Even “the mildest” restrictions limiting AT&T’s and Verizon Wireless’s participation in the incentive TV auction would cost the federal treasury billions of dollars in lost revenue, argues a new economic analysis of the auction by three economists who studied the issue on behalf of AT&T. “More severe restrictions, which might result in de facto exclusion of AT&T and Verizon from the auction, would magnify this loss, implying auction revenue reductions of between $13.4 billion and $26.8 billion, depending on the quantity of spectrum ultimately sold,” the paper said. “Our analysis ignores the fact that lower auction revenue may result in a smaller quantity of spectrum cleared due to the structure of the 600 MHz auction; this would further increase the adverse effect on the Federal budget.” Other parties that urge spectrum aggregation limits for the auction argue that fewer competitors would be offset by more bidding by smaller carriers, the paper said. “We estimate that the number of bidders outside the ‘big four’ (AT&T, Verizon, Sprint, and T-Mobile) would need to increase by roughly 150 percent to offset the adverse effects arising from even the least aggressive restrictions on auction participation under consideration.” The paper was authored by Philip Haile of Yale and Maya Meidan and Jonathan Orszag of Compass Lexecon. “Prompt, successful completion of the 600 MHz auctions is essential to the continued health and growth of the U.S. broadband wireless marketplace,” AT&T said in a letter submitting the study to the FCC. “The self-interested proposals for auction participation restrictions plainly threaten that outcome, and they should be rejected.” “It is quite appropriate that this study came out today -- it is nothing more than a distracting Halloween trick concocted by AT&T,” said Steve Berry, president of the Competitive Carriers Association. “AT&T hopes these self-serving findings will allow them to continue to aggregate spectrum in and out of the auction room and eliminate competition. No one has ever suggested that AT&T and Verizon should be excluded from participating in the 600 MHz auction. In fact, we want them to participate, so they can participate in the wireless ecosystem. I'm also not surprised that AT&T does not contemplate the entrance of new competitors who may be discouraged from participating absent any competitive safeguards.” T-Mobile also fired back. “In its latest submission in the 600 MHz incentive auction docket, AT&T contends that any attempt to put consumer benefit above AT&T’s balance sheet will lead to disaster,” said T-Mobile Vice President Kathleen Ham. “AT&T is wrong again. Encouraging participation from more bidders will increase auction revenues. But without reasonable spectrum-aggregation limits on the two dominant incumbents, both consumers and revenues will suffer.”
Nielsen’s paper diary method of collecting data is not effective in today’s increasingly digital world, said Rick Ducey, BIA/Kelsey managing director, at a BIA/Kelsey webinar on local TV audience measurement Thursday. From research for the Council for Research Excellence, Ducey said he found audiences are becoming increasingly fragmented, and viewing is distributed across a variety of platforms. Advertisers are willing to pay stations within a 10 percent margin of error on Nielsen ratings calculations, but CRE’s study found the margin of error sometimes went above the standard amount, said Ducey. “Diaries do not necessarily work for advertisers because you need a bigger sample size to be more accurate,” said Ducey. Local stations are creating more digital content, with users checking their websites multiple times a day for traffic, weather, sports and local events, said Bill McDowell, Raycom Media vice president-research. “Local markets need to focus on what is generating the traffic,” said McDowell. “More people are viewing videos and digital assets online, and everything is dependent on that relationship with the viewer.” New methods to collect information such as set top box measurement, the Nielsen code reader and the adjacent meter market still need work to provide a more comprehensive view of the types of viewers, said Ducey. Advertising needs to focus on lifestyle habits, said McDowell. “Each market is unique, and different opportunities for advertisers,” he said. “Cross platform integration is going to become more important for advertisers to engage with viewers."
