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Breaking Down the Telecom Industry

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Sunny Hughes

on 27 November 2012

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Transcript of Breaking Down the Telecom Industry

% of Households: •1952 - 70 “cable” systems served 14,000 subscribers nationwide. 0.1%
•1962 - almost 800 cable systems serving 850,000 subscribers were in business. 1.7% Before 1984: Before the 1980's, many people really used and depended on their land line telephones.

1984-1996: During the 1980's, many still used their land line telephones, but AT&T's Bell Laboratories began testing a mobile telephone system. This really interested people because they could now take their phones with them.

1996-Present: Today, phone companies still spend billions of dollars a year on maintaining their land line service, however, the amount of customers has dropped significantly and many now