Broadband Cable Association of Pennsylvania


August 27, 2012


Local telecommunications provider Armstrong has been selected by Cable Fax Magazine, a leading publication in the Telecom Industry, as its top customer service provider in the nation for 2012. The magazine awarded the company its Independent Customer Service Award in its July issue.

"We're very excited for our employees to receive this recognition," said Jeff Ross, president of Armstrong's Cable Division. "They work hard every day to be sure we offer our customers the best service possible. And now that hard work has been noticed nationally." Since the company's inception, customer service has been an important part of its business plan. "It's what sets us apart from other providers," said Terry Dickerhoof, vice president of Customer Care. Armstrong uses several benchmarking methods to insure their service stays high. These scores consistently rank them among the best service companies in the nation.

"When we started in this business more than 60 years ago, we knew a lot of our customers personally." Ross said. "While we can't know them all now, we want them to feel like we do."

Previously, Armstrong was recognized by Cable Fax Magazine as the Independent Operator of the Year in 2007. Armstrong provides television, high-speed Internet and telephone services to its customers in Pennsylvania, Ohio, West Virginia, Kentucky and Maryland, and is America's 15th largest multiple system operator according to the National Cable & Telecommunications Association. Uniontown Herald Standard

Verizon Communications Inc. must pay royalties to a California company whose patents it infringes, though it doesn't have to stop providing its FiOS TV customers with video-on-demand service, a U.S. appeals court said Friday.

A jury's $115 million damage award to ActiveVideo Networks Inc. was affirmed, as was an order for Verizon to pay ActiveVideo $2.74 per month for each FiOS-TV subscriber. The U.S. Court of Appeals for the Federal Circuit in Washington upheld a finding that three ActiveVideo patents were infringed and reversed a finding as to a fourth. ActiveVideo, which licenses its technology to Verizon competitor Cablevision Systems Corp., owns inventions related to delivering interactive television to subscribers. After Verizon lost the trial, a federal judge in Norfolk, Virginia, gave Verizon six months to alter its video-on-demand service or stop providing it. That order was put on hold pending the appeal.

The damage award has grown to almost $260 million with interest and royalties, Jeff Miller, ActiveVideo's chief executive officer, said in a statement. "We're glad to have this part of the case behind us so that we can put all of our energies into doing what ActiveVideo Networks does best: enabling our customers to deliver the best TV navigation, guides and content experiences to all of their subscribers," Miller said in the statement.

Edward McFadden, a spokesman for Verizon, said the company had no immediate comment. The appeals court said that "substantial evidence supports the jury's verdict" against New York-based Verizon regarding three patents, while it doesn't back up a claim against FiOS processors involving one of the patents. ActiveVideo can't prevent Verizon from providing a video-on-demand service when the San Jose, California-based company was actively licensing its patents to all comers, the panel wrote. Cablevision might lose customers to the competition; ActiveVideo only loses potential revenue that would be balanced out by Verizon's royalties, it said.

"In light of the record evidence including ActiveVideo's past licensing of this technology and its pursuit of Verizon as a licensee, no fact finder could reasonably conclude that ActiveVideo would be irreparably harmed by the payment of a royalty," the three-judge panel wrote in an opinion posted on its website. The Federal Circuit panel also vacated a judge's ruling that a Verizon patent was invalid and remanded that part of the case for further proceedings. The jury had awarded Verizon $16,000 in damages based on infringement of its patents. The case is ActiveVideo Networks Inc. v. Verizon Communications Inc., 2011-1538, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is ActiveVideo Networks Inc. v. Verizon Communications Inc., 10cv248, U.S. District Court, Eastern District of Virginia (Norfolk). Bloomberg

The future looks static for Cablevision Systems. And since the spinoff of both Madison Square Garden and AMC Networks, the cable operator has nowhere to hide its flagging performance.

If still combined today, the three pieces of the business would be valued at about $35 a share, a 35% gain over Cablevision's stock price before the spinoffs, excluding dividends. But that lags far behind the performance of rival cable operators Comcast and Time Warner Cable, which are up 122% and 98%, respectively, since the spinoff of MSG in February 2010. Looking at Cablevision itself, the picture is even nastier. MSG's shares have more than doubled since being spun off, reaching an all-time high Friday. AMC's shares have climbed 12% since its July 2011 spinoff. But since the spinoffs started, Cablevision's adjusted share price is down 1.9%.

The problem is growth. In many ways, the cable operator has been a victim of its own success. It already has high penetration rates across all products, leaving little room for expansion. Sales are expected to rise less than 1% in 2012, compared with 11% for Comcast and 8.8% for Time Warner Cable. In addition, its coverage area, including parts of New York and its suburbs, has nearly 50% overlap with rival Verizon Communications's FiOS network. Comcast and Time Warner Cable face much lower competitive intensity, given their 13% and 12% overlaps, respectively, with FiOS.

In 2011, Verizon began aggressive promotions to gain share in Cablevision's market. While that is now waning, the onslaught was at least in part responsible for a 1% subscriber decline at Cablevision during that year. In addition, Chief Operating Officer Tom Rutledge, who was credited with much of Cablevision's success, departed at the end of 2011. In response, Cablevision is spending 2012 investing in its broadband network and building out Wi-Fi coverage in public areas while keeping prices level. These efforts paid off with subscriber gains in the first and second quarters. But, using earnings before interest, taxes, depreciation and amortization, or Ebitda, margins sagged to just over 30%, compared with more than 33% in the first and second quarters of 2011. Second-quarter margins were well below those of Time Warner Cable and Comcast at 37% and 33%, respectively.

Amid higher capital spending, free cash flow has taken a dive, coming in at $60 million in the second quarter, down from $292 million at the end of the first quarter of 2011. This is a crucial metric as the stock, which offers a 4% dividend yield, has long been considered a cash play. Of course, cash flow could return once Cablevision's investment period is over. And it has prioritized its dividend in the past, raising it in 2011, despite the threat from Verizon. But flipping that switch won't erase Cablevision's long-term growth challenges. Moreover, its net debt stands at 4.8 times Ebitda, which, while not historically high, looks steep now that growth has slowed. Considering this, cash likely will need to be redirected toward paying down debt, according to Sanford C. Bernstein. Given all that, Cablevision doesn't look that cheap. It trades at 6.6 times Ebitda, slightly below Time Warner Cable's 6.9 times but above Comcast's 6.1 times. That partly reflects hopes of a takeover. But its leverage, growth profile and competitive footprint have made it less appealing for an acquirer. And the controlling Dolan family still has shown no sign of wanting to sell. Cablevision looks increasingly boxed in. Wall Street Journal

The Pennsylvania Cable Network has been providing gavel-to-gavel coverage of the state Supreme Court for the past year, but no session has the potential to grab as much attention as the one set for Sept. 13. The court is scheduled to hear arguments in the challenge to the state's voter ID law and the legislative redistricting appeals that day in Philadelphia. Oral arguments start at 9:30 a.m. Both cases play a role in impacting elections as soon as this fall in one case and through the decade in the other.

Supreme Court Chief Justice Ron Castille decided to open up the courtroom to PCN cameras last August to let a statewide audience see how the court operates and follow arguments in cases that affect every resident of the state. That decision came after a successful pilot videotaping of the state's other appellate courts. Not all sessions of the Supreme Court have been broadcast, and the court can limit coverage when it deems it necessary to ensure orderly conduct of proceedings and to protect parties' rights, under terms of the agreement with PCN. Until last year, the court never allowed oral arguments to be taped for video or sound, or even to be photographed by the media or public. Harrisburg Patriot-News