The FCC can’t shirk its equal employment opportunity duties

Posted October 28th, 2010 in African Americans, EEO, FCC, Government Regulation, Hispanics and tagged , , by Alton Drew

Thanks to Jeneba Ghatt at Jeneba Speaks for keeping the topic of minority representation at the forefront.

I always expect both sides of the political spectrum to give but mere lip service to the issue of minority representation in media. That this Democratic-controlled FCC would be no different is not surprising.

They have given themselves two convenient excuses; the national broadband plan and net neutrality. Unfortunately for the FCC, both initiatives currently shed no fruit. Maybe the FCC should have erred on the side of doing what is currently mandated by rule, overseeing the status of minorities in media, versus wasting time on net neutrality.

Spreading broadband to the masses shouldn’t cost the feds money

Posted October 28th, 2010 in Broadband, FCC, Government Regulation, Internet and tagged , , by Alton Drew

An interesting article in PC World, where John Holdren, President Obama’s chief technology officer, is cited as saying that pursuing a national broadband system should not have to involve a whole lot of government spending.

Would anyone be surprised if I said I couldn’t agree more?

The main determinants for purchasing broadband or any service for that matter are income and price. Comcast’s quarterly earnings report for the third quarter of this year gave us some insight into what drives demand for broadband. Comcast has found that it is consumers in the lower income strata that are having the hardest time keeping basic service.

Consumers are dropping wire line telephone service and going to mobile. Consumers are also ditching video services and keeping that high-speed pipe, at least according to Comcast. I suspect other cable companies are seeing consumers using over the top service all in an effort to maximize choice over programming while saving a few dollars.

With our national output at least a trillion dollars off of historical growth and unemployment expected to hover around ten percent well into 2011, the last thing the federal government needs to do is dump billions of dollars into a national broadband plan to incentivize consumers who are having a hard time affording service.

Instead, the federal government should put its focus on managing our resources so that we get national output and employment up. Let the private sector tailor the pricing plans necessary for getting as many customers on to the network as possible with the realization that not everyone will get on the ark.

Taking advantage of digital signals

Back on October 25, 2010, Dave Flessner of The Times Free Press in Chattanooga, Tennessee, posted a very informative piece on how an entrepreneur is taking advantage of the move to digital signals by local television stations. I had one of those, “okay, I know this guy” moments as I read it. You’ve probably seen one of the new networks discussed in the piece, RTV. Now you’ll get a little insight on what makes the network tick and more importantly how a little ingenuity can go a long way to serve underserved markets.

Henry Luken is going retro with his newest business venture.

The 51-year-old Chattanooga businessman is banking on old-fashioned over-the-air broadcasting and classic TV shows to attract what he hopes will grow into millions of viewers and hundreds of millions of dollars for his new TV networks.

But the way Luken Communications is building the growing networks is far from old fashioned.

Luken, who made a fortune pioneering a low-cost, long-distance phone business in the 1980s, is applying his computer software and telecom genius to build and deliver an array of new television networks for both cable and over-the-air stations.

“Every time I try to do something the same way everybody else does, it’s a struggle,” said Luken, who has bought or built businesses in everything from boat building and real estate to telephone service and jewelry sales.

“When I find a new way to do something — either my way or finding a way someone else has come up with but not taken advantage of yet — that’s how you make money,” he said. “It’s just building a better mousetrap.”

Luken is convinced he can build a better mousetrap to deliver television programming at a fraction of the costs of other distribution outlets, be they broadcasters, cable operators or Internet-protocol video services.

From a non-descript, brick building that once housed the data processing operations of American National Bank in Chattanooga, Luken is developing up to 10 nationwide networks. In a former bank vault, the 50 employees of Luken Communications are transferring old videotapes and computer files of television shows and running 140 master controls for program distribution via satellite to TV stations nationwide.

“Programming is key and we have some of the best,” said Neal Ardman, a consultant for Luken Communications who previously headed operations at Equity Broadcasting Co. in Little Rock, Ark. “Henry is a genius when it comes to computer software and technology and he’s figured a way to deliver content in a much better way than other networks.”

Two years ago, Luken paid the then-bankrupt Equity Broadcasting $18.5 million to buy the Retro Television Network and its license of television shows from the 1970s and 1980s. The renamed RTV includes such shows as The Rockford Files, Adam-12, Dragnet and Magnum P.I. and has helped launch the first of many networks Luken is planning to deliver to new digital add-on and low-power stations nationwide.

Last year, Luken partnered with the Seals Entertainment Co. LLC to launch Tuff TV, which features a variety of male-oriented sports and adventure programs. In the next month, a children’s network, PBJ, is set to debut and Luken says he is actively working on partnerships for other movie channels and networks of old shows.

Station delivery

Each of the networks is distributed via satellite feeds to stations in an individualized format from a bank of computers and satellite uplinks from Luken’s 5-story building on 8th Street in downtown Chattanooga.

Luken divides the available commercial time — usually about five minutes every half hour — equally between the local station and the network. With each network, Luken will have time for 5,000 or more commercials a month.

Tom Tolar, general manager for WRCB-TV3 in Chattanooga, is among the TV broadcasters that lined up with Retro TV to program the additional channels available to broadcasters following their digital upgrades.

“It’s obviously in its infancy and we’re just beginning to understand the audience for this,” Tolar said of the Retro TV lineup on Channel 3.2 (Comcast Channel 216). “But I think there’s a tremendous opportunity and gives us another outlet to get viewers.”

Tolar said Luken himself has come to the station to adjust the satellite equipment and make sure the RTV signal is working.

