Satellite-TV provider Dish Network has admitted liability and agreed to pay a $150,000 penalty for failure to properly de-orbit its EchoStar-7 direct-broadcast satellite, according to the FCC, which said it was the first enforcement action under its space debris policy.

The settlement avoids a possible Federal Communications Commission hearing on whether Dish has the basic qualifications to hold a license.

Dish put the satellite into a “disposal orbit” below that required by its FCC license, according to the FCC Enforcement Bureau. The reason was that the satellite, which was launched in 2002, ran out of fuel and could not follow its disposal plan of an orbit 300 Km above the Earth, instead dropping to 122 Km, well short of its debris mitigation plan.

Also Read: FCC Approves New Ring of Satellites

“This is a breakthrough settlement, making very clear the FCC has strong enforcement authority and capability to enforce its vitally important space debris rules," Enforcement Bureau chief Loyaan A. Egal said.

In 2020, the FCC updated its orbital debris rules to help satellite operators do a better job of taking out the space trash, or at least mitigating its impact.

The update was necessitated, in part, by the FCC’s approval of constellations — sometimes thousands — of smaller satellites to provide competitive internet access services.

Dish Network ended 2022 with some of the most downer data the U.S. pay TV business has ever seen, losing another 191,000 satellite TV customers and 77,000 virtual Sling TV subscribers in the final three months of the year. 

Dish, which won't formally announce Q4 earnings until sometime next month, made the disclosure in an SEC filing Tuesday, in conjunction with the revelation of a $500 million secured debt offering. 

While the nominal rate of decline for Dish satellite didn't increase -- the company bled 203,000 satellite customers in the fourth quarter of 2021 -- the overall erosion rate reached a record 9.8%, usurping the 9.7% bleed rate in Q3 and the 8.9% erosion experienced in the second quarter. 

As equity research company MoffettNathanson noted, Dish satellite's remaining base of just over 7.4 million subscribers is about a third of its peak 2009 size.  

Meanwhile, Sling TV's remaining base of 2.334 million subscribers puts its size roughly where it stood in early 2018, just three years after launch. Its losses, combined with Dish satellite, put Dish's total pay TV erosion in the fourth quarter at 8.9%. 

Dish is the fourth largest pay TV company in the U.S., based on subscriber reach. Its customer bleed rate approached No. 1 pay TV company Comcast in 2022 -- Comcast lost customers at a rate exceeding 10%. 

The losses, which accompany another 24,000 customer defections for Dish's Boost Mobile MVNO-based retail wireless business, aren't shocking. But their pace of decline is concerning for a telecom that's in a race against time -- and acquired capital resources -- to build out its own wireless network, as agreed to under federal consent decree. 

As was also stated in Tuesday's SEC filing, Dish broke ground on its target of 15,000 microcells, with the expectation that those cells will cover 60% of the U.S. population.

Over the next two years, as Dish looks to fund this pricy buildout, analyst Craig Moffett noted Tuesday, investors are probably in for a wild ride.

"While they have used debt thus far, there is a growing expectation that their convertibles will need to be equitized, resulting in meaningful equity dilution," Moffett wrote. ■

The Biden administration is telling a federal court that low power TV stations (LPTVs) are not eligible for satellite must-carry and it should reject a challenge to a clear statutory directive to that effect.

That came in a brief to the U.S. Court of Appeals for the D.C. Circuit, the court of principal jurisdiction over FCC decisions, filed by the FCC and Justice.

While some low-powers are eligible for cable must-carry, the FCC said the statute is clear that is not the case with satellite even for similarly situated stations.

Cable must-carry applies to full-power TV stations and certain “qualified” LPTVs. To qualify, a low-power station must be within 35 miles of a cable headend and there must be "no full power television broadcast station licensed to any community within the county or other political subdivision … served by the cable system."

Also Read: New LPTV Association Launches

Satellite must-carry is a bit different. No satellite carrier has to carry local TV stations, but if they carry one in a given market then they must carry all of them, though only full-power stations. The statute holds that low-power WVUX-LD Fairmont, West Virginia, petitioned the FCC for a declaratory ruling and demand for carriage from Dish Network and DirecTV, which the FCC denied, citing the statute language that satellite must-carry does not include “low-power TV stations,” and saying that language was “fatal” to the petition.

The owner of WVUX, Michael Karr, sought FCC review, but was denied. Karr then sued the FCC, arguing it had misapplied the statute and that, in any event, the disparate treatment by cable and satellite was an unconstitutional abridgement of speech. He pointed out that his low-power met the definition for “qualified” LP under cable must-carry.

The FCC said in its brief to the court that "the fact that WVUX-LD qualifies for carriage by its local cable operator as a qualified low power television station has nothing to do with whether it qualifies for carriage by a satellite carrier."

Also Read: FCC Doesn't Suddenly Grant Must-Carry to LPTVs

Karr argued that a footnote in a 2016 Government Accountability Office report on low-power TV (“17 Federal law requires cable and satellite operators to carry the signal of qualified LPTV stations serving their markets”) was “persuasive authority.” But the FCC said the footnote was just wrong and that an inaccurate statement does not trump the clear language of the statute.

Karr said the FCC should have found a way to interpret the statute differently to avoid running afoul of equal protection given the disparate treatment of LPTV by satellite and cable. But the FCC said the doctrine of “avoidance” does not allow an agency to rewrite a statute under the guise of interpreting it.

“Congress may well have thought it reasonable to require cable companies, under their local franchises, to carry qualified low power stations, since such stations qualify only if, among other things, they provide programming “address[ing] local news and informational needs which are not being adequately served by full power television broadcast stations,” the brief said. “By contrast, the basis for the carriage obligation of satellite carriers reasonably takes account of the fact that they provide programming on a nationwide basis, and their obligation to carry local stations is a consequence of their voluntary choice to provide local programming.”

The FCC and Justice also pointed out that Congress treated cable and satellite carriage differently because the services  are different, one being that cable is a local franchise while satellite is a national service and another that there are technical issues to carrying local TV stations on a satellite that cable does not have.

As to a First Amendment argument, the FCC and Justice said the complaint does not allege that the differential treatment of cable and satellite in statute is an attempt to disfavor the speech of one over the other, while WVUX’s speech rights are not implicated since it is free to broadcast and has no inherent right to have it signals carried by satellite.

"The LPTV Broadcasters Association firmly believes in all re-trans opportunities for both Full Power and Low Power TV," said Michael Lee, executive director of the LPTV Broadcasters Association. "We stand with Michael Karr and WVUX in seeking satellite carriage. Small and rural LPTV stations are often the only front line for local and community news.  The recently introduced Local Journalism Sustainability Act strongly recognizes the role and importance of local broadcasters." 

Alaskan cable and telecom provider GCI said it has entered into a $150 million partnership with Intelsat to expand its geosynchronous satellite capacity to meet growing demand in rural areas across the state.

According to GCI, the deal provides continued access to Intelsat’s C-band and Ku-band capacity -- already part of GCI’s portfolio -- but also provides new access to Ka-band spectrum across the state. 

As part of the deal Intelsat will supply a multiple-satellite solution over an enhanced managed earth station platform and a tri-band (C, Ku, and Ka) network that will cover the entire state of Alaska.

In a press release, GCI CEO Ron Duncan said the Intelsat deal will nearly quadruple the company’s available satellite capacity and is part of a much broader rural connectivity strategy that also includes its ambitious AU-Aleutians Fiber Project. 

“Today’s announcement is another example of GCI’s continued commitment to our rural customers and our willingness to make the investment necessary to serve small, remote communities across the state,” Duncan said in the press release.

Also Read: GCI Targets 17 Rural Communities for 2021 Broadband Upgrades 

GCI is Alaska’s largest telecommunications company and has delivered satellite-based connectivity for 35 years. The company said the Intelsat deal will ensure it has sufficient capacity to meet the needs of rural customers like regional tribal health care providers, school districts, government agencies, and businesses.

“What sets GCI’s satellite service apart is that we manage the network from end to end, combining Intelsat’s satellite capacity with GCI’s satellite engineering and remote logistics know-how,” GCI SVP of corporate development Billy Wailand said in a press release.

Also Read: GCI Commits to Deploy 2 Gbps Service in Alaska in 2022 

The agreement also adds another tool in GCI’s broadband service approach, which includes a mix of fiber, microwave, GEO satellites and eventually low earth orbit (LEO) satellites. GCI has been actively engaged in talks with LEO providers including SpaceX, OneWeb, and Telesat. 

Also Read: Cable’s Last Frontier 

“We are confident that LEOs will become an important part of GCI’s toolkit over time,” Wailand said in the release. “But before we begin encouraging some of our customers to consider a move to LEO satellites, we need to be confident in their performance and ability to meet our customers’ current and future demands. Our partnership with Intelsat provides GCI and our customers with an immediate solution that addresses capacity needs today, as well as the ability to integrate future technologies like LEOs when they become ready.”

Dish Network stock fell more than 5% Wednesday after JP Morgan media analyst Phil Cusick downgraded the stock, casting doubt on the satellite TV giant’s wireless plans and adding that the one potential bright spot in the strategy is at least two-to-three years off.

Cusick downgraded Dish shares to “underweight” from “neutral,” but raised his 12-month target on the shares from $38 to $45 each, saying that its plans to build a wireless network in the next several years could be extremely costly and that the No. 2 satellite TV service provider enters the market at a time when barriers are high and competition is fierce. 

Dish shares fell as much as 7.3% ($3.16 each) to $40.42 per share on June 9, closing at $40.44 each, down 7.2%. 

“We can’t find a way but to be skeptical on the Dish story,” Cusick wrote. “[W]e have nothing but respect for Dish chairman Charlie Ergen and his team, but can’t get over our skepticism on three major issues.”

Those issues, according to Cusick are the difficulty in building a wireless network, Dish is expected to struggle to compete against wireless carriers with double and triple its spectrum holdings, and fears that Dish may be too late to the 5G game as other carriers have accelerated deployment and eliminated any advantage Dish would have had if it had been first. 

Dish has said it would spend about $10 billion to build a nationwide 5G wireless network based on ORAN technology, a figure that many analysts said is shockingly low. Dish has about one year to make the network available to 20% of the country as part of the federal requirements for its wireless spectrum licenses, and to 70% of the country by June 2023, deadlines the company says will be reached easily but that other analysts are skeptical can be achieved without a partner. Dish has said it will launch service first in Las Vegas in the third quarter. 

Also Read: Dish: No Partner Needed for Wireless Dance 

Some had hoped that partner would be Amazon, and Dish said in April that it picked the e-retailing giant to provide cloud services for its wireless offering. But so far, Dish is expected to build the network on its own. 

In his report, Cusick wrote that the only bright spot for Dish’s wireless endeavors -- a possible partnership with Amazon in some sort of “Prime Wireless” offering -- if it were to occur, is at least two to three years off in the future. 

“What could a ‘Prime Wireless’ offer look like? What would it bring? We think a lot about where we could be wrong, and how Dish could really disrupt the wireless industry,” Cusick wrote, adding that it’s difficult to see how the satellite company could offer disruptive pricing on its own. 

While Cusick says it is possible that Dish and Amazon could mirror what e-retailers Rakuten and Jio have done with wireless -- offering months or years of free wireless service to drive Prime subscriptions -- he still has doubts.

