Category Archives: News

As Dish Subscribers Decrease, Company Increases Coupon Incentives

Charlie Ergen has been with Dish Network since the very beginning. He’s seen quite a bit of change over the last three decades but there has never been a period in the company’s history more pivotal than right now. Ergen is tasked with salvaging the Dish Network brand as the last quarterly earnings paint a bleak picture for the nation’s second largest satellite television provider.

Compared to 2014, last year saw Dish’s earnings drop by nearly $200 million. The company also lost 81,000 pay-TV subscribers last year, even worse than the 79,000 subscribers who canceled their service in 2014. These numbers on their own are not too surprising, given the currently tumultuous state of affairs for all pay-TV providers. However, the real trouble facing Ergen is that after these figures were released, stock prices for Dish plummeted nearly ten percent. This has led to some vocal criticism from the company’s board of directors.

Having heard such criticism before, Ergen, time and again, has stressed that he does have a plan to steer the company through this difficult point. His main plan is to revitalize the company by capitalizing on the expansive airwaves holdings possessed by Dish. Over the last five years, the business has bought up billions of dollars worth of spectrum and plans to spend another $4.5 billion in an FCC-sponsored auction that will be held in March. Knowing that demand for these airways is only going to increase in the years to come, the CEO of Dish wants to accumulate a large portfolio of holdings so that he will be able to turn around and sell that spectrum for a large profit in the future.

Analysts are mixed over the viability of Ergen’s long-term plan. In the meantime, Dish is working hard to reward existing customers and entice new subscribers with their own Dish promotions. Their current offering of promotion codes can be found here. In addition to regular satellite television discounts, Dish is also offering deals for its streaming service, Sling TV. Promotion codes for Sling can be found here. Specifically designed to appeal to a younger demographic and cord-cutters, Sling offers smaller bundles of television networks, like ESPN and The Disney Channel, for only $20 per month.

As industry insiders griped about Dish’s overall decline in subscribers, a spokesman for the company announced that it had gained over 600,000 Sling subscribers since the service launched last March. According to telecom analysts, these subscribers are almost exclusively new customers and not existing subscribers changing to cheaper plans. Among the same analysts there has been rampant speculation that Dish will announce special discounts to entice new subscribers to Sling TV as college basketball’s March Madness approaches. Whether or not these savings materialize, it is clear from the flurry of activity that Dish is working hard to weather the current storm hitting pay-TV providers.

Elected Officials Push For Countrywide Performance Equality of Broadband Providers

NCC Logo

As advertisements promoting increasing broadband speeds circulate around the internet, elected officials in cities throughout the United States are coming together to ask for a system that gathers performance information across providers. This collective of elective officials, including some mayors, is known as Next Century Cities (NCC), an advocacy group which aims to bring reliable and affordable broadband internet to everyone in the country. Formed last September, the mission of this group is to make available to any community in America fiber broadband with speeds of 1 Gbps.

There are large urban areas included in the NCC, such as Boston, Massachusetts, Seattle, Washington, and Kansas City, Kansas. Overall, there are 35 members of the group, not all of which are large or urban areas, as seen by member communities like Salisbury, North Carolina, which has a population around 33,000, and Yellow Springs, Ohio, which has a population around 3,500. In a letter to the FCC, these city leaders stressed the need to find ways to measure the cost, the reliability, and the speed of broadband internet. The current procedure does not require a standard measurement method for providers, so for the consumer shopping around, the situation is a bit like comparing apples to oranges. Furthermore, the NCC wants the reports produced through these new standard measurement rates to be easily understood, by both government officials and citizens, in the hope that they will be more empowered when selecting a broadband provider.

The member cities of the NCC have gained considerable backing from recent findings published by the Government Accountability Office (GAO). A GAO report suggested two changes to the current FCC policy. The first change involves the FCC publishing resources on broadband performance that are accessible to the general public while still including the pertinent reliability and speed information about the ISPs. The second suggested change involves ISPs adopting a universal standard to measure their broadband speeds but also adding relevant information from consumer reports and research to these findings to make them more inclusive.

Methods for implementing these suggestions have already been developed. The NCC is stressing the need for an advisory panel of local and state officials, in addition to community organizers, to take the new broadband information and present it to cities and individual customers. To ensure that this process goes smoothly, a centralized and accessible database will be created that allows users to track the standardized performance reports for all providers according to geographic region. Finally, there will be measures and assessments made of the general public to ensure that the database meets their needs and that the advisory panel is conveying effectively the pertinent information.

