Broadband Cable Association of Pennsylvania


January 24, 2014

Nearly three years ago, Greentech Media reported on a small cooperative utility in the suburbs of Indianapolis that was merging with the local telecom to offer electricity, phone, broadband and home security services through one company now called NineStar Connect. At the time, it was a very small and local example of a trend emerging in competitive electricity markets: telecom and other consumer-facing companies selling electricity, the way Marks & Spencer does in the U.K.

Now Comcast, the biggest internet and cable company in America, is spreading the model to Pennsylvania. On a call with reporters to discuss DEFG's report, Annual Baseline Assessment of Choice in Canada and the United States, Robert Powelson, chairman of the Pennsylvania Public Utility Commission, said that Comcast was teaming up with a retail electric supplier in the state. The electricity offering could be rolled out in the fourth quarter of this year. A representative from Comcast would not provide details, but did confirm "this is something we're exploring." "Now it will be a quadruple play," said Powelson, talking about cable, internet, phone and electricity all bundled together. In Australia, one utility and telecom have partnered to offer up to seven bundled services.

Comcast already has an energy play as part of its Xfinity home product, which offers home controls for lighting, security and thermostats. It leverages EcoFactor's cloud service to fine-tune the thermostat for savings of up to 20 percent on heating and cooling. The connected home space is increasingly competitive, with telecoms, big-box stores and security companies vying for market share. Google's recent $3.2 billion acquisition of Nest also positions Google as a potential contender in the burgeoning sector.

The Comcast offering is a big deal for Pennsylvania, which is one of the more competitive states when it comes to retail choice, but still far behind Texas. That too may soon change. "We're coming right at Texas," said Powelson. The state would like retail electricity providers to set up their headquarters in the state, as many have in Texas so far.

To make Pennsylvania as attractive as the Lone Star State, a bill has been introduced to the state senate that would essentially end default service. Part of Texas' success is that customers must choose a retail supplier when they sign up for service; customers are not defaulted to the incumbent provider. Pennsylvania Senate Bill 1121 would require customers to choose a new electricity supplier and would give them $50 for doing so. Those who do not switch would be put into an auction, and suppliers would court them for their service. If the bill passes, it would go into effect in June 2015. "We're looking at new ways to move the needle on competition," said Powelson.

Texas has been the leader in the U.S. for retail electricity choice for years. In DEFG's 2014 report, the state scored a 92 out of 100, with Pennsylvania ranked second with a score of 64. Other states are also seeing an increase in competition. Illinois had more than 3 million customers switch their suppliers last year, up from about 500,000 in 2012. "This is largely driven by municipal aggregation," said Illinois Commerce Commissioner Ann McCabe. The trend is expected to continue in 2014. Illinois is one of a handful of states that allow for community choice aggregation, a trend that is gaining steam across the U.S.

Pennsylvania is not one of the states that currently allows community choice aggregation, but that is not what the state is relying on to increase competition. "We've studied the Texas model," said Powelson. By mimicking Texas, Pennsylvania hopes it will soon match that state's robust retail choice landscape. Texas, meanwhile, is happy to have company. "We welcome your competition," Texas Public Utility Commissioner Donna Nelson told Commissioner Powelson on the call. "I am so grateful to see the merging of telecom and electric. I've been waiting for this. It makes things exciting."

The Clinton County commissioners took two actions Thursday in support of KCnet's application for a grant, the money of which would greatly expand broadband network capabilities throughout the Northern Tier. There aren't any guarantees, however. This is the third year the Keystone Community Network - better known as KCnet - has entered into the competitive grant process in an effort to obtain $1.5 million for expansion. The first two efforts were turned away. The Redevelopment Assistance Capital Program (RACP) is a Pennsylvania grant program administered by the Office of the Budget for the acquisition and construction of regional economic, cultural, civic, recreational, and historical improvement projects. The commissioners approved a resolution yesterday designating the county as "grantee" of the RACP funding. That means the county government has agreed to act as a pass-through agency for any financial resources if KCnet's grant application is successful. Lock Haven Express

For the past five years, the Federal Communications Commission has cheered wireless broadband as the future of communications. But television broadcasters have much of the spectrum that wireless companies want. So the FCC has intervened to reassign chunks of spectrum from one group to another-and its broadband bias comes at the expense of broadcasters.

