Broadband Cable Association of Pennsylvania


May 7, 2012

Lawmakers on Friday stopped a plan to phase out a $54 million annual payout to Colorado telecom companies, saying there wasn't enough time to settle differences over a complex bill.

Republican Sen. Mark Scheffel killed his own bill, telling a panel of lawmakers he was disappointed it sat on the legislative calendar for six weeks. "It's an unfortunate commentary on the process," he said. Scheffel said it was "ludicrous" to expect lawmakers to debate the bill now with four days before they adjourn and settle big differences over how much of the subsidy should be shifted to developing broadband in rural areas.

The proposal sought to eliminate subsidies in places where 90 percent of customers have at least five telecommunications providers. Providers working in less competitive areas would still be eligible for the fund. The subsidy would be gradually eliminated by 2025 as ratepayers pay less into it. Consumers pay 2.9 percent of their phone bills toward the fund, or less than a dollar for a $30 bill. The fund was at an estimated $54.3 million last year. CenturyLink Inc., which cover most of Colorado's rural areas, consistently received more than 90 percent of the subsidy and was one of the loudest critics of the bill.

Jim Campbell, CenturyLink's regional vice president for legislative affairs, said the measure would hurt the company's consumers who would have to pay more for service without the subsidy. It was created in the early 1990s to make it attractive for telephone companies to provide service in costly, hard-to-reach areas. Without the subsidy, service in some places would be more expensive. During the hearing, Scheffel referred to lobbyists in the room, saying the "folks behind me will be toasting each other and declaring winners and losers." Small and large telecom companies supported the bill, including AT&T Inc.

"The real losers today are the citizens of Colorado," he said. He later told CenturyLink representatives outside the room, "Congratulations, you guys won." He told them he had "major problems" with how they conducted themselves and accused CenturyLink of misrepresenting what the bill did. "I will tell you we advocated hard and I'm not at all ashamed that we did advocate on behalf of our rural consumers who were singled out," Campbell told The Associated Press.

Scheffel and other bill sponsors wanted the money to go back to ratepayers, with another portion, about $25 million, going toward broadband development. Senate Democratic Leader John Morse was advocating to have more $200 million to expand broadband, saying he wanted to invest in the latest technology. Democratic Sen. Lois Tochtrop said the bill was about overhauling the state's telecom regulations and that the proposal had been "hijacked" over broadband funding. Denver Post

Dish Network Corp.'s first-quarter earnings fell 34% from a year-earlier period that included a litigation gain, while the satellite-television operator's former EchoStar Corp. unit posted a profit increase.

Dish acquired the video-rental chain Blockbuster out of bankruptcy last year and launched a Blockbuster-branded streaming service in October as it looked to diversify in the face of a maturing U.S. subscription-television market and the growing popularity of online entertainment. The new service contributed to a reversal of Dish's subscriber losses in the fourth quarter. The Englewood, Colo., company is also attempting to attract more affluent customers who are willing to spend more each month on video and would be less likely cancel their services, and has said it will freeze prices through January 2013. But the efforts have caused it some subscriber problems amid aggressive promotional offers from rivals.

Dish on Monday reported a profit of $360.3 million, or 80 cents a share, down from $549.4 million, or $1.22, a year earlier. The year-earlier quarter included a $340.7 million gain from the reversal of accrued expenses related to a settlement agreement with TiVo Inc. Revenue jumped 11% to $3.58 billion. Analysts polled by Thomson Reuters expected earnings of 70 cents on revenue of $3.62 billion. Operating margin dropped to 16% from 30.5%. Dish added 104,000 net subscribers during the first quarter, though its customer base slipped 0.8% to 14.1 million from 14.2 million a year earlier. Its average monthly subscriber-turnover rate, or churn, was 1.35%, compared with 1.47% a year earlier.

Meanwhile, EchoStar—the maker of set-top boxes that was spun off from Dish at the beginning of 2008—bought Hughes Communications Inc. in June in a $1.33 billion deal expected to boost its capabilities for transporting video and data. EchoStar reported a profit of $127 million, or $1.45 a share, up from $17 million, or 19 cents, a year earlier. Revenue rose 59% to $480. Wall Street Journal

Comcast Corp. said its NBCUniversal unit exercised an option to sell "a substantial portion" of its stake in A&E Television Networks to joint-venture partners, a transaction that could be worth about $2 billion. In a filing Wednesday with the Securities and Exchange Commission, the Philadelphia-based media company said it exercised the option on March 26 and expects the transaction to close in the second half of 2012. Comcast owns 15.8% of A&E, while Walt Disney Co. has a 42.1% stake, and Hearst Corp. owns a 42.2% stake. Disney and Hearst declined to comment.

A person familiar with the matter said the parties are still discussing how much of the stake will be sold. In a report Friday, Citigroup analyst Jason Bazinet said he estimates the stake's value at about $2 billion. A&E consists of several channels including A&E, The History Channel, The Biography Channel and Lifetime. Comcast picked up A&E when it acquired NBCUniversal from General Electric Co. last year. Mr. Bazinet said he viewed the deal favorably because it leaves the company with more assets it actually controls. "Comcast is complex enough without large minority stakes," he said in the note. Comcast had said previously it had the right to require the joint-venture partners to purchase a portion of its stake in the first quarter. Wall Street Journal