Telesat reported consolidated revenue of about $228 million in the third quarter this year, an increase of 8 percent from the same period last year. Growth was due mainly to revenue earned on the Anik G1 satellite, which entered commercial service in May (CD May 9 p13), it said in a news release (http://bit.ly/HrWYQh). For the nine-month period ended Sept. 30, consolidated revenue was $645 million, an increase of about $53 million from the same period in 2012, it said. The increase was offset mainly by a decrease in revenue earned on the Nimiq 1 satellite, Telesat said. During the quarter, Telesat announced the procurement of a multi-mission satellite from Astrium SAS that will replace and expand on Telstar 12 at 15 degrees west, it said. The satellite, Telstar 12 Vantage, is expected to launch in 2015.
Intelsat’s Q3 revenue of $652 million slipped slightly from $655 million in the same period last year. The business is doing well, “although pressures from the U.S. government budget, sequestration, and to a lesser extent, the effects of increased competition in the Africa region are impacting our growth rates,” Intelsat CEO Dave McGlade said Thursday during a webinar on the company’s Q3 earnings. Network services revenue is up 1 percent at $300 million for Q3, he said. Transponder service growth was driven by cellular backhaul applications in Latin America, he said. Growth in managed services is a result of new service activations from maritime and aeronautical service providers in the U.S. and Europe, and cellular backhaul services in Asia, he said. Revenue in these applications and in those regions was offset by declines in some network services in Africa, McGlade said. Current trends there, like expanding deployments in terrestrial fiber and increased supply from traditional satellite operators that have more recently entered the region, have impacted the market, he said. The growth profile on the continent has drawn other satellite operators that compensate for their smaller position “by using price to gain market share with a customer that, for certain applications, is very price conscious,” he said. “These trends are having a more volatile impact on the lower end of the market, where some of our service provider customers have struggled to adopt a viable cost structure.” Intelsat expects sequestration and further reductions in government spending to have a direct impact on its government business, he said. This concern will remain for the balance of 2013 and 2014, he said. McGlade said Intelsat is open to merger and acquisition opportunities: “If a company fits well within our coverage footprint and it could add to our capacity for key regions that we think are useful for certain customer applications, like direct-to-home … we certainly could have an interest.”
The House Communications Subcommittee rescheduled its hearing on challenges and opportunities in the 5 GHz spectrum band for Nov. 13, a spokesman confirmed. The hearing was first scheduled for Oct. 1 at 10:30 a.m. in 2123 Rayburn, with written testimony already online (CD Oct 1 p10), but that was the day the government shutdown began. According to testimony, a point of contention was whether the band can be easily shared, particularly with intelligent transportation advocates eyeing the spectrum. A committee spokesman said witnesses will be Cisco Chief Technology Officer Bob Friday, Toyota Info Technology Center Principal Research Manager John Kenney, Comcast Senior Vice President-Business Development Tom Nagel and the FCC’s Julius Knapp, chief of the Office of Engineering and Technology.
Lumos Networks is upgrading its fiber assets in western Pennsylvania and Richmond, Va., said the company in a news release Thursday (http://yhoo.it/18GNHtt). Its fiber assets in Pennsylvania are now 100 Gbps-compatible, and “on and off ramps” have been added to further the reach of Lumos’s footprint, said the company. Lumos has also completed fiber routes from Pittsburgh to Harrisburg, Pa., and Ashburn, Va., said the company.
Comment deadlines for the FCC Media Bureau’s public notice on what expenses incurred by broadcasters during the post-incentive auction repacking will be eligible for reimbursement have been moved back a few days, the bureau said Thursday (http://bit.ly/1agcqFh). Comments on the Catalog of Eligible Expenses (CD Sept 24 p13) are now due Monday, reply comments Nov. 18, the bureau said. The small extension is part of the reshuffling of deadlines caused by the federal government shutdown, said the bureau.
