Telecom technology and industry convergence is disrupting business models and regulation, speakers said Thursday at an annual event at Hogan Lovells. Competition policy has become harder due to the hazier definitions of markets, said NERA Economic Consulting Managing Director Chris Dippon. Along with new opportunities, convergence "destroys old business models," Verizon Associate General Counsel Robert Griffen said.
Dish Network is confident of meeting its March 2020 deadline for rolling out a 5G-centric narrowband (NB) IoT network, and is talking with chipset makers and tower owners with hopes of deals in coming months, executives told an earnings call Thursday. They expect to have radios using its AWS-4 and lower 700 MHz E-block spectrum holdings next year, being deployed shortly thereafter.
Time Warner stock closed down 6.5 percent to $88.50 Wednesday after reports (here and here) DOJ was pushing for divestiture of Turner Networks or of DirecTV as conditions on AT&T's proposed $108.7 billion buy of the programmer. AT&T Chief Financial Officer John Stephens told investors it's in active discussions with Justice, but "timing of the closing of the deal is now uncertain." Separately in a statement, CEO Randall Stephenson said that throughout DOJ's review of the deal, "I have never offered to sell CNN and have no intention of doing so.” Turner's assets include CNN. AT&T had expected to close on TW by year's end (see 1711020051). Free Press said it continues to oppose AT&T/TW on media consolidation grounds, and forcing divestiture of content properties such as Turner distribution properties or DirecTV could soften those consolidation harms, but department opposition is problematic if it's based on President Donald Trump's antipathy to CNN coverage: "Everyone should agree that the government shouldn’t base antitrust decisions or FCC rulings on whether it likes a newsroom’s coverage." As a candidate for president, Trump said he opposed AT&T/TW (see 1610220002). If Justice has a problem with a vertical merger like AT&T/TW, the possibility of horizontal mergers in the sector seems "substantially lower" than previously thought, meaning a Disney move for Fox wouldn't pass muster, let alone Comcast buying Charter or any further content assets, BTIG analyst Rich Greenfield emailed investors Wednesday. He raised the specter of Comcast having to sell its NBC or Hulu ownership after the Comcast/NBCUniversal consent decree ends, saying if AT&T/TW is problematic for DOJ, "how is the former okay?" DOJ in a statement said it's "committed to carrying out its duties in accordance with the laws and the facts." Wells Fargo analyst Marci Ryvicker, in an email to investors, said there are no potential buyers for DirecTV, but CNN could command $8 billion to $10 billion and be a strategic fit with CBS. She also said while there's now "a really uncertain spell on M&A in general," Discovery/Scripps Network and Sinclair/Tribune are likely not at risk.
Grandfathered Earth stations and population caps are emerging as key issues for satellite operators as they push for changes in the FCC spectrum frontiers 2.0 draft. General satellite industry sentiment is that the latest draft (see 1710270030) is better for the industry than the original spectrum frontiers order, satellite insiders and officials told us. One big improvement was preserving 4 MHz of high-band spectrum for satellite use in the 48.2-50.2 GHz and 40-42 GHz bands, though not every company feels that's sufficient, said a satellite executive.
Cable experts and insiders see retransmission consent negotiating advantage swinging further toward broadcasters if the FCC revises its local TV ownership rule to allow top-four station consolidation, with that increased leverage leading to higher retrans fee costs. Dual station ownership could be "a real challenge for us," said TDS Telecom Vice President-External Affairs and Communications Drew Petersen. Meanwhile, many say the FCC's proposed case-by-case review of top-four combinations raises unanswered questions.
During the first weeks of Ajit Pai’s tenure as FCC chairman he was particularly active in meeting with the media and with lawmakers, according to a Special Report analysis of his appointment calendar obtained through a Freedom of Information Act request. Pai, like predecessor Tom Wheeler, also had many meetings in those early weeks with telco and media interests, with Pai early on more active gathering with public interest groups.