Also Read: Satellite TV: Five Years, That’s All You’ve Got 

Cusick estimated that it could cost Amazon as little as $11 per subscriber per month to offer a Dish wireless service with Amazon Prime, but he wondered “why Amazon would do this until Dish’s network is proven and of sufficient quality. It makes a lot more sense to us, if it happens, 2-3 years from now at earliest.”

Cusick also speculated on a possible merger of satellite TV assets with rival DirecTV, which in February said it would spin off its TV business with private equity firm TPG. He added a deal is more likely to happen now, especially as content providers continue to unleash direct-to-consumer products, but would likely take at least a year to complete.  

Also Read: Dish Gets Back to its Rural Roots

“We believe that a combination of Dish and DirecTV is likely to face substantial regulatory scrutiny should the parties come to an agreement given the rural concentration of the sub base, but we believe that a deal can eventually be approved,” Cusick wrote. “A deal could be announced by 2022, after AT&T's sale of DirecTV to TPG closes, but getting Ergen and AT&T executives to agree on a price is likely to face hurdles.”

Cusick noted that while the 2007 merger of Sirius Satellite Radio and XM Satellite Radio Holdings is often cited when predicting federal approval of a Dish-DirecTV union, it took 17 months for that earlier deal to get the regulatory nod, “despite the stress that the businesses were under.”

Orby TV was a bit of a contradiction in terms when it launched back in 2019: A video programmer that was offering a skinny bundle (a plus), over a satellite distribution platform (a minus) but economically priced at $40 per month (a plus) and aimed at a market that was becoming increasingly neglected by traditional TV (Baby Boomers who wanted a lean-back experience.) But former CEO Michael Thornton said the service, which was zeroing in on its break-even point after a little more than a year in business, was done in by a combination of industry misperceptions about the satellite TV business, broken promises from potential investors and the emergence of streaming video.

In an interview with B+C/Multichannel News, Thornton said Orby TV was in the final stages of landing a new benefactor before they pulled out at the last minute, dashing the satellite startup's chances of survival and leading to it filing for Chapter 11 bankruptcy in March.

Thornton, a former chief revenue officer at premium programmer Starz, founded Orby TV in 2018, with $25 million in backing from the General Electric Pension Trust. Armed with that money, Thornton said that Orby TV was poised to carve out a healthy niche, even if it was in a segment of the TV business that practically everyone else believed was dying a slow, painful death. 

But according to Thornton, the initial reaction to the service was extremely positive. 

“When we went out [to potential investors], I guess it was in late 2017, we got a ton of traction,” Thornton said. “The story, even though it was somewhat contrarian, people understood it, particularly the idea of a centralized and very un-capital intensive [company]. It was a really easy story to tell [and] it didn’t take a lot of subscribers to generate a fair amount of cash.” 

Thornton said when Orby TV shut down, it had about 30,000 subscribers, nearly half-way to its break even point (where it would start turning a profit) of 65,000 customers.  

Simple Pitch

Orby TV’s pitch was focused on its prepaid, pay-as-you-go offerings, with no contracts to sign and no credit checks to slog through. The company believed that it could appeal to the 30 million existing prepaid wireless customers, who are traditionally focused on keeping costs low and don’t particularly cotton to the hidden fees and charges that pop up in many traditional video packages. With Orby TV there were no surprises in the monthly bill -- that $40 included all taxes and fees.   

But though the service launched with much optimism, there were already two strikes against it: the precipitous decline of satellite TV and the chasm between what consumers say they want and what they are willing to pay for.

First, the satellite business. 

Satellite Decline

Subscriber numbers for the satellite business have never been worse than they are today, but they weren’t much better in 2019. DirecTV and Dish Network had been steadily losing subscribers for years -- DirecTV had peaked at about 21 million customers in 2017, around two years after it was purchased by AT&T, but has lost about 8 million subscribers in just three years, according to Statista. Dish Network, which had about 11 million satellite TV customers in 2017, had shrunk to about 8 million subscribers by the time Orby TV launched. 

Orby TV launched amid that backdrop, which to the untrained investor would look like a risky neighborhood. Even trained investors said that in retrospect, launching a brand-new satellite TV service in that climate would have raised many questions.

FBN Securities media analyst Robert Routh, who has followed the satellite business for years but did not cover privately-held Orby TV, said that the primary rule for any TV service is that it brings something new to the overall business. And though Orby TV was trying to differentiate itself through its low-priced prepaid options, he said to most consumers, that probably wouldn’t be enough. 

“When it comes to distribution, unless you're bringing to the table something that is a real advantage to the consumer that the other’s don’t have -- and I don’t know what that could be --  at a better price, why bother?” Routh said. “It’s like putting up a gas station across the street from other gas stations.” 

Thornton said he realized that satellite TV service was in decline, but he and his investors believed that was tied more to the inefficiencies and high prices of the larger providers. Plus, Orby TV only needed to convince less than 100,000 prepaid wireless customers to sign on to the video service to make money. With 30 million prepaid wireless customers already out there, that seemed like a good gamble. 

“The difference with us, we were looking at tens of thousands of customers for a profitable business and a really profitable business once it hits that break-even,” Thornton said. “So, it doesn't take a [lot of] time to move forward. But you’re right, satellite is not the future in terms of in-home television viewing, And that just became a really really hard thing to overcome.” 

Blinders Off

Thornton didn’t enter into the satellite venture naively. A 22-year veteran of the TV business, he had spent eight years at premium channel Starz, was an EVP at Disney/ABC Domestic Television and even served as SVP of programming acquisitions at DirecTV in the late 1990s. So he knew how the pay TV business worked. And even with the satellite business in decline, Thornton was convinced that there was room for a focused, cost-efficient, niche player that offered a strong programming slate for a low price.

“We really felt that the traditional market was just too expensive and there had to be an opportunity for people to access television but not at these exorbitant prices that just keep going up and up,” Thornton said of the decision to start up the business. “The idea was, even with the streaming that hit the market, there were still a ton of people, particularly in the boomer generation, that just wanted to turn on their TV and watch it and get a skinny bundle with a lot of value that wasn’t exorbitantly priced, wasn’t in that $125 price range.” 

And the prevailing wisdom seemed to back him up. For years prior, analysts, distributors and some programmers touted the need for “skinny bundles,” thinner packages of programming, usually minus sports networks, that could be offered at lower prices to consumers. With the traditional TV bundle costing north of $100 per month, several distributors attempted to offer up smaller, cheaper bundles that at first brought some pretty stiff resistance from programmers. As time went on, and pay TV subscriber rolls have dwindled across the board, that resistance has waned somewhat. 

The Trouble With Skinny Bundles

And that brings us to the second strike against the satellite startup -- rights issues and payment demands have hamstrung MVPDs in trying to set up skinnier packages for years. While that is beginning to ease a bit, consumers have managed to talk a good game when it comes to desiring smaller video packages, but have been reluctant to open their wallets.

A combination of not being able to get the channels they want in a skinny package, the hassle of switching providers and the emergence of streaming services like Netflix, Amazon Prime Video and Hulu have effectively squashed the skinny bundle. The advent of direct-to-consumer offerings from established programmers like Disney (Disney Plus), WarnerMedia (HBO Max); ViacomCBS (Paramount Plus) and Discovery (Discovery Plus) have made it even more complicated. 

Secondly, for pay TV stalwarts like cable, telco and satellite TV companies, skinny bundles haven’t really worked. Mainly because they’re not that skinny.

Obligations to keep pricey sports channels like ESPN, FS1 and regional sports networks on the most popular tier have tied many a cable, telco and satellite TV operator’s hands. When Verizon’s Fios first introduced its Custom TV skinny bundle in 2015, it was met with outrage by programmers, who said the package violated their agreements. One year later, Verizon amended the Custom TV package, adding ESPN and other sports channels to a Sports and More offering for the same price.  Today, Verizon has “Mix and Match” which allows customers to “test drive” its entire channel lineup, formulating a package of most-watched channels after two months.  

But Then Again, There’s Philo

At the same time, Philo TV, launched in 2018, around the same time as Orby TV, has managed to carve out a niche in low-cost, non-sports programming. Philo first offered 35 channels for $16 per month (an add-on package of nine channels was also available for an additional $4 per month). Now the company offers 63 channels (including AMC, Comedy Central and Discovery Channel) for $20 per month and as of November 2020 had about 800,000 subscribers. 

Thornton pointed to Philo as proof that the skinny bundle is still desirable.

“They [Philo TV] have many, many more subs that we had with a smaller bundle than we had,” Thornton said. “The skinny bundle is something that people want.”

He also dismissed the argument that what consumers really want is ala carte programming where they can mix and match their favorite channels for lower prices. While that’s the ideal, it’s also a hassle to sort through the hundreds of possible options such a future could bring. 

“Ultimately everybody tries to get to more of an ala carte place, but in reality people don't want ala carte, they want to be told, ‘Here are the different packages,’” Thornton said. “They want to be pointed to the best value, they want the ability to think that they can ala carte as well. It’s a difficult balance, and a lot of it is based upon history.”

Routh added that adding to the pressure is that some people, especially in really rural areas, don’t want TV at all. And it doesn’t matter how low the price for the service is.

"You can’t change the nature, the behavior of those people,” Routh said. “There’s nothing wrong with that, but out of that universe he was targeting, there was [probably] a certain percentage that even for nothing they wouldn’t take it.” 

Opening Optimism

When it launched in 2019, Orby TV offered content from top programmers like ViacomCBS, WarnerMedia, AMC Networks and Discovery. From the start, Orby TV offered 44 channels for $40 per month, with an expanded package that included digital networks like MTV Classic, DIY and others for $50 per month. Orby TV was able to keep its rates low because it didn’t offer sports channels like ESPN and FS1, and broadcast channels. Customers could access their local broadcast networks via a digital antenna over-the-air. 

Also Read: Brave New TV World 

With lower cost programming -- no USA Network, Fox News Channel or Disney Channel --  and no upfront equipment costs -- customers had to buy their own dishes and set-tops at Best Buy, Target or other retailers -- Orby TV had low overhead. Thornton said the company at its height only had 17 full-time employees. 

 "The cost basis was very low," Thornton said.   

Financing Troubles 

Looking back, Thornton said he wished he hadn’t relied on one financial backer. And even with low overhead, the company burned through most of that $25 million in about 16 months -- bankruptcy documents said the company had $500,000 in cash and $52 million in liabilities, mostly to programmers. 

According to court documents, GE Pension Trust is owed about $11.6 million, while programmers like Viacom ($16.4 million), AMC Networks ($10.4 million), Turner Broadcasting System ($4 million) round out the list of unsecured creditors. 

When it became clear that the GE Pension Trust wasn’t going to put any more money in the company, Thornton said that he had lined up a group of investors -- including programmers who had networks carried by the service -- to pump in needed capital. But that deal collapsed literally inches away from the finish line. 

“We lined them up, hopefully to close in the middle of 2020, but like everything else in the pandemic, things were slow to get going,” Thornton said. “That close kept getting pushed off, pushed off until the fall. Then at the eleventh hour, literally the week we were set to close with the programmers, one programmer backed out. With that programmer backing out, all the programmers said, ‘Well, maybe we will take a step back and rethink this.’ The irony at least to me was the numbers had held really really well during the pandemic -- a lot of people were watching TV, were watching their budgets, and we continued to grow.” 

