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News summary for 5/11/07

Fri, 05/11/2007 - 8:50am

CLECs alarmed by threat of ILEC copper retirement
By Brian Santo, CED

The Office of Advocacy of the U.S. Small Business Administration has asked the FCC to open a rulemaking on the way incumbent local exchange carriers (ILECs) retire their copper infrastructure. The move may help competitive carriers (CLECs) who lease those lines.

ILECs don’t rip out their copper when they install fiber. The procedure, as they install more and more fiber, is to send a copper retirement petition to the FCC. These are granted in as few as seven business days. Once approved, the ILECs no longer have to support those lines, although apparently, they typically still do.

CLECs who may be using those lines (or who had planned to) remain concerned, however, that the ILECs could entirely shut down their retired copper loops. Recall, too, that the FCC has determined that ILECs do not have to lease fiber loops to CLECs.

In essence, the CLECs see a threat that as ILECs are increasing their potential fiber markets, they could simultaneously shrink the CLECs’ potential markets. Meanwhile, the pace at which the ILECs file petitions for copper retirement is accelerating as the pace of their fiber installations increases.

As a practical matter, the ILEC of most concern is Verizon, since it is running fiber to the home for FiOS, while AT&T  continues to rely on copper for U-verse. Qwest has yet to announce how it will proceed with its network upgrade.

XO Communications is one of the CLECs who asked the Office of Advocacy to ask the FCC to review this process in light of the possible harm to CLECs, and consider establishing new rules that may better protect the CLECs’ business.

The Office of Advocacy has sent a letter with that request to FCC Chairman Kevin Martin. In it, the Office asserts that CLECs are developing competitive new services that ultimately benefit consumers. A rulemaking, the Office said, will give these companies a formal venue for discussing the issue.

Comcast prevails in court; Can put NFL Network on sports tier
By Brian Santo, CED

A Manhattan Supreme Court justice ruled that Comcast can place the NFL Network within a premium sports tier.

The decision reasserts the right of an MSO to bundle channels in the way that makes the most sense for the operator. Putting the NFL Network within a premium sports tier would encourage football fans to sign up for an additional service for an additional fee of $5 a month.

The NFL, meanwhile, loses its chance for the widest possible audience for its network. The league sued Comcast last year when Comcast tried to put the NFL Network on a sports tier. The NFL intends to appeal the ruling.

The ruling was actually narrow, concerning only Comcast and the NFL Network. The judge found that Comcast’s right to move the NFL Network to a digital tier was – as Comcast argued – a logical and legal consequence of contracts the two had previously signed.

Joost receives round of funding from five investors
By Traci Patterson, CED

Joost, a broadcast-quality Internet TV service, said five parties have collectively invested approximately $45 million in the company, with each investing in a minority percentage.

Index Ventures led the round of funding with Sequoia Capital. Other investors are CBS Corp. and Viacom, which provide channels and programming on Joost, and the Li Ka Shing Foundation.

“Joost allows content owners to reach audiences of any size at any time, where the viewer can ‘lean back’ to enjoy an immersive yet interactive video experience,” said Roelof Botha, general partner at Sequoia. “At the same time, Joost enables brand marketers to efficiently deliver precisely targeted and measurable advertisements. This ability poises the company to expand the video distribution business and capture an enormous market opportunity.”

The funding will enable Joost to accelerate product development, global expansion, localization and service offerings, the company said.

Joost was founded in January 2006 by Janus Friis and Niklas Zennström, the two guys behind Skype. The free service is powered by an Internet platform that enables interactive, ad-supported video while providing copyright protection for content owners and creators.

English survey: Not much Internet VOD action
By Traci Patterson, CED

A survey conducted by CacheLogic reveals that most adults in England do not watch Internet movies and TV shows on-demand. Of the more than 2,400 respondents, only 15 percent of Internet users had downloaded a full-length TV program, and only 14 percent an entire movie.

The most common responses, when asked, “What would need to be addressed for you to view or download more?” were “speed of download” and “reliability.” When asked to imagine a VOD service that worked quickly and easily, 65 percent of respondents said they would be “fairly interested” or “very interested” in using it, and just 13 percent were “not at all interested,” the company said.

“These results challenge conventional wisdom that widespread consumer acceptance of video-on-demand is dependent on seamless integration into living room TV sets,” said CacheLogic’s CTO Andrew Parker. “Consumers are clearly ready to use their PCs to watch TV shows and movies. We just need to provide the content quickly and efficiently.”

The company recently launched a global content delivery network (CDN) for the distribution of DVD-size files over the Internet.

Broadband Briefs for 5/11/07

* EchoStar adds 300,000+ subs in Q1
EchoStar Communications Corp.’s DISH Network added about 310,000 net subs in Q1 2007, ending the quarter with more than 13.4 million subs.

Net income totaled $157 million for the quarter, up $10 million year-on-year. The company’s total revenue was $2.64 billion for the quarter, a 15 percent increase compared with $2.3 billion in Q1 2006.

* Despite Verizon battle, Vonage adds subs, ups revenue
Vonage Holdings Corp. added approximately 166,000 net subscriber lines in Q1 2007, finishing the quarter with nearly 2.4 million lines in service.

Revenue increased to $196 million, a 64 percent increase year-on-year. Adjusted loss from operations was down 20 percent to $58 million, compared with $73 million in the year-ago quarter. The company’s net loss narrowed to $72 million, down from $85 million in Q1 2006.

* ADB supplying Polish MSO with iTV STBs
Advanced Digital Broadcast (ADB), a supplier of digital TV systems and software solutions for iTV, has reached an agreement with Polish MSO Multimedia Polska to supply advanced HD digital cable STBs. The MSO has about 575,000 subs.

ADB will provide its ADB-5800C interactive cable STB, enabling Multimedia to expand its broadband TV service into new areas, such as HDTV, VOD and IPTV. The ADB-5800C incorporates standard SD and HDTV reception utilizing MPEG-2 and H.264/MPEG-4 advanced video coding (AVC).

* Shaw Communications executing 2-for-1 stock split
Shaw Communications Inc. plans to implement a two-for-one stock split of its issued and outstanding Class A participating shares and Class B non-voting participating shares.

Shaw’s board of directors has already approved the stock split, and now the company’s shareholders must approve it at a July 10 meeting. It is subject to regulatory approval and the filing of articles of amendment. If the shareholders approve it, the effective date of the stock split is expected to be July 30.

* Streaming21 launches Tokyo subsidiary
Streaming21 has established a wholly-owned subsidiary in Tokyo, Streaming21 K.K., that will provide local engineering, project management and sales support to the company’s customers in Japan.

Streaming21 has appointed Mike Chiang, VP of Business Development of Streaming21, as the acting general manager of Streaming21 K.K.

The company's streaming IPTV system has been deployed by NTT Communications, NEO Index, Vic Tokai, Enterwave and Tepco in Japan; KT (Korea Telecom) in South Korea; and Chunghwa Telecom in Taiwan.

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