The settlement, unveiled August 31, was part of an overall investigation by the attorney general’s office and the Connecticut Department of Consumer Services as to whether Frontier deceived or misled consumers in the state in the marketing and sale of its internet services. The two agencies jointly reviewed more than 1,400 consumer complaints against the company, ranging from fees for equipment already returned, poor customer service and charges that continued after service had been canceled. 

“Frontier failed Connecticut consumers,” Connecticut Attorney General William Tong said in a press release. “Their DSL internet quality was slow and unreliable, and their customer service was unacceptable. They tacked on hidden fees, charged families for returned equipment, and kept charging customers even after services had been cancelled. That ends now.”

Also: Nearly 2,000 Striking Frontier Workers Back on the Job in California 

In a statement, Frontier said the complaints dated back to old legacy services and the company admitted no wrongdoing. 

“Frontier is investing hundreds of millions of dollars to build a fiber infrastructure that will provide high speed, reliable connectivity across the State of Connecticut,” Frontier said in a statement. “The settlement with the State of Connecticut is primarily related to legacy DSL services and stipulates that Frontier has admitted no wrongdoing. We settled the investigation in good faith to put it behind us so we could focus on our business – that’s in the best interest of all our customers.”

As part of the settlement, Frontier will spend $42.5 million over the next 3.5 years to upgrade outdated digital subscriber line (DSL) service in the state, with at least half of those improvements made in economically distressed urban and rural communities, or about 40,000 homes. In addition, Frontier has agreed to eliminate what the state called a $6.99 hidden monthly surcharge for internet service (amounting to $16 million last year alone), to pay $1 million to the state and to dole out $200,000 for credits and refunds to consumers who filed complaints beginning in 2019.

“We intend to hold Frontier accountable to every word of this agreement,” Tong continued. “If you continue to have any problems with Frontier, we want to hear from you.”

This is the second settlement Frontier has made in the past three months. In May it agreed to pay $8.5 million in civil penalties and costs and return $250,000 to consumers in California as part of a settlement with the Federal Trade Commission and two California law enforcement agencies over DSL service.  

Also: FCC to Investigate Frontier Outages in Arizona  

Also as part of the Connecticut settlement, Frontier must meet several accountability targets over the next six years, including new price and billing disclosures, advertisement disclosures that address its DSL representations, requirements that Frontier deliver promised internet speeds or provide options for consumers who do not receive promised speeds, and assurances that the company will implement transparent and fair cancellation and equipment return processes. Failure to meet those requirements could end in another $6 million in penalties levied against the company by the state. 

The agreement also provides protections for consumers offered the upgrade, including a 45-day period to decide whether to transition to fiber internet, protections against early termination or disconnection fees if they elect to cancel Frontier service, access to new customer promotional rates, and information about internet subsidies through the Affordable Connectivity Program (ACP). ■

That is according to a new Pew Research Center report based on a survey of 4,623 adults polled April 12-18, 2021, a snapshot about a year into the COVID-19 pandemic.

A vast majority of respondents (81%) said they have talked with someone via a video call sometime during the pandemic and 40% said they had used the internet or other technology in a way that was new or different for them, although there was some Zoom fatigue.

Four out of 10 of those using video calls said they felt worn out, at least some of the time, by the time they have had to spend on them. A third said that they have attempted to cut back on their use of smartphones or the net sometime since last April.

Also Read: Pew Says Majority of Americans Don't Trust Social Media

The pandemic has also led to some major broadband service upgrades, according to the survey. Almost a third (29%) said they had done something to boost speed, reliability or quality of their home high-speed internet connections since the beginning of the virus outbreak.

That could be related to their response to another question. About half (48%) of those with a high-speed internet connection said they have had problems with speed, reliability and quality of their home connection at least sometimes.

Some respondents will be happy with the help the Biden Administration wants to give them--in the form of billions of dollars in subsidies.

Back in April, almost half (46%) of lower income respondents said that they were at least somewhat worried about paying their internet bills. The survey also found that lower income respondents were 20 percentage points more likely to say they were having issues with their connections.

While only 37% said the government should ensure access, almost half (49%) said K-12 schools "have a responsibility to provide all students" with laptop or tablet computers in order to help them complete their schoolwork during the pandemic, which is up 12 percentage points from April 2020.

The margin of error for the survey is plus or minus 2.2 percentage points.

It was the biggest customer growth period for that industry since the first quarter of 2012, LRG said. 

Led by Charter Communications’ subsidy-spurred growth of 850,000 high-speed internet users, the leading eight cable broadband providers added nearly 1.4 million broadband customers in the second quarter. They now jointly control more than 68% of U.S. wireline broadband subscribers. 

No. 1 U.S. cable company Comcast added 323,000 high-speed internet (HSI) customers in the second quarter. 

AT&T (down 114,000 wireline HSD customers), Verizon (down 23,000), CenturyLink (down 29,000) and Frontier Communications (down 41,000) were part of a phone company contingent that jointly lost nearly 156,000 customers in Q2, according to LRG. 

Viewers 18-34 years of age get 53% of their news consumption from the internet compared to 21% for traditional television, according to Horowitz’s State of Viewing & Streaming 2020 study.

Young people question whether broadcast networks and cable news services like Fox News, CNN and MSNBC are providing a complete picture of the stories that they cover, according to the survey. Only 33% of 18- to 34-year-olds surveyed believe that television is the best way to get in-depth news reporting and analysis, said Horowitz. In comparison, 56% of adults 25-54 and 64% of adults 35+ offer a more favorable view of traditional television news.

“Can the major broadcast and cable outlets rise to the challenge of providing truth and perspective and less sensationalism?,” said Howard Horowitz, president of Horowitz Research. “Just like social media has provided new ways of exposing discrimination and misconduct, so too has it given young people a new way to view and understand the world around them, providing validation of what is really happening and holding major news outlets more accountable.”

Horowitz also reported that 58% of TV content viewers believe that the media plays a very big role in reinforcing stereotypes, and 68% say that they feel it is important that the media represent diverse people and communities in the U.S. in ways that challenge and break stereotypes.

“Poignantly, we are hearing from staff, family members, and social media that young people feel that their parents and older family members, who rely heavily on TV news, are not getting a well-rounded picture of the protests and why they are happening,” said Horowitz senior VP of insights and strategy Adriana Waterston. “Showing looting and sensationalizing violence creates more fear and obscures the issues of police brutality and persistent systemic racism that these young people are seeing, experiencing, and feeling.”

Related: Streaming Services Lead Broadcast Networks and Cable in Program Diversity

The report comes as the entertainment industry continues to use social media and traditional television platforms to reach out to African-Americans in light of the death of Floyd, who was killed while in Minneapolis police custody on May 25.

Streaming service UMC on Tuesday posted on Instagram its support of the African-American community. “There are no words to describe the pain that we feel. As Black people, it is an unspoken language that only we as a community truly understand. We are beyond tired. We have had MORE than enough,” stated the AMC-owned service.

