News summary for 8/02/07

Thu, 08/02/2007 - 10:10am

Sprint Nextel bails out of cable JV
By Traci Patterson

Sprint Nextel has opted out of its spectrum-bidding JV - dubbed SpectrumCo - with cable operators Comcast, Time Warner Cable, Cox Communications and Bright House Networks (Advance/Newhouse).

Each JV partner has the right to exit the JV under certain conditions, according to the 10Q TWC filed with the SEC on Wednesday. Sprint gave notice that it would exit about two months ago. TWC said it will contribute about $30 million in Q3.

TWC’s CEO Glenn Britt, during the company’s earnings call, stressed that the pullout will not affect Pivot, the integrated wireline and wireless service offered by the cable partners that is currently being rolled out.

Sprint was a non-voting, minority shareholder and owned about 5 percent of the company. It is unlikely that Sprint will bid in the upcoming 700 MHz spectrum auction.

SpectrumCo was the winning bidder for 137 wireless spectrum licenses in the FCC’s wireless auction last fall, spending $2.37 billion. Publicized contributions to the JV were Comcast with $1.29 billion, TWC with $632.2 million and Cox with $248.3 million. 

Widevine, Verimatrix in patent dispute 
By Traci Patterson

Widevine Technologies Inc. has filed a patent infringement lawsuit against Verimatrix, for unspecified damages. The suit follows Widevine’s attempt to openly license its intellectual property to Verimatrix.

Widevine’s 7,165,175 patent describes and claims methods and systems for selectively encrypting different portions of data sent over a network, the company said. Widevine claims that Verimatrix’s content security solutions, such as the Verimatrix Content Authority System (VCAS), infringe on this patent. The VCAS solutions - which have been sold throughout the world - practice Widevine’s patent.

Widevine claimed that Verimatrix has “willfully infringed and continues to willfully infringe Widevine’s patent rights.” Verimatrix has not responded to Widevine’s offer to openly license the patent, Widevine said.

Widevine’s intellectual property in the content protection market includes a portfolio of eight issued patents and about 45 pending patents - both domestic and international.

The suit was filed in the U.S. District Court for the Eastern District of Texas.

Charter’s second-quarter revenues climb by 8.4 percent
By Mike Robuck

Spurred on by growth from its high-speed data and telephone services, Charter Communications’ Q2 revenues grew 8.4 percent.

Second-quarter revenues this year were $1.5 billion, compared with $1.4 billion in the year-ago quarter. And Charter’s high-speed Internet revenues increased by 19 percent, or $48 million, to $310 million. The company added approximately 60,300 new data subscribers, which was a 16 percent increase year-on-year.

On the telephony side, Charter’s phone business was up $51 million, which represented a 176 percent increase. Charter has a total of 700,300 phone customers, compared with 257,000 in Q2 2006. The company expects its telephone service to reach between 9.5 million and 10 million homes passed by the end of next year.

Charter’s video revenues were up less than 1 percent, to $859 million from $853 million a year ago. Digital video penetration increased by 7,600, compared with 23,800 additions in the year-ago quarter. Charter’s analog video customers dropped by 29,300, close to the same net last year.

The company narrowed its net loss to $360 million, compared with a loss of $382 million a year ago. As of June 30, Charter had about 5.58 million customers, $19.6 billion in long-term debt and $81 million of cash on hand.

Sprint Nextel buys out affiliate Northern PCS 
By Mike Robuck

Sprint Nextel wrapped up its $312.5 million acquisition of Northern PCS Services, which was a former affiliate of Sprint Nextel.

Northern PCS, based in Waite Park, Minn., provided Sprint PCS services in certain small- to mid-size markets in Minnesota, North Dakota, Wisconsin and Iowa.

As a result of the acquisition, Sprint Nextel obtained more than 167,000 direct wireless subscribers and more than 69,000 reseller subscribers in a coverage area of more than 1.8 million people.

Northern PCS’ 240 or so employees will now become employees of Sprint Nextel. Northern PCS had revenues for the 12 months ended Dec. 31, 2006 of $130 million.

The buyout by Sprint also resolved litigation matters that were pending between the two companies.

Study says more customers considering bundle from telecoms 
By Mike Robuck
A new study released by the CFI Group said that more consumers would consider bundled services from telecom companies than the ones offered by cable operators.

