Broadband Cable Association of Pennsylvania

NewsClips

May 10, 2013

Cambria County commissioners hope to get the county out of the wireless Internet provider business by dropping the Cambria Connected service. About 600 business and residential customers use the system, but the network has seen diminishing returns for the county, commissioners said. The wireless system was expected to net the county about $600,000 a year, said Steve Ettien, county director of technology. But the actual annual returns have been about $500,000 short of that estimate, President Commissioner Douglas Lengenfelder said. Customers will not see their wireless broadband access disappear overnight.

Ettien said commissioners will need to vote during their May 23 meeting to eliminate the Cambria Connected wireless Internet network. Customers would have to be notified about 90 days prior to the service shutoff, Ettien said. Two ISPs, In The Stix and SkyPacket, will continue to offer wireless broadband Internet access plans for customers and businesses. The updated county 911 system will not be affected by the loss of wireless Internet for business and residential customers.

The resolution approved Thursday will restructure existing funds and accounts from the Cambria Connected wireless Internet program and simplify the accounting and operating services of the overall Cambria County Network, which includes the wireless Internet and county 911 systems, Ettien said. All debts and other expenses of the Cambria Connected wireless network will be absorbed by the Cambria County Network as part of the restructuring, Lengenfelder said. The next commissioners meeting is scheduled for 7 p.m. May 23 at Northern Cambria High School. Altoona Mirror

Faced with rising programming costs, pay-TV providers are getting pickier about the customers they want to keep. Quarterly results from Dish Network Corp. Thursday, as well as Comcast Corp., Charter Communications and DirecTV in the past week or so, show that pay-TV companies are focusing more on holding on to the subscribers that generate the most revenue and profit, even if that means letting less-valuable customers fall to the wayside. Each of the companies reported higher video revenue, thanks in part to rate increases, despite lower subscriber numbers. Dish, for instance, reported a 65% drop in video-subscriber additions in the first quarter, acquiring 36,000 new customers compared with 104,000 a year earlier. However, the operator's subscriber-related revenue increased 4% to $3.4 billion, driven primarily by a rate increase for cable packages implemented in February, as well as higher fees for equipment.

Dish executives told analysts on a conference call Thursday that the company expects to see higher monthly revenue from customers who have its new Hopper digital video recorder and that these customers tend to buy more services and additional packages. Dish appears to be "moving toward a higher-quality subscriber strategy," said ISI Group LLC analyst Vijay Jayant in a research note. The results highlight a reality of pay TV today: With the market saturated, providers have to rely on raising prices or selling extra services to increase revenue. And given steadily rising programming costs-levied on a per-subscriber basis-lower-end video customers who aren't taking such services as digital video recorders and broadband are less attractive to retain.

Comcast and Charter had higher rates of subscriber losses but increased video revenue. A big chunk of the subscribers disconnecting from both companies were people who only subscribed to video rather than to "triple play" packages of video, broadband and phone. Charter said earlier this week that most of its video-subscriber loss of 24,000 came from "single play" subscribers who were receiving cheaper analog video, an old video-transmission technology that Charter has stopped marketing. The company said the decision was made in part to free up bandwidth for more advanced video services and faster Internet speeds. One byproduct of chasing higher-value customers, executives say, has been to drive some video subscribers to disconnect entirely. That is feeding the cord-cutting phenomenon still debated throughout the entertainment industry. "We probably lose a little market share to cord cutters...who can't afford $80 a month any more," said Dish Chairman Charlie Ergen on an earnings conference call Thursday. "They put up...an antenna and go to Netflix and pay $7.99, and they get enough TV" for their budget.

Some cable operators say that most of the video-only subscribers who are disconnecting are going to satellite firms. But UBS analyst John Hodulik said perhaps "nobody is getting the cost-sensitive customers."

Google Inc.'s YouTube video service on Thursday unveiled its long-awaited paid-subscription channels, which allow some video creators to charge viewers a monthly fee to watch certain content. The channels represent a potential new revenue stream for YouTube and its thousands of content partners, and plans for them already have helped to draw some new video makers to the site. They include the producers of Sesame Street and Ultimate Fighting Championship, both of whom wanted a subscription model for their videos, rather than relying on revenue from advertising that is sold largely by YouTube.