Comcast Attempts to Stay Relevant Now While Planning For the Future

Comcast Stream image

Comcast recently responded to the growth of over the top (OTT) streaming video services by launching its own version. While not an outright OTT, the idea behind Comcast’s Stream is to provide a narrow collection of channels that will appeal to a younger demographic. Seeing as the system developed out of an earlier program designed specifically for college students, it is not surprising that Comcast hopes those same viewers will purchase Stream as they begin living on their own. Ultimately, according to a spokesman for the company, Comcast believes that once these consumers achieve higher income levels, they will upgrade to a full cable package.

Although Stream has seen some growth since its release earlier this summer, industry analysts question whether or not the service launched too early. In particular, they have pointed out that it does not provide the same flexibility as a real OTT, since it requires the user to already be a Comcast internet customer, and it can only broadcast live shows on the home wireless network of the consumer. In order to access live television programs remotely, say on a tablet while traveling, the broadcast network needs to have its own mobile app through which the Stream subscriber can authenticate. The ability to watch live shows via Stream while away from the home network should be available by early 2016, around the same time that the service will have expanded to a national audience. Currently, only Comcast internet customers in Chicago and Boston have the option to purchase the service.

Looking toward the future, Comcast is working to make its larger channel packages even more appealing. Part of the positive forecast is reflected in the announcement of a new deal with Discovery Communications, the group responsible for producing the Discovery Channel, Animal Planet, and TLC, that will extend into the 2020s. Additionally, Comcast is in contract discussions with companies, including Business Insider and Vice Media, to produce original programming for the cable company. In the eyes of the media conglomerate, original content can’t appear soon enough, as Comcast lost almost 70,000 cable television subscribers during the first six months of 2015.

In another realization of the changing nature of their business plan, Comcast has announced that it is beginning the testing phase of a new modem model known as the DOCSIS 3.1 The testing of this modem parallels the company’s announcement that it will be offering a fiber internet service with speeds of 2 Gbps. The potential expansion of fiber with the DOCSIS 3.1 is extensive, as it could allow speeds to eventually reach 10 Gbps, although that remains a distant reality at this point in time.

AT&T Fighting Fines For Throttling Customers’ Data

ATT Logo with a tightened belt around it

Despite the company’s recent success in gaining approval from the Federal Communications Commission (FCC) to complete its purchase of DirecTV, AT&T has suffered from a string of legal decisions and regulatory violations that have resulted in sizeable fines. Both the FCC and the Federal Trade Commission (FTC) have taken aim at the telecom firm over what they claim are illegal and unethical practices related to AT&T’s data usage policies.

The FTC’s case began last October when the commission made clear that they were going to sue AT&T for “deceptive and unfair data throttling.” In particular, the lawsuit focuses on customers who have unlimited data plans on their mobile devices. AT&T discontinued the plans years ago, but around 20% of its customers have been grandfathered in and retain the cap-free data packages. However, according to the FTC’s suit, AT&T has actually been imposing a limit on these consumers. This has been occurring in two ways. For those customers with older 3G phone models, a 90% reduction of their speeds took place as soon as they hit 3GB of data during the monthly cycle, while those with LTE phones saw a similar reduction in their speeds after hitting 5GB per month. Ultimately, the crux of the FTC’s lawsuit is that such actions are in violation of the contract signed by unlimited data plan customers. While AT&T claims that no such violation exists, they have modified the language in their contracts to state that throttling will only occur if the user is connected to an overloaded cellular relay.

Around the same time that the FTC’s case got underway, the FCC saw an increase in the number of complaints from AT&T customers who were irritated that their connection speeds had been slowed down. This led the commission to accuse the telecom provider of violating a transparency rule that was part of the Open Internet Order passed in 2010. Although the FCC has known about AT&T’s data throttling policy for the last four years, it was only recently that the number of unhappy customers prompted Chairman Tom Wheeler to level a massive $100 million fine against the mobile service provider.

AT&T is not simply accepting its fate and has vowed to fight the $100 million fine in court, claiming that customers knew full well that their data speeds would be throttled after reaching a certain quota and that no harm came to customers as a result of the slowdown. There is no doubt that AT&T is going to stand its ground for as long as it can on the issue, knowing that the judge in the FTC case may cite the FCC’s actions as a precedent. The telecommunications conglomerate has filed a grievance against the FCC stating that the current fine is excessive and that, at most, AT&T should have to pay only $16,000, even though its policies were not illegal.