The CFI Group’s “Telecom-Cable Industry Report” said that the higher customer satisfaction with telecom companies gives telecoms an advantage over cable companies as they battle for subscribers in a converged marketplace.

The study, which examined customer satisfaction for video, broadband Internet access and wireless communications, found that cable companies lag telecom companies in customer satisfaction - in all areas where they offer competing services.

Telecoms have partnered with satellite TV companies, which have superior customer satisfaction to cable. On the other hand, cable companies have aligned themselves with wireless carriers that have the worst customer satisfaction scores, as measured by the University of Michigan’s American Customer Satisfaction Index (ACSI).

“For many customers, it’s a choice between the lesser of two evils, but our research suggests that telecom has an opportunity to take advantage of its relatively superior customer satisfaction,” said Phil Doriot, program director for CFI Group. “That’s not to say that cable companies are out of the game. They’re just not accustomed to this kind of competition and have a lot of work to do if they want to keep customers from defecting.”

TWC considering Insight investment
By Traci Patterson

Time Warner Cable’s CFO said the MSO is considering an investment in Louisville cable TV provider Insight Communications, according to The Courier-Journal.

“We’re exercising our usual disciplined approach to evaluating strategic opportunities of this sort,” CFO John Martin said during an earnings conference call. “Beyond that … it would obviously be inappropriate for us to make any further comments” until the matter is resolved.

In April, Insight and Comcast Corp. reached an agreement on their JV. Insight retained systems in southern Indiana, Kentucky and Ohio, while Comcast took over systems in Illinois and central Indiana.

AT&T spending $350M on N.C. upgrade
By Traci Patterson

AT&T Inc. will invest approximately $350 million in the next several years toward fiber network upgrades, further broadband deployment and Internet-based technologies for the company’s North Carolina consumers.

Last year, North Carolina passed the Video Service Competition Act. Companies now must obtain a state-issued franchise rather than negotiate with individual municipalities.

AT&T's infrastructure and investment will include its U-verse service, a 100 percent IP-based TV offering.

AT&T is also in the process of implementing U-verse in the Southeast region of the U.S. and plans to provide a comprehensive update later this year.

HBO gears up for HD with equipment from Thomson
By Mike Robuck

HBO is following up on its goal of offering all 26 channels in HD next year by purchasing $5 million worth of equipment from Thomson.

HBO has ordered Grass Valley HD cameras, servers and routers from Thomson. The Grass Valley cameras will be used in HBO’s digital production facility in New York City, while the servers and routers will be installed in HBO’s main playout facility in Hauppauge, N.Y.

HBO has already begun its migration from Grass Valley Profile XP Media Platform servers to the latest-generation K2 Media Server and Media Client systems from Thomson. The cable network expects to complete the process by the end of the year.

Broadband Briefs for 8/02/07

* Time Warner, IBM enter patent cross-license deal
By Traci Patterson

Time Warner Inc. and IBM have entered into a long-term patent cross-license agreement. Financial terms were not disclosed. The length of the agreement was also not disclosed.

IBM has earned the most U.S. patents for the last 14 years and is the world's largest holder of U.S. patents, the company said.

* Telecom industry groups join for convergence
By Traci Patterson

The Home Gateway Initiative (HGI) and the Fixed Mobile Convergence Alliance (FMCA) have entered into a cooperation agreement, a move toward the widespread availability of fully interoperable home gateways, access points and devices. Together, the companies represent 36 telecom operators and more than 1 billion customers worldwide.
"This agreement is a great step toward hastening the delivery of converged services to customers around the world," said Rodrigo Donazzolo, FMCA’s program director.

* Comcast opens new Wash. HQ, adds Filipino VOD channel
By Traci Patterson

Comcast has opened a new $20 million call center and state headquarters in Washington State. The Lynnwood call center is one of three that Comcast operates in Washington; the other two are in Everett and Fife.

Comcast has also added Filipino on-Demand to its service. The subscription-VOD (SVOD) service will feature 25 hours of content, with new programming available regularly.

* Verizon’s FiOS headed to Westborough, Mass.
By Mike Robuck

The board of selectmen in Westborough, Mass., approved an agreement to allow Verizon to start selling its FiOS TV service to a footprint of 6,000 households in the area.

Verizon didn’t say in its press release when the service would be available in Westborough, but it has agreements in place with 53 communities in Massachusetts, with negotiations continuing with an additional 15 communities.



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