Thornton declined to identify the investors, but said the specter of streaming TV dominated almost every conversation he had with potential backers. At one point, because of its pre-pay option that allowed customers to “pay-as-you-go,” for service, Thornton met prepaid wireless carriers like Tracfone and its then-parent American Movil about potential partnerships.

“We had some very interesting discussions with the Tracfone guys and even American Movil out of Mexico City,” Thornton said. “But unbeknownst to us, at the same time we were talking to them, they were talking about selling as well.” 

Tracfone said in September that it had agreed to be purchased by Verizon. 

Hooking up with a prepaid phone carrier would have been a smart move, Routh said.

“What he was doing, it did, on a certain level did make sense, and if he could have gotten it bundled with a prepaid phone plan, then it probably would have had a much greater chance of survival,” Routh said. “Since he wasn’t able to, I’m sure he was paying the programmers multiples of what Comcast pays. And with the upfront costs and the leverage, he couldn’t grow subs fast enough. It was ballsy to even attempt, you have to give him credit for that.” 

Thornton added that there was no lack of trying. In the pitch to phone providers,  he compared Orby TV to another alternative video carrier -- Layer 3 -- that was eventually swallowed up by T-Mobile in 2018 for $325 million.  T-Mobile shuttered that service, along with its TVision video offering, about two years later.  

Orby TV was pitched as a way for prepaid carriers to break into the video market at a lower cost than Layer 3, he said. At the time Layer 3 (which raised about $100 million in several rounds of financing) was marketing a high-end, “fat bundle” package, targeted at customers that wanted lots of video, white-glove customer service and weren’t afraid to pay top dollar for it. Layer 3 video packages started at $75 per month. 

“In some of the early pitches, I would say if you’re familiar with Layer 3, we are exactly at the other end of the spectrum,” Thornton said. 

Streaming Emerges

Also at that time, several programmers were eyeing streaming options, but most were still selling content to SVOD companies like Netflix and Amazon Prime. That all changed when The Walt Disney Co. launched its Disney Plus streaming service in 2019. Disney set the tone with a $6.99 monthly price point, and was followed by offerings from WarnerMedia (HBO Max), AMC Networks (AMC Plus), NBCUniversal (Peacock), ViacomCBS (Paramount Plus) and Discovery Inc. (Discovery Plus). 

“The surprise to me was the amount of focus solely on streaming, it's the bright shiny object that everyone seems to be chasing,” Thornton said. “People talk about that there is a lot of money out there that needs to be invested, and there is, but people are singularly focused on streaming.”

He added that the market responds quickly and favorably to seemingly minuscule streaming moves, ignoring the fact that it will take a tremendous amount of growth before that segment is profitable. Meanwhile, other parts of the video business are being ignored. 

“People are wildly, wildly focused on that one [streaming] aspect,” Thornton said. “Wherein last I checked it’s still a very profitable business to be in the broadcast business. Local broadcast stations are still doing insanely well. Do they need to grow and do they need to adapt? Absolutely. But it’s a great business right now.” 

Still, there’s no mistaking that streaming is the future of the business. And programmers are making moves to lay out the infrastructure for that future now. In the meantime, there are some analysts that predict that some satellite players will be whittled down to nothing in as soon as five years. 

Thornton said that when it became apparent that the bottom was falling out of his financing deal, he tried hard to save the company, talking with Dish Network founder and chairman Charlie Ergen about a possible partnership. In the meantime, speculation was high that the company was in trouble, especially after its website suddenly went dark. 

“I went to Charlie and we talked about even doing an MVNO relationship,” Thornton said. “Using his capacity, using his satellites and his equipment and just keeping  the Orby name and having to transfer everybody over. He [Ergen] sees the value in these customers because it’s probably not unlike the customer he originally went after. In the end, while we talked about it and thought about it, the expense of pushing everybody over he felt was probably more than it was worth.”

After it filed for bankruptcy in March, Orby TV urged customers via its website to switch to Dish Network. 

Lessons Learned

Today, Thornton isn’t holding out much hope for an Orby TV rebirth.

“I think if it was going to be able to restart, it probably would have by now,” he said. “The longer the customers are without programming, the harder it is to bring them back. If it got down to right before pre-filing that I thought there was a chance for somebody to come in and swoop it up, I actually thought about trying to raise money myself and swoop it up, but it just became more trouble than we thought would be worthwhile.”

But he believes there is a lesson to be learned from the demise of the business.

“You would think that the programmers would look at that and say we’ve got to figure this out,” Thornton said. “When a cable operator, no matter how small, says it’s worth my while to give you a Firestick or an Apple TV or a Chromecast because I can't give you programming in a way that I can make money, something’s wrong.” 

AT&T’s decision to sell a minority interest in DirecTV to TPG Capital didn’t come as a surprise, it had been expected for months as the phone company let small details around the deal trickle out beginning last year. But the deal, where TPG Capital will get a 30% interest in DirecTV, virtual MVPD AT&T TV Now and IPTV service U-verse for $7.8 billion, had analysts searching for meaning behind selling what was once the premier pay TV asset for about a quarter of what it paid for it seven years ago. 

The TPG deal values DirecTV, once the scourge of every cable operator and the largest multichannel video programming distributor in the country, at $16.25 billion (after it paid, including assumed debt, $66 billion for the asset in 2015). Enough has been said about how since AT&T bought DirecTV, it has nearly sucked the life out of the satellite giant, how it has lost nearly 10 million customers, its relevance as a brand and its heart as the gold standard for customer service and quality. Put those thoughts on the shelf for a minute. What the deal shows, according to some analysts, is that AT&T, seeking a way, any way, to pay down the debt it has accumulated over the past six years through the DirecTV buy and its $100-plus billion purchase of Time Warner Inc. -- has again been taken advantage of in the TV space.

Granted, DirecTV is a declining asset -- it has lost bucketsful of subscribers over the years and in the broadband era, its product can’t really compete with cable operators with two revenue streams and  the streaming services that appear to have taken over the TV business. But, c’mon, did it really have to end like this?

In an email to clients, MoffettNathanson principal and senior analyst Craig Moffett, long a critic of AT&T’s purchase of DirecTV in the first place, wrote that the TPG deal serves the purpose of removing the satellite company’s dismal financials from the phone company’s books. But that’s essentially where the benefit ends. 

“In short, what they’ve really done is buy the right to lock DirecTV in the basement in the hope that no one remembers it’s down there,” Moffett wrote.  “It will surely no longer be mentioned when AT&T reports earnings.”

The “bewilderingly complex transaction,” according to Moffett, will basically give AT&T some extra cash ($1.8 billion from TPG), a vehicle in the spun-off entity to raise debt ($5.8 billion) and control of an asset it doesn’t care for. 

And the ultimate irony is that the deal doesn’t actually reduce AT&T’s leverage, it increases it. According to Moffett, the $7.8 billion used to pay down debt is offset by the loss of $3 billion in cash flow from DirecTV. So in real numbers, AT&T leverage ratio climbs from 4.1 times cash flow to 4.2 times when the deal closes in the second half of this year.  

The deal may be complicated, but Moffett said one thing is glaringly obvious.

“This much is clear,” he wrote. “ AT&T’s DirecTV is inarguably one of the worst acquisitions of all time.”   

Also Read: AT&T and DirecTV: Divorce Won’t Be Easy

In a research note, Barclays Group media analyst Kannan Venkateshwar noted that AT&T has said that it expects about $1 billion in annual free cash flow starting next year from the spin-off. While the structure is complicated -- he added that it isn’t clear how AT&T will split the $4 billion in DirecTV free cash flow (70/30 or 50/50) -- if TPG gets in the neighborhood of the $1 billion AT&T expects, the returns on its $1.8 billion cash investment will be rather large in a very short period of time. Remember, that according to the deal terms, TPG is contributing $1.8 billion in cash and assuming about $6 billion in debt as part of the deal. Curiously, that amount is pretty close to the $8.1 billion TPG received in its sale of Astound Broadband, the 1-million subscriber cable operator (RCN, Grade Communications, Wave Broadband and enTouch) it sold to Stonepeak Infrastructure Partners last year. 

Venkateshwar was one of many analysts who pointed out that the deal appears to favor TPG more -- in another research note, Evercore ISI Group analyst Vijay Jayant wrote that determining whether the sale was good for AT&T is “Complicated”. But the Barclays analyst deal hinted that the TPG deal is so bad for AT&T that it just has to have an angle that maybe others are missing. 

Also Read: AT&T: Taking a Mulligan on Media 

In his note, Venkateshwar said that the deal is interesting because it hits almost none of the metrics usually associated with such deals -- it’s free cash flow dilutive, it doesn’t really reduce AT&T’s debt that much (about $200 million) and allows AT&T to “lose strategic control” over one of its biggest cash cows. To make matters worse, he wrote that the leverage on the new company is a lot lower than what investors would normally expect from a private equity deal.  

“A skeptical read could be that the decision to sell despite the low valuation, the inability to hit financial deal objectives, and the unusually low leverage are all likely due to more structural risk than investors may have anticipated in AT&T,” Venkateshwar wrote. “However, in our opinion, the unusual structure could imply that the transaction is potentially just the first phase of a more comprehensive transaction. It is also possible that it is a combination of both.”

Venkateshwar suggested that TPG might be able to work better behind the scenes toward a Dish merger, adding that the synergies of such a deal could boost AT&T’s economics at some point in the future. 

“This would also explain the decision to put a low leverage on the asset as the combined company could have significant synergies which can then be levered up more efficiently to drive much higher returns for all counterparties,”  Venkateshwar wrote. “Therefore, while the initial read for AT&T from the announcement seems to be negative, we think there could be more to the deal than meets the eye.”

On a conference call with analysts to discuss the deal on Feb. 25, AT&T CEO John Stankey didn’t want to comment on the merger potential of the deal. 

“There are a lot of different terms and conditions in it  [the TPG deal] and a lot of different scenarios that might be out there that I’m not going to talk about or fill in the public on,” Stankey said on the call. “Generally speaking, we remain a participant in any future value that gets created as a 70% owner of this entity. If something else occurs, we get 70% of the value and our partner gets 30% of the value as a general rule. Both parties are incented to try to create more value because it’s good for our investment and our structure moving forward. That’s the simplest way to think about it. ” 

The concept of the combination of DirecTV and Dish is nothing new. But even though the climate has changed, and the fact that the only two satellite TV companies in existence are both struggling, regulators are apparently no more open to a combination now than before. As recently as October, under a Republican administration mind you, the Dept. of Justice was reportedly sending messages that they would not allow a merger to take place. With a current Democratic administration not necessarily keen on making even struggling rich guys richer, chances of a deal happening can’t be much better. 

Dish chairman Charlie Ergen has said the merger of Dish and DirecTV is “inevitable,”  adding that the satellite business is a declining asset and that putting the two together would ensure their health. 

“Make no mistake, whether it’s a year from now or 10 years from now, I believe it’s inevitable those companies go together,” Ergen said during Dish’s Q3 conference call in November. 

To me, putting together two companies in an industry that has passed them by isn’t a solution, it’s procrastination. Together the two may have some cost synergies and additional scale, but the satellite TV business is still going to die. A Dish/DirecTV merger would only prolong the inevitable demise of both companies. 

In an August research report, Moffett estimated that merging with Dish would only improve the combined company’s subscriber erosion to 15% per year. And Moffett added that with Charter and others planning to increase rural broadband buildouts, the picture is even gloomier.

