The fast pace of innovation and changing technology has triggered the FCC to update rules around how content is delivered to viewers of cable systems, said Alison Neplokh, Media Bureau chief engineer. The commission took at look at rules on “viewability,” encryption and the HD carriage exemption, she said Tuesday during a webcast of a Practising Law Institute panel. The commission realized that when a system is all digital, it can save money, time and hassle for consumers by not turning off service to the household if it can encrypt the signal, she said. But “that doesn’t come without some cost to consumers,” she said. Last year’s FCC order to allow encryption of the basic-service tier includes provisions from a previous order that went to Cablevision requiring cable companies to provide free equipment for a certain amount of time (CD Oct 16 p6), she said. Neplokh said she noticed a few quieter commercials since the Commercial Advertisement Loudness Mitigation Act went into effect. “We've gotten complaints and inquiries since going into effect, but there has been no enforcement action on these rules yet,” she said. The FCC is still reviewing the record on a rulemaking to update signal leakage rules, she said. The next generation of set-top boxes will challenge how far the FCC’s direct and ancillary authority goes under Section 629 of the Communications Act, said Paul Glist, a cable lawyer at Davis Wright. The FCC, to its credit, “has already recognized that a model of micromanaging … isn’t the best way to approach a changing, fast-paced market,” he said. In predicting the future of set-tops, “we need to keep in mind that no single configuration fits all customers,” he said: “Grandma … doesn’t want a home network or a tablet.” The box model isn’t dead, he said: “Consumer tastes really matter and we can’t make rules by calling those tastes in advance.”
NAB attorneys told officials from the FCC’s Media and Consumer and Governmental Affairs Bureaus that existing text-to-speech technology is problematic for creating audio versions of on-screen emergency information that can be heard by the blind and sight impaired, an ex parte notice said (http://xrl.us/bodd2x). On-screen emergency information crawls may originate from a variety of sources at a station, such as the newsroom, master control, weather center or its emergency alert system equipment, the notice said. “While text-to-speech technology and software is available, there is currently no methodology for interfacing the output of the graphics equipment” that creates the on-screen crawl to the text-to-speech equipment, it said. “Thus, we urge the commission to refrain from requiring or precluding any technology for audio transcription,” it said.
Charter and CBS said they renewed their carriage agreements. The deal covers retransmission consent of CBS’s TV station group, carriage of its Showtime networks, the CBS Sports Network, and the Smithsonian Channel. It also provides for new online and VOD availability for Charter subscribers, including access to the Showtime Anytime app for mobile devices and tablets.
Analysts gave mixed reactions on Tuesday to Netflix saying it will raise $400 million through a senior note offering. Netflix will use about $225 million of the proceeds to redeem its outstanding 8.5 percent senior notes due 2017, it said. Netflix will use the remaining proceeds for “general corporate purposes, including capital expenditures, investments, working capital and potential acquisitions and strategic transactions,” it said. Moody’s, which assigned a Ba3 rating to the offering, assigns Ba ratings to investments it considers “speculative” and “subject to substantial credit risk,” according to its website. Moody’s believes Netflix “regained some positive momentum in the past few quarters, adding” more than 2 million U.S. streaming subscribers in the 1ast quarter of 2012, and is “on the path to meeting or exceeding our expectations of at least 4 million net additions per year along with growth in operating margins,” Moody’s said in a news release. The increase in debt “raises gross debt leverage,” but Moody’s said that’s “mitigated by Netflix’s significant cash balance” of $748 million as of Dec. 31 including short-term investments. Moody’s projected that Netflix will use part of its cash towards investments in original programming that “require more up-front cash payments, but expect it to maintain cash balances that are close to or exceed its funded debt levels.” Standard & Poor’s assigned the debt offering an issue-level rating of BB- with a recovery rating of 3, saying its rating outlook was “negative based on an increase in debt leverage as well as our expectation for negative discretionary cash flow in 2013 and possibly into the first half of 2014, resulting from increased investments in original programming.” Original programming is “the primary cause of discretionary cash flow deficits as it requires more upfront payments and the return on investment can be highly uncertain,” said S&P. The Netflix strategy “raises business and financial risk, and will likely consume liquidity at least over the near term,” said S&P. The Netflix offering will “likely provide interest rate relief” and “temporary breathing space from hefty content deals,” said Wedbush analyst Michael Pachter. The offering “reflects the continuing cost escalation” of Netflix’s streaming deals, he said. Pachter is “confident” that Netflix can lower its interest rate, but believes “the excess amount borrowed” will be used “primarily to pay third-party content providers,” he said. The debt is “necessary to solve near-term cash flow problems, and indicates the low likelihood of positive cash flow for the year,” he said. Original content is “likely to lower” Netflix’s “dependency on third-party content over time,” but “we do not expect a critical mass for many years,” and he believes Netflix’s “lack of free cash flow and the risk incurred by increasing debt makes Netflix a risky investment,” he said. Netflix shares closed 4.3 percent higher Tuesday at $169.12.
