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Frontier May Pull FiOS TV Plug in Oregon

An independent telco's move to possibly exit the pay-TV business two years after buying a bunch of Verizon Communications Inc. (NYSE: VZ) assets leads today's cable news roundup.

  • Frontier Communications Corp. (NYSE: FTR) has hiked the cost of new FiOS TV installs from $79 to a whopping $500 (spread out over three months) after notifying four Oregon cities that it's opting out of its franchise deals and may stop offering FiOS TV services there. But Frontier, which took over other Verizon properties in the Western U.S. last year, told The Seattle Times that it's too early to assume that Frontier will eventually unplug FiOS TV in markets beyond Dundee, McMinnville, Newberg and Wilsonville, Ore. (See Frontier to Buy Verizon Assets .)

  • That over-the-top video distribution deal Starz Entertainment LLC has with Netflix Inc. (Nasdaq: NFLX) didn’t prevent it from adding 800,000 cable and satellite subscribers in the fourth quarter.

  • In some of the first job cuts resulting from its acquisition of NBCUniversal LLC , Comcast Corp. (Nasdaq: CMCSA, CMCSK) is shifting some network programming operations from the Comcast Media Center (CMC) in Denver to an NBCU facility in Englewood Cliffs, N.J. The decision could result in "dozens" of layoffs at the CMC, reports The Denver Post. (See Comcast, NBCU Seal the Deal .)

  • No shortage of stories about the ad business today as the American Association for Advertising Agencies holds its confab in Austin, Texas. This includes a look at targeted advertising efforts at Cablevision Systems Corp. (NYSE: CVC), Comcast, DirecTV Group Inc. (NYSE: DTV) and TiVo Inc. (Nasdaq: TIVO). (See Cable Execs Defend Advanced Ad Efforts.)

  • Cross-MSO advanced ad J.V. Canoe Ventures LLC signed software vendor Donovan Data Systems to help with its rollout of interactive TV ads on several cable-run networks. (See Startup Seeks Open-Source VoD Ad-Vantage, Cable ITV: Is It a Real Business Yet? and Canoe Boots Up Interactive Ad Campaign .)

  • Here's a good primer on multiple efforts to come up with a single-source rating for cross-platform content distribution. (See CIMM to Test 'Three Screen' Measurement Tools.)

    — Steve Donohue, Special to Light Reading Cable

  • Jeff Baumgartner 12/5/2012 | 5:10:54 PM
    re: Frontier May Pull FiOS TV Plug in Oregon

    Well, that kind of fee all but assures Frontier that it won't have to worry about any new customers signing up for TV service. 


     Also interesting to read that they are pinning part of the blame on high programming costs.  This is a surprise?  I thought that was the kind of thing an organization like the NCTC can help out with, and give smaller operators a way to get volume pricing on programming and other gear.  Granted Frontier can't get the deal VZ gets for FiOS TV, but NCTC has helped out many an operator that isn't even close to the size of Frontier.


    But the news that now has an option to pull out has some people wondering if Frontier meant to follow through on its franchise commitmments from the beginning.


    Frontier countered in The Oregonian that the company didn't realize or understand the costs of running a cable TV business.  How was that not vetted when Frontier was pursuing this multi-billion deal in the first place?  JB


     


     


     

    paolo.franzoi 12/5/2012 | 5:10:54 PM
    re: Frontier May Pull FiOS TV Plug in Oregon

     


    Jeff,



    I actually think it is a secret to most of your readers who are not in the cable space too directly.  They make an assumption that a High ARPU product like cable (compared to POTS) is not a commodity.  They do not realize the cost of acquiring content.


    Frontier got a chance to lower its internal costs by dramatically growing its network.  It SHOULD get lower equipment prices and be able to amortize its costs over a lot more lines.  But if you look in the rest of Frontier, you will not find a lot of IPTV.   So, the Verizon properties were an aberration from a video standpoint.  The older parts of Frontier (with a couple of exceptions) are just not worth doing video in (Rochester, NY might be a counter-example). Verizon already gave up on the parts it sold, so you know there is not fertile ground there.


    Why would anybody who thinks this through rationally believe that running this service is a good business case?


    seven


     

    Jeff Baumgartner 12/5/2012 | 5:10:53 PM
    re: Frontier May Pull FiOS TV Plug in Oregon

    Thanks, Bernie. That's a fair one to point out. There was some controversy about whether NCTC should let telcos play in their sandbox.  I think it's a fair question to ask both Frontier and NCTC: Did Frontier try to become a member of NCTC? If  Frontier tried and failed, why wasn't it allowed in? For the competitive reasons you pointed out?


    Also, was membership in an org like NCTC central to Frontier's video business model?  If it tried and failed, I can see why it would have to backpedal. JB


     


     

    Jeff Baumgartner 12/5/2012 | 5:10:53 PM
    re: Frontier May Pull FiOS TV Plug in Oregon

    Seven, That is true... it is a situation everyone here might not be aware of. In fact, it was a big topic at the first TelcoTV show I every attended 7 years ago.  Independent telcos with something 200 subs were wondering why Disney wouldn't return their call.  I seem to recall at that same show that reps for the NCTC were on hand to say, "Let us help you!"


    But even if video is new to Frontier, look up top; it's run by a cable vet. It's still hard to believe that someone there just didn't do their homework.  JB


     


     


     

    pivotmedia 12/5/2012 | 5:10:53 PM
    re: Frontier May Pull FiOS TV Plug in Oregon

    Jeff,


    You're right about NCTC, but you're also assuming NCTC would let Frontier in as a member. That's not a given. I'm not sure if Frontier gets there programming from NCTC - they might. But for telcos and munis, it's not as simple as just filling out a membership form with NCTC, although there are no formal rules against them joining. They actually have a lot of telco members, but most of them were grandfathered in as a result of a historical affiliation with a cable company (i.e. they owned one as a sub). But if you're a new telcoTV player today, good luck.

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