BET on Tuesday announced that it would be developing a series of specials addressing the issues facing Black America, including Justice Now: A BET Town Hall later this month as well as a June 19 BET News Presidential Forum in which the network has invited both President Donald Trump and Presumptive Democratic Presidential Nominee Joe Biden to discuss issues and concerns of the African-American community, according to network officials. 

“We stand in steadfast solidarity with George Floyd’s family, the many victims of racist brutality, and those who are using their voices and platforms to challenge it. There are no easy solutions for these systemic issues of racism, injustice, and trauma. BET is leveraging every platform and resource at our disposal to support and inform our community and help identify strategies and viable solutions in this time of crisis,” said BET President Scott Mills in a statement. "We are committed to using our unique ability to mobilize our powerful, cross-sector coalition of partners to help drive critical outcomes and amplify leading voices in the Black community.”

In a Securities and Exchange Commission filing, Verizon said the Oath unit has experienced pressures in 2018 that have resulted in lower than expected revenue and earnings performance.

“These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business,” Verizon said in the filing. “Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses”

Verizon added that during its normal budgeting process, it formed a new five-year plan for the Oath unit that resulted in “unfavorable adjustments to Oath’s financial projections.” Therefore, the company deemed it necessary to record a goodwill impairment charge of $4.6 billion ($4.5 billion after-tax) in Q4. Prior to the writedown, Oath had a goodwill balance of about $4.8 billion, according to the filing.

According to Verizon, Oath had revenue of about $5.6 billion in the first nine months of this year, roughly one-tenth of the $97 billion the telco generated overall. In October during its Q3 conference call with analysts, Verizon said Oath would likely miss its target of $10 billion in total revenue by 2020. 

Verizon purchased dial-up pioneer AOL in 2015 for $4.4 billion and plunked down another $4.5 billion for Yahoo in 2017 with the hopes of parlaying the well-known yet dated brands into success in the digital arena. The Yahoo purchase was delayed for months after a data breach at the search engine lowered the sale price by about $350 million. 

Related: Five Things You Probably Didn’t Know Verizon Will Own After the AOL Deal Closes 

In April 2017, Verizon combined the two units in a new division dubbed Oath and tapped AOL CEO Tim Armstrong to head the unit. After some initial enthusiasm, Oath stumbled as more swift internet video providers took market share. Armstrong, who joined Verizon from Google shortly after it purchased AOL, left Oath in September. The unit is now headed by K. Guru Gowrappan, who joined the company in April after stints at Yahoo and Alibaba Group. 

And with the emergence of 4K-UltraHD, the trend is only accelerating.

According to Cisco’s Visual Networking Index, the amount of traffic crossing the global internet will increase by 153% to around 356 exabytes a month by 2022, with video accounting for 82% of traffic.

By 2022, Cisco estimates that nearly two-thirds (62%) of connected flat panel TVs will support 4K. By that time, the far denser data requirements of 4K-UltraHD resolution will account for 2% of global internet traffic.

Related: Video Continues to Eat the Internet: Cisco Study

Of course, traffic growth will also be driven by the proliferation of internet of things. Also by 2022, Cisco predicts that machine-to-machine modules will be located on 51% of global devices, with their connections accounting for 6% of global IP traffic.

Now matter what’s driving the growth, the spike in internet usage is startling. More traffic will cross the internet in 2022, Cisco predicts, than in the entire span of 1984-2016 combined. And in five years, 60% of the world’s population will be using the internet.

“The size and complexity of the internet continues to grow in ways that many could not have imagined. Since we first started the VNI Forecast in 2005, traffic has increased 56-fold, amassing a 36 percent CAGR with more people, devices and applications accessing IP networks,” said Jonathan Davidson, senior VP and general manager, Service Provider Business, Cisco. “Global service providers are focused on transforming their networks to better manage and route traffic, while delivering premium experiences. Our ongoing research helps us gain and share valuable insights into technology and architectural transitions our customers must make to succeed.”

In addition to the benchmark, the cable company also said it will expand the program to nearly one million low-income military veterans.

Comcast said it has connected two million users to Internet Essentials just in the last year—its largest annual increase to date.

Related: Comcast Connects on New Internet Essentials Campaign

“This program has had an enormous impact on millions of families and children who now have high-speed Internet at home, many for the first time in their lives,” said David L. Cohen, senior executive VP and chief diversity officer for Comcast, in a statement. “We’re excited to extend that same opportunity to more than one million, low-income veterans. Veterans have stood up for our country, now it’s time for us to stand up for them by providing access to life-changing digital tools and resources.”

Comcast also announced that U.S. Olympic Gold Medalists Jocelyne Lamoureux-Davidson and Monique Lamoureux-Morando will join Cohen on a multi-city tour to raise awareness for the Internet Essentials program.

Washington —The “Wild West” of unaccountable edge providers, whose white hats have been blackened of late, could be getting a new sheriff. Sen. Mark Warner, the ranking member of the Senate Intelligence Committee and someone on a number of people’s shortlists to run against President Donald Trump in 2020, has begun to outline ramped-up government oversight of edge providers.

There has been a movement on Capitol Hill to shed the “garage innovator” rose-colored glasses that have left the Googles and Twitters of the world relatively free of the government minding that the “core” of the network — that would be internet service providers — has faced.

Sen. Ron Wyden (R-Ore.), author of the provision that gave edge providers a liability carveout for their content, said the days of shielding online platforms are over, and it’s time to unsheathe the sword.

Warner, a Virgina Democrat and former cellular industry executive, has drafted something of a game plan for regulating the edge in a white paper that makes its motive clear in the title: “Potential Policy Proposals for Regulation of Social Media and Technology Firms.”

While the paper says Facebook, Google, Twitter, Amazon, Apple and others on the edge deserve kudos for their transformative tech, they also deserve “increased scrutiny.” Warner was helped toward that conclusion as one of the leaders of the investigation into Russian election interference and its use of social media, saying the probe has exposed “the dark underbelly of an entire ecosystem.”

Government has been either incapable or unwilling to address the impacts of troubling online trends on privacy, competition and the online public square, Warner said.

Warner said policymakers should focus on three major areas:

• The ability of communications tech to promote disinformation that undercuts trust in institutions, the press, markets and democracy itself.

• The ability of communications technology to track users online across multiple devices, aggregate their data and profile them (citing Facebook and Cambridge Analytica as an example of how that information could be used to target voters inappropriately.

• The dominance of the internet by a few edge giants “poses key problems for long-term competition and innovation across multiple markets, including digital advertising markets (which support much of the Internet economy), future markets driven by machine-learning and artificial intelligence, and communications technology markets.”

Warner does more than identify the problems. He offers a host of possible regulatory backstops, including:

• Creating an affirmative duty for online platforms to identify inauthentic accounts and report them to the Securities & Exchange Commission, advertisers and the public.

• Making platforms liable for not removing “deep fakes” or otherwise manipulated audio or video.

• “Legislation that guarantees that platforms above a certain size provide independent, public interest researchers with access to anonymized activity data.”