Malik Ducard, head of content partnerships at YouTube, said in a conference call with reporters that YouTube viewers will be able to pay for access to the special channels by using their credit card. He said the channel creators will get to keep more than 50% of the revenue while YouTube keeps the rest, similar to the arrangements that exist for sharing the site's ad revenues. Mr. Ducard said 30 video creators who are participating in a pilot program to launch 50 paid subscription channels-including the producers of the National Geographic TV channel and Hollywood production company Magnolia Pictures-will charge an average of $2.99 a month. The channels will charge a minimum of 99 cents a month. He said other "qualified" YouTube video creators will be able to start such channels in the coming weeks, adding that some creators will charge for live content, rather than just on-demand programming. More than a million YouTube channels currently generate ad revenue, and more than a billion users visit the site per month, Mr. Ducard said.

Despite the rise of Web video, revenue growth from the business has been slower than many in the industry expected, because advertisers have been resistant to shifting broadcast-TV ad dollars online. As a result, YouTube has changed some of its policies to help video creators generate more revenue from their videos, both on and off the site. The new subscription channels don't come as a surprise. YouTube executives have long discussed creating such channels on the site, including at an event for advertisers in Los Angeles earlier this year. It isn't clear whether YouTube viewers who have gotten used to free content will choose to pay for special channels. Paid subscription services offered by video-streaming sites Netflix Inc. and Hulu LLC have shown that such services can be viable.

Some analysts said YouTube's prices might be too high. The company's new paid channels make Netflix's $7.99-a-month subscription price for thousands of movies and TV shows look "amazing" by comparison, said Rich Greenfield, a media analyst at BTIG Research. YouTube already generates some revenue from offering movie rentals or purchases that can cost between $1.99 and $14.99, but industry observers say that part of YouTube doesn't appear to be a big hit. In a bid to attract more advertising dollars and shift advertiser budgets away from TV, YouTube spent hundreds of millions of dollars in recent years to provide cash advances to video producers around the world to create high-quality, original content for YouTube. In the U.S., YouTube made payments to firms involving celebrities such as rapper Jay-Z, Hollywood director Jon Avnet, companies such as BermanBraun LLC and IAC/InterActiveCorp .'s Electus, which also create shows for NBC and cable-TV channels.

Some YouTube channel creators, such as Jason Liebman, who runs a how-to channel called Howcast, said they are considering trying a paid-subscription channel. Others are more skeptical. RJ Williams, who runs the celebrity-themed Young Hollywood channel on YouTube and doesn't plan to launch a paid-subscription channel, said that while he applauds the move to allow new business models, and that it might work for live events, "it will be challenging in the beginning" because a large chunk of YouTube viewers are teenagers who would be unlikely to pay. Hank Green, who for years has run YouTube educational channels on topics including science, says he has generates more revenue from selling shirts related to his programs than from ad revenue. He said that "online video, when it comes down to it, is about sharing, and you can't share something behind a paywall. That's hugely limiting."

Is state Sen. Mike Stack of Philadelphia blowing a political dog whistle to question the viability of U.S. Rep. Allyson Schwartz in the 2014 Democratic primary for governor? Stack, who tells us he is a few weeks to a month out from deciding whether to enter that race, sent a letter two weeks ago to ward leaders, union leaders and elected officials in Philly. Stack, while pitching himself as an ideal candidate, said the party should nominate someone "free of any baggage that would make them unappealing to voters in broad areas of the state."

Was that a reference to Schwartz, who helped found and run a health-care clinic in Philly that performed abortions? "As I've gone across the state, and I've been out there extensively, some folks in other parts of the state are bringing that up," Stack said. "I have not done anything to bring it up or tried to inflame it." Schwartz's campaign declined to comment on Stack's letter. Stack won his Senate seat in 2000 with significant help from former state Sen. Vince Fumo, who is due to be released from federal prison in February after serving time on corruption charges. Philadelphia Daily News

Links