mobile voice service, and mobile-only voice subscribers comprise more than 60 percent of U.S. households.

In 2016, the FCC adopted a comprehensive reform and modernization of the Lifeline program. For the first time, the FCC included broadband as a supported service in the program. Lifeline program rules allowed support for stand-alone mobile (think cell phone) or fixed broadband Internet access service (think home broadband service delivered over a wire), as well as bundles including fixed or mobile voice and broadband. The 2016 decision also set in motion a plan to zero-out support for voice-only services.

In its February 2021 report, Thornton found that the phase-down and ultimate phase-out of voice services by December 1, 2021 may negatively impact 797,454 Lifeline consumers (that’s over 10 percent of all Lifeline enrollees) who use voice-only services for fundamental needs. So that’s nearly 800,000 households that could face being disconnected from phone service this winter.

The FCC needs to change course and help more Americans keep connected to communications services that are essential to navigate the ongoing public health and economic crisis.

And it needs to act before December 1.

Most importantly, the FCC should act swiftly and hit the pause button on the 2016 plan to zero-out support for voice-only services. During the pandemic, the stakes are just too high for anyone to be disconnected from essential communications networks.

Then the FCC should launch a new effort to reform and further modernize the Lifeline program, informed by what we’ve witnessed during COVID, and the findings in Thornton’s and the FCC’s own recent review of the Lifeline program.

First, Lifeline needs to have foundational governance documents—such as strategic plans, performance objectives, and an integrated communications plan—to assist in the longitudinal success and guidance of the program.

Second, the FCC has to consider raising Lifeline’s monthly subsidy, $9.25, so it can make more meaningful services affordable for low-income families. Home-broadband prices (both for fixed and wireless service) remain disproportionately high when compared to the Lifeline program subsidy. The FCC should evaluate minimum service standards in relation to the average cost of wireless, wireline, and broadband data plans and determine if the subsidy will cover all, or even the majority of costs to provide Lifeline services.

Third, the FCC must adopt changes in the program so it better benefits the people it was created to connect.

  • The FCC should seek to understand the composition of Lifeline households and what services various members need (i.e., school-aged children, telecommuters, etc.). The minimum services supported by Lifeline should address the needs of the entire household.
  • Just 25 percent of the people eligible to participate in the Lifeline program actually enroll. The FCC must understand why and should consider ways to improve awareness of the Lifeline program. One idea is to partner with other federal benefit programs, and the state agencies that administer those programs, to not only increase outreach about Lifeline, but ideally to integrate Lifeline’s application processes into those program applications.
  • The FCC should adopt program rules that incorporate Lifeline consumer feedback to ensure the program works for the most vulnerable people in society.

Fourth, changes in the Lifeline program should encourage all telecommunications and broadband service providers to compete to serve low-income households in their service areas.

Finally, the FCC should also consider revising its measure of affordability of broadband for low-income consumers. Currently, the FCC considers “affordable service” as 2 percent of disposable income of those below 135 percent of the federal poverty level. Instead, the FCC should consider affordability in the context of a subscriber’s purchasing power in a geographic location and balanced with availability of services and choice of providers. The FCC should evaluate the pricing packages of voice and broadband services offered by Lifeline carriers and provide assurance that packages offered are in the reasonable standard of affordability for low-income consumers. And the FCC should institute a structured process to regularly review the Lifeline program’s pricing packages and incorporate measures of both the subsidy rate and service standards for similar programs (like the Emergency Broadband Benefit), income statistics of current consumers, and the percentage of Lifeline subscribers who pay out of pocket for services.

The commitment to connecting people with low incomes to essential communications services is not new. But the past 18 months have offered stark reminders of the importance of universal service. We need the FCC to act now to keep everyone connected. And we need the FCC to update the Lifeline program so everyone can rely on a basic level of connectivity no matter how much income they have.