• New disclosure requirements for online political ads (Warner has introduced a bill, the Honest Ads Act, to that effect).

• Giving the FTC rulemaking authority over privacy and data protection.

• Requiring first parties to opt in to data collection and use.

There is more, but the thrust is clear. FAANG is on notice that D.C. policymakers are going to start showing some teeth, too, something ISPs have pushed for.

The service problems appear to gave started around 12:30 p.m., and seemed to be initially confined to Northeast ISPs, but according to social media complaints, quickly spread as far west as California.

Comcast’s customer care operation tweeted later that one of its large backbone network partners experienced a fiber cut. Because that line also served as a backbone to several other service providers, they too were expected to experience intermittent outages.

[embed]https://twitter.com/comcastcares/status/1012767042158510080[/embed]

“We identified two, separate and unrelated fiber cuts to our network backbone providers" Comcast said in a statement. "Our engineers worked to address the issue immediately and services are now being restored to business and residential internet, video and voice customers. We again apologize to anyone who was impacted.”

Charter spokesman Justin Venech said he was unaware of any large service disruptions for the carrier, but said it was aware of the Comcast problems.

Newsday reporter Joan Gralla tweeted that one of the fiber lines that were cut serviced New York City to Chicago, the other between Ashburn and South Carolina.

[embed]https://twitter.com/JoanGralla/status/1012761031922409473[/embed]

According to website Downdetector.com, which tracks service outages via social media, the problems started with Comcast but quickly spread to other ISPs. 

[embed]https://twitter.com/crysterious/status/1012745763271598081[/embed][embed]https://twitter.com/CrabLover7/status/1012740261405954049[/embed]

An internet meme "quoting" Abraham Lincoln about internet truth has been a favorite for the past few years. The only thing better is a version of Lincoln's "advice" about not believing "everything you read on the internet" accompanied by an illustration of Benjamin Franklin. (I have been unable to confirm if the designer of the Franklin version was being ironic or ignorant - a fitting factor for this discussion.)

These admonitions came to mind as I reviewed an NBC report last week about "Headline Stress Disorder." Although NBC's focus was on the negative effect of non-stop downbeat news coverage, a larger issue emerges: How will media deal with the public's trust - or disdain - for media?

Does the bubbling desire to "kill the messenger" apply only to news channels (which are actually thriving), or could it ripple over to other conventional media content? Several analyses of the popularity of feel-good programming, such as Hallmark Channel's Christmas movie spree (for example: this Forbes story) characterized it as a way to escape the stresses of the season and of these times.

In the American Psychological Association study, which was the basis for the NBC report, and in a newer APA "Stress in America" study conducted by Harris Poll, 72 percent of Americans said they believe the media "blows things out of proportion." Most adults (95 percent) say they follow the news regularly, but 56 percent say that doing so causes them stress, according to the survey.

The new APA survey found that 59 percent of Americans "consider this the lowest point in U.S. history that they can remember"; APA pointed out that this negative mindset came from people who lived through World War II, Vietnam, the Cuban Missile Crisis and the 9/11 terrorist attacks.

“With 24-hour news networks and conversations with friends, family and other connections on social media, it’s hard to avoid the constant stream of stress around issues of national concern,” according to Arthur C. Evans Jr., PhD, APA’s CEO. “Understanding that we all still need to be informed about the news, it’s time to make it a priority to be thoughtful about how often and what type of media we consume.”

Trust in Media (?)

Although media itself is not in the top rank of personal stress factors, it is obviously the vehicle via which people learn about the problems that do unsettle them. "The medium is the message," as Marshall McLuhan intoned five decades ago.

APA said that the major stress inducers are health care, the economy, trust in government, hate crimes and general crime plus global war and terrorism. The recent APA report is loaded with other, fascinating demographic differences - e.g. women have significantly higher stress levels than men (5.1 vs 4.4 on a 10-point scale). The study did not explore whether such differences are affected by the amount of media consumption - a topic for further scholarly exploration, no doubt.

Amid all the analyses of Americans' stress situation is the more serious and expansive issue (which is being examined elsewhere): What are the political and societal implications of a devalued news industry? Is it a prelude to disbelieving everything? Beyond today's behaviors, such as only tuning in to the news sources that match your opinions, will future consumers choose to ignore it all?

If you're in or around the telecom/media biz, there's an extra stressor - depending on how close you are to the deals afoot. Friends and neighbors - "civilians" (or mere consumers) in the digital era - think you must know something about net neutrality, Disney-Fox, AT&T/Time Warner or any of the other landscape changers that have become part of the stressful media environment. Do you want to give them the right answer, presuming you KNOW the right answer? Or are you too consumed with the uncertainty of how these changes will affect your life. That is: more stress.

The NBC report included an APA checklist of things to do to reduce the media stress. It's a familiar roster ranging from avoiding social media, "no news before bedtime," and cold turkey (cut off completely). Although some viewers may adopt some of the recommendations, for people in the media/telecom industries, the options may take on a more ominous impact.

Stress will, in some yet-unknown ways, change the ways in which audiences actually consume what the industry wants to deliver. You can believe that - even if you see it on the "Interwebs."

Cable stocks were mixed in the wake of the Federal Communications Commission’s long anticipated decision to unravel net-neutrality rules, with Comcast and overbuilder Wide Open West up the strongest in early trading after the vote was announced, while other cable stocks yawned.

WOW shares rose the highest – they were up as much as 7% (61 cents) to $9.37 per share in early trading, while Comcast shares rose nearly 3% ($1.10 per share) to $39.68 each in the afternoon, shortly after the FCC announced its vote. But other cable operators and ISPs saw less dramatic stock price fluctuations.

Charter Communications was up about 0.3% ($1 per share) to $330 in afternoon trading, while Altice USA dipped slightly (0.1%, or 2 cents each) to $19.33 each and Cable One fell 1.3% ($9.19 each) to $684.31 per share.

Telcos AT&T and Verizon were relatively stable, down 0.4% and 0.6%, respectively.

Net neutrality’s biggest proponents – Google, Amazon and Facebook – didn’t see much damage from the decision in their stock prices. By the afternoon, all three were up by less than 1%.

Programming stocks were mixed as well. 21st Century Fox and The Walt Disney Co. were up the most – 5.4% and 3%, respectively, but that was for reasons other than net neutrality. For the rest of the sector, growth ranged from 2.7% for Discovery Communications and 0.4% for Time Warner Inc.

The digital divide between Latinos and whites is shrinking, according to a new Pew Research Center survey.

Since 2009, according to Pew, Latinos who say they use the Internet has grown by 20 percentage points, from 64% to 84%, while for whites the increase was from 80% to 89%, or fewer than 10 percentage points.

The biggest increase has come from Spanish-dominant Hispanics--almost doubled from 36% to 74%--and Hispanic immigrants, whose use has jumped from 51% to 78% since 2009.

There is no divide over what is the dominant Internet access tool: a mobile device.

The survey found that 80% of Latino adults access the 'net from a mobile device. That figure is 77% for blacks and 76% for whites.