 

 

 

Mobile Faceoff Mid-2015: Samsung vs. Apple

Galaxy S6 phone and iPhone 6 displayed side-by-side

With the top three selling mobile phones in the United States produced by the two companies, it may seem that the rivalry between Samsung and Apple is settling in for the long haul. However, the most recent numbers provide a window into how tumultuous the market is in the highly coveted wireless industry. Apple’s newest launches, the iPhone 6 and iPhone 6 Plus, have enjoyed considerable success, in large part because of changes to the operating system, but more importantly, finally increasing the screen size in an effort to appeal to more business users. Samsung’s most recent launches, the Galaxy S6 and the Galaxy S6 Edge, generated considerable buzz from consumers upon their release, but industry analysts speculate that this interest diminished quickly due to a lack of innovative design in the newest Galaxy models.

Despite having the iPhone 6, the number one selling phone, Apple actually lost ground in overall market presence among smartphone users in the first part of 2015. Around 80% of the American population has a smartphone, of which 31% are running a device that has iOS. Compared to this total, roughly 66% of smartphone users have a device running the Android platform. However, in terms of overall profit, Apple saw significant gains during the first few months of the year. This growth has been, in large part, sustained by foreign interest. A prime example of Apple’s profitability in a year when there are no major upgrades planned for the new iPhone is the company’s request for the production of an additional 92 million units. Most of these are destined to be sold in China, although the size of the request to Apple’s manufactures has led some analysts to speculate that the iPhone 6S and iPhone 6S Plus may have more upgrades than initially planned.

Meanwhile, Samsung is scrambling to address its sales issues. Over the last thirty-six months, the company has seen its wireless profits fall every quarter. Part of the issue with the latest phone launch was related to production trouble for the Galaxy S6 Edge screens. Even worse for Samsung though was the negative publicity generated by poor reviews on social media for the S6. Complaints on Facebook and Twitter highlighted underwhelming battery life, problems with clarity when completing calls, and overall concerns that the phone itself was unreliable. While its main line of wireless phones has not lived up to expectations, Samsung’s specialty phones, particularly the Active branch that is designed to survive screen scratches, exposure to water, and the occasional drop onto the floor from table height, has seen remarkable growth. Until it can address the reliability concerns associated with its flagship phones, Samsung may turn its attention to consumers who are looking for a sturdy mobile device that does not require a bulky, limiting case.

AT&T Expansion and DirecTV Merger

AT&T and Direct TV Logos

In 2014 AT&T and DirecTV announced a merger worth almost $50 billion dollars. While this proposed deal would provide a new way for AT&T to expand its footprint, the process had been stuck in the approval phase for months, although after FCC Chairman Tom Wheeler recommended last week that the deal move ahead, industry experts now believe that it will be approved formally within ten days. It appears that the main sticking point had been ensuring that AT&T adheres to the new FCC rules pertaining to broadband speeds. While this impasse persisted, AT&T was forced to file for two extensions to close the deal, the most recent only a few weeks ago.

When the deal does receive final approval, it will make AT&T the largest TV provider in the nation and will give DirecTV customers access to broadband services. Two recent filings to the FCC detail parts of AT&T’s plan to address the Department of Justice’s concerns that the merger may create a TV and broadband monopoly. The first filling stipulates that lower and middle income families will have access to DSL services, if available, at discounted prices. Upon further review of the filling, however, there are major limitations on this provision. In particular, the program will continue for only four years and for the more remote locations, will only provide speeds of 1.5 Mbps, which is too slow to support streaming services like Hulu Plus or Netflix. This low speed option has caused experts to speculate this is a different tactic in video slowdown and wonder if AT&T will be in full compliance with the Net Neutrality ruling if they do not improve this aspect of their proposal. Prices for this service would range from $5 to $10 per month, while a higher tier with speeds up to 5 Mbps would cost $10 to $20 per month.

The second filing to the FCC also addresses coverage issues, but deals with fiber internet customers. As part of its proposed merger, AT&T has promised that it will extend its 1 Gbps fiber footprint to almost 12 million businesses and homes within the next four years. This announcement comes on the heels of one made in April 2015 that AT&T was looking at nearly 100 cities where they might roll out fiber service, including Chicago, San Francisco, and Atlanta. As mentioned in the new FCC filing, AT&T has now added a new focus on the state of Florida, in particular the cities of Miami and Fort Lauderdale. The company will draw on its recent successful expansion in the state of Texas, particularly around Dallas and Austin, to implement an efficiency plan to bring its GigaPower fiber service to the Sunshine State by the middle of 2016. Whether or not these efforts are enough to alleviate any lingering concerns still held by the Department of Justice should become clear by the middle of August 2015.

