Broadband Cable Association of Pennsylvania


December 6, 2013

It will be up to the Michigan House of Representatives to determine if phone companies can phase out traditional land line service beginning in 2017 with just 90 days notice after the Senate passed the bill Thursday on a 31-4 vote. After hearing concerns from phone customers, especially senior citizens, the Senate tweaked the bill to ensure that the Michigan Public Service Commission had a stronger role in determining whether reliable phone service was available in an area where the phone company wanted to cut its traditional land line service.

Right now, phone providers have to go through both the Michigan Public Service Commission and the Federal Communications Commission if they want to abandon traditional landline service in an area of the state. The bill would take the MPSC out of the front end of the equation and leave it up to the FCC to approve or deny a withdrawal application from a phone company. Customers would receive 90 days' notice of traditional landlines being disconnected. That's where safeguards come in. A customer can petition the MPSC to investigate whether a reliable alternative is available.

If the MPSC couldn't identify an alternative, it could declare an emergency in the area and require the phone company seeking to end the service to maintain the service until a suitable and reliable replacement can be found. "Once consumer can say 'I'm worried that my phone isn't working,' and the PSC would have to investigate," said state Sen. Mike Nofs, R-Battle Creek, who sponsored the bill. "I understand the anxiety that comes with change and changing technology. But this provides a balance between rolling out of advanced communication technology and critical consumer protections."

Phone companies, particularly AT&T - one of the largest phone service providers in the state - want to streamline the process to phase out traditional landline service and go to wireless or Voice over Internet Protocol service, better known as VoIP or cable company-provided wireless service. The cost to maintain two systems of service - the traditional landline service and more advanced technology - is becoming cost prohibitive, they said. AT&T's traditional landline customer numbers have dropped 71 percent since 2000. The bill now moves to the House for consideration. Lansing (MI) State Journal

Any effort by Comcast Corp. to acquire Time Warner Cable Inc. would face significant hurdles in Washington, according to a Federal Communications Commission official, casting doubt on a cable-industry consolidation scenario that has grabbed Wall Street's attention. Comcast, the No. 1 cable provider, measured by subscriber numbers, has been considering a bid for the No. 2 player, Time Warner Cable, which is already being pursued by a smaller cable firm, Charter Communications Inc. But Ajit Pai, a Republican commissioner at the Federal Communications Commission, said in an interview that the Obama administration would be unlikely to approve a combination of Comcast and Time Warner Cable. "The Obama administration has applied greater scrutiny to proposed mergers and acquisitions," he said, citing examples including AT&T Inc.'s attempted takeover of T-Mobile US, a deal that was abandoned after the Justice Department sued to block it. The DOJ's opposition to the US Airways-American Airlines merger led to a settlement last month. "Precedents like this suggest an outright acquisition by Comcast of Time Warner Cable could face a number of hurdles in the Obama administration," Mr. Pai said. "A Republican administration likely would be more inclined to approve a deal."

Mr. Pai is one of the two Republicans on the five-member FCC. Time Warner Cable approached Comcast about a combination in recent months, hoping to head off Charter's advances, according to people familiar with the situation. Another company that is weighing a bid is Cox Communications Inc. People close to the situation say that Comcast isn't likely to make the first move with a bid, instead waiting to see what Charter does. Charter, whose biggest shareholder is Liberty Media Corp. , has made at least two proposals to Time Warner Cable in recent months, both of which were rebuffed, say people familiar with the situation.

One of Charter's proposals was made in October, say people familiar with the situation, pitched below $130 a share. The stock traded between about $110 and $120 in October, although news of Comcast and Cox's interest has helped lift it further since then. It has closed as high as $138.22 in recent weeks, but closed at $132.53 on Thursday. Charter in recent weeks has been lining up debt financing that would allow it to make a new offer that includes $90 a share in cash with the rest expected to be in Charter stock, people familiar with the situation have said. Comcast has discussed working with Charter on a deal, the people say, although the companies aren't likely to make a joint offer, despite speculation on Wall Street to the contrary. It is still possible that Comcast won't do anything, one of the people said. Wall Street is trying to gauge the potential for regulatory pushback if Comcast makes a bid. A Comcast takeover bid would have to get approval from antitrust regulators at the Justice Department and separately from the FCC. Lawyers have said that because cable operators don't directly compete with each other-they operate in discrete geographic areas-approval of big mergers is possible, with conditions.