The study was based on phone interviews with a representative sample of 1,500 Latino respondents 18-plus Oct. 21 - Nov. 30, 2015. The margin of error is plus or minus 3.3 points.

“Super Subscribers,” as we have identified them, are savvy shoppers of subscription services. They once accounted for a small portion of all shoppers, but today they account for most of them.

Super Subscribers are also consumers who are migrating their entertainment content delivery and traditional shopping — through expanded broadband and wireless data pipes — to get the specific content and service they desire, for a better-value price and convenient schedule.

That’s why broadband Internet services and smartphone data plans have the largest subscription bases. Cable TV subscriptions, while still very popular, are seeing a macro trend we identified as “cord-shortening.” The majority are keeping their cable, but downgrading to basic from premium, and supplementing with streaming services. At this moment, subscribers of premium and basic cable packages are roughly the same size; however, basic plans are approaching the inflection point of eclipsing premium bundles.

Streaming content is 50% bigger than basic or premium cable individually. More people are starting to “cut the cable cord” as they migrate to streaming and on-demand entertainment options, but cable shortening is more prevalent than cord-cutting at this point in time. That’s why HBO Now is at a must-launch stage for HBO. Netflix has already surpassed HBO’s subscriber base, and with a shrinking group of premium subscribers and growing streaming subscribers who outnumber premiums by almost 50%, HBO really has no choice.

We found that for entertainment content, be it movies, television or music, the best incentives that attract the most customers are post-purchase rewards offering open loop prepaid cards that can be spent anywhere. When these rewards are branded with the issuer’s logo and have an accompanying offer, they can extend initial subscription periods, and also work effectively to drive cross-sell services.

Post-purchase rewards that offer consumers 20–50% more value — but at the same cost to the issuer which is significantly less than an “instant discount” — are now a very popular acquisition incentive in many key subscription categories.

Our “Super Subscribers: Disrupting the Subscription Services Model” study identifies which consumer groups (including views by income, age and ethnicity) are using disruptive subscriptions the most and how to acquire these customers. The research, conducted online in March, questioned 1,757 U.S. consumers representative of the country’s demographics.

Rodney Mason is group vice president, marketing, at Blackhawk Engagement Solutions.

My five-year study, Net Vitality: Identifying the Top-Tier Global Broadband Internet Ecosystem Leaders, was recently released by The Media Institute. Here are some key leadership lessons highlighted in the report:

The broadband leaders of the Net Vitality Index (a composite of 52 indices covering applications, content, devices and networks, along with relevant macroeconomic factors) have a powerful common driving force — innovation. Innovation is the result of unusual effort.

“Once a company achieves competitive advantage through innovation, it can sustain it only through relentless improvement,” according to Harvard University professor Michael Porter. This powerful lesson of the centrality of innovation is directly applicable to the desired goal of promoting continuous net vitality.

The goals of national institutions and individual and corporate values also contribute to national competitive advantage. Each of the five Net Vitality Index countries that comprise the top tier attach significant prestige to their role in information and communication technologies generally, and to the Internet specifically. Consequently, they guide the flow of capital and human resources to enhance this positioning, which directly affects the competitive performance of companies that comprise the broadband Internet ecosystem.

Although it may be difficult to determine cause and effect, these have clearly made attaining international Internet success a priority. In doing so, the Internet sector also is more prestigious for those within the country seeking education, investment or employment.

The top-tier global broadband Internet ecosystem leaders’ strategies, viewed as a whole, also have included a range of government roles, such as:

• Developing a vision and strategy;

• Promoting digital literacy;

• Investing in infrastructure, aggregating demand and serving as an anchor tenant;

• Fostering facilities-based competition;

• Creating incentives for private investment;

• Offering electronic government activities, including health care, education, access to information and licensing;

• Promoting universal services through subsidies and grants; and

• Revising and reforming governmental safeguards to promote a high level of trust, security, privacy and consumer protection in ICT services.

Successful incubation appears to require government involvement, albeit with a light hand that stimulates and rewards investment, reduces regulatory underbrush and promotes global marketplace attractiveness. This is a success formula that the U.S. and peer country leaders should continue to emphasize.

Stuart N. Brotman is a faculty member at Harvard Law School and a nonresident senior fellow at The Brookings Institution’s Center for Technology Innovation. He also serves on The Media Institute’s Global Internet Freedom Advisory Council.

In January, a bipartisan group of House members reintroduced the bill. ITFA prevents state and local taxes on Internet access in all but a handful of grandfathered jurisdictions.

ITFA, which expires unless reauthorized, has been extended five times since 1998, most recently through September 2015, when the moratorium was extended last December as part of a must-pass appropriations bill. http://www.multichannel.com/news/content/itfa-renewed-through-september/....

The House has the bill in July 2014, but it got hung up in the Senate.

Cash-strapped states and local governments are always looking for new revenue sources, but the bill would make sure that would not include taxes on access to the Internet. That would make sense given that the government has made a priority of promoting Internet access and adoption and keeping the cost down.

The bill is spearheaded by Reps Anna Eshoo (D-Calif.)--ranking member of the Communications Subcommittee--and Bob Goodlatte (R-Va.), cochairs of the Congressional Internet Caucus. Also sponsoring the bill are Reps Steve Chabot (R-Ohio), Steve Cohen (D-Tenn.) and Tom Marino (R-Pa.)

Not surprisingly, ISPs have been pushing for passage of the permanent moratorium.

Cox Communications is the latest cable operator to test the usage-based pricing waters, with plans to test a service that would add about $10 to customer bills for every 50 gigabytes over their usage cap they exceed.

The service will be tested in Cleveland beginning on May 19 and if things go as planned will be expanded throughout the footprint beginning in 2016. News of the usage-based pricing effort was first reported by DSL Reports.

Cox joins other operators like Mediacom Communications, Suddenlink Communications, Cable One and Comcast that have introduced $10 fees for extra buckets of gigabytes.

Cox recently increased the usage limits for its high-speed data tiers dramatically, possibly in anticipation for the new usage-based charges.The company’s usage limits are as follows:

Starter package: 150 GB per month

Essential: 250 GB per month

Premier: 700 GB per month

Ultimate: 2 terrabytes per month

Cox said that the usage fees will affect less than 5% of its customer base and will offer users an alternative to stepping up to a higher-priced level of service. In addition, customers will see any additional usage fees on their bills beginning in June, but won’t actually be charged for them until the October billing cycle. Cox officials said that would give customers a chance to better analyze their usage patterns and plan accordingly.

Customers in Cleveland will receive an e-mail notification when they reach their data limit.

Cable analysts have predicted that usage-based pricing would come to the industry as increased video streaming has spiked bandwidth needs. At INTX: The Internet & Television Expo earlier this month in Chicago, analysts said that usage-based pricing was “inevitable,” adding they expected smaller operators to test the waters first.

While usage-based pricing has been around since the days of dial-up, it has virtually disappeared in the broadband age as consumers have been highly sensitive to anything that hints of caps or limitations on the Internet.