 

T-Mobile Expands Offerings as Customer Totals Increase

T-Mobile coverage map showing all of North America

Over the first six months of 2015, T-Mobile has seen an increase in overall customer totals that was higher than industry analysts expected. During the recent release of subscriber figures, during the second quarter of the year the company added over 2 million new customers across pre- and post-paid accounts. This growth brings the company’s customer total to just under 60 million which, despite the increase, maintains T-Mobile as the fourth largest carrier behind Verizon, AT&T, and Sprint. Commentators in the wireless industry believe that this growth will continue throughout the remainder of the year, although long-term forecasts suggest the promotions T-Mobile has used to elevate its presence in the market will not be sustainable.

In an effort to preempt the predictions that it will not be able to sustain its growth beyond this year, T-Mobile has announced the extension of existing promotions and new ones that it hopes will allow the company to enjoy a larger footprint, both domestically and internationally. One of its most ambitious plans was the offer for any Verizon customer to try T-Mobile for two weeks, absolutely free. The latest reports indicate that this plan was successful during the first quarter but has tapered off during the second quarter, although similar programs for AT&T and Sprint transfer customers have not seen any signs of slowing down.

Similarly, T-Mobile has expanded its two most popular data plan packages. These packages both cost $100 per month, but one includes two phone numbers with unlimited LTE data, while the other offers four phone numbers with 2.5 GB of data per line. Having satisfied its customers by providing an unlimited data plan, T-Mobile is now turning its attention to the part of its consumer base that wants to upgrade phones on a frequent basis. With a new program titled Jump on Demand, for a monthly fee of $10, T-Mobile customers will have the option to upgrade their phone three times per twelve months.

As innovative as the program is to allow multiple phone upgrades annually, T-Mobile’s plan to offer coverage throughout North America, including Mexico and Canada, without roaming fees is being heralded as a game changer. In particular, this plan is attracting attention because it will be available to customers sooner than the plan proposed by AT&T months ago, which will offer similar perks. Under T-Mobile’s plan, subscribers will be able to text, call, and use web services, like email and GPS applications, while in Mexico or Canada without incurring any additional fees. The plan will go live by the start of August 2015.

Verizon FiOS Growth and Verizon’s Streaming Video Service

Combined Verizon and AOL logos.

Analysts remain conflicted over the potential growth of Verizon FiOS as 2015 continues. New subscriber projections suggest there will only be around 90,000 additions during the second quarter, which are 25,000 fewer than had been anticipated. To put these totals in perspective, for the same period of time in 2014, FiOS subscribers increased by over 135,000. However, despite these underperforming totals, the expansion of Verizon FiOS, especially in parts of New York, Texas, and New Jersey, is expected to increase substantially over the next eighteenth months.

 

Even if FiOS numbers remain down, one of the reasons that observers are optimistic about Verizon’s financial growth over the long haul is that it plans to release its own video streaming service by September 2015. Over the past few months, Verizon has reached agreements with a number of content providers and is continuing talks with even more. While the initial target is to provide around 25 channels to subscribers, including content from Comedy Central, MTV, Food Network, HGTV, and the Travel Channel, the yet-unnamed service will also include video shorts produced by AwesomenessTV, a subsidiary of DreamWorks. While these offerings will whet the appetite of many consumers, Verizon has made clear that it is especially interested in a younger demographic. As a result of this focus, it has established agreements with ESPN, the ACC Network, CBS Sports, and 120 Sports. Content from these networks will include some NFL, college basketball, and college football games, but broadcast restrictions will apply.

 

Although complete details of the Over the Top (OTT) streaming service have not yet been announced, it is clear that Verizon plans to have an ad-based model, similar to what Hulu Plus does, compared to the pure subscription model used by Netflix. While Hulu Plus has not enjoyed the same subscriber growth as Netflix, Verizon hopes to change this by benefiting from its recent purchase of AOL. Since its days of providing users dial-up internet access, AOL has transformed itself into a leader in online advertising. Survey results produced by the advertising industry have shown that AOL is successful in reaching a target audience more than 55% of the time, a figure that is the envy of all advertisers besides Google. Another aspect tied to the success of the ads on the new Verizon service is that the company hopes users will enjoy the content not only at home, but also on their mobile devices. This means streaming over Verizon’s existing wireless network while consuming a lot of data. However, realizing that the threat of data overage fees may turn off some consumers, Verizon has established an agreement in which the advertisers will help subsidize part of the cost for data used while viewing video content.

 

Time Warner Cable Mergers and Net Neutrality Expectations for Charter

Charter Communications and Time Warner Cable logos combined.