“If we see a huge post-COVID stimulus/infrastructure bill next year targeting broadband expansion, as seems likely, then the defensible rural segment will all but disappear,” Moffett wrote in the August note.

So, perhaps the reasoning behind the deal is really as simple as a company that realized it got into a bad business at an even worse time and just wanted out. In opening up the conference call on the deal Feb. 25, Stankey said " We didn't expect this outcome when we closed the DirecTV transaction in 2015, but it’s the right thing to do."

Or maybe, as a slightly older, wiser sage once put it, there is no why.

The ongoing retransmission consent battle between Dish Network and Nexstar Media Group continued Friday, with the station group claiming that Dish has declined reasonable offers to settle the dispute.

Dish fired the first shot in the dispute on Thanksgiving Day, claiming that Nexstar is threatening to darken its 164 stations across the country to Dish subscribers if it is not paid what the satellite service provider claims are unprecedented rate increases.

“Nexstar is intentionally turning its back on its public interest obligation and instead demanding consumers pay significantly more for the channels they could receive for free over-the-air,” Dish TV group president Brian Neylon said in a press release. 

Nexstar said in its own press statement that its stations will go dark to Dish customers at 7 p.m. local time on Dec. 2 if a retransmission consent deal is not reached. Nexstar added that talks have been ongoing since July, and that Dish has rejected reasonable offers from the broadcaster at rates the distributor’s peers have agreed to in the past. 

“Since July, Nexstar has been negotiating tirelessly and in good faith in an attempt to reach a mutually agreeable multi-year contract with Dish, offering Dish the same fair market rates it offered to other large distribution partners with whom it completed successful negotiations in 2019 and 2020,” Nexstar said in the release. The satellite TV company, Nexstar claims,  has instead countered those offers by proposing rates that go “significantly backward” and by threatening to drop Nexstar’s cable channel, WGN America. 

Nexstar also pointed out Dish’s past retrans and carriage scuffles, adding that in 2020 alone, the company has dropped network or local community programming from The E.W. Scripps Co., Cox Media Group, Mission Broadcasting, and the NFL Network. In contrast, Nexstar pointed to its recent carriage deals, adding that in October alone it had reached agreements with nearly 200 distribution partners and that since purchasing Tribune Media in September 2019, it has completed agreements with distributors covering more than half of its U.S. footprint.

“If the companies are unable to reach an agreement, Dish subscribers in 115 Nexstar markets from Los Angeles to Charlotte will lose access to thousands of hours of vitally important local news, just as the country prepares for an explosion in new coronavirus cases and a new President prepares to take office,” Nexstar said in the release. “Dish subscribers will also lose the ability to access the NFL and college football games scheduled for the weekend of December 5-6, and all of the entertainment programming provided by Nexstar’s network partners, CBS, FOX, NBC, ABC, The CW and MyNet."

Nexstar said that it still hopes to hammer out a deal in time. But if that fails, it intends to “actively educate” customers in the affected markets -- mainly by urging them to drop Dish and signing on with alternative distributors that carry the networks. 

It was always a long shot, but ACA Connects failed in its attempt to get a federal court to block the FCC's Sept. 14 deadline for electing a lump sum payment for moving off satellite spectrum in the C-Band.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit Monday (Sept. 14) denied the association's request for a write of mandamus, which is essentially a court stepping in to block an agency decision before it becomes final.

Related: ACAC, FCC Make C-Band Payment Cases

The judges said ACA Connects had not demonstrated its challenge of the underlying order was likely to succeed on the merits of the argument that the FCC's Wireless Telecommunications Bureau was required to include decoder equipment costs in its lump sum or that the process at arriving at that lump sum was arbitrary and capricious.

“ACA Connects is disappointed that the D.C. Circuit has denied our request to stay the lump-sum election deadline," the group said in a statement. "We are reviewing the court’s order and fully considering our options going forward."

ACAC said the FCC decision on the lump sum payments were "the product of secret meetings with a handful of unidentified stakeholders" and "rests on undisclosed data and an impossible-to-reproduce methodology."

The FCC is paying cable operators and other earth station operators to move off the lower portion of the band so it can auction it for 5G, giving them the option of itemizing expenses or a lump sum.

ACA Connects has issues with what the FCC is and isn't paying for.

In a move that ACAC had signaled could land the FCC in court, the Wireless Telecommunications Bureau in July released the final cost catalog for C-Band relocation expenses and lump sum elections and it did not include compensating cable operators for integrated receiver/decoders (IRDS), as ACA Connects and other cable operators had pushed for.  

Including the IRD costs would make it easier for cable ops to move to fiber delivery, but the FCC said the lump sum was meant to approximate the cost of moving earth stations, not moving to a new distribution technology.

“Rolling out the next generation communications network needs to happen fast, as we’re already behind in this race," said Mike Rogers, chairman of 5G action Now and former chairman of the House Intelligence Committee. "Today’s court decision ensures the 5G roll out will continue at the swift pace necessary to beat China.”

The FCC has denied a protest by satellite companies over its decision to move them out of the lower 300 MHz of the 500 MHz C-Band so it could auction 280 MHz of that band (minus a 20 MHz guard band).

The FCC had denied a request by small satellite operators ABS Global Ltd. (ABS), Empresa Argentina de Soluciones Satelitales S.A. (ARSAT), Hispamar Satélites S.A., and Hispasat S.A. (Hispasat) to stay its decision to auction the lower portion of C-Band satellite spectrum for terrestrial 5G. A federal court had likewise denied a stay, after which the operators protested to the FCC that it was not authorized by statute to make such a "fundamental change" to their licenses.

Related: FCC Sets December Auction for C-Band Spectrum

The FCC voted unanimously, with two partial dissents from the Democrats, to dismiss the protest on procedural grounds because it did not raise any new arguments but relied on arguments already made. And, since it relied on arguments the FCC had addressed when approving the migration, the FCC also dismissed the complaint on the merits for the reasons it gave when denying the stay. 

The FCC, in denying the protest, countered that it was empowered to modify any license if it concluded that would promote the public interest, and pointed to court precedent that the FCC can migrate licenses from one spectrum range to another and not run afoul of the prohibition on fundamental changes to licenses so long as the migration allows them to continue to provide comparable service.

Related: Divided FCC Votes to Proceed with C-Band Auction

The FCC concluded that the move to the upper 200 MHz of the band will allow for that comparable service since the upper portion of the band is being used now by those operators. It even suggested that the migration might make it possible for them to serve new customers. 

FCC commissioner Jessica Rosenworcel said she approved the dismissal because "in doing so, the agency clears the way for a court to consider the merits of the FCC’s decision-making in the underlying proceeding." A court can't consider an appeal until the agency has provided a final decision, which it has done in rejecting the protest. "I support today’s order because I believe we should speed the way for this resolution," she said.

Amazon, which is getting into the satellite-building business, is taking issue with some of the FCC's proposals to tighten standards for satellite-related orbital debris, saying they are at odds with orbital debris policies of the rest of the government and risk U.S. space leadership.

The commission voted unanimously in favor of the draft rule changes last week. 

Related: FCC Updates Orbital Debris Rules 

But Amazon execs, in phone meetings with FCC staffers, said some of the draft rules, including one analyzing collision and casualty-risks, "threaten U.S. leadership in the commercial space sector and compromise innovation in the space environment." 

The company said it remains committed to space safety, just not the way the FCC is proposing to achieve it.  

Amazon said the FCC proposal diverges from existing government space policy, and not in a good way. 

Related: Pai Proposes Streamlining Smallsat Licensing 

"[T]he Draft R&O substitutes Commission rules for the consensus U.S. government position of more than a dozen different government departments, agencies and offices," Amazon execs said. "The Draft R&O’s approach conflicts with the President’s desire for a 'coordinated,' “national space policy.”

"Rather than adopt inconsistent regulations that may inhibit innovation and raise the specter of interagency jurisdictional conflict, Amazon recommends the Commission adopt debris mitigation standards that align with existing U.S. government standards," it told the FCC staffers. 

The FCC has updated its orbital debris rules to help satellite operators do a better job of taking out the space trash, or at least mitigating its impact, literally. 

The rules cover all licensed satellite operators in the U.S. and have not been updated since 2004, the FCC pointed out Thursday (April 23) following the approval vote at the FCC's April (virtual) public meeting. 

Related: FCC Proposes Streamlining Smallsat Licensing 

The update was necessitated, in part, by the FCC approval since that time of constellations--sometimes thousands--of smaller satellites.

"As we enter a new era in which tens of thousands of new satellites could be deployed, space debris is becoming a more serious concern," said FCC chair Ajit Pai Thursday (April 23). "If you want a graphic illustration of the problem, just re-watch the movie Gravity." 

The Report and Order (a final action) adopted Thursday (April 23) requires satellite operators to more precisely measure collision risk and post-mission disposal success, and casualty risk by assigning them numerical values. 

There are also new disclosure requirements on protecting inhabitable spacecraft as well as on maneuverability of the satellites, any release of "persistent liquids" trackability and more. The time also tweaks the process for seeking extensions of license terms for geostationary orbit satellites--the kind that the FCC is anticipating can start providing competitive broadband service. 

The FCC also adopted a Further Notice of Proposed Rulemaking (FNPRM) seeking comment on various other issues including collision risk and casualty risk for satellite constellations "on a systemwide basis." 

With a perhaps-unfortunate word choice, commissioner Jessica Rosenworcel talked about the "explosion of activity in space, courtesy of so many new constellations and satellite systems." 

The FCC vote for the rule update was unanimous, but she only concurred, which is short of an approval.  

She said that was because the FCC missed an opportunity to do more. While the FCC teed up tightening the 25-year rule--allowing a satellite and its debris to remain in orbit for a quarter century after its useful life--the FCC did not do so.  

She said that meant taking a pass on one of the most important things it could have done, though she conceded, and appreciated, the fact that the item anticipated it could be dealt with in a succeeding rulemaking. She also said the FCC could have done more in terms of "collision risks for large constellations, accidental explosion risk, and maneuverability issues," among the issues teed up in the FNPRM. 

"Going forward we need to prepare for the future with more speed and urgency if we want the United States to retain our global authority in space matters," said Rosenworcel.

AT&T’s DirecTV pay TV unit has successfully petitioned the FCC to let it move one of its satellites that is in danger of exploding due to a battery problem.

Earlier this week, DirecTV notified the agency that Spaceway-1, a 15-year-old satellite that delivers 720P programming and has been relegated to back-up status, suffered in December “irreversible thermal damage” to its batteries.

If the satellite uses its damaged batteries while in its current geostationary orbit, it could cause an “accidental explosion,” DirecTV said. (Think back to the cascading effect that caused the disaster in Alfonso Cuarón’s 2013 action thriller Gravity.)

As of now, Spaceway-1 can remain operational using solar panels. But that won’t be the case in the upcoming “eclipse season,” which starts later next month.

“Boeing, the spacecraft manufacturer, concluded based on all available data that the batteries’ cells cannot be guaranteed to withstand the pressures needed to support safe operation of the spacecraft in eclipse operations; rather, there is a significant risk that these battery cells could burst,” the FCC filing said.

“Use of the batteries during eclipse is unavoidable and there is no ability to isolate damaged battery cells,” the filing added. “The risk of a catastrophic battery failure makes it urgent that Spaceway-1 be fully de-orbited and decommissioned prior to the February 25th start of eclipse season.”

