CenturyLink Q4 profit declined 16 percent to $867 million from a year ago, the company said. With the implementation of the FCC’s Universal Service Fund and intercarrier compensation order, the company’s access revenue will decline over the next few years, Chief Financial Officer Stewart Ewing said during a conference call. But the company’s hopeful of some broadband-related USF revenues, he said. Broadband subscriptions are a bright spot: Subscribers rose 4.5 percent to 5.55 million. The company is on track with its integration of Qwest and Savvis this year, Ewing said. Helped by growth in wireless backhaul and wholesale Ethernet, the wholesale unit reported $564 million in strategic revenue, up 5.4 percent. The company expects operating revenue between $18.2 billion and $18.4 billion for 2012.
TerreStar’s reorganization plan to emerge from bankruptcy was approved by the U.S. Bankruptcy Court for the Southern District of New York, Dish Network said. Dish is seeking FCC approval for it to use TerreStar’s and DBSD’s S-band spectrum terrestrially. “DISH is prepared to close both transactions upon receipt of Federal Communications Commission approval of the license transfers and associated waiver requests,” said a Dish spokesman. “With these approvals, DISH would immediately begin the design and construction planning for the nation’s first 100 percent LTE network. The requested waivers are necessary, among other things, to remove an outdated requirement for every handset to have the capability to establish a communications link to a satellite. The waiver of this requirement will allow DISH to provide more meaningful competition and greater choice for wireless consumers."
Regulatory considerations are the biggest deterrent DirecTV faces to making more acquisitions, CEO Mike White said Thursday during its earning call: “We're always looking opportunistically for acquisitions. … Clearly, in our industry being a regulated industry, probably the one, two and three consideration is always regulatory in that regard. Frankly, you have to look at the current landscape post the [AT&T/] T-Mobile deal and at least be reasonably careful in making assessments about what regulatory situation there might be.” Programming costs continued to hurt DirecTV in Q4 2011, growing by 13 percent per subscriber, said Bernstein Research analyst Craig Moffett in a note to investors. DirecTV had $7.46 billion revenue in Q4, up 13 percent from the same quarter a year ago, the company said. Operating profit grew to $1.78 billion in the quarter, up 6 percent from Q4 a year ago, it said. Profit margin fell from 25.4 percent in Q4 2010 to 23.9 percent in Q4 2011, largely due to higher programming costs, the company said.
Knology Q4 sales increased 4.6 percent to $129.3 million from a year earlier, the company said Thursday. Profit of $11.5 million compared to a $13 million loss a year earlier that was the result of a $19.7 million debt extinguishment loss. The company ended the quarter with 256,653 video customers, up 0.5 percent from a year earlier. It had 276,607 phone customers, a 3.1 percent increase, and 262,089 data customers, up 8 percent.
CBS has held discussions with Netflix about producing original programming for the online video distributor, CBS CEO Leslie Moonves said Wednesday during an earnings call. “Until they are doing 22 hours a week of premium content, we don’t look at them as a competitor but rather another place to put our content, whether it’s original, or buying libraries as they have,” he said. “When you look at the Netflixes of the world and Amazons of the world doing new production, we welcome that,” he said, according to a transcript of the call on Seeking Alpha (http://xrl.us/bmshhm).
Three makers of consumer electronics that won’t get cable programming directly from operators if the FCC OK’s basic-tier encryption lobbied against such rules. Boxee, the most vocal CE company against encryption rules the agency is working on (CD Feb 15 p7), Hauppauge Computer Works and Really Simple Software opposed scrambling in filings this week in docket 11-169 (http://xrl.us/bmshhy). Hauppauge again took issue with the environmental benefits cable operators point to, because clear QAM equipment used by that company, Boxee and Really Simple Software wouldn’t work without subscribers using other energy-consuming gear to get encrypted shows. “More cable boxes means more cost to consumers and increased energy consumption,” Hauppauge CEO Ken Plotkin wrote (http://xrl.us/bmshh4). “Instead of the customer waiting at home for an installation” as without encryption, “she must drive to a cable TV service center and wait there to pick up equipment,” he said. “Stops at homes by trucks already in the neighborhoods would be replaced by 2-way drives by consumers. Environmentally this is at best a wash.” Cable operators have pointed to reduced truckrolls as a way to cut carbon dioxide emissions, because scrambled video service could be activated and deactivated remotely. Using traps to prevent cable broadband subscribers from stealing video lets clear QAM devices get unencrypted programming, and saves energy, Plotkin said. “If cable TV operators would install an addressable RF trap at subscriber homes, they could enable or disable cable TV service remotely without requiring a truck roll. This would require the installation of an RF trap at each home where remote enable/disable of cable TV service is desired and could be installed at the time when service to a home was discontinued.” Traps could operate when the power goes out, so consumers could get clear QAM cable when the electricity is out, Plotkin wrote. “The addressable RF trap could be put in a S3 sleep mode, thereby reducing power consumption, waking up periodically to receive commands from the central office. Longer term, an addressable RF trap could be integrated into cable modems similar to the way in which telephone service is controlled through the cable modem box today.” Boxee CEO Avner Ronen and other executives told aides to Commissioners Mignon Clyburn and Robert McDowell that encryption would harm “consumers and device competition,” a filing said (http://xrl.us/bmshi3). It asked the agency to not move forward “until a comparable alternative is available, such as delivery of the basic tier over IP in a way that does not require additional hardware rental or cable operators’ consent in order to access the broadcast channels.” Really Simple Software’s Simple.TV, which attaches to DVRs and allows video to be streamed to Roku and Boxee devices, is “specially engineered” to “work with unencrypted Clear QAM basic cable,” the company said. “Eliminating unencrypted Clear QAM and requiring cable subscribers to rent industry-provided STBs to decode encrypted basic cable signals would adversely impact the market for Simple.TV, impair RSS’s business as well as the businesses of other companies offering innovative Clear QAM based products, and reduce the number of choices available to consumers.” The company reported (http://xrl.us/bmshjw) executives spoke with Chief Bill Lake and others in the front office of the Media Bureau, which is drafting the encryption order.