Time Warner Cable learned the hard way in 2009, when it caused an uproarafter introducing usage caps in some of its markets. That resulting furor led the cable giant to rethink its pricing strategy,  keeping pricing the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter.

Even with the caps, Cox said that most customers won’t come close to exceeding the new limits. According to the company, customers of its most popular data plan can do all of the following each month without pressing against the limits:

• watch 50 two-hour HD movies online
• watch 120 half-hour standard def TV shows

• watch 500 three-minute videos
• surf the web for 1,000 hours
• listen to 10,000 songs that are each  4-minutes long

At least that was the takeaway from a Pew Research study of 32 emerging/developing nations.

According to the study, 64% of respondents said the Internet has had a good influence on education, versus 18% who said it has had a bad influence. Only 29% said the 'net has had a positive influence on morality, while 42% said it had a negative influence.

The respondents were divided on the Internet's impact on politics, with 36% saying it was a bad influence and 30% saying it was good.

But much of that input is not based on regular experience with the technology. Pew said fewer than half of the respondents said they used the Internet at least "occasionally." Usage varied widely, from 3% of people in Uganda to 78% in Russia.

The study was based on 32 different samples -- ranging from 1,000 people to more than 2,000. It was conducted in the spring of 2014.

Federal Communications Commission chairman Tom Wheeler will circulate an item to the other commissioners this week proposing granting the request by two cities that the FCC preempt state laws limiting their broadband buildouts, an FCC official familiar with the item confirmed on background.

The FCC decision only applies to the two cities, but a senior FCC official said that it provides precedent for how the FCC will view similar petitions.

The official said that the majority of municipal broadband networks have not failed or needed bailouts or created unfair competition to private buildouts, all arguments ISPs and state legislators have made.  The FCC is asserting its broad Sec. 706 authority to preempt, saying that preemption falls under the mandate to regulate to extend broadband.

It is the first time the FCC has considered preempting municipal broadband, though it has preempted local authority, for example in the 2004 Vonage order where the FCC decided that state tarriffs could not be applied to VoIP.

The three Democrats are expected to vote to approve, while the Republicans will almost certainly dissent.

Back in July, the FCC received requests from Chattanooga and Wilson, N.C., to preempt state laws they say unreasonably restrict their ability to provide broadband service. Wilson and Chattanooga complained that state laws were preventing expansion of their exisiting municipal broadband networks via numerous restrictions. In the case of Wilson including requiring public referenda on a buildout, barring discounts, requiring it to impute artificial costs, and barring overbuilds of commercial systems providing 768 kbps downstream.

The chairman had signaled a vote on the items on the Feb. 26 meeting and he has made no secret that he thinks the commission has the power to preempt and the responsibility to do so if it feels those state laws are impeding price and service competition for broadband.

“Communities across the nation know that access to robust broadband is key to their economic future – and the future of their citizens. Many communities have found that existing private-sector broadband deployment or investment fails to meet their needs," wheeler said Monday after the item's circulation had been reported. "They should be able to make their own decisions about building the networks they need to thrive. After looking carefully at petitions by two community broadband providers asking the FCC to pre-empt provisions of state laws preventing expansion of their very successful networks, I recommend approval by the Commission so that these two forward-thinking cities can serve the many citizens clamoring for a better broadband future.”

President Obama has Wheeler's back on pre-emption, saying before the state of the union that the FCC should step in in the 19 states with such laws. Both have branded those laws as efforts by incumbent ISP's to block competitors.

State officials have countered that they are simply doing their fiduciary responsibility to their citizens by protecting them from failed buildouts, including by passing laws that prevent overbuilding. They have threatened to sue if the FCC approves the petitions.

The Coalition for Local Internet Choice, which has been pushing for FCC preemption of state laws limiting municipal broadband, was pleased. "This is a big step forward and just the beginning -- we look forward to working with the Chairman, the rest of the Commission and other stakeholders to remove barriers to better broadband around the country," CLIC said.

Those legislators and Republican FCC members have argued the FCC will be exceeding its authority.

In a backgrounder supplied to reporters Monday, senior FCC officials exlained the authority the FCC has to preempt the laws.

•    "Section 706 of the Telecommunications Act of 1996 directs the FCC to take action to remove barriers to broadband investment and competition.
•    "A federal agency may preempt state laws that conflict with its regulations or policies so long as it is acting within the scope of its authority.
•    Provisions of the Tennessee and North Carolina law prevent expansion of service into surrounding unserved and underserved areas and constitute barriers to broadband deployment.
•    "While states retain authority to grant or withhold the ability of their cities and towns to enter the broadband market, once states have granted that authority, they may not impose on community providers regulatory burdens that act as barriers to infrastructure investment and competition.
•    "Broadband is an interstate service, and the preempted provisions impose state restrictions, impose economic costs, and delay the deployment of interstate communications."

FCC officials pointed out that the Chattanooga and Wilson cases were not about whether service can be provided, since the cities had state authority, but whether states can dictate the mechanics of that service in a way that appears to protect ISPs and to impede the deployment of broadband that the FCC's Sec. 706 authority mandates that it facilitate.

There are at least three states that have absolute bans on muni broadband--including Comcast home state of Pennsylvania, as well as Nebraska and Montana, where preemption could be problematic, but the officials said there is some disagreement on how absolute those are and the FCC would consider all petitions on a case-by-case basis.

“We welcome reports that Chairman Wheeler is taking the concerns of cities and their leaders seriously when it comes to local choice," said executive director Deb Socia. "We look forward to seeing the details, but any move to expand choices for towns and cities is good for innovation, competition, and for the country.”

Sen. Ed Markey (D-Mass.), who supported preemption, praised the move as a big win for consumers.

"Today’s proposal by the FCC to lift restrictions that are preventing these two communities from expanding their own broadband infrastructure is a major win for local choice and competition. Choice in broadband access is not as broadly available in the United States as it should be, and each local community deserves the opportunity to connect its citizens and businesses with the resources and opportunities that competitive broadband supports.”

Cable operators were pushing hard for that outcome through one of their highest-profile advocates, National Cable & Telecommunications Association president Michael Powell (see sidebar), who, as FCC chairman in the early 2000s, concluded that Internet access should be treated as an information service, not a telecommunications service under Title II of the Telecommunications Act of 1996. That conclusion was supported by the U.S. Supreme Court in its 2005 NCTA vs. Brand X Internet Services decision, in which it ruled that cable companies could forbid competing ISPs from using their broadband pipes.

DEMS QUIET AT HEARINGS

But the lack of Democratic support for what was billed as a bipartisan bill was obvious from a pair of hearings on network-neutrality legislation last week that served mostly to showcase key, and still-contentious, issues in the years-long debate over net-neutrality rules, with the draft legislation as the latest flashpoint.

Republican lawmakers in both the House and Senate suggested they were willing to adjust the bill to respond to various Democratic critics, and said their goal was to protect the open Internet and innovation and investment at the same time.