Adrianne Furniss is the Executive Director of the Benton Institute for Broadband and Society. She manages the institute’s staff and relationships with Benton experts, partners, and supporters in service to Benton’s mission and in consultation with Benton’s Trustees and Board of Directors. Previously, she held management positions at both non-profit and for-profit content creation companies, focused on program development, marketing, and distribution. This piece was originally published in the Benton Institute’s Digital Beat, and is reprinted with permission. © Benton Institute for Broadband & Society 2021. Redistribution of this publication – both internally and externally – is encouraged if it includes this copyright statement.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Expert Opinion

Sen. Michael Bennet: Broadband Infrastructure Legislation Follows Colorado Model

Senate-passed legislation for broadband investment inspired by Colorado’s experience, says senator.

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The author of this Expert Opinion is Michael Bennet, U.S. Senator from Colorado

Washington may soon make the biggest broadband investment in U.S. history, and the first draft was written in Colorado.

Last month, the Senate passed a bipartisan infrastructure bill that includes a historic $65 billion for broadband. This section draws directly from the BRIDGE Act, the bill I wrote with Coloradans to reflect our state’s struggles and successes against the digital divide.

Long before the pandemic, broadband was a consistent source of frustration for people across our state. Parents on the Front Range, farmers on the Eastern Plains, and nurses on the Western Slope all told me the same thing: broadband was too slow or expensive to be of any practical use.

Too often, Washington’s answer was to shower the biggest telecom companies with billions in subsidies to build networks, usually in rural areas, that were outdated almost as soon as they were finished. At the same time, Washington had no good answer for working families, many in cities, who couldn’t afford existing broadband options.

As usual, Colorado didn’t wait on Washington to act. Cities created their own municipal networks, like Longmont’s NextLight, which PC Magazine named one of the fastest broadband providers in America. Electric coops like the Delta-Montrose and Yampa Valley Electric Associations deployed fiber-optic networks in rural communities at world-class speeds and prices. Through it all, the Colorado government demonstrated that it could get money out the door for broadband faster and more effectively than Washington.

With these lessons in mind, I wrote the BRIDGE Act with Republican U.S. Sen. Rob Portman from Ohio and Independent U.S. Sen. Angus King from Maine. Our bill became the model for the broadband provisions in the bipartisan infrastructure bill, which is now on the cusp of becoming law.

Based on the BRIDGE Act, the infrastructure bill gives the lion’s share of the broadband funding to states, not Washington. This is a sea change in policy, because it puts states and local leaders — not federal bureaucrats — in the driver’s seat. After all, they have the best understanding of needs on the ground and the greatest incentive to spend limited funds wisely.

Second, the bill more than quadruples the minimum speeds for new broadband networks, while prioritizing even faster networks. For a typical family, this means kids could download homework (or stream Netflix) even as parents work remotely — all without their connection slowing to a crawl.

Third, the bill includes $2 billion for broadband on tribal lands, including the Southern Ute and the Ute Mountain Ute here in Colorado. According to the FCC, one in three homes on tribal lands lack access to high-speed broadband — a significantly higher rate than the rest of the country. Closing this gap is an economic and moral imperative.

Finally, the infrastructure bill prioritizes affordability by requiring new broadband networks to provide at least one low-cost option. Inexplicably, Washington has never insisted on this before. And it can’t come soon enough.

All of these ideas came directly from the BRIDGE Act and what I’ve learned from Colorado. Now we have to pass them into law.

If we do, it would represent the biggest broadband investment in our history, but also one of the most transformative investments in our future. It will mean every worker in our mountain communities can connect remotely for their jobs. It will mean every farmer and rancher can deploy the latest technologies for precision agriculture. It will mean every family can connect with their doctors online, instead of traveling hours to the local clinic. And it will mean no student will be left without broadband, which today is no different than leaving them without textbooks.

We are on the verge of connecting every American to affordable, high-speed broadband. And if we succeed, we can take satisfaction in knowing that Colorado led the way.