Television broadcasters already converted more than 25% of their spectrum to digital in 2009. That wasn't enough to end the so-called shortage. In 2010, the FCC proposed that broadcasters relinquish an additional 120 MHz-20 channels-to be repurposed for broadband. In 2012, Congress authorized the FCC to reallocate the spectrum through a voluntary auction, with the Treasury and the broadcasters sharing in the proceeds. In December, the new FCC Chairman Tom Wheeler hit the pause button on this effort. Mr. Wheeler did so in part to ensure that the software required to host a complicated, two-sided auction wouldn't become an iteration of the debacle. But before it proceeds, the FCC needs a more realistic vision of spectrum use that accounts for the public's benefit from all types of users. Its auction needs rules to recognize spectrum's different dynamic uses, not just broadband.

The FCC's preoccupation with wireless broadband has pushed to the side any other use for the spectrum. But the agency's seeming indifference to TV broadcasting overlooks this medium's efficiency. Broadcasting uses a point-to-multipoint network architecture, meaning a high-power TV signal is transmitted from one tower and received by many receivers. The service area can span hundreds of square miles. Cellular service, or broadband, is point-to-point-from one location or person to another. It uses many small antenna sites, with low-power transmitters covering small areas. Broadcasting trounces cellular service in efficiency and reliability. Thanks to its structure, broadcasting can reach millions more people per unit of spectrum bandwidth used.

Broadband fails when the local tower site nearest to the user fails. In a bomb threat at a crowded stadium, broadband service is useless as soon as traffic overwhelms the nearest tower. Should one TV broadcasting station fail, however, many others can provide further advisories in an emergency. Broadcasting kept more than eight million people safe and informed during Hurricane Sandy. Broadband can't do that. The turn in FCC policy against broadcasting also discounts the growing audiences for free over-the-air TV. While broadcast TV is mostly viewed through cable and satellite, the annual survey by GfK, the market research institute, reported that nonpay TV households constitute more than 19% of the population, up from 14% two years ago. Centris Marketing Science in October 2013 reported pay TV audiences declined to 83% of the population, amid cord-cutting, booming over-the-air antenna sales and new broadcast DTV channels. FCC rhetoric of "all broadband, all the time," doesn't reflect public interest when it comes to licensed spectrum.

The FCC should dispense with its usual spectrum prejudices before the 2015 auction. It should consider technological means that enable a broadcast or cellular licensee to share existing spectrum dynamically when not using it. One such innovation is instant, electronic auctions that align spectrum supply and demand. These services allow someone in Manhattan with AT&T to instantly borrow spectrum from another carrier to complete a call during a peak traffic time. (Disclosure: I'm on the board of a company called Rivada Networks that does just that.) These entrepreneurial solutions are a financial and service win for companies and the FCC alike.

Furthermore, the FCC certainly shouldn't bow to lobbyists for T-Mobile and Sprint. The two companies, German and Japanese-owned, respectively, are pushing to restrict the amount of spectrum AT&T and Verizon can purchase under the guise of fostering "competition." Wireless broadband is a vital service that has transformed the world of communication. But it's not the only service. Broadcasting remains the primary source of news and information for more than 300 million Americans, and the go-to source when disaster strikes. The two are complementary: Broadband is for personalization; broadcasting is for coverage. The FCC should recognize the differences and put the broadband pompoms down. Wall Street Journal

The man who declared Gov. Tom Corbett would raise $40 million in his bid to remain governor, believes the $6.8 million the incumbent raised last year is a sign the fundraising goal is within reach. "Gov. Corbett is well on his way to having the resources to deliver his message to Pennsylvania voters," Pennsylvania Republican Party Chairman Rob Gleason said in a statement. "He has received great support and the party is very encouraged where the campaign stands."

Earlier in the week, Corbett's campaign released the fundraising figure, comparing it to the $12.3 million the governor raised in 2011, and noting that the campaign currently had $7.5 million on hand. The 2013 single digit tally surprised Democrats, and even some Republicans. But Corbett supporters, such as Gleason, note that the governor's 2013 haul is roughly twice that of the best-funded Democratic challengers - state Treasurer Rob McCord, U.S. Rep. Allyson Schwartz, and former state Revenue Secretary Tom Wolf. All three have augmented their coffers from personal funds or other political war chests. "To count millionaire self-funding and transfers from other accounts doesn't give a very accurate picture," Gleason said.