But even Democrats who did not reject the legislative effort on its face suggested it could be on a parallel track to new FCC rules based in Title II, and said the regulator should not wait around for Congress.

Even Powell stopped short of asking the FCC to delay a planned Feb. 26 vote on a new Internet Order, which is widely expected to be based on reclassification of Internet-service providers under Title II rules: Powell’s point was that the chairman gets to set the agenda. That might have been professional courtesy, from a former chairman to current FCC chief Tom Wheeler.

If the FCC does go ahead with the Feb. 26 vote, Wheeler opts for Title II, and if he has at least two other votes — all of which looked likely at press time — the FCC is headed for another court battle.

At both Capitol Hill hearings last week, Meredith Attwell Baker, president of cellphone trade group CTIA– The Wireless Association, used the venue to level an ultimatum. If the FCC goes the Title II route, she said, the CTIA will sue — and it expects to win.

Verizon Communications, a CTIA member, was the only company to sue the FCC over the previous rules. Given the ensuing events, there are likely many ISPs who wish it had kept its powder dry.

Whether or not network-neutrality legislation could actually emerge from both the House Energy & Commerce and Senate Commerce Committee likely hinges on how much both Republicans and Democrats are willing to give.

At the House hearing, Democrats and witnesses favoring strong net-neutrality rules pointed to several problems in the bill, chief among them that it foreclosed Title II and also says the FCC can’t use Section 706 (of the Telecom Act) as a grant of authority.

Democrats argue that is basically a gift to incumbent ISPs, could prevent the FCC from insuring rural broadband rollouts and could prevent the agency from pre-empting state laws limiting municipal broadband.

Republicans didn’t back off from those asks at the hearing, but Rep. Greg Walden (ROre.) did signal he was willing to work with Democrats on the issue of specialized services.

The bill allows for such services, which Powell defended vigorously last week. ISPs charge for delivering services over the nonpublic Internet, something the FCC and even President Obama has said should be allowed. But Democrats argue that the definition is too vague and could become a back door to paid prioritization, something the bill would bar at the front door.

Walden said at the hearing that the committee was not trying to allow something then create a loophole, so he was willing to talk about resolving that issue in the bill language.

On the Senate side — and the House side, for that matter — Democrats were concerned that removing Section 706 as a grant of authority would mean the FCC could not support the migration of the Universal Service Fund to broadband or support municipal broadband.

BOOKER: DON’T TIE FCC HANDS

Sen. Cory Booker (D-N.J.) was adamant that the language tied the FCC’s hands on municipal broadband, something he said was unconscionable given that cities were trying to provide low-cost service for residents, often intended for minority constituents. Booker, himself the former mayor of Newark, N.J., last week announced a bill that would block state laws limiting municipal broadband.

Senate Commerce Committee chairman John Thune (R-S.D.) said the bill presumes that the FCC has ancillary authority to continue to support the Universal Service Fund.

While some Democrats praised the principles behind the bill, that was mostly to be able to add that they were glad Republicans had finally come around to agreeing that the threat to the open Internet was real and that network neutrality rules were needed.

The Democratic support for legislation was only for legislation that would do what most Democrats want the FCC to do: ban blocking and discrimination, paid prioritization and specialized services if they are a stealth attempt at paid prioritization, while preserving the FCC’s authority via Section 706 and Title II, the latter at least as a hammer with which to threaten ISPs into their best behavior.

Powell: There Ought to Be a Law

WASHINGTON — National Cable & Telecommunications Association president Michael Powell made a prolonged pitch for network-neutrality legislation to Congress last week. Here is an excerpt.

“In the absence of a clear Congressional directive, the FCC will continue its attempts to force the round peg of open Internet policy into the square hole of existing statutory frameworks.

“We have already wasted years on protracted court battles, repeatedly failing to come up with a sound legal foundation to support the FCC’s authority to adopt open Internet regulations. And if as it increasingly appears will be the case, the FCC attempts to impose the outdated and heavy handed common carrier obligations of Title II on broadband Internet access services, it is guaranteed that we will waste several more years.

“There is nothing to be gained by prolonged uncertainty, especially when a simpler solution is before us. Even FCC chairman [Tom] Wheeler has suggested that if Congress were to intervene legislatively, it would ‘make the whole lawsuit question moot.’”

E! has signed Internet star and comedian Grace Helbig for a new hybrid comedy show premiering in April 2015.

The series will feature interviews with celebrity guests as well as what’s trending in pop culture, according to network officials. Helbig is best known for her “It’s Grace” YouTube channel, which has 2 million subscribers.

“This show is a fresh take on the conventional talk show with a very unconventional host who has already captured an enormous fan base of young viewers on the web,” said Jeff Olde, Executive Vice President, Original Programming & Development, E! Entertainment. “As we continue to seek out programming that offers a rich multiplatform experience, we are excited to launch this forward-thinking talk show that speaks so perfectly to our audience and to the core of E!’s pop culture brand.” 

The primetime talk series announcement comes five months after E!’s popular talk show Chelsea Latelywent off the air.

That ’s not surprising, given that the issue is about protecting access to Internet destination and apps like, well, social media. So, like Hair Club for Men, social-media purveyors are not just the leading voice, they’re also the “client.”

From a powerful House member using Reddit to try and rebrand the push for strong open Internet rules, to a group rallying its online supporters to clog the FCC with phone calls, to the record-breaking flood of comments — more than 4 million — in the official docket, online activism has gotten results.

One need look no further than 1600 Pennsylvania Ave. to see just how impactful. When President Obama announced he was going all in for Title II reclassification, he began his YouTube video announcing the position with a simulated buffering symbol. That was a nod to an online protest during which websites used that same device.

There was pushback four years ago from some of the same critics of anything short of Title II, but social media — such as Twitter and Reddit— and mobile broadband, have exploded in the interim (witness the FCC’s current consideration of applying its no-blocking or discriminating rules to mobile broadband, something it chose not to do last time around).

Even the National Cable & Telecommunications Association tried to fight fire with social- media counterfire. It launched a stealth Web/Twitter campaign, “Onward, Internet,” a soft-sell campaign soliciting input on why the Internet is working just fine “unfettered by rules,” an argument cable operators have been making against Title II-based regulations.

“I think social media had a huge impact in quickly spreading the word about what the FCC was doing,” Craig Aaron, president of Title II advocate Free Press, said. “And I think the fact that people rely on social media so much more than even a few years ago only drives home for people just how important the free and open Internet is to their ability to connect and communicate.

“And whether people were finding out about net neutrality because they watched [a clip from HBO’s Last Week Tonight With] John Oliver on YouTube or because Tumblr put the spinning wheel of death on their site during the Internet slowdown, they saw it and responded in record numbers. It completely changed the debate.”

Evan Greer, campaign director of Fight for the Future, which helped promote pro-Title II protests, including one at FCC chairman Tom Wheeler’s house, agreed.

“We are always looking for new and innovative ways to use social media to both activate the huge base of support that exists on the Internet, and to pressure those in power who need to hear from the public,” she said.