Delta Air Lines requested an extension of the Commission’s Jan. 1, 2013, deadline for migration of all VHF and UHF Part 90 operations to narrowband, according to a filing posted Wednesday. “Delta has already purchased thousands of radios that needed to be replaced in order to be compliant with the Commission’s narrowbanding standard,” Delta said. Delta expects to complete its narrowbanding efforts at 24 locations by the end of 2012, covering more than 60% of its fleet, but that will leave about 150 stations “for which Delta anticipates difficulty” meeting the deadline. Because Delta’s 10,000-unit land mobile radio system is spread nationwide, the narrowbanding must be done in a “staged manner,” it said, taking “far longer than it would have if the system was located in a single geographic area.” The process is “complicated” because of Delta’s 2008 acquisition of Northwest Airlines, it said: “A significant amount of time needed to be spent accessing each airline’s radio operations, and determining what, if any, consolidation was needed.” Delta intends to complete the narrowbanding process across all its facilities “by the end of 2013,” it said.
Clearwire widened its Q4 loss to $236 million from $128 million in 2010, the company said Wednesday. Clearwire is actively looking for new wholesale customers, a key priority for 2012, CEO Erik Prusch said during a conference call, regarding the FCC’s decision on LightSquared (CD Feb 16, p1). Analysts believed the move removes a competitor to Clearwire. “We continue to field a lot of inbound inquiries in terms of wholesale deals,” Prusch said. The company’s pleased with “the pipeline of opportunities that we have got in front of us,” he said. Meanwhile, Clearwire has been working with its majority owner Sprint Nextel to identify sites for the planned TD-LTE network, which will overlay Clearwire’s WiMAX network, Prusch said. The initial sites are expected to be up and running by mid-2013, he said. The company will also be working with its TD-LTE partners to accelerate the development of TD-LTE devices, executives said.
Possible paths forward remain for LightSquared, Phil Falcone, CEO of Harbinger Capital Partners, the company’s biggest investor, said in a statement late Wednesday. “I made this multi-billion dollar investment in LightSquared in reliance on FCC’s stated conditions for our receiving a license.” The public notice proposing to block LightSquared from beginning service (CD Feb. 15 p1) “not only disregards this decade old regulatory order but also reverses a policy adopted by Republican leadership in 2005,” said Falcone. “In doing so, it jeopardizes private enterprise, jobs and telecom investment in America’s future. What’s more, the FCC’s recent statement contradicts itself. On the one hand it has ordered LightSquared to build a $14 billion wireless system and on the other hand it has told the company that it cannot proceed. This was not a decision based on science or technology but was a politically motivated decision fueled by special interest groups in the GPS and telecom industry. Nevertheless, there are solutions to this problem that can and will address the needs of the GPS community and allow all Americans to enjoy the benefits of new competition in the wireless industry, resulting in lower prices, and innovative service, if rational public policy prevails."
Latinos are least likely to adopt broadband but three times more likely than the general population to rely on cellphones as their only access to the Internet, said a report (http://xrl.us/bmsg5b) that the National Hispanic Media Coalition released Wednesday. About 45 percent of Latino homes have adopted broadband, compared to almost 69 percent of white homes and almost half of African-American homes, NHMC reported. Latinos also tend to have higher mobile phone bills than any other group, probably because they use mobile data apps almost twice as much as whites do, said the report. Average cellphone bills for whites were $88 per month and for African Americans $95, compared to $104 per month for Latinos. Based on the data in its report, NHMC suggested policy changes such as reforming the Universal Service Fund, preserving competition in the wireless industry, preserving the open Internet over fixed and mobile services, and protecting consumers from predatory business practices.