An Ignoble Experiment

1. Report: AT&T talks merger with DirecTV in a deal potentially worth $40B

LOS ANGELES--Although members of the CableWiFi Alliance have said repeatedly that the primary incentive behind their growing Wi-Fi hotspot portfolio (which now stands at 250,000 nationwide) is to complement their customers' broadband service in the home and differentiate themselves from their telco competitors, there are signs that a bigger agenda is afloat.

At The Cable Show here this week, Wi-Fi was part of nearly every discussion. During the keynote address yesterday NCTA Chairman Michael Powell positioned the cable industry's Wi-Fi footprint as a competitor to wireless carriers when he spoke with FCC Chairman Tom Wheeler. And Wheeler agreed, noting: "Wi-Fi offers new opportunities in broadband and high speed data as well as voice service."

Likewise, Comcast Chairman and CEO Brian Roberts claimed that his company is the "biggest wireless provider in the country already," and said that the convergence of Wi-Fi with the cable network is a powerful tool that will be very important in the future. "It distinguishes us from the competitors and gives us a better business," he said, during the keynote panel session.

But what exactly do the cable MSOs have up their sleeves when it comes to monetizing their growing Wi-Fi footprint? When I walked the show floor and met with a few companies, I heard some interesting theories.

For example, Scratch Wireless CEO Alan Berrey is hoping to attract the attention of cable MSOs that might be interesting in marketing his wireless service to their customers. Scratch operates as a Sprint mobile virtual network operator, but considers itself a Wi-Fi first mobile service provider. In other words, customers primarily use Wi-Fi for their mobile calling and mobile data needs and only fallback to Sprint's 4G network when there are no Wi-Fi hotspots available. Continue...

Today's Top News

By Jim Barthold

Comment |

2. Wheeler to cable industry: 'Open Internet rules will be tough and enforceable'

AT&T (NYSE: T) reportedly talked to DirecTV (NASDAQ: DTV) recently about a merger. The potential move, valued at more than $40 billion, was first reported by The Wall Street Journal.

In the wake of Comcast's (NASDAQ: CMCSA) proposed $45.2 billion Time Warner Cable (NYSE: TWC) acquisition, a deal between the nation's largest satellite provider and an up-and-coming pay TV service with an ever-stronger broadband arm would make sense. DirecTV's video-first business is increasingly challenged by broadband-rich wireline providers; AT&T's U-verse TV, meanwhile, can't reach every nook and cranny of its 22-state franchise, even as the carrier pushes forward its multibillion-dollar, fiber-rich Project Velocity IP infrastructure upgrade.

The WSJ reported that DirecTV--which has also been reported in talks with fellow satellite TV service provider Dish Network (NASDAQ: DISH)--was amenable to the merger.

In its most recent earnings call with analysts, DirecTV executives made clear that the company considers broadband an important part of its business mix. One effort to make the company more broadband-enabled uses a wireless play that would seem to fit into AT&T's 4G LTE strengths.

"It's kind of almost a tower-by-tower, neighborhood by neighborhood build," DirecTV Chairman, CEO and President Michael White explained at the company's Investor Day Conference late in 2013. "You get your tower and then you've got to go sell 70 homes in the neighborhood."

The plan White discussed is being put into effect for DirecTV customers in South America. It could work equally well in rural areas where AT&T has built out broadband infrastructure via Project VIP but is lacking the wireline infrastructure to deliver U-verse TV over fiber.

AT&T, like Comcast, probably has the resources to pull the deal off.

The carrier's wireless business is flourishing, having added 625,000 postpaid net wireless subscribers in the first quarter. In wireline, AT&T recently announced an aggressive plan to deliver 1 Gbps to as many as 100 qualified municipalities and cities in 21 regional markets across its footprint.

Financially, the company is reportedly worth $185 billion, according to a Time story.

AT&T declined to comment to FierceCable on the report.

For more:
- The Wall Street Journal has this story (sub. req.)
- Time has this story
- see this Investor Day transcript

Read more about: Dish, GigaPower
back to top

This week's sponsor is Ooyala.
	Webinar: Making Money From OTT Thursday, May 8^th, 11am CET/ 10am UTC With rising programming costs, pay-TV providers are looking at ways they can benefit from OTT entertainment. This webinar will look at how Pay-TV providers can embrace OTT and not erode their core subscription TV services. Register Today!

By Sue Marek

Comment |

3. Charter CEO Rutledge endorses Comcast-TWC deal, calls it 'dynamically positive' for customers

LOS ANGELES--FCC Chairman Tom Wheeler didn't beat around the bush when he took the stage at the The Cable Show here, telling the cable industry that the FCC is not "gutting the open Internet." He clarified by saying the commission is focused on maintaining a broadly available fast and robust internet.