Greer pointed out that the battleforthenet. com website includes a “political scoreboard” that allows visitors to easily send Twitter posts to Congress members “to either praise or shame them for supporting or opposing Title II.”

But it’s more about channeling than driving the social-media pushback, according to Greer. “Our task is not so much convincing people as channeling their energy into meaningful actions that make change,” she said.

Sen. Ted Cruz (R-Tex.) has posted a YouTube video explaining why internet service providers should not be regulated under Title II.

In the video, of a speech on the issue in Austin, Tex., last week, Cruz says that smart phones should be outside of Title II, and uses black rotary phone and cell phone to illustrate the difference between calcified public utility regulations and the innovation start-ups and entrepreneurs.

He said the simple message is: "Don't mess with the Internet."

Cruz, who told the crowd his parents were computer programmers back in the 1950s and 1960s, the era of key punches and cards and vacuum tubes, said it is now a whole different world and that the President's call for regulating ISPs under decades- old Title II was the worst thing that could happen. "The government shouldn't be picking winners and losers," he said. He argued that it was regulation that favored "the big guys with armies of lobbyists," rather than the startups and innovators.

Cruz is also the former chair of the Internet Task Force at the Federal Trade Commission, he pointed out.

"The worst thing you want is for five unelected bureaucrats in Washington to take charge of regulating the Internet as a public utility," he said.

Cruz also said 'net freedom is a speech issue and an empowerment issue and an entrepreneurship issue, and that that freedom depends on not "messing with the Internet" by imposing the "plague" of excessive regulation. He said that includes no Internet sales tax--there is a bill that could be voted on in the lame duck session, the Mainstreet Fairness Act  that would impose a sales tax on 'net transactions by eliminating the requirement that a business be connected by brick and mortar with a taxing jurisdiction.

He also argued for the U.S. not handing domain name registering over to international stakeholders.

The FCC is currently considering numerous approaches to restoring network neutrality rules, including using Sec. 706 authority to promote broadband deployment, Title II authority to regulate monopoly markets--treating ISPs as so-called "terminating monopolies" of Internet access--or some combination of the two.

The White House recommendation that the FCC should place public utility regulation upon Internet Service Providers rankled countless insiders and, of course, totally confused "civilians" - the unwashed masses who merely rely on the Internet for all kinds of business, consumer, financial and entertainment services.

By fortunate coincidence, several D.C. think tanks had already scheduled broadband seminars for the week, some timed as follow-up analyses to the recent Congressional elections, others keyed specifically to the evolving debate about Title II regulation.  Obama's screed merely inserted an added dimension into the predictable, politically-fueled pronouncement that emerge from these think-tank symposia.

What did not emerge from these seminars or from Obama's appeal was any comprehensive approach to the big issue confronting policy-makers: an omnibus overhaul of the nation's communications law, the elusive "Telecommunications Act Reform" process on Capitol Hill.

Indeed, last week's Kabuki maneuvering and posturing about the FCC and Title II was a good way to distract attention from a really big topic - policy overhaul - and focus instead on the pretty-big topic du jour - Internet regulation. To be fair, some of the Washington events touched on copyright reform (which might include retransmission consent), media mergers, Internet tax issues (some of which require immediate action) and spectrum allocation.

Collectively, these interconnected issues cry out for integrated analysis and action. Realistically, the new Congress is unlikely to tackle such a massive undertaking - especially when brush fires such as Title II can both distract attention and simultaneously attract so much lobbying support  (i.e. contributions).

Inevitably, at last week's seminars, there was substantial debate about the merits of "Section 706" (the part of the 1996 Telecom Act that lets the FCC oversee "Advanced Telecommunications Capabilities") versus Title II regulation.   For example, at Friday's Free State Foundation session entitled "Thinking the Unthinkable" (i.e. the 'utility model" regulation) Rep. Bob Latta (R-Ohio), who sits on the House Communications Subcommittee, and the two Republican members of the FCC blasted the "unthinkable" idea of Title II regulation.

FCC commissioners Ajit Pai and Michael O'Rielly(pictured left and right) both pointed to two significant ripple effects of imposing Title II regulation on ISPs: putting onerous Universal Service Fund fees on ISP usage and sending a bad message about America's Internet stance to foreign authorities. The USF issue would have more immediate impact on cable operators and other ISPs since customers would see substantial fees directly in each month's bill. 

Pai and others are even more concerned about any policy that would embolden foreign governments, especially repressive regimes, to impose Internet regulation of all sorts on their domestic system operators. Pai warned that if the FCC adopts a restrictive Title II policy, it would further diminish America's credibility and tell other nations to "do as we say not as we do."

In addition, there are immediate problems, such as how a unilateral U.S. regulation policy will affect international treaties for dealing with transborder communications, an issue with vast consequences in the Internet Protocol era.

In separate remarks at the Free State Foundation event, O'Rielly focused on forebearance, the process by which the FCC could carve out exemptions from its most severe policies.   But  as O'Rielly said, it "should not  be conceived as easy"  and there has been no indication about which parts of Title II might receive such forebearance.

Last week's seminars served as reminders about the complexity of the individual issues and the inevitable frustrations triggered by such piecemeal action rather than a comprehensive process, such as a Communications Act overhaul.

Going down either road will take a lot of time, and as the recent policy-wonk omphaloskepsis reminds us: there is unending contemplation ahead.  Bringing it all into a bleak perspective were the concluding comments at the FSF seminar.

It's a "regulatory rat hole," said Gerald Faulhaber in an abject summary of the FCC's current options.  Faulhaber, a former FCC chief economist and now professor emeritus at the University of Pennsylvania's Wharton School, characterized the choices:

"The only difference between Title II and Section 706 is how fast we go down the rat hole."

Aside from one review that blasted me for talking too fast (“sounds like babbling”), the reaction from three audiences (the course debuted in New York on Oct. 15) was gratifying.

Here’s the gist: Cloud is everywhere. Whether you’re designing a storeroom on a construction site, running a pet store or sending a file too big for an email mailbox, you’ve heard of or are actively using cloud technologies. The same is true for video and cloud. And, like anything anchored in IP (Internet protocol), it intersects with every step in the journey of a video asset from the time it’s created to the time it reaches the eyeballs.

The overarching premise of the class, developed for non-technologists, was this: If you accept that “the competition” is no longer “just” satellite and telco, and now includes over-the- top purveyors, then it’s time to accept also that how the cloud changes how people work, culturally.

It’s not better or worse — just different. It’s faster. It’s agile and collaborative, with a mantra of “continuous improvement.” (And yes, there is a persistent whiff of “kumbaya” in this part of any cloud discourse — but it’s allowable, because the results are measurable, by way of reversed subscriber churn and speed-to-market with new stuff that’s clearly working.)

From there, we (to include my partner, Craig Leddy) bucketed the video cloud into sections: Content culture. Distribution. Processing. Devices. Applications.