A little over two months ago a proposed merger between Comcast and Time Warner Cable (TWC) was called off. Almost no time passed before Charter Communications entered into an agreement to purchase TWC for roughly $57 billion. As the calendar turns to July, there remains a certain level of uncertainty surrounding the details of this proposed purchase, as well as how the FCC will respond to the bid.

 

Early after its announcement in 2014, the bid by Comcast to purchase TWC was considered a long shot. Claims from within the broadband community, consumer advocate groups, and the public all made it clear that they were concerned with the creation of what would have been the largest TV operator in the United States. Even the Chairman of the FCC, Tom Wheeler, expressed his opposition to the merger. Wheeler’s main point of contention, however, was that if the purchase were allowed to proceed, it would create an unfair competitive advantage for Comcast in the broadband market. In particular, the company would have enjoyed a controlling share of almost 60% among broadband providers. Ultimately it was this near monopoly, coupled with the lack of any penalty fee for ending the agreement, which caused Comcast to back out of the deal.

 

Drawing lessons from the failed deal between Comcast and TWC, Charter has begun to promote how its proposed purchase of TWC will not alter the television or broadband playing field on the national stage. The CEO of Charter, Tom Rutledge, has stressed that even if his company is successful in acquiring TWC and Bright House, the newly expanded company will still be only the second largest provider of cable and high speed internet services behind Comcast. At most, Charter would supply about 20% of all TV customers and 29% of all broadband customers. Another issue that Charter does not need to address is that unlike Comcast, which has a financial interest in Hulu, there is no concern that Charter may regulate speeds for video streaming services, such as Netflix or Amazon Prime.

 

Charter is also drawing on the FCC ruling which made broadband a Title II utility as a reason for why its proposed merger should be approved. Rutledge made clear that the footprint of the expanded company would not overlap geographically and that there would remain competition for broadband services offering 25 Mbps in all of its coverage areas. Additionally, he stated that since the majority of the company’s investment is in broadband, not television, it would encourage the expansion of Over the Top (OTT) streaming video services and not impose any sort of data cap on customers. Indeed, subscribers with the new Charter, if the merger is approved, could see significant savings on their broadband subscriptions as their speeds are tripled while their monthly bill is lowered.

 

While the merger works its way through regulatory checks, industry analysts appear confident that the deal will occur. The latest suggestions are that there is a 75% chance that the deal is approved. The FCC has announced that they hope to have this process decided, in favor or opposition of the merger, by the end of 2015.

 

Confirmed and Potential Changes to Sports Bundles and Television Providers

Logos for MLB, the NBA, the NFL, and the NHL.

Continuing the trend of breaking apart cable packages, the NBA announced after the 2015 NBA Finals that beginning next season they will be making changes to their League Pass. In existence since 1994, the League Pass for the 2014-2015 season cost $200 and provided subscribers access to over 1,000 games that were not already available on a local sports network in the region. This plan was offered through TV providers and directly from the NBA via their own online video platform designed for iOS, Android, and desktop computers.

 

The changes in the NBA League Pass bundling will allow subscribers to purchase season-long access for a single team or purchase access to individual games. Although the official pricing tiers will not be released until July 2015, industry experts expect that following a single team for the season will range in cost from $50 to $100, while individual game prices will be in the $2 to $5 range. The latest speculation is that the prices for these tiers will be consistent across markets and teams, regardless of their size or popularity. However, the one restriction will be that this unbundled package will only be offered through the NBA’s video platform, rather than through the television providers. In light of this announcement, there have been discussions to resolve some areas of concern between the NBA and their broadcast partners, including ESPN, Turner Networks, and regional sports networks, such as the Los Angeles Lakers’ SportsNet.

 

While analysts praise the NBA for making this decision, and stress the new growth this move is bound to bring to Commissioner Adam Silver’s league, the NBA is bucking the trend of the other professional sports leagues in how they offer their products. MLB and the NHL also have sports packages, while the most famous, and controversial one, is the NFL’s Sunday Ticket Package, which has also been in existence since 1994. Offered exclusively through DirecTV, a lawsuit was filed recently claiming that the NFL’s package structure and use of blackouts are in violation of federal law and need to be overturned. While this lawsuit is just beginning, a recent development in a case involving NHL blackouts and bundled packages may ultimately impact the case against the NFL. The settlement in the NHL case means that for the next five years fans will be able to purchase a package online, known as Game Center Live, that allows them to follow a single team at prices more than 20% below the current cost of bundled packages. Legal experts expect the lawsuit against MLB to be resolved in the same way. All of this suggests that while television providers may be unhappy with the NBA’s voluntary decision to provide a non-bundled package, it may spare the NBA costly legal battles in the future.