Wheeler addresses The Cable Show attendees. (Screencap via NCTA Cable / YouTube)

"I'm here to say 'wait a minute,' put away the party hats," Wheeler said. "The open Internet rules will be tough and will be enforceable."

Wheeler, of course, was referring to the FCC's decision to write a new set of net neutrality rules aimed at preventing broadband providers like Comcast (NASDAQ: CMCSA) and Verizon (NYSE: VZ) from throttling traffic from Netflix (NASDAQ: NFLX) and other online video providers. The proposed changes have been criticized for not doing enough to prevent bandwidth "toll lanes" from being created by major ISPs.

This decision came about after the D.C. Circuit Court of Appeals overturned part of the FCC's previous Open Internet order in January, including those prohibiting ISPs from blocking content.

Wheeler directed his remarks specifically to the cable industry, which he regards as the principal providers of the nation's broadband connectivity, and added that the commission is open to input. "All options are on the table," he said.

However, he also warned that the commission would enforce the new roles, once they are determined. "Prioritizing some traffic by forcing the rest of the traffic onto a congested lane won't be permitted under any proposed open Internet rule," he said. And that he added that he would considering using Title II to enforce them. "I will not hesitate to use Title II if warranted," he said.

Title II refers to the FCC designating a broadband provider a Title II common carrier service, a strategy that was lauded by consumer group Public Knowledge. "We're pleased to see the Chairman recognize Title II as a legitimate option for going forward with strong net neutrality rules. We are also encouraged to hear him reiterate his opposition to fast lanes on the internet, and his recognition that all Americans deserve access to a 'broadly available, fast and robust' web experiences," said Michael Weinberg, vice president at Public Knowledge, in a statement.

Wheeler went on to encourage the cable industry to use its leadership in broadband to provide schools and libraries with high speed connections at a reasonable cost. In addition, he lauded AT&T's recently announced plans to expand fiber to 100 communities. He said he hopes the cable industry responds in a similar manner, noting that AT&T's announced plans are in response to the competitive threat of Google's (NASDAQ: GOOG) fiber service. "This is not dissimilar to DBS," Wheeler said. "I hope you respond in a similar manner."

For more:
- see this release
- and the NCTA video of Wheeler's speech

Read more about: net neutrality
back to top

By Craig Kuhl

Comment |

4. Viacom shuts down online access for Cable One subscribers

LOS ANGELES--Comcast's (NASDAQ: CMCSA) pending $45.2 billion acquisition of Time Warner Cable (NYSE: TWC) was prevalent in nearly every conversation at The Cable Show here, including the opening session where four of the industry's top executives weighed in on the deal.

Cable CEOs at Wednesday's general session. From left: Jon Fortt, on-air editor, CNBC; Matt Blank, Chairman-CEO, Showtime Networks; Brian Roberts, Chairman-CEO, Comcast; Tom Rutledge, President-CEO, Charter; and Bob Stanzione, Chairman-CEO, Arris. (Photo courtesy of The Cable Show)

"It's a great deal for Comcast and a smaller one from Comcast's perspective, but both companies will serve customers in a dynamically positive way," said Tom Rutledge, president and CEO of Charter Communications (NASDAQ: CHTR). Rutledge initially opposed the deal, because it would give Comcast nearly 40 percent of the broadband market and 33 million TV subscribers.

For Comcast, according to Chairman and CEO Brian Roberts, the deal means a net addition of 7 million customers. "When you net it out, we're buying 7 million customers. We're trying to give the industry the chance for a better footprint."

Beyond Comcast's pending acquisition, the other hot-button topic at top of mind was cable's exploding Wi-Fi footprint. Comcast's Roberts admitted that Wi-Fi is a big asset for the industry, noting that close to 75 percent of the bits over the wireless networks in the next 24 months will be over Wi-Fi. "It's a new world and it expects Wi-Fi. It's a huge asset for the industry."

Stanzione agreed. "Wi-Fi is looming now across the country and Wi-Fi assurance is a growing field to improve customer experiences and control in the home."

Regarding DOCSIS 3.1, which has been rebranded as Gigasphere, the cable execs noted the huge investment the industry is making in this new technology that promises faster speeds and bigger bandwidth. "The industry is investing in DOCSIS 3.1 and we're investing $500 million, so it's an enormous investment and the industry has to allocate the bandwidth. The chip vendors are also investing a lot," said Bob Stanzione, chairman and CEO of Arris.

Investing in new technologies is paramount, said Matt Blank, chairman and CEO of Showtime Networks. "There will always be a new technology and part of that means accepting all the technology changes. We just want to stay ahead of the technology and take advantage of it. That is critical for us."

Read more about: cable14, acquisition
back to top

By Jim Barthold

Comment |