Distribution changes with the addition of WiFi as a tetherless conveyer built for content, and with the establishment of CDNs (content distribution networks) that centralize video storage, then organize it hierarchically. Intent: Put the most popular stuff closest to viewers (in lieu of “pitching” and “catching” video assets, via satellite, to a distributed storage footprint).

Processing changes, with the addition of adaptive bit rate streaming to “right-size” an asset for the screen that displays it, and with the delineation of things that are better done in the cloud than in the end device, such as encoding and transcoding. Preservation of “state,” which is software-speak for “pause/resume,” with the addition of “anywhere” to the mix. (Pause in the living room, resume in a hotel somewhere.)

Devices change in a delicate interplay of what happens locally vs. in the cloud: Number of tuners per box, physical storage and the encoding/transcoding, specifically. Box people want these things to stay in the box; cloud people want the opposite. And the same vendors populate both sides, so, everybody wins?

I’m skipping a lot here — it’s a four-hour class. The good news is that the buckets worked, and it appears that we lifted at least some of the cloud’s … fogginess. Thanks again to CTAM and Rocky Mountain WICT for commissioning the cloud!

Stumped by gibberish? Visit Leslie Ellis at translation-please.com or multichannel.com/blog.

Cash flow growth is expected to decelerate to between 2% and 3% for cable operators in 2015, down slightly from the 4% rise expected this year. But a continued focus on higher margin broadband and commercial services should keep profit margins fairly steady for the foreseeable future, according to credit ratings agency Moody’s Investor’s Service.

In its report, Broadband is the Game, Cable is Poised to Win, Moody ‘s estimates that cash flow margins will decline mainly because of the maturing video business. Video customer losses and higher content costs should continue to impact that segment of the business going forward. And though the broadband business has also shown some signs of maturation as subscriber growth has slowed down, Moody’s believes cable operators will see profits rise as customers upgrade their service to higher speed and higher costs tiers. Earlier this year, the broadband subscribers surpassed cable video customers for the first time.

“It’s the broadband business now, and speed upgrades make it cable’s game to win,” the Moody’s report said

Proposed over-the-top offerings from Sony, Verizon, Dish Network and DirecTV are expected to have some downward effect on pay TV subscribership, but Moody’s believes it will be minimal.

Moody’s doesn’t believe that content providers are going to want to rock the boat of affiliate fees and ad revenue from cable that hard, adding that it expects content providers to make content available to a degree and at a price that targets people outside that audience.”

While widespread adoption of odver-the-top services could throw a wrench in that strategy, Moody’s believes “programmers will tread lightly, limiting pressure over at least the next year or so.”

On the commercial services side, Moody’s expects cable to continue to gain market share – it pointed to the pending Comcast-Time Warner Cable merger, which would allow the combined entity to serve larger customers in major cities like Los Angeles  New York City and helping to build on the more than 20% annual revenue in that segment for both companies. Providing cellular backhaul services – essentially using their network to transmit information between cell towers, also is expected to be a healthy business – Moody’s projects 7% to 10% annual revenue and cash flow growth for that segment alone over the next three-to-four years.

“What’s good for the cell towers is good for the cable operators serving them,” Moody’s said.

WiFi could also prove to be a cash generator for cable operators in the future, Moody’s said. Currently used primarily as a retention tool – operators offer it as a free add-on to broadband service – WiFi is becoming increasingly important and could withstand a small monthly surcharge without a resultant subscriber loss, Moody said. The credit rating agency estimated that at Cablevision – which was a pioneer in offering WiFi service – could lose as much as 5% of its customer base before an additional $2 monthly charge would be uneconomical. A $3 monthly charge pushes that acceptable subscriber loss to 7%, according to Moody’s.

MCN: How would you categorize the adult on-demand business today?

Bill Asher: For a while, people were panicking that the sky was falling with regard to adult content on TV because you have free porn on the Internet — it’s hard not to find it. The numbers were coming down on the TV side. But all of the sudden they leveled off over the past couple of years. There are a lot of people who want to get free porn, and I get it, but if you make unique and good, quality content, you don’t have to give it away free on the Internet.

MCN: So basically, people are tiring of the free and often poor-quality porn on the Web and are paying for more high quality content through on-demand?

BA: Yes. It’s almost like there’s a resurgence of adult content on television. It sounds kind of funny, but now it’s more high-end porn, if you will. There are two kinds of consumers and two kinds of marketplaces: the free stuff on the Internet, where it’s used to generate traffic to sell to other sites, and there is quality adult content. The number of people who watch tons and tons of stuff on the Internet has leveled off. I think people are coming back to more traditional TV viewing.

MCN: From a business standpoint, is Vivid now seeing revenue increases in its adult content offerings?

BA: We are about where we were five years ago, so the slide has stopped. I don’t think we’ll ever get back to where we were 10 years ago, but I think this is the floor and we’re bouncing back. Now, we have to come up with something more creative to keep the momentum going, whether it’s swingers or something else. I think it’s a pretty lucrative market, and we’re comfortable where we are.

MCN:Are viewers coming back to television for adult programming skewing younger or older?

BA: First, there are the older and wealthier viewers who are traditional TV viewers that continue to view adult [content] on television. But then there’s a general audience who really enjoy adult. Our generation acquitted that with the dirty old guy in the raincoat. What you’re seeing now are young people who enjoy adult content openly, and they talk about it amongst each other — it’s just a different attitude around adult. They look at it as part of their sex life. They will pay for exactly what they want to watch.

Affluent Americans are highly engaged with traditional television but their digital media consumption is increasing significantly, according to a 2014 affluent survey conducted by global research company Ipsos.

More than 90% of Affluents -- defined in the survey as the 23% of U.S. households with at least $100,000 in yearly household income -- watched video on traditional television screens over as 7 day period, according to the report. In addition, 44% watched video on a computer, with both figures virtually unchanged from last year.

Nearly half of all Affluents have a TV connected to the Internet, 23% own a smart TV, and 23% have a TV connected to a digital media receiver or streaming device – all of which are up significantly from 2013, according to the survey.

Wealthy Americans also watch 16 hours of traditional broadcast or cable television a week – virtually matching last year’s figures – and tune into an average of more than 15 cable channels a week.  

While affluent Americans are still enjoying traditional television viewing, they are also increasingly turning to digital media for their entertainment. Video viewing on tablets increased to 25% in 2014 compared to 22% last year, while smartphone viewing increased to 31% from 28% in 2013, according to the survey.

Overall, 67% of Affluents now own a smartphone, up from 45% in 2011 and 48% own a tablet, up from a meager 9% in 2011.

Affluents are also big internet users, averaging 42.9 hours of online use weekly. Facebook is the most popular social media network, with Affluents spending more than 6 hours weekly on the site, followed by Instagram with less than five hours a week, according to the survey.

“Digital media use continues to grow, and traditional media use has changed much less than many people expected,” says Steven Krus, chief Insights Officer for Ipsos. “Consumption of new media is supplementing, not supplanting, traditional media use – and the result is a net increase in Affluents’ overall engagement with media.”