AT&T, DirecTV’s parent company, is currently working with communications satellite service provider Intelsat to move Spaceway-1 into the so-called “graveyard” orbit—a much higher trajectory that puts it out of harm’s way.

AT&T and DirecTV needed to seek a waiver from the FCC, because they can’t comply with a key requirement—to move to the graveyard orbit, satellite’s must expel all their remaining propellant. Due to its urgent situation, Spaceway-1 will only have time to safely jettison a “nominal portion” of its fuel, DirecTV’s filing said.

For its part, AT&T put out a statement assuring its customers that not only will they be safe from falling satellite debris, they won’t miss their favorite shows, either.

“This satellite is a backup and we do not anticipate any impacts on consumer service as we retire it,” AT&T said in a statement. “We are replacing it with another satellite in our fleet.”

AT&T’s DirecTV pay TV unit has successfully petitioned the FCC to let it move one of its satellites that is in danger of exploding due to a battery problem.

Earlier this week, DirecTV notified the agency that Spaceway-1, a 15-year-old satellite that delivers 720P programming and has been relegated to back-up status, suffered in December “irreversible thermal damage” to its batteries.

If the satellite uses its damaged batteries while in its current geostationary orbit, it could cause an “accidental explosion,” DirecTV said. (Think back to the cascading effect that caused the disaster in Alfonso Cuarón’s 2013 action thriller Gravity.)

As of now, Spaceway-1 can remain operational using solar panels. But that won’t be the case in the upcoming “eclipse season,” which starts later next month.

“Boeing, the spacecraft manufacturer, concluded based on all available data that the batteries’ cells cannot be guaranteed to withstand the pressures needed to support safe operation of the spacecraft in eclipse operations; rather, there is a significant risk that these battery cells could burst,” the FCC filing said.

“Use of the batteries during eclipse is unavoidable and there is no ability to isolate damaged battery cells,” the filing added. “The risk of a catastrophic battery failure makes it urgent that Spaceway-1 be fully de-orbited and decommissioned prior to the February 25th start of eclipse season.”

AT&T, DirecTV’s parent company, is currently working with communications satellite service provider Intelsat to move Spaceway-1 into the so-called “graveyard” orbit—a much higher trajectory that puts it out of harm’s way. 

AT&T and DirecTV needed to seek a waiver from the FCC, because they can’t comply with a key requirement—to move to the graveyard orbit, satellite’s must expel all their remaining propellant. Due to its urgent situation, Spaceway-1 will only have time to safely jettison a “nominal portion” of its fuel, DirecTV’s filing said. 

For its part, AT&T put out a statement assuring its customers that not only will they be safe from falling satellite debris, they won’t miss their favorite shows, either. 

“This satellite is a backup and we do not anticipate any impacts on consumer service as we retire it,” AT&T said in a statement. “We are replacing it with another satellite in our fleet.”

The House has scheduled a vote on suspension Tuesday (Dec. 10) on compromise STELAR-related legislation, H.R. 5035, the Television Viewer Protection Act (TVPA), that would make permanent the FCC's mandate that broadcasters and MVPDs negotiate in good faith. 

Suspension is a procedure for fast-tracking noncontroversial bills, so the bill is expected to pass.

Currently, the mandate sunsets every five years unless Congress renews it. But the TVPA does not renew the compulsory satellite license at the heart of STELAR, which was delegated to the House Judiciary but which also sunsets Dec. 31. 

The license allows satellite operators to import distant network-affiliated TV station signals to markets that lack them. 

Related: ACA Has Issues with TVPA 

The bill is expected to pass, but what happens next is unclear.  

House Energy & Commerce Communications Subcommittee chairman Mike Doyle (D-Pa.) and ranking member Greg Walden (R-Ore.) reached the agreement on the TVPA. 

If it makes it to the President's desk--and Judiciary does indeed add the license renewal part--the bill would allow MVPD buying groups the same good faith guarantee in negotiations as individual companies, as ACA Connects had lobbied for, and still requires fee disclosures by MVPDs and prohibits MVPDs from charging consumers for some equipment.  

But where it goes next is unclear. The House Judiciary has been busy with impeachment hearings and an industry source said there did not seem to be any movement on its re-upping of the license, which broadcasters would be happy to see go. 

The Congress could punt on the issue for a couple of months in a couple of ways, passing a bill extending the license and good faith provisions until early in the New Year, as happened a decade ago. Or it could be slipped in as an extension into the continuing resolution--CR--Congress will need to pass soon to keep the government open past Dec. 20. 

No word on how the Senate is proceeding with STELAR bills on that side of the aisle, though the chairman of the Senate Judiciary Committee, Lindsey Graham (R-S.C.) has signaled he wants the compulsory license to sunset, while Commerce Committee Chairman Roger Wicker (R-Miss.) has said he thinks it is important to renew it, and has introduced a straight renewal bill and pitched it on the Senate floor.  

Sen. Roger Wicker (R-Miss.) took to the Senate floor to implore his colleagues to pass an extension of the STELAR compulsory license/good faith negotiation law.  

He warned of the viewers who would lose access to distant network signals if the law were allowed to sunset. 

It expires at the end of the year unless reauthorized or that deadline date extended.  

House E&C Schedules STAR Markup 

Wicker has proposed a simple five-year reauthorization, STAR or Satellite Television Act Reauthorization, but pulled it from a markup last week, likely because he did not have the votes to pass it out of the Senate Commerce Committee, of which he is chair. 

There are at least two bills in the House, both with added reforms that could make it tough to reconcile with a Senate bill. 

Following is a transcript of Wicker's floor statement, as supplied by his office: 

"Madam President, I rise today because there is a legislative deadline in front of this body that we dare not miss. Even as I speak, our colleagues in the House Energy and Commerce Committee are considering the Satellite Television Extension and Localism Act Reauthorization – or STELAR. 

"For 30 years, STELAR and previous versions of the law have allowed people who live beyond the reach of a broadcast signal to receive broadcast programming nonetheless. 

"Some Senators believe that in 2019 STELAR has outlived its usefulness and want it to expire. But other Senators want to extend some of these provisions – at least in the short term – to prevent consumers from losing these broadcast signals. Still others want to use the STELAR reauthorization legislation as a vehicle to implement other reforms. 

"I have introduced new legislation, the Satellite Television Access Reauthorization – or STAR – to move this process forward. The existing STELAR statute expires December 31st. 

"So absent congressional action before the end of the year, the provisions included in STELAR that enable nearly 870,000 Americans to access broadcast TV signals will no longer be the law of the land. 

"These Americans, who depend on STELAR, are mostly in rural parts of this country, like my home state of Mississippi. They include truckers, tailgaters, and RV drivers. And they include Americans living in very remote areas. 

"I say to my colleagues, now is the time for Senators to make their positions clear. Over the course of this year, I have been polling Members to ascertain what this body wants. As Chairman of the Senate Commerce Committee, I will act according to the majority wishes. But time is running short. 

"Many people point to the fact that the media landscape is changing. There are more options for video content than ever before. New programming is coming out every day that is being streamed through new services. Those are all great things. As I said at a June Commerce Committee hearing, we are living in the Golden Age of television. 

"The Commerce Committee has been working to close the digital divide between rural and urban America to make sure all families can access those choices and all families can be part of the Golden Age. But, there are still Americans without internet access and without broadcast signals. They deserve the ability to view basic television services, just like everyone else. 

"Without the reauthorization of STELAR, many Americans would not be able to watch broadcast news or enjoy access to programming that is available for the rest of the country. They will be on the wrong side of the digital divide, and there would be a widening cultural divide as they would be cut off from the flow of programs and information. 

"If members of this body are of a mind to move forward with some extension of this statute, we will work with our colleagues in the House. That may include improvements and enhancements to STELAR that address good faith requirements, level the playing field in the marketplace, promote access to programming, and ensure robust competition. But we don’t have much time. 

"After this week, senators will go home for Thanksgiving. Many of those across the country who benefit from STELAR in our states will watch football games and the Macy’s Thanksgiving Day Parade thanks to the STELAR law. They will enjoy time with their families, and I look forward to doing the same. 

"But when Congress returns, there will be just two weeks – ten legislative days – to finalize any legislation and send it to the President for a signature. 

"Madam President, in this body taking no action is easy, it comes naturally. But in this case no action equals the repeal of the STELAR law in its entirety and members should know that. 

"We have ten days to ensure 870,000 Americans will be able to watch the same programs next year that they are seeing this year. Or we can let STELAR expire and take the risk of letting the chips fall where they may." 

After shining a light on the management structure for its new U.S. satellite TV service that quietly soft-launched earlier this year, Orby TV Friday released more details regarding its technical execution.

The company is teaming with Eutelsat Americas for capacity on the Eutelsat 117 West A satellite. Outlining the arrangement at the IBC Show in Amsterdam, the companies are referring to their deal as a “multi-year, multi-transponder” agreement.

Related: Start-up Orby TV Beams into U.S. Satellite TV Biz with Pre-Pay Play

Speaking to Light Reading, Orby TV CEO Michael Thornton said the company is launching the new pre-paid, $40-a-month service largely off existing third-party spectrum and delivery platforms. For set-top receivers, the company has contacted Kaon to deliver boxes that receive both satellite and over-the-air signals.

Burbank, California-based Orby TV is delivering a base package of around 44 basic cable channels, which includes the big WarnerMedia, Viacom, AMC Networks and Discovery Networks entertainment-themed channels, but little in the way of live sports outside of, say, TNT. Local broadcast stations are delivered via OTA, eliminating retrans considerations from the price point.

The U.S. satellite business has, of course, been in free-fall, with AT&T warning investors yesterday to expect even more DirecTV subscriber attribution in its upcoming Q3 report. This warning came two days after a hedge fund with $3.2 billion worth of skin in AT&T’s game demanded that the telecom sell DirecTV.

For its part, Orby TV believes that satellite remains a reliable, cost-effective way to deliver pay TV, particularly in rural areas with less access to broadband. And it believes it can undercut DirecTV and Dish Network in this market.

“This groundbreaking deal showcases the important role satellite continues to play in TV distribution, even in well-established markets. We look forward to supporting Orby TV as their innovative business and offerings continue to grow,” said Mike Antonovich, CEO of Eutelsat Americas, in Friday’s IBC announcement. 

Sure, people laughed at Jeff Binder when he launched a cable TV start-up back in 2015 … until he sold it to T-Mobile for $325 million.

Certainly, the launch of Orby TV, a new satellite TV startup co-founded by former Starz chief financial officer Michael Thornton and ex Disney executive Tres Izzard, seems counter-intuitive, coming in a year in which the major U.S. satellite TV incumbents, DirecTV and Dish Network, are on pace to shed another 1.5 million customers.

Things have gotten so bad in the U.S. satellite TV business that hedge fund Elliott Management, which controls $3.2 billion worth of AT&T shares, sent a letter to the telecom’s board demanding that they sell off DirecTV.

But into the breach goes Orby TV, which is charging $40 a month for around 44 cable channels, including the crown basic cable jewels from WarnerMedia, Viacom, AMC Networks and Discovery. There’s no ESPN or other sports channels. Orby TV offers an outdoor antenna for customers to receive local channels. (Orby’s marketing page, which includes two programming tiers, is already up.)

