Broadband Cable Association of Pennsylvania


October 31, 2013

As wireless phones continue to eclipse landlines, does traditional home phone service still merit the kind of special oversight provided by agencies such as Pennsylvania's Public Utility Commission and New Jersey's Board of Public Utilities? Descendants of the old Ma Bell monopoly, led by Verizon and AT&T, say no, and have been pushing in state capitals for a get-out-of-regulation pass. Their effort failed last year in New Jersey, but a similar proposal, House Bill 1608, is on the table in Harrisburg, with a hearing set for next month.

The companies say deregulation would allow them to compete more aggressively with newcomers using different technologies - wireless, voice-over-Internet, and cable phone service - that are largely free of traditional oversight. "The bill would move Pennsylvania toward a level playing field," said its chief sponsor, State Rep. Warren Kampf (R., Chester). Kampf says his bill, which has about 60 cosponsors, is similar to laws enacted in 20 other states.

Critics of the proposal, led by consumer organizations such as AARP, say it is at best premature in a state whose rural expanses often lack or have spotty wireless coverage. In cities and suburban areas, they argue, the bill would allow phone companies to easily escape the "provider-of-last-resort" obligation that has helped Pennsylvania have near-universal phone service. And they say that when something goes wrong, the bill would leave consumers without a crucial avenue of complaint - a point stressed last month by PUC Commissioner James H. Cawley in an appearance on Pennsylvania Cable Network.

Cawley said that by allowing phone companies to escape PUC oversight by declaring a phone-exchange area competitive, the legislation would throw "residential customers to the wolves." To declare an exchange competitive, a landline company would have to certify that the area was also served by at least one wireless carrier and one Internet provider - a standard critics call inadequate. "There's a reason there's been a public utility commission for 100 years," Cawley says. He says the commission and its Bureau of Consumer Services serve as a buffer between powerful utilities and their customers.

Kampf dismisses concerns that consumers would suffer without the PUC to handle complaints. "There's the marketplace and complaints to the company - that is the avenue that consumers have," Kampf says, arguing that competition is the chief protection, for instance, for those who have problems with pay TV. "Complaints can be made to the individual provider of the television service. For many people, if you're not satisfied with that, you can switch to another provider. We as a society have said that's OK," Kampf says. Verizon's Lee Gierczynski offers a similar argument. "They can direct their complaints to the Federal Communications Commission, to the attorney general, or to the Better Business Bureau, just like consumers do for other services and products across the state," he says.

Cawley says the FCC isn't designed or staffed to address individual problems, as the PUC does when something goes wrong. "They are not equipped - and they'll be the first to tell you - to handle large-scale customer complaints," he says. The two sides agree on at least one thing: the dramatic shift in phone use, driven partly by the emergence of competing landline offerings such as cable companies' "triple play" deals and partly by the spread of cellphones and "cord cutting."

In cities, where wireless is most reliable, it's hard to find a twenty-something who owns a landline. It was no surprise when the Centers for Disease Control and Prevention reported that by the end of last year, nearly two in five U.S. households relied entirely on wireless phone service. No question, the shift has been dramatic. But are we really ready to end state government's capacity to intervene when something goes wrong? Philadelphia Inquirer

Comcast executives downplayed speculation that it was near a deal with Netflix to add the streaming service to its cable set-top boxes. On a conference call with analysts to discuss the cable and programming giant's third-quarter results, Comcast Cable President Neil Smits dismissed the flurry of recent media reports that a groundbreaking agreement to add a Netflix app to its set-top boxes was in the works. "It is incredible to me the amount of press coverage this has received," Smits said, adding that there is "nothing to report" and that a Neflix app on set-top boxes is "not really a high priority for us." Smits noted that Comcast customers already have many ways to access Netflix.

Comcast and Netflix are at odds over the latter's Open Connect delivery system that it wants Comcast and other broadband providers to use. Until that issue is resolved an agreement for a set-top box tie-in probably won't happen. For the quarter, Comcast said profit fell 18% to $1.73 billion and revenue was off 2.4% to $16.15 billion. The nation's largest pay-TV distributor and parent of NBCUniversal, Comcast attributed the revenue declines to the fact that the third quarter of 2012 included NBC's coverage of the Olympics, which generated significant advertising revenue. There was also substantial political advertising for the presidential election.

When the Olympics are removed from the equation, revenue at Comcast was actually up 5.2%. The company also noted that third-quarter 2012 results included gains from the sales of programming assets and wireless spectrum. Revenue for Comcast's cable unit jumped 5.2% to $10.5 billion for the quarter. While the company lost 129,000 video subscribers, it made up for that by adding more broadband and voice customers, which is where many cable operators are now focusing their efforts. At NBCUniversal, revenue was down 14.2% to $5.9 billion. If the $1.2 billion in revenue the 2012 Summer Olympics took in is removed from the comparison, then revenue was actually up almost 4%.

Operating cash flow jumped about 10% to $1.3 billion for the quarter. At NBC, where the bulk of the Olympics money was made, revenue declined 41.1% to $1.6 billion. The cable networks unit, which includes USA and Bravo, posted revenue of $2.2 billion, up 4% from a year earlier thanks to a 5.4% increase in distribution fees and 4.6% improvement in ad revenue. Filmed Entertainment revenue grew 3.3% to $1.4 billion, thanks in large part to the performance of "Despicable Me 2." Los Angeles Times

After nearly a month of upheaval at The Philadelphia Inquirer, including the abrupt firing of the paper's top editor and lawsuits among its owners, the majority owners on Wednesday offered to buy out the minority investors, in what they described as an effort to provide stability to the company. George E. Norcross III and William P. Hankowsky, both majority owners in the Philadelphia Media Network, which also publishes The Daily News and, said they wanted to put an end to the infighting.

So they offered to buy out two minority investors, H.F. Lenfest and Lewis Katz, for $29 million, which they asserted was nearly a 12 percent profit in the 18 months since they made the original investment. Mr. Norcross and Mr. Hankowsky said in a statement that they were prepared to wire the funds within 24 hours after an agreement was reached. "We did not want or initiate the litigation that has created a sideshow that will ultimately waste hundreds of thousands, if not millions, of dollars in legal fees that could be used to further strengthen and build the company," they said.

Jay Devine, a spokesman representing Mr. Katz, Mr. Lenfest and William K. Marimow, who was the paper's top editor, declined to comment on the offer. Mr. Norcross, a Democratic power broker, and Mr. Lenfest, a parking lot magnate, were among a group of local investors who bought the struggling newspaper in April 2012. The investor group then hired back Mr. Marimow, who had previously served as The Inquirer's top editor from 2006 to 2010. While there appeared to be conflicts among investors from the start over how to run the paper and its website, these battles culminated in Mr. Marimow's firing on Oct. 7. Three days later, Mr. Katz and Mr. Lenfest sued, claiming that Mr. Marimow should be reinstated because the firing took place without their consultation. Then Mr. Norcross countersued. New York Times