Mr. Pai said he is inclined to support any deal that "would serve the public interest," doesn't pose competitive harm in the industry and could generate efficiencies. He has deep background in antitrust law and the telecom and cable industries. Before becoming an FCC commissioner in 2012, Mr. Pai worked in the agency's general counsel's office, and earlier in his career had stints at Verizon Communications and in the DOJ's antitrust division. The views of Tom Wheeler, the new chairman of the FCC, are likely to carry significant weight. In a speech at Ohio State University earlier this week, he said the agency's approach to mergers "should be to ask how competition can serve the public-and what, if any action [including government action] is needed," according to prepared written remarks. He didn't comment on cable-industry deals. But he praised the FCC's opposition to the AT&T takeover of T-Mobile, saying the result was that T-Mobile and fellow second-tier player Sprint were able to raise money to build their networks and increase industry competition.

Representatives for the FCC and the Justice Department declined to comment. A Comcast spokesman declined to comment. The FCC used to have a rule that barred pay-TV operators from serving more than 30% of the nation's subscribers, although a federal appeals court tossed out that cap in 2009. Comcast would have about 33% of the pay-TV market if it completed a merger with Time Warner Cable, according to Barclays Capital, and even more of the market for high speed Internet access. Not only is Comcast already the biggest cable operator, serving nearly 22 million TV subscribers, but it owns a big entertainment company, NBCUniversal. Its acquisition of NBCU underwent a long regulatory review before it was approved. Charter, in contrast, could combine with TWC and still be smaller than Comcast, with fewer than 16 million TV subscribers. Wall Street Journal; see related Journal article (registration may be required)

Cable giant Comcast's move into selling movies via its Xfinity TV digital platform is off to a strong start. According to a post on the company's website, Xfinity was the No. 1 seller of digital versions of "Despicable Me 2" for the week that ended Dec. 3, topping Apple's iTunes, Amazon and Wal-Mart's Vudu. "Despicable Me 2" was made by Universal Pictures, a unit of Comcast. Xfinity has also been the No. 1 seller of "The Hunger Games," for the last two weeks. "The Hunger Games" was made by Lionsgate. Actual sale figures for the two titles were not disclosed by Comcast. Comcast launched the digital sell-through service on Nov. 19. Subscribers who buy movies via Xfinity store the movies in a remote cloud. The movies can also be viewed on multiple platforms. With over 21 million subscribers, Comcast has a large base of potential customers and hopes to tap into the approximately $20-billion home entertainment market. Los Angeles Times

Verizon Communications was fined $20,050 Thursday by the state Public Utility Commission for slow work in Warren County. Verizon took more time than state rules allow to respond to problems that resident Ken Eernisse of Russell had complained about. Eernisse then complained to the commission, which found that "Verizon often made temporary repairs in response to outage reports instead of adequately inspecting and repairing its facilities," the commission said in a news release. "Given the history of outages and overall service quality, Verizon should have known the condition of the lines serving the resident were not providing adequate service and required maintenance," the commission said. Pittsburgh Tribune-Review

U.S. Rep. Chaka Fattah will soon be hosting his own talk show on the Pennsylvania Cable Network. "A Capitol Idea with Chaka Fattah" will air about twice a month starting Jan. 19, Fattah spokeswoman Debra Anderson said. In the first half of the 30-minute shows, the Philadelphia Democrat will interview newsmakers on specific topics. In a pilot episode already filmed, he interviews U.S. House Minority Whip Steny Hoyer, a Maryland Democrat, about manufacturing.

In the second half, the congressman will talk to citizens who are impacted by the issue being discussed. The topics, Anderson said, all will pertain to one of Fattah's five legislative priorities: neuroscience, manufacturing, co-operatives, youth mentoring and the Gear Up education program. If he needs some TV tips, he can always turn to his wife, NBC10 anchor Renee Chenault-Fattah. While "A Capitol Idea" is pleasant enough, we at Clout believe the talk show's name is a missed opportunity for some horrendous puns, such as "Now we're Fattalkin," "Chakatalka" and "The Chakatalk Nation." Philadelphia Daily News