Embarq Keeps an Eye Out for Rural Telecom Acquisition Targets

No Author (6.12.2007)

http://www.teleclick.ca/2007/06/embarq-keeps-an-eye-out-for-rural-telecom-acquisition-targets/

Embarq looking to advance their competitive position

Regional telephone provider, Embarq Corp., is positioning itself to acquire smaller competitors in the months and years to come, as the telecommunications sector continues to consolidate.

Buying up small rural phone carriers would help Embarq to slash costs and increase efficiency, said the company’s CEO, Daniel Hesse, in an interview late last week.

“Today you have roughly 800 local exchange carriers in the U.S., and we’re competing with much larger competitors — the wireless companies, the cable companies,” Hesse said. He acknowledging, however, that Embarq had yet to find any specific deals where cost benefits outweighed the likely premiums.

“We’re very well positioned to be an acquirer,” he explained, “but in today’s market, a lot of the prices are too high. And we have a very disciplined approach to looking at acquisitions.”

Embarq — which was spun off by wireless giant, Sprint Nextel in May 2006 — has experienced significant growth in the past year, with its stock price rising over 20% since debuting on the market. Hesse believes that a further increase in value could help his company put together an attractive acquisition proposal.

“The stock has moved up a lot in the past year, not only in absolute terms but relative to the industry. If we continue to perform that well, then all of a sudden our equity can become a currency,” the CEO said, referring to the possibility of an all-stock deal.

Embarq offers local, long distance, and broadband internet services in 18 states, primarily in rural areas, and faces strong competition from major cable and wireless providers.

FCC rules speed telco video

Carol Wilson (3.5.07)
http://telephonyonline.com/home/news/FCC_video_rules_030507/

FCC finalized rules to speed up the local franchising process to a 90-day cap with mixed reactions.

The Federal Communications Commission today issued new rules designed to speed up the local video franchising process. The rules set a 90-day limit on the local government’s decision and prohibit extraordinary requests for deployment of hardware or for tying in of unrelated requests.

Major telecoms are excited about the news stating it will provide choices and create competition. FFC chairman Martin claims this increased competition will fight rising cable costs. Democratic Commissioner Michael Copps said the rules failed to promote genuine broadband competition and said he favored a provision which would have retained local franchise authority rights to impose specific build-out requirements and public programming.

Republican Commissioner Robert McDowell said, however, that the new policy seeks to address both sides of the issue. “This order strikes a careful balance between establishing a de-regulatory national framework to clear unnecessary regulatory underbrush, while also preserving local control over local issues,” he said.

The new rules may also face a legal challenge, either from the cable industry or groups representing local governments.

The FCC has agreed to announce within six months whether the 90-day rule will apply to incumbent cable operators that are seeking to renew their local franchises.

Further reading:
http://www.multichannel.com/article/CA6421729.html?display=Breaking+News

Don’t Panic. Yet.

Broadcasters, Cable Operators Think They Can Prevent 'Tsunami of Public Outrage’ If Millions of Televisions Don’t Work Two Years From Now

By Ted Hern (2.19.07)
http://www.multichannel.com/article/CA6417227.html

On February 17, 2009, analog signals to TVs will be no more leaving many millions of TVs dark and millions more customers angry.

With this impending deadline, the way people receive TV might go through some radical overhauls depending on government subsidies, and innovations in IPTV, for example.

By forcing TV stations from their analog channels by a specific deadline, the DTV (digital TV) law cleared the way for the FCC to auction off what would become surplus analog spectrum for at least $10 billion, paid by companies, perhaps even cable companies, that want to grab the channels for wireless broadband services. The other channels are to go for free to fire, police and emergency organizations hungry for new frequencies.

One and a half billion dollars will be set aside to subsidize analogue to digital converters, but legislators and broadcasters believe this will not be enough, and many are speaking out against the hard deadline, saying it is too soon.

The other concern is making people aware of the switch date. On Jan. 31, the Association of Public Television stations released a survey showing that 61% of Americans polled “had no idea the transition was taking place.” The cost of this campaign to reach large channel stations to small local radio stations is estimated at 100 million dollars, and manufacturers have been ramping up production of converter-boxes to meet the deadline that is now just under 2 years away.

FCC ruling changed phone industry in 1968; it could happen again today

Kevin Maney (1.30.07)
http://www.usatoday.com/money/industries/technology/maney/2007-01-30-carterfone_x.htm

FCC chairman to enforce a provision in the 1996 Telecommunications Act that will force cable carriers to provide descrambling codes to competitors. This may also have effect on similar cellphone-carrier links in the future.

Cable companies will have to unbundle the cable system by sharing the descrambling code with other device makers. The cable industry has gotten deadline extensions ever since 1996, but the current extension runs out on July 1, and Martin says he doesn't want to allow another one.

One certain outcome: A TiVo or Microsoft will be able to sell a box that connects to the cable line and the Internet. It will pull in cable channels, Web-based video and downloadable movies, mix them all together and present them on screen in a single menu. (Cable companies despise that because they lose control of the viewing experience.)

FCC Chairman Kevin Martin believes this deregulation will inspire innovation in the cable industry. It is also known that he has is looking next to the similar monopolies network providers have over cellphones. Though no action has been taken to allow cellphones to work across all networks, both consumers and manufacturers have expressed this desire.