The Louisiana Public Service Commission reformed the state’s prison phone call rules. In an order decided Dec. 12 and released Monday (http://xrl.us/boddxf), it ordered that charges for any prisoner calls made to immediate family, legal aid services and groups, religious figures, government authorities, including schools, and attorneys should be capped at a $1.69 initial charge and five cents a minute. Calls made to people under these five categories shouldn’t experience different rates based on inter-LATA, intra-LATA, mileage bands or time of day, the PSC said. These caps and rates must be effective within 24 months and are to take effect in any new contracts once current contracts expire, it said. The commission had been investigating these calls, which many allege to be overly expensive, since April 2011. The cost of calls to prisoners will, under the new system, drop by about 25 percent, the PSC said. Commissioner Eric Skrmetta directed PSC staff to open this January a new docket specifically to regulate prison calls and to handle all prison phone company business in that docket, according to the order.
Verizon Wireless will allow customers to use signal boosters on its network as long as the FCC adopts without substantial change safe harbor protection standards submitted to the agency by various companies in June, the carrier said in a letter filed at the commission. Verizon agreed to the standards, as did T-Mobile, Nextivity, V-Comm and Wilson Electronics (CD June 28 p17). “Those conditions are that the customer must register the booster with Verizon Wireless prior to operating the booster on the Verizon Wireless network, the operation must comply with all requirements of the protection standard, and the customer must cease using the booster immediately upon being notified that the booster is causing interference,” the letter said (http://xrl.us/boddw9). “Verizon Wireless reserves the right to withdraw its authorization for any booster that causes harmful interference or fails to operate properly.”
The effective date of an August order from the FCC allowing fixed microwave operators to use smaller antennas in three of the most heavily used microwave bands is April 1. The FCC approved changes to its wireless backhaul rules at its August meeting (CD Aug 6 p8). The order adopts a Rural Microwave Flexibility Policy, which allows operators in rural, non-congested areas to build substantially longer links, eliminating the need for intermediate relay stations and cutting operational costs. It also allows wider channels in two microwave bands, which is expected to mean faster data speeds for consumers and limits the cases when applicants need waivers to locate fixed microwave links near geostationary satellite facilities, harmonizing U.S. rules with international regulations. The FCC published a notice in the Federal Register (http://xrl.us/boddbx). “In this document, the Commission announces that the Office of Management and Budget (OMB) has approved, for a period of three years, the information collection associated with the Commission’s Report and Order, Facilitating the use of Microwave for Wireless Backhaul and Other Uses and Providing Additional Flexibility to Broadcast Auxiliary Service and Operational Fixed Microwave Licensees,” the notice said.
ThinkAnalytics said it licensed Comcast’s reference design kit (RDK) software stack to develop software and set-top box testing services to box and chip makers and cable operators who plan to use the RDK, it said. “One of our goals with the RDK program is to foster a community of innovators bringing enhanced user experiences to consumers, by providing a platform that enables these new applications and services” on different devices, said Steve Reynolds, senior vice president of Comcast’s home network and consumer premises equipment division. ThinkAnalytics has developed a recommendations engine designed to let TV networks and distributors deliver personalized TV recommendations, it said.
Tvinci said Singapore’s MediaCorp is using its over-the-top video platform to deliver a new online video service called Toggle. MediaCorp’s Toggle service delivers premium linear and VOD “rights protected” content to iOS, Android and Windows devices using a combination of digital rights management systems depending on the device, Tvinci said. The deal makes MediaCorp Tvinci’s first customer in Asia, it said. “It’s quite a significant deal for us both in terms of the size of the deal and that we are now targeting the Asia-Pacific region,” said Ido Wiesenberg, Tvinci’s co-founder. “Having a good case study in this region can help us leverage into different countries,” he said.
Western Pacific Broadcast sought a 22-day delay to Feb. 18 to reply to Armstrong Utilities’ opposition to the broadcaster’s must-carry FCC complaint for WACP Atlantic City, N.J. The request cited talks between engineers for the two sides over whether the cable operator gets the station’s signal in good quality at its principal headend, and the discussions could lead to a settlement, Western Pacific said in a motion for extension in docket 12-364 (http://xrl.us/boddtb). The motion was similar to other extension requests the broadcaster has made for WACP must-carry complaints against Armstrong and others (CD Jan 16 p17).