Headquartered out of Burbank, Calif., Orby TV lets users configure up to four rooms with CPE they buy themselves. The Orby TV satellite receiver and remote cost $100, or $200 for one with a DVR. The company is offering installation of the the satellite dish, as well as the TV antenna, and wiring and set-up of one receiver/DVR, for $150. Each additional room costs $50.

Perhaps most notable: Orby TV has a pre-paid format, allowing users to “pause” their pay TV subscription when they’re not using it.

Indeed, as start-up virtual MVPD company Vidgo is insisting, there’s a significant untapped market of consumers who face financial barriers into the traditional pay TV ecosystem, which typically requires a credit check. (Editor’s note: Orby TV claims to be the first pre-paid pay TV service in the U.S., but Vidgo has been in business with a pre-paid virtual pay TV package since last year.)

Further, Orby TV believes there is a core of rural consumers, for whom the broadband capabilities necessary to stream video are unavailable. Satellite is their best option for receiving TV signals … but again, DirecTV and Dish are increasingly pricey, as all traditional pay TV services are, and they require a credit check.

“Orby TV is truly looking to make a difference for consumers who enjoy television by providing an alternative that is ‘easy to do business with’ and offer great value, affordability and transparency. Orby TV prides itself on offering a low prices without promotional gimmicks,” Thornton said in a statement. “For the estimated 30 million U.S. households who don’t have or want an expensive high-speed connection, and the millions more who want an affordable TV provider alternative, Orby TV offers quality TV entertainment at a reasonable price.”

Dish Network has purchased more pieces of EchoStar, the company announced.

In an all stock deal valued at $800 million, Dish will acquire nine direct broadcast satellites, licensing for the "61.5-degree orbital slot” and some real estate properties.

The latest agreement follows a 2017 pact in which Dish bought EchoStar set-top box development, Sling TV technology, software development employees and U.S. satellite TV ground infrastructure.

"In 2017, when Dish acquired the EchoStar assets that we needed to deliver the Dish TV and Sling TV customer experiences, key broadcast satellite operations and services remained with EchoStar," said Dish president and CEO Erik Carlson, in a statement. "This transaction brings those operations, including the BSS satellites, associated assets and key team members, in house and we expect those additions will create operational efficiencies and improve both free cash flow and EBITDA."

The FCC has approved another constellation of low-earth orbit satellites it hopes can provide some competition in the data-delivery space.

The commission voted unanimously to allow Theia Holdings to build, launch and operate the satellites to provide high-resolution earth imaging in the U.S. and around the world.

Related: FCC Lets SpaceX Move on Down

Theia plans a ring of 112 non-geostationary satellites, which the FCC says it can use for fixed satellite or earth exploration services.

That follows the approvals in the past year and a half, of similar constellations proposed by OneWeb, SpaceX and others (SpaceNorway, Kepler).

For example, the commission in November 2018 approved SpaceX's application to deploy constellations of non-geostationary orbit constellations of satellites to deploy and operate a worldwide broadband delivery service.

While the vote was unanimous, there was some concern expressed about the number of satellites orbiting the earth and the potential debris field issues.

“In the past year, the Federal Communications Commission has approved over 13,000 new satellites for launch," pointed out Commissioner Jessica Rosenworcel. "[I]ncreasing the number of satellites in orbit like this brings new challenges. Chief among them is that the growing amount of debris in orbit could make some regions of space unusable for decades to come.”

She pushed the Republican majority to come up with a plan for mitigating potential collisions, including coordinating with other agencies.

Commissioner Brendan Carr was also concerned about debris, but said he was not sure the FCC was the right agency to be dealing with that issue.

Dish Network has announced the hire of Suma Nallapati as senior VP and chief digital officer, reporting to recently appointed CIO Atilla Tinic.

Englewood, Colo.-based Dish didn’t have to look far—Nallapati currently works in the cabinet of Colorado Governor John Hickenlooper as secretary of technology and State CIO.

Prior to joining Hickenlooper’s cabinet in 2014, Nallapati served as associate VP of service delivery at Catholic Health Initiatives. She also previously worked at TeleTech as global director of enterprise applications. 

Notably, Nallapati began her career as a software programmer for Dish back in 1997. Profile has come from recent awards: She was named “CIO of the Year” earlier this month by the Colorado Technology Association. Nallapati was also named a 2017 Top 25 Most Powerful Women in Colorado honoree by the Colorado Women’s Chamber of Commerce.

Related: Dish Names Former CenturyLink Exec Tinic CIO

“Suma’s mission is to ensure Dish is well positioned with the applications and platforms that deliver a best-in-class customer and employee experience for our current businesses, and set the stage for our future wireless business,” said John Swieringa, executive VP and chief operating officer for Dish.

Tinic and Nallapati were both hired after a flurry of recent executive departures from Dish, including Vivek Khemka, executive vice president and chief technology officer, who joined Liberty Global in September. 

After losing a record number of traditional pay TV subscribers in the third quarter, AT&T’s outlook for Q4 doesn’t look anymore promising.

As highlighted by a new MoffettNathanson report, the company’s satellite TV division, DirecTV, continues to experience churn pressure from customers coming off promotional pricing enacted in June 2016.

Back then, AT&T tacked on a second year of promotional pricing for new customers, provided they also subscribed to one of AT&T’s other services—wireline broadband, landline telephone or wireless. The discount amounted to around $40 per customer, MoffettNathanon said.

Related: AT&T Stock Plunges as Video Losses Mount

Even as DirecTV went back to offering only one year of introductory pricing, the number of customers on promotional deals stacked up to a peak of around 28.2% of the overall subscriber base in the first quarter of this year.

However, the number of promotional deals expiring began to spike in the third quarter, with that percentage falling to just 15.9%. Perhaps not by coincidence, DirecTV lost a record 359,000 customers in Q3.

With fewer and fewer DirecTV traditional pay TV customers getting discounts, investment analysts are still waiting to see improvements in average revenue per user (ARPU) and earnings before taxes, interest, depreciation and amortization (EBITDA)—an equation undoubtedly clouded by the fact that some users with expiring plans are migrating to AT&T’s low margin DirecTV Now virtual pay TV service.

In meetings with investors, AT&T has also hinted that it might work with customers with expiring deals to keep them in the fold.

But with the percentage of the base on promos expected to fall to 15.2% in Q4, investment analysts are bracing for the worst as far as subscriber attrition goes.

“To the extent that rates do rise significantly for that much of the subscriber base, one might reasonably expected elevated churn in response,” the MoffettNathanson report concluded. “There is no such thing as a free lunch.”

Hughes Network Systems, a unit of EchoStar, said it has enhanced the capability of its Jupiter broadband satellite platform and made progress with its work with OneWeb, an initiative that is developing a constellation of low earth orbit (LEO) satellites for broadband.

On the Jupiter front, Hughes said it has doubled the throughput of HT2xxx terminals, to more than 200 Mbps, which, for example, will bring more data capacity to the Jupiter Aero System, which delivers more than 600 Mbps to each aircraft that’s served.

RELATED: Broadband’s Space Race Heats Up

The Jupiter System, which has also added an in-route prioritization scheme for faster browsing for encrypted web pages and apps like automatic tellers, is currently deployed on more than 20 satellites round the world.

Hughes, which times the announcement with the Satellite 2018 show, is also working on Jupiter 3 (EchoStar XXIV), a high-capacity satellite that will be capable of delivery 100 Mbps or more. That satellite is expected to enter service sometime in 2021.

For the OneWeb project, Hughes’s gateways include multiple tracking antennas to support operation and handoff of traffic to and from the coming LEO satellites. Hughes said each gateway will be able to handle up to 10,000 terminal hand-offs per second.

Hughes said the shipment is the first of 40 gateways that will support OneWeb, factoring into a $190 million contract announced in November 2017.

Comcast said it has made an offer for U.K. satellite TV company Sky that bests an earlier proposal by minority owner 21st Century Fox by 16%.

Fox, which owns 39% of Sky, has been winding through the U.K. regulatory approval process in an attempt to acquire 100% of the company. British regulatory bodies have balked at approving the deal because they feel it would concentrate too much media power in one company’s hands.

But the Comcast bid is a surprise. The cable company had held some U.K assets in the past but sold them in the late 1990s to concentrate on the U.S. business. As domestic cable subscribers have increasingly opted for over-the-top and online video alternatives, international assets are becoming more attractive.

Sky is the largest pay TV service provider in the U.K., also has operations in Germany and Italy.

Comcast has offered £12.50 per share ($17.44), a 16% premium to Fox’s £10.75 ($14.99) bid.

“We think Sky is an outstanding company,” Comcast chairman and CEO Brian Roberts said in a statement. “It has 23 million customers and leading positions in the UK, Italy, and Germany.  Sky has been a consistent innovator in its use of technology to deliver a fantastic viewing experience and has a proud record of investment in news and programming.  It has great people and a very strong and capable management team.”

Roberts continued, adding that Comcast plans to use the satellite operation as a growth platform, and has a U.K. presence in London through its NBCUniversal international operations. The company said it intends to maintain Sky’s U.K. headquarters and that the deal would increase Comcast’s international revenue from 9% of total revenue to 25%.

Fox had intended to make the Sky stake as part of its overall deal to sell certain assets to The Walt Disney Co. Reports have said Comcast has been mulling making an offer for those assets as well, outbidding Disney. 

Viasat said ViaSat-2, its next-gen broadband satellite, is ready for service as the company prepares to introduce faster speeds – up to 100 Mbps downstream—alongside new unlimited data plans.

Viasat launched the Boeing-built ViaSat-2 satellite last June. Viasat-2, delivered into orbit aboard Arianespace's Ariane 5 heavy-lift launch vehicle, is packed with 300 Gigabits per second of total throughput.

RELATED: ViaSat 2 Launches With Big Broadband Potential

“We anticipate launching the service region-by-region, starting as early as next week with national coverage planned for the end of this month,” Mark Dankberg, Viasat’s chairman and CEO, said Thursday on the company’s fiscal Q3 call.

Dankberg reiterated that Viasat’s target market will be somewhat “granular” early on, going after consumers that rely on the internet more for video entertainment, as well as consumers who like to stream video but don’t have access to higher-speed tiers – in the area of 25 Mbps to 50 Mbps – via wireline ISPs.

To prepare, the company has been testing new unlimited plans on the legacy, bandwidth-constrained Viasat-1 platform, coupled with a “video stream management” system. By the end of the quarter, about 43,000 subscribers were on those test plans on ViaSat-1.

Dankberg also talked up ViaSat-2’s flexible bandwidth allocation capabilities, which enables the company to balance the load in the upstream and downstream based on usage patterns and to pump up data to geographic areas where demand is greater.

RELATED: Viasat to Sunset ‘Exede,’ ‘WildBlue’ and ‘Yonder’ Sub-Brands

“With ViaSat-1, we found that downstream bandwidth was a bottleneck,” he said. “We would have traded back some of the upstream that we had left over from more downstream if we could.”  That obstacle will be removed from the equation with ViaSat-2.

In addition to subscriber growth, Viasat also believes that the new satellite will also help it drive  higher average revenues per user, by offering faster speeds and by expanding into new geographies and market verticals. Up to 95% of the bandwidth on ViaSat-1 is allocated for residential broadband, so its ability to poke new markets is extremely limited.

Viasat lost about 12,000 satellite broadband subscribers in fiscal Q3, ending the period with 577,000, but said the loss was partially offset by growth in ARPU.