Puerto Rico fixed wireless and fiber ISP AeroNet expects to have service 100 percent restored by early January, President Gino Villarini emailed us Friday. He said the company began re-establishing infrastructure immediately after Hurricane Maria and expects to be 90 percent restored by early December. He said damage was mostly broken antennas, wear damage, and damaged and cut fiber, plus 15 collocated towers fell down. Restoration will cost more than $3 million, he said. Communications network recovery in Puerto Rico has been hampered by lack of electricity (see 1711010012). Villarini said minus the power outage, about 70 percent of its customers would have service Monday, but actually about 50 percent do. He said that for the first four weeks after the hurricane, recovery efforts also were hampered by employee issues. "We had a lot of issues without housing, food and gas," he said, with employees staying at AeroNet facilities and the company providing meals and gas. He said the FCC expedited a company request for special temporary authority to operate backhaul radios in the 5.9 GHz band, with approval in about two days. As of Monday, 48 of 78 counties had more than 50 percent of their cellsites out of service, down from 49 the previous day, according to the FCC's latest Maria status report. It said 47.8 percent of cellsites in Puerto Rico and 38 percent of cellsites in the U.S. Virgin Islands were out. It said two Puerto Rico TV stations and 61 AM and FM radio stations are confirmed or suspected to be off-air.
The FCC's consideration of axing Form 325 reporting requirements for cable operators (see 1710260049) is being met with welcome relief, cable interests tell us, with some seeing as likely a 5-0 vote on the NPRM. With the form "outdated and duplicative" given the multiple forms and schedules video providers have to share with the FCC, its elimination is "low-hanging regulatory reform fruit, so to speak," TDS Vice President-External Affairs Drew Petersen told us. The NPRM on November's agenda asks for comments on whether to eliminate or alternately streamline the annual reporting requirement. The form -- filed by all operators with more than 20,000 subscribers and a random sampling of smaller operators -- has been an annual requirement since 1971, it said. It asks about such issues as numbers of subscribers, network structure, systemwide capacity and programming. The FCC said if it opts to keep the form, it would like input on modernizing it. Form 325 isn't a popular item with MVPDs. NCTA in the media modernization proceeding earlier this year (see 1707060060) said cable operators “devote many hours to completion” each year, even though much of the information is available from other sources, even as online video distributors and non-cable MVPDs don’t have similar filing requirements. One cable company executive said the form is significantly burdensome, but couldn't say how it compares to other reporting requirements. Petersen said as far as regulatory compliance burdens go, public inspection files "are more impactful" due to what needs to be kept and consistently updated, particularly given the utilization rate of those files being "pretty low." A cable official said with the industry also pushing to be allowed more use of electronic notification to customers instead of paper, there's hope that idea might come back around as Chairman Ajit Pai's FCC works through its regulatory modernization and streamlining efforts. The agency in June issued a declaratory ruling allowing cable operators to email annual notices to customers (see 1706190074).
Arguing that Sinclair still hasn't articulated a case for why its proposed $6.6 billion Tribune purchase is in the public interest, an array of industry groups, programmers and state attorneys general pushed against FCC approval or called for conditions. The docket 17-179 comments were in response to Sinclair's Oct. 5 replies to an agency information request (see 1710060055). The FCC's 180-day unofficial "shot clock" of the merger review remained paused Friday at 104 and the agency didn't say when it might restart.
AT&T remains confident it will close on Time Warner by year's end, despite word DOJ is considering challenging the deal, analysts said Thursday. That close could come by month's end, analyst David Barden of Bank of America emailed investors Thursday. The Wall Street Journal that day reported the agency is discussing possible settlement terms. BOA said it's standard for the agency to work along multiple fronts for merger reviews. BOA said new DOJ antitrust chief Makan Delrahim is positioning himself to have the last word on any conditions, and the company expects any conditions to be reasonable. It said the time Delrahim is taking has to do with coming up to speed on the takeover rather than with material issues. Wells Fargo's Jennifer Fritzsche emailed investors the issue might be more about Justice increasing leverage in negotiating conditions than a serious intent to block the deal, saying the DOJ would face an "uphill battle" in court trying to block the vertical merger. If the department does push back, that might indicate horizontal mergers -- like Sprint/T-Mobile -- might not fly with the administration, Wells Fargo said. DOJ didn't comment. AT&T said when the agency reviews any transaction, "it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception." Time Warner closed down 3.8 percent to $94.70. BOA said AT&T Senior Executive Vice President-External and Legislative Affairs Bob Quinn indicated this week DOJ wouldn't likely approve consolidation of two national wireless carriers without creation of a fourth facilities-based player, since that would likely face political and career antitrust staff opposition. BOA said an MVNO-based cable provider also wouldn't fit that bill of a facilities-based operator. AT&T didn't comment on that.