“Henry is a very hands on guy, and the quality of the shows and the delivery from the network is superb so we feel good about it,” Tolar said.

Broadcast stations picked up extra stations when they converted from analog to digital formats in recent years. Depending upon the equipment used and the high-definition quality sought for the main station, up to five new digital add-on stations can be added for most TV stations.

WDEF-TV-12.2 added another one of Luken’s networks this month. Channel 12.2 (Comcast 212) is airing TUFF TV, which includes Motoworld, Unreliable Sources and first-run dramas like Black Dawn and Port City PD.

“We’ve had the capability for some while, but we were waiting for the most suitable programming channel,” WDEF General Manager Phil Cox said. “We think TUFF TV is a very good niche program for this market and our strategic plan is to build additional sports and outdoor programming opportunities around Tuff’s core network shows,”

With the same hometown, both WRCB and WDEF bill themselves as the flagship stations for Luken’s first new networks.

The RTV and TUFF TV networks don’t have Nielsen television ratings in most markets so it’s too soon to know the exact audience. But Luken expects to have a presence on several channels in every television market within the next few years, giving him access to a share of nearly $100 billion spent a year on television advertising in recent years.

“Even if that has shrunk to $70 billion in the current downturn and even if we get only a tiny share of that pie, there’s still a tremendous potential here,” Luken said.

Already, Luken networks are available in about 140 U.S. markets, reaching more than 80 million persons.

Unlike other national networks, Luken says he can localize ads from the original network feed.

“We have a tendency to build hardware and software solutions here ourselves,” Luken said. “We’re not doing much of anything the way industry is already run. We’re a bit of a rogue.”

Buying low-power

Luken isn’t just content with providing the content for other stations. The Chattanooga entrepreneur is also eager to buy up low-power stations to add far more choices for the 22 percent of American households that don’t subscribe to cable or satellite TV services.

Luken recently paid $60,000 to buy one of the unused low-power TV stations in Chattanooga — WOOT-LP – Channel 6. He is also negotiating to acquire or partner with other broadcasters for more than 100 other low-power stations around the country.

By converting such stations to a digital format, each of the stations could broadcast four or five channels each.

“I’d like to have 400 low-power TV permits eventually,” Luken said.

With so many stations, Luken figures he can dramatically cut the digital conversion costs and help multiply the number of over-the-air TV outlets available to those without cable or satellite TV connections.

Most cable operators also are including the local stations in their lineup, Luken said.

“Our TV content is almost universally liked by consumers and the cable providers so we really don’t have a problem getting our stations on cable,” he said.

But with the sluggish economy, Luken said many American households may opt to rely entirely upon free over-the-air television, especially as the number of such channels proliferates and programming options expand.

The market research firm SNL Kagan, reported its first drop in the number of cable subscribers during the second quarter of 2010 with 711,000 fewer households hooked up to cable service.

“Although it is tempting to point to over-the-top video as a potential culprit, we believe economic factors such as low housing formation and a high unemployment rate contributed to subscriber declines in the second quarter,” SNL Kagan analyst Mariam Rondeli said in a statement.

Luken said his TV venture is already turning an operating profit, although he is a long way from paying back the investment in the programming and stations. But Luken sees a tremendous growth potential as he adds more networks and station affiliates and more viewers become familiar with the new options, either over the air or on cable.

“I think television is all about choice so as many choices as I can put up the more I can win. I like to win,” he says with a chuckle.

Does high-speed market really need an intrusive broadband plan to connect more Americans?

Yesterday’s release by Comcast Corporation of its third quarter earnings report points out something the net neutrality advocates always overlook. Comcast, and probably other broadband access providers as well, does not need a national broadband plan in order to connect more customers to the Internet. The company appears to be doing well on its own via the free market.

Even with unemployment at 9.6%, Comcast appears to be keeping Americans connected

to the most important resource anyone can use, especially during an economic downturn: information. For example, the number of customers subscribed to Comcast’s high-speed Internet service grew 6.5% between third quarter 2009 and third quarter 2010. The company added 249,000 subscribers in the third quarter, and a total of 766,000 customers between October 2009 and October 2010.

Even in the face of rising cable prices, this increase in broadband subscribership was done without net neutrality regulations, to boot.

As the FCC continues to sell the idea that we need to march through another regulatory swamp in order to get broadband to more Americans, the free market chugs away doing what it does best — meeting the needs of consumers.

Rush’s endorsement of Comcast/NBCU merger touts the mergers benefits

Posted October 27th, 2010 in cable television, Comcast-NBC/Universal merger and tagged , , by Alton Drew

Mergers such as the one proposed by NBC Universal and Comcast Corporation always bring out the antitrust cockroaches. We hear every reason why this merger would be bad for consumers, including the nauseating argument about less voices being heard and the probability that Comcast will not share the content it will acquire with other distributors of video programming.

It’s good to see that U.S. Representative Bobby Rush, Democrat of Illinois, has the insight to cut through the melodrama of the Free Press posse and cut to the chase when it comes to benefits that will flow from the merger, especially benefits that should flow to minority communities.

For example, the $20 million capital venture fund would be a win-win for Comcast and minority developers of unique content. Comcast appears to have the political and business savvy to recognize that planting a little seed money in the minority community in return for future content that will drive consumers to Comcast’s network provides some pretty neat upside.

Some of my friends in the Free Press posse will no doubt post on their blogs that Mr. Rush and other minority politicians are being hoodwinked and turned into puppets by towing the Comcast line in return for the benefits. On the contrary. This is how, in the real world of politics, you extract concessions from a business that wishes to extract profits from a community.