Regarding potential new markets for ViaSat-2, Dankberg said enterprise customers are a good example, citing Comcast as an example where satellite delivery could help to “fill in sites” that aren’t supported by the MSO’s wireline network.

Viasat is also developing a set of ViaSat-3 satellites that will provide global coverage by enhancing coverage in the Americas and expanding into Europe and the Middle East and Africa regions. That project has transitioned to the construction phase.

Dankberg was also asked to comment on OneWeb, a platform that will use a constellation of low-earth orbit satellites to deliver services into rural areas, and counts Intelsat, Virgin Qualcomm, SoftBank and Hughes among its investors.

RELATED: FCC OKs OneWeb Satellite Broadband Service

Dankberg downplayed the threat posed to Viasat. OneWeb and its use of LEO systems “are definitely interesting from a technology perspective,” he said. “We are not predicting the failure of OneWeb, [but] I just think that it’s not going to bring an amount of bandwidth to the markets that we serve that’s going to disrupt our ability to compete in those markets.”

Viasat also made some progress with its airline-focused business, announcing a new deal with United Airlines that will cover more than 70 aircraft, including at least 58 of the carrier’s Boeing 737MAX planes. That deal includes access to the ViaSat-1, ViaSat-2, and ViaSat-3 platforms. 

During the quarter, Viasat signed contracts for 92 additional aircraft from existing customers, bringing the total of in-service and under-contract plans to just under 1,500, Dankberg said.

Viasat posted a Q3 net loss of $24.6 million on revenues of $381.8 million, flat from year-ago revenues of $380.6 million.

As it pivots to become a global satellite company, Viasat said it will sunset its sub-brands – including Exede and Yonder – as part of a new global brand identify that will be led by the Viasat name along with a new corporate logo.  

Exede has been serving as the brand for Viasat’s consumer satellite broadband service, and Yonder serving as the brand for its Ku-band aviation service. WildBlue is another brand that’s been associated with Viasat’s residential broadband service. Viasat acquired WildBlue in 2009. Viasat will also be phasing out the GoFiFi name (its managed WiFi service), and Arconics (aviation software). Viasat expects to retire those bands in a phased approach over the next six months or so.

RELATED: ViaSat To Acquire WildBlue For $568 Million

“We found we were diluting our own brand by having too many sub-brands,” Steven Mesnick, Viasat’s VP of marketing and pricing, noted in this blog post. “This led us to be highly motivated to rebrand under one master name to restore awareness and capture new opportunities across markets.”

The new logo, designed to be more modern and friendly that its processor, will be applied to new industry sectors being targeted by Viasat, as well as in more international markets.

The newly unified brand comes as Viasat prepares to launch serve on its new high-capacity broadband satellite, ViaSat-2, that will help the company deliver speeds of 100 Mbps and more. The change also comes as the company moves ahead with plans for ViaSat-3, a set of satellites that will give Viasat global coverage.

RELATED: ViaSat 2 Launches With Big Broadband Potential

“Our previous brand proudly served Viasat for more than three decades, but as our service portfolio expands both domestically and internationally across consumer, enterprise, aviation and maritime markets, and our defense business continues to defy industry trends, there is greater value for us to present one unified brand to customers and partners around the world,” Mark Dankberg, Viasat’s chairman and CEO, said in a statement. “Drawing on the industry reputation and strength of relationships we’ve built in each segment of our business, we believe one brand can help us grow market and consumer awareness as well as attract the very best talent around the world.”

EchoStar Corp. and Lockheed Martin said this week that one of the older satellites in EchoStar’s fleet has been successfully recovered following an unspecified “anomaly” that occurred in July that caused communications with the bird to be interrupted.

Per FCC regulations, that satellite, EchoStar III, has been retired and placed into “graveyard orbit,” they said.

RELATED: EchoStar Loses Contact With Older Satellite

"After the initial loss of contact, with a joint effort by EchoStar and Lockheed Martin, a command and control link was reestablished and deorbit maneuvers performed," Derek de Bastos, chief technology officer for EchoStar Satellite Services LLC, said in a statement.” "EchoStar III is now safely in a graveyard orbit more than 350 kilometers above the geostationary arc with its fuel and pressurants depleted, batteries drained, and systems shut down."

EchoStar III, a Ku-band BSS satellite, provided coverage over the U.S., and is a “fully depreciated, non-revenue generating asset.”

The satellite, launched in 1997 and built by Lockheed Martin, exceeded its 15 year design life, EchoStar said.

RELATED: Looking for Powerful Liftoff (subscription required) 

"Because of the robustness of the A2100 satellite design, our teams were able to command all the necessary recovery actions," added Barry Noakes, commercial satellite chief engineer at Lockheed Martin.

Leichtman Research Group estimated that the pay TV business added about 10,000 video subscribers in the first quarter, a number that could have been bigger if not for heavy losses at AT&T’s U-verse.

According to LRG president and principal analyst Bruce Leichtman, the pay TV business ended the first quarter with 94.1 million video customers – 49.1 million from the cable sector, 34 million from satellite and 11.1 million from telco TV providers.

The top nine cable providers added 50,000 video customers in the quarter compared to a loss of 65,000 in the prior year. Satellite TV service providers added 305,000 customers, compared to a gain of 95,000 in the previous year. The satellite numbers were bolstered by contributions from Dish Network’s over-the-top service, Sling TV.  Not including Sling TV, satellite added about 175,000 net new subscribers in the period, compared to a loss of 74,000 in Q1 2015.

The top telco TV providers lost 344,000 subscribers in the quarter, compared to a gain of 140,000 customers last year. Driving those result was a loss of 380,000 subscribers at U-Verse, which Leichtman called the largest quarterly loss by any single provider ever.

“While DirecTV and top cable providers had a comparatively strong quarter in 1Q 2016, their gains were largely offset by a historically weak quarter for AT&T U-verse,” Leichtman said in a statement. “Overall, the traditionally strong first quarter for the pay-TV industry was tepid this year. Despite slight gains in the quarter, net adds in 1Q 2016 were down by about 160,000 from a year ago.”

Pay television providers lost a collective 1.1 million subscribers in 2015 according to SNL Kagan, despite gains by some cable companies, which the research firm interpreted as a share shift rather than a retreat from cord cutting.

According to Kagan, the losses were more than four times those in 2014 and it was the third consecutive overall annual drop for the industry.  Kagan added that the sectors showed some signs of stabilization during the latter part of the year, losing a collective 15,000 total customers in the fourth quarter of 2015, matching the losses of the same period in 2014. 

In its monthly subscriber report, SNL Kagan noted that cable operators lost 599,000 total video customers in 2015, its best performance since 2007 when the industry lost 458,000 customers. It was also the platform’s first sub-1 million drop in 7 years. The satellite sector shed 478,000 subscribers during the year to end at 33.1 million customers, compared to a loss of 39,000 in 2014. The telco segment ended 2015 essentially flat, with downward pressure from AT&T's shift away from U-verse to the lower cost video platform of DirecTV weighing on the overall platform’s performance.

Nearly half of customers surveyed said they would take their business elsewhere within a day after a bad service experience as long as the price and products are comparable, according to a study by [24]7, with cable and satellite service providers the most vulnerable.

In its [24]7 2016 Customer Engagement Index, the research company surveyed 1,200 U.S. consumers and found that 47% of those surveyed would take their business elsewhere within one day of being on the receiving end of poor customer service (79% would switch providers within one week).

 “The way customers engage with brands has dramatically shifted, yet many enterprises’ approach to customer service and sales is stuck in yesterday’s paradigm,” [24]7 founder and CEO PV Kannan said in a statement. “For this reason, it’s more important than ever for brands to be where their customers are, and allow them to engage on their own terms. Companies that fail to prioritize the customer experience risk falling behind.”

According to the survey results, cable and satellite providers are the most susceptible to losing customers due to poor service, and a quarter of millennials have changed retailers due to poor customer service.

Cable and satellite service providers had the lowest customer satisfaction scores in the survey with 59%, with Internet service providers the second lowest at 63%.

Customer service has been a major priority for cable companies in the past, with major providers like Comcast, Charter Communications and Time Warner Cable pumping resources and stepping up efforts to improve the customer experience. In the past few years cable operators have made big strides in reducing basic video customer losses, with Charter and Time Warner Cable reporting their first positive full-year basic video customer growth in several years in 2015. 

Automated phone service appears to be a common frustration for customers. According to [24]7, 37% of consumers who ended a business relationship from poor customer service did so because they were frustrated with the interactive voice response (IVR).

Additional findings from the [24]7 2016 Customer Engagement Index include:

• 95% of customers use three or more channels and devices to resolve a single customer service issue
• One in five consumers who ended a business relationship from poor customer service did so because they waited too long to talk to someone on the phone
• 86% of consumers describe a great customer service experience as one of the following: the company anticipates their needs, the self-service is optimal and they’re able to contact the company any way they want.
• 35% of millennials report that optimal self-service is what they look for in a great customer service experience.

Rising programing costs again are the culprit for cable rate increases, according to Evercore ISI Group media analysts David Joyce and Vijay Jayant, with the cable charges on average rising 3% to 4% in 2016 while programming costs have risen between 8% and 10% annually over the past four years.

Three of the four top cable operators have announced their 2016 rate increases – Charter Communications is the only holdout so far – with Cablevision Systems the only top operator that has not increased video rates.

According to the analysts, almost all of Comcast’s double play packages increased by $3 –to-$4 per month (2%-5%) and triple play packages rose by $1.50 per month (1%).  Limited basic video packages increased by about $1 per month while  expanded basic video decreased by $1 per month. Some of the increases took the form of installation and service fees. Retransmission consent fees forced the largest cable operator in the country to nearly double the broadcast fee from $3  to $5 per month. Comcast said its average bill will rise by 3.9% in 2016.

At Time Warner Cable, which hopes to complete its merger with Charter by the end of the first quarter, monthly charges for its Starter TV and Standard TV rose by $4 (20%) and $2 (2%), respectively. The second largest cable operator also announced new broadband pricing packages and has increased most of its equipment and service fees, in addition to raising rates for  premium channels Cinemax and Starz.

Cablevision Systems, which is expecting to complete its $17.7 billion merger with Altice in the first half of this year, said it will not incrase pricing for its base products, but is raising set-top box rental charges and DVR fees by $1  per month each for residential and commercial customers. All commercial customers will now be paying $9.99 per month for modem rental fees. Cablevision has said that the average customer bill will increase by 2.9%.

Satellite TV and telco TV operators also have announced increases, with DirecTV (now part of AT&T) announcing price increases for its video packages ranging from $1 to $9 per month, according to the analysts. Dis Network has announced increases between $2 and $8 per month for all its packages effective Jan. 14.

On the telco TV side, AT&T announced increases  of between $2 and $4 per month for  all its video packages, effective Jan.28. The analysts wrote that they haven’t seen any official announcements from Verizon’s FiOS TV but their own channel checks indicate that all premium channels saw a $2 monthly price  increase , while its Showtime Starz Entertainment Package was increased by $4/month.

A sharp rise in cord-cutters during the second quarter helped drive pay TV customer losses to record highs in the period with the industry losing about 625,000 subscribers in the period, according to SNL Kagan.