Cable Confronts Bandwidth Crunch

Alan Breznick (1.24.09)
http://www.lightreading.com/document.asp?doc_id=115344&site=cdn&WT.svl=news1_1

Cable companies are finally recognizing impending bandwidth limitations, and gathering resources to address the problem.

Cable operators are now drawing up plans to boost capacity at both the headend and plant levels. Instead of debating whether the coming bandwidth crisis is genuine, they're looking at ways to confront the crisis by splitting fiber nodes in half, converting systems over to more efficient switched digital video delivery, testing pre-Docsis 3.0 channel-bonding technologies, and expanding their systems' RF capacity to 860 MHz or 1 GHz.

Cable technology strategists are also looking at boosting their QAM power, instituting out-of-band spectrum overlays, and upgrading to MPEG-4 video compression standards. They're even weighing such previously unthinkable moves as building fiber-to-the-home (FTTH) networks and adopting PON architecture, just like some of the big phone companies.

At a conference sponsored by PK Worldmedia Inc. in Houston Tuesday, found that increasing bandwidth consumption is threatening to overwhelm even their fastest broadband piplines. Conference speakers also noted that such prime cable rivals as DirecTV Group Iinc. and Verizon seem determined to outflank MSOs by offering several dozens or, in DirecTV's case, even hundreds of HD channels to their customers.

Dom Stasi, CTO of TVN Entertainment Corp., pointed out that his company now supplies 3,500 hours a month of VOD content to cable operators, up from a mere 150 hours per month in 2001.

Council OKs tough approach with Cox

Rob O'Dell (1.18.07)
http://www.azstarnet.com/metro/165119

Formal franchising process will begin with Cox if compromises are not met.

The City Council voted 5-2 Wednesday to put Cox Communications through the costly and time-consuming federally mandated license-renewal process for the company to maintain its Tucson cable franchise.

The formal process could be suspended if Cox and the city can agree on several remaining sticking points:

● Five public access, education and government channels (PEG), down from the current nine, but more than the four Cox is offering.

● A nine-year franchise agreement, down from Cox's offer of 12 years.

● Requiring outside agreements made with the University of Arizona and Pima Community College to run for nine years — the same length as the franchise agreement. This would in effect give the city seven PEG channels.

● If the agreements for the higher-education channels expire before nine years, Cox would be required to give the city back one PEG channel.

Councilwoman Karin Uhlich is hopeful for a speedy resolution, but believes the vote shows the council's willingness to go through with formal processes, while Councilmen Steve Leal and Jose Ibarra voted no. Leal said the city should negotiate harder and should look at denying Cox's license and buying its cable system.

Council to vote on Cox's cable offer

Eric Sagara (1.17.07)
http://www.tucsoncitizen.com/daily/local/38889.php

City officials and Cox communications argue over public access channels in Tuscon.

Cox's informal offer would reduce the number of public, education and government channels available to the city, make viewing those channels more expensive for some customers, and remove a requirement for the cable company to provide free service in Tucson schools.

City officials are willing to compromise on the number of PEG channels available to Tucson, but the dispute lies in how many should be removed from the airwaves, and say Cox's offer does not meet the needs of the community and hope that a formal process can bring about a better deal for Tucson. However, they must reach an agreement with Cox before July 1, when a new state law engineered in part by Cox takes effect.

The law will limit the number of PEG channels available to cities to four and place a cap on the fees cities can charge cable companies to use their rights of way to install cable.

The City Council is expected to make its decision during today's study session after a closed-door meeting to review a study conducted by the city.

Cox renewal bid comes up short, council say

By Rob O'Dell (1.10.07)
http://www.azstarnet.com/metro/163983

The City Council unanimously declared a proposal from Cox Communications for its cable franchise renewal insufficient in six key areas on Tuesday.

It set a deadline of Jan. 17 — the same deadline Cox has set — to come to an agreement in informal negotiations. If the deadline is missed, the council vowed to take Cox through the costly and time-consuming federally mandated license-renewal process.

The result of that process could be denial of Cox's franchise renewal and the city seeking another cable provider — although people on all sides say that's unlikely and would lead to litigation.

The council listed concerns about public access channels, the proposed length of the agreement, new public channels for education, the "digital divide" that would charge non-digital users higher bills to get access channels, unpaid license fees and issues with providing cable for schools.

U.S. Broadband Penetration to Hit 60% in 2007, Led by DSL Growth

SILVER SPRING, MD -- (MARKET WIRE) (1.8.07)
http://www.marketwire.com/mw/release_html_b1?release_id=200951


About 60 percent of all U.S. homes will subscribe to broadband service by the end of the year, but cable operators will come precariously close to losing their majority market share, Pike & Fischer concludes in a new report published by its Broadband Advisory Services unit.

Cable operators will see their share of the high-speed Internet market fall to slightly more than 50 percent as adoption of standard DSL and, to an increasing extent, fiber to the home or node (FTTx), continues to help the major telephone companies net the largest number of new broadband customers, Pike & Fischer forecasts in its "Broadband Business Outlook 2007."

However, a growing array of on-demand and high-definition programming, together with aggressive promotional offers, will lead digital cable subscriptions to make up the majority of the industry's core video customer base.