Michael Bennet is U.S. Senator from Colorado. This piece was originally published in the Grand Junction (Colo.) Daily Sentinel, and is reprinted with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Shrihari Pandit: States Can Enable Broadband Infrastructure Through Open Access Conduits

By creating open infrastructure systems, states can reduce the barriers to entry and foster increased broadband competition.

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The author of this Expert Opinion is Shrihari Pandit, CEO of Stealth Communications

Now that the infrastructure bill has passed the Senate, we see key provisions included for broadband in America. In fact, a whopping $65B will go toward broadband funding — provided it passes the House this month. But, will throwing more money at broadband help to solve key issues like closing the digital divide and making broadband access more affordable for millions?

The short answer is: not necessarily. For years the federal government has provided subsidies to incumbent ISPs hoping they will solve key issues with broadband in America and still access to the internet continues to be a challenge. What we need is a radical broadband overhaul where we can level the playing field for smaller ISPs to compete in the marketplace and fill the gaps incumbent ISPs have neglected for years.

As the broadband infrastructure funding provisions emerge, it appears that states will have a major role in determining how to allocate these resources. And, they must make careful considerations to help connect the unconnected and meet the needs of their residents. As access to a robust digital communications network is so critical now – in an ongoing pandemic era – states also have to look ahead and ensure they are creating sustainable and long-term infrastructure in the public interest.

Creating open-access conduit systems

State governments should focus on enabling key infrastructure, namely conduits, rights of way and utility poles – as these are the biggest hurdles for ISPs looking to extend fiber. Sometimes referred to among pros as “layer zero”, the telecom market can be transformed with open-access conduit systems running across the country and extended locally. A conduit highway would be akin to the interstate in which fiber could be easily run between cities and towns across multiple states.

An open-access conduit system can help create a more approachable marketplace for new ISPs to enter and help to fill coverage gaps left un-served by incumbent ISPs. Easier and cheaper access to neutral utility poles would help to reduce the cost of broadband access and allow providers to easily pull their fiber optic infrastructure to homes, businesses, and wireless towers, especially vital for longer-distances in rural areas. In NYC, for example, there is a robust competitive marketplace enabled by a shared conduit system managed by Empire City Subway.

Although currently limited to boroughs of Manhattan and The Bronx, this carrier-neutral system allows multiple ISPs to run cables up and down streets with ease and provides a pathway to extend fiber access to additional NYC neighborhoods. Across the country, open-access models are proliferating, including Ammon, Idaho, as summarized in a recent report by Benton Institute for Broadband & Society.

Leveling the ISP marketplace

By creating open infrastructure systems, more providers can enter the marketplace and create increased competition as the barriers to entry are reduced. Previously, incumbent ISPs have received billions of dollars to close the digital divide, – the divide, as well as their market power, persist.

By creating infrastructure that brings additional private ISPs into the marketplace, states can give residents and businesses  more choices to meet their internet needs which is in the best interest of everyone. More competition also means that incumbent ISPs need to step up their game and offer the services they boast about – or they risk losing market share to private competition. In other words, a long-term, sustainable solution.

Embracing the public infrastructure/private service model

When considering a new infrastructure project, oftentimes, the burden of proof lies with the state. However, with the public infrastructure/private service model, the risk is shared between the state and the ISP. This model enables cities and counties to finance and maintain infrastructure while also managing rights-of-way. And, private or incumbent ISPs can ensure broadband access including cable, fiber optic, or wireless. This is a scalable option for communities that are unaware of how to operate communications networks but want to own and control core communications assets.

States have a major undertaking ahead as they consider how to utilize their infrastructure funding to boost public works projects. As broadband infrastructure development has been so crucial in the last year, creating an improved marketplace for ISPs through open-access infrastructure should be their priority in their long-term public interest.  And with a public infrastructure/private service model, the risk will be shared with providers.

Shrihari Pandit is CEO and co-founder of the New York City-area fiber provider Stealth Communications. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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