Leap Wireless said its shareholders approved AT&T’s proposed buy and merger of the carrier. More than 99 percent of participating shareholders voted in favor of the merger at a meeting in Denver, Leap said (http://bit.ly/HrMReb). AT&T has said it will shutter Aio Wireless, its own foray into prepaid, preferring to merge and expand its prepaid footprint under Leap’s Cricket brand. The possibility of prepaid consolidation as a result of an AT&T-Leap merger has been one of the major reasons behind some public interest groups’ petitions to the FCC to veto the deal. AT&T has said there are undeniable public interest benefits to the deal (CD Oct 25 p9). Both the FCC and the Department of Justice must still review the deal.
The FCC Wireline Bureau is seeking comment on a petition by Navajo Pillars Telecommunications for designation as an eligible telecom carrier and to receive waivers of several FCC rules, it said in a public notice Thursday (http://bit.ly/16pcBkq). The telco seeks a waiver of the commission’s study area boundary rules to modify a current Frontier study area in order to create a new study area. It also seeks “immediate access” to high-cost loop support and interstate common line support, the public notice said. It wants a waiver of the definition of “telephone company” to let it become a member of the National Exchange Carrier Association and “immediately participate in NECA pools and tariffs,” the notice said. It also wants a five-year waiver of the cap on interstate originating and terminating rates, intrastate terminating rates, and the transition path for those rates as set forth in the commission’s rules. And it wants a five-year waiver of the rule limiting reimbursable capital and operating expenses for high-cost loop support. “Given the complexities of the issues raised in the Petition, the Bureau finds that the Petition is inappropriate for streamlined treatment, and should be subject to further analysis and review,” the bureau said. Comments in WC docket 10-90 are due Dec. 2, replies Dec. 16.
The Transatlantic Trade and Investment Partnership negotiations must secure all-inclusive tariff elimination between the U.S. and the European Union, while making inroads toward regulatory harmonization, said lawmakers and executives at a Senate Finance Committee hearing on the TTIP (http://1.usa.gov/17ZIygG). If the U.S. and EU broker a comprehensive tariff elimination, the deal could boost U.S. exports to the EU by a third, adding $100 billion annually in U.S. gross domestic product and creating hundreds of thousands of domestic jobs, said committee Chairman Max Baucus, D-Mont. “Tariffs are already relatively low between the U.S. and EU, so it shouldn’t be difficult to gain an agreement to get rid of those tariffs that remain,” testified Michael Ducker, FedEx Express chief operating officer. Lawmakers and witnesses Wednesday sought expeditious passage of Trade Promotion Authority. The TPA negotiating authority should be passed this year, said Baucus. “Congress needs to be a full partner in the development and execution of this agenda. The best way to do that is to pass Trade Promotion Authority and to do it soon. The United States has numerous other trade opportunities. The Trans-Pacific Partnership, the TPP, is near conclusion.” Rep. Dave Reichert, D-Wash., has started to whip votes in the House for TPA, his spokeswoman told us Tuesday. He began this week the Friends of TPP Caucus (CD Oct 31 p13). The sluggish global economic recovery and poor World Trade Organization progress on trade facilitation make TTIP more attractive for both the U.S. and EU, said Ducker. “The economic conditions have certainly given us greater leverage. Whether it’s a consequence of the Doha Round stalling or not, I think people are taking an opportunity like this.” He was referring to the WTO talks that will formally resume in December. The administration is pursuing arguably the most ambitious trade agenda in U.S. history to increase American exports, raise international trade standards, address emerging dynamics and strengthen the global multilateral trading system, said U.S. Trade Representative Michael Froman at the Economist Buttonwood conference Wednesday, according to a news release (http://1.usa.gov/1bGwza5). “That’s why we're pursuing” TPP and the Transatlantic Trade and Investment Partnership, “which together will allow us to conduct free trade with economies representing nearly two-thirds of global GDP,” said Froman. “It’s also why we've pressed for a binding agreement on trade facilitation at the WTO.” The U.S. is also pursuing Bilateral Investment Treaty negotiations with China, while aiming to deepen trade ties with India, Brazil, sub-Saharan Africa and the Middle East, said Froman.