Broadband Cable Association of Pennsylvania

NewsClips

October 24, 2012

Franklin County and borough officials are working together to establish a shared fiber optic network to improve services and reduce costs. For the past year, officials have been discussing an Intermunicipal Agreement and Fiber Optic Joint Venture Agreement to reduce duplication of services, said Borough Manager Jeffrey Stonehill. The two agreements set up a joint computer network used by both entities but owned by the borough, Stonehill said. "Currently, the borough utilizes a fiber optic network to communicate with our computers at various facilities that we own and operate," he said. "It is our hope that together, the borough and Franklin County could share this computer network as well as the data on this network to our mutual benefit."

This is an "outstanding idea" will not only allow for cost savings for both entities but also an improvement to the county's network, said Sean Crager, chief information officer for the county. "The (county) network, as a whole, is a microwave network. It's pretty outdated," he said. "This will give us an opportunity to move up to more industry standard network." Depending on whom you talk to, the county's network is anywhere from 10 to 100 times slower than industry standard, Crager said. This agreement will not only allow employees to have quicker Internet and application process but also improve day-to-day functions, such as backing up data.

The Fiber Optic Joint Venture Agreement establishes a 20-year term for use, expansion, costs and maintenance of the network. The county will pay a one-time "capital equipment contribution," according to the draft agreement. After that time, the county shall be permitted to use 50 percent of the capacity of existing cables. Cost of maintenance and repair of existing cables used by the county will be shared equally by both parties with the borough invoicing the county for their portion, the draft agreement states. The cost of installation of new cables will be paid proportional to benefit. New shared cables remain property of the borough. "We agree to share the existing borough fiber optic network," Stonehill said. "In addition, any increases to that network would be paid for jointly by the borough and Franklin County either in some proportional split by who benefits more." The county's share would be $13,500 over the 20-year span.

The cumulative effect of all county users slows the speed of its microwave system, Crager said. Video conferencing, document storage and backup use the same system, and data backup takes days. If the county's data were the size of a basketball, the current system tries to move it through a garden hose, he said. Optic cable would allow the data to roll through a pipe the size of a sewer main. "It truly is a foundation project moving us forward," Crager told commissioners on Tuesday.

With faster transmission, the county may be able to centralize its underutilized computer servers, according to Crager. He is studying whether to eliminate the microwave system as a backup. The borough's fiber optic cable does not reach the county jail, located several miles outside of town. The Intermunicipal Agreement allows for the sharing of data on the network. It is effective for an initial term of five years and shall be automatically renewed on an annual basis from year-to-year. As part of the draft agreement, the borough and county would make all data available to each other, including land use records, tax records, geographic information systems, code enforcement records, photographic imagery, maps, plans and drawings, dispatch records and recordings as well as security camera images. "If we have it, they can see it. If they have it, we can see it," Stonehill said. Outside of this, "whatever we have remains ours and whatever they have remains theirs."

One of the biggest concerns with this shared data is security, Crager said. "We went back and forth with the borough a couple times on a few different revisions, mostly making sure it was very clear who would be responsible for what and security was a very big concern, too," he said. As part of the agreement, user names, passwords, IP addresses, firewall and security software will all be required to protect data from ineligible access. Neither party can share or sell the data to a third party without express written approval. Chambersburg Borough Council approved the draft agreement unanimously on Oct. 15 with Councilwoman Sharon Bigler absent. Franklin County commissioners are expected to vote on the agreement on Thursday. Chambersburg Public Opinion


Netflix Inc. reported an 88% drop in third-quarter net income and lowered its expectations for subscriber additions, sending shares tumbling. The Los Gatos, Calif., company also said it expected overseas markets to report as much as a $119 million loss in the fourth quarter, effectively wiping out the gains it will pull in from its U.S. streaming customers in the period. Netflix added 1.7 million subscriptions overall from the second quarter to 31.8 million world-wide, including 1.16 million U.S. streaming video customers. But its original DVD-by-mail business continued to shed customers, posting a 634,000 subscription drop in the quarter. Investors sent shares down more than 16% in after-hours trading on the news, to $57.35. Before the results were released, the shares had edged up during the regular Tuesday trading session, despite a brutal day on Wall Street.

Netflix is facing a raft of competition in its core U.S. streaming business from online video sites, cable television and other streaming services, notably Amazon.com Inc., which has been expanding its offerings as part of its $79 Prime membership. The results mean Netflix is highly unlikely to reach a goal-set by Chief Executive Reed Hastings earlier this year-to add as many as 7 million U.S. streaming subscriptions by year-end. Through the first nine months of the year, Netflix has added just 3.43 million streaming subscribers and on Tuesday it said it expected 2 million new subscriptions at most for the fourth quarter. The company reported $7.68 million in net income, or 13 cents per share, down from $62.5 million, or $1.16 per share, a year earlier. Analysts surveyed by Thomson Reuters were expecting 5 cents per share. Revenue of $905.1 million was about in line with expectations.

Netflix finished the quarter with 25.1 million U.S. streaming customers, up from 23.9 million in the second quarter. Its international subscription base grew to 4.31 million, from 3.62 million, while the DVD business ended with 8.6 million subscriptions. The company's legacy DVD-by-mail service is nearly three times as profitable as streaming because of higher costs for content deals in that newer business. Netflix has bet that tablet computers, smartphones and advanced televisions will help speed growth in its streaming subscriptions.

For the fourth quarter, Netflix offered a wide projection, ranging from a loss of as much as $13 million to a profit of as much as $2 million. The murkiness is a result of the international expansion, where the company has to negotiate and pay for new content deals country-by-country or region-by-region. While Netflix said it sees subscriptions overseas growing by as much as 1.6 million in this year's final months, the company is expecting the business to lose between $107 million and $119 million, essentially erasing the $92 million to $102 million in profit that is expected for its U.S. streaming unit. "Our aggressive investments today in international expansion have laid the foundation for building long-term profitable franchises in these markets," said Mr. Hastings and Chief Financial Officer David Wells in a letter to shareholders Tuesday. Netflix recently expanded to Sweden, Norway, Denmark and Finland and expects to finish the year with 51 markets world-wide.

Mr. Hastings told investors on a conference call that he had "mispredicted" the company's growth prospects. "I would call it a forecasting error," he said. Mr. Hastings said original programming that will initially appear only on Netflix, such as cult hit "Arrested Development," will help drive customer growth next year. Wall Street Journal


Dish Network and AMC Networks have settled their long-running lawsuit. But which company won? Maybe both. The deal, which resolves an old dispute between Dish and AMC sibling Cablevision Systems over the latter's now-defunct high-definition Voom channels, comes with a $700 million payment by Dish to Cablevision and AMC. But its most important outcome is arguably Dish adding AMC's channels back to its lineup after an almost four-month hiatus. AMC lost money every day its content was off Dish. For its part, Dish gets AMC back and can roll its contract with the network into the settlement. Shares of Dish rose 3.3% Monday, and AMC shares were up 3.9%.

While it is an extreme example, the settlement is the latest evidence of the tougher negotiating environment between cable networks and pay-TV operators. Others have included Viacom's dispute with DirecTV in July, in which the network's channels were blacked out for more than a week, and AMC's own down-to-the-wire negotiations with AT&T in June. It is often unclear who comes out ahead because the terms of content deals are rarely disclosed. But uncertainty created by a prolonged dispute weighs on the stock of the parties involved. AMC shares have risen 9.3% over the past three months, compared with 19% for Viacom and 18% for smaller peer Scripps Networks. Stocks tend to rise when the parties kiss and make up, but the real lesson for investors may be to get out when the fur starts to fly. Wall Street Journal

Links