According to Kagan, the losses were the heaviest to date, as total pay TV customers dropped to 100.4 million in the period. The losses were mainly driven by sharp declines at satellite TV and telco TV companies, who usually take up the slack for cable losses. Ironically, cable, which has been the focus of much of the cord-cutting hysteria over the past several months, had its best second quarter since 2008 according to Kagan, shedding about 350,000 basic customers. Cable operators lost about 211,000 basic customers in Q2 2008 and on average have shed 609,000 subscribers in the second quarter.

While the second quarter is a traditionally weak one as college students leave school and customers disconnect service as they move to summer residences, Kagan said the slide follows an uncharacteristically weak first quarter, when total subscribers were down by 26,000. That could point toward the possibility of a much larger decline for the full year than during 2010-2014, which was, according to Kagan, “a period of general malaise.”

Kagan’s numbers are slightly higher than previous estimates by MoffettNathanson principal and senior analyst Craig Moffett, who said declines were about 566,000 in the quarter.

Other highlights from the Kagan report include:

•  Telcos increasingly appear to be trading subscriber gains for improved financials. AT&T's U-verse has aligned its strategy with DirecTV’s focus on profitability. As a result of the belt tightening, the combined multichannel video subscribers served by FiOS and U-verse were flat at 11.7 million at the end of the second quarter, behind net adds of just 4,000. 
• The DBS segment lost an estimated 304,000 subscribers, as DirecTV and Dish Network both reported record declines. The DBS segment retreated to just under 34 million subs, according to Kagan.   

Arianespace announced  Friday (May 22) that it received the go-ahead for the scheduled May 27 launch of Arian 5, a dual-payload rocket that will carry the DirecTV 15 and SKY México-1 direct-to-home satellites, from its facility in  French Guiana.

Arianespace said it received the green light for Flight VA223 following a launch-readiness review, confirming “go” status of Ariane 5. That means all is set for rollout today of Ariane 5, followed by the anticipated liftoff on May 27 during a launch window that opens at 6:16 p.m. local time in  French Guiana (5:15 p.m. ET).

 The DirecTV 15 satellite (a rendering of it is above), built by Airbus Defence and Space, will provide capacity for additional digital TV services (in the Ku-, Ka- and R-bands) for DirecTV’s U.S. customers, including capacity that can be applied to the satellite TV operator’s 4K plans.

With a design life of 15 years, DirecTV 15 is slated to be the eighth satellite orbited by Arianespace for DirecTV.

DirecTV 14, launched in December 2014, added add more VOD capacity and live streaming capabilities for DirecTV, whichlaunched a limited 4K offering last November.

The SKY México-1 spacecraft will be operated for SKY, which is owned by Mexico’s Grupo Televisa S.A.B. and DirecTV.

DirecTV 15, a new satellite that will bring more 4K capabilities to DirecTV, has taken a big step toward its anticipated launch this May.

Airbus Defence and Space announced Monday that DirecTV had left the company’s cleanrooms in Toulouse, France, and is now being shipped to Kourou, French Guiana, for launch by Ariane 5 in May.

The satellite will provide capacity for additional digital TV services for DirecTV’s U.S. customers, including DirecTV's ambitious 4K plans. Based on the Eurostar E3000 platform, the new satellite will pack more than 150 radio frequency amplifiers.

DirecTV 14, launched in December 2014, will add more VOD capacity and live streaming capabilities for DirecTV, which launched a limited 4K offering last November.

Despite relentless regulatory threats (see Rules), at least a few bulls believe 2015 will be the year that cable operators — particularly Comcast and Charter Communications — will cross the chasm into positive video growth, capitalizing on satellite’s continued decline and its strong broadband offerings.

In a note to clients previewing his 2015 outlook on the sector, MoffettNathanson principal and senior analyst Craig Moffett said that after several quarters of flirting with positive video growth, both Comcast and Charter should cross into positive territory in 2015, with Comcast adding 70,000 video customers and Charter adding 67,000.

Moffett made a point to separate Comcast and Time Warner Cable, which are expected to complete their $67 billion merger early this year. TWC, which has faced some subscriber challenges over the past several years, will lose about 463,000 video customers in 2014, reducing that to a loss of 186,000 customers in 2015 (which would offset Comcast’s 70,000 gain), Moffett estimated. TWC will add 18,000 video customers in 2016, according to the analyst.

SLUGGISH SATELLITE

That growth won’t necessarily come from new household formation or the realization by millennials that Internet video is just a fad, but mainly from subscriber losses by satellite- TV providers DirecTV and Dish Network. After years of net new subscriber additions in the hundreds of thousands, Moffett predicted, DirecTV will dwindle to 14,000 additions in 2015, culminating in a loss of 151,000 customers by 2018. Dish, which added about 1,000 customers in 2013, is expected to lose about 92,000 customers in 2015 and 134,000 by 2018, according to Moffett’s estimates.

He’s not alone. Other analysts, such as Pivotal Research Group principal and senior media and telecommunications analyst Jeff Wlodarczak, also said satellite’s growth days could be over.

The notion that cable operators could cross the positive subscriber threshold first surfaced in 2013, when Comcast reported its first quarterly video customer-growth in about six years, adding 43,000 video customers in the fourth quarter. That turned out to be just a fleeting glimpse — Comcast ended up losing about 267,000 video customers that year, but it was fewer than in years past and a sign of things to come.

Comcast again reported positive video customers in the first quarter of 2014 (24,000). Although Comcast reported video customer losses in the second quarter (144,000) and the third quarter (81,000), Moffett said he expects a fourth-quarter gain that will reduce full-year subscriber declines to just 9,000.

Charter entered positive video-customer territory in 2012, adding 22,000 customers in the first quarter — which it credited to more-effective packaging and more HD channels — and again in the first quarter of 2014 (18,000 video customers).

Video-subscriber growth has been the cable industry’s Holy Grail for about a decade. The industry last showed a video-customer gain in 2001 when, according to the National Cable & Telecommunications Association, there were 66.9 million U.S. cable customers. As of last March, that number had fallen to 54 million, according to the NCTA.

Video-subscriber growth also comes at a time of high pressure on the video side of the business. Overall cable-video rates are rising between 3% and 5% per year to help partially offset double-digit increases for programming, retransmission consent and sports rights.

Over-the-top video competition also is heating up as Sling TV, Sony, Verizon Communications, HBO and CBS all have plans to offer lower-cost online video packages before the year is out.

OTT THREAT OVERBLOWN?

Moffett believes that Sling TV, Dish Network’s OTT offering, will have some initial interest, but it costs too much for the non-sports enthusiast and lacks the programming true sports nuts crave — regional sports networks and broadcast TV stations. Though the Sony offering is a little hard to forecast, Moffett wrote that maybe investors and industry pundits that fear OTT services that merely aggregate existing cable programming are looking in the wrong place.

“Disruption isn’t likely to come from within the existing ecosystem, in our view,” Moffett wrote. “It is likely to come from outside. Millennials aren’t waiting for a lower-priced package of the same content; they are abandoning the ecosystem altogether in favor of content produced on and for social media at a fraction of the production cost of traditional pay TV.”

That said, Moffett estimated DirecTV and Dish Network would lose a collective 285,000 subscribers by 2018, more than enough to fuel cable increases.

Wlodarczak said he believes that cable has finally caught up with the satellite business after years of fierce competition, adding that even AT&T’s proposed $48.5 billion acquisition of DirecTV won’t be enough to stop the bleeding.

“The presence of AT&T at DirecTV (which we believe will end up driving slower growth in and of itself) is likely to offset improvements in the economy and [satellite] is unlikely to show annual video-subscriber growth ever again,” Wlodarczak wrote in a recent note to clients.

IT’S THE ECONOMY

Wlodarczak said he believes that although there has been a lot of noise on the OTT front, the data shows that the economy has been the biggest factor in pay TV losses, forcing more and more consumers to revert to free, over-the-air broadcast programming. According to Nielsen, broadcastonly households have increased by 1.2 million over that past four years, while new pay TV customers increased by 475,000 homes. With about a 2.65 million additional occupied households in the same period, Wlodarczak wrote that implies that about 1 million households elected to go without TV or to a digital alternative in the past four years.

“As for the argument that millennials are less interested in pay TV, pay TV penetration among 18-24 [year-olds] is actually higher today (90.5%) than it was 4 years ago (88.2%) [although pay TV viewership hours declined over the same period] according to Nielsen,” Wlodarczak wrote. “In our view, if household incomes continue to rise, household formation accelerates off historically low levels, and millennials keep moving out of the basement of their parents’ homes, pay TV results could improve materially.”

The FCC items proposing defining some linear over-the-top (OTT) video providers as MVPDs and extending online public file obligations to cable, satellite and radio are still in the works and at press time an FCC source said both would probably not get voted on this week.

Both items already have enough votes for approval--the three Democratic commissioners (including the chairman)-- so the Republicans were on a Dec. 10 must-vote deadline for the items, which had been circulated by the chairman for a vote weeks ago.

But the deadline can be extended, and the source said the political file item would likely get an extension until Dec. 17. The commissioners were still working through edits on the MPVD item offered up by the Republicans, which will not likely be released until next week.

The political file item is in  response to a petition filed by campaign finance reform groups seeking that extended online filing.

Currently, only TV stations are required to post their political files online to an FCC database, but the FCC In August asked whether that requirement should be extended, seeking input on a petition to that effect filed by the Campaign Legal Center, Common Cause and the Sunlight Foundation.

The over-the-top  item would define an OTT that delivers a linear stream of programming as an MVPD. That means those OVDs would have access to content through the FCC's program access rules, but also have to negotiate retransmission consent with broadcasters. It would not apply to TV Everywhere, which is in essence an authentication regime for an online mirror of traditional service, in which access rules already appear. But it does ask questions about how it should treat TV Everywhere.

The idea behind the NPRM is to give over-the top providers offering an online service that mimics a linear cable offering the same FCC-enforced access to vertically integrated programming.

An FCC source confirmed the item had been voted by the Dems, with the Republicans still making edits that were being considered by the other offices at press time.

It is possible that the item could be 5-0 if the edits are accepted.

In addition to starting the process of defining OTT's in terms of competition to traditional video, the item responds to a complaint by OTT provider SkyAngel about access to content.

Exactly which OTTs should be defined as MVPDS and what other obligations or rights would apply beyond that access--PEG channels, exclusivity--are all teed up in many questions for the commenters, and ultimately the FCC, to answer.

A source who has seen the item describes it as the beginning of a process of answering some tough questions that will help determine the future of online video.

Dish Network said it lost about 12,000 pay TV customers in the third quarter, down from a gain of about 35,000 net new customers in the same period last year, as gross additions declined and churn rose slightly.

Dish ended the period with 14.04 million customers. Revenue for the period rose 4.8% to $3.68 billion from $3.51 billion. Subscriber-related revenue increased 5.3% to $3.65 billion from $3.46 billion a year ago.

Net income attributable to Dish Network totaled $146 million for the quarter, compared to $315 million last year and diluted earnings per share were 31 cents, compared to 68 cents during the same period in 2013.

Pay-TV ARPU for the third quarter totaled $84.39, up from $80.98 a year ago and subscriber churn increased slightly to 1.67% versus 1.66% for third quarter 2013.

Gross new subscriber additions in the period fell to 691,000 from 734,000 in the same period last year.

The satellite company added about 28,000 net broadband subscribers in the third quarter, bringing its broadband subscriber base to approximately 553,000. Dish added approximately 75,000 net broadband subscribers in the third quarter 2013.

Dish has scheduled a conference call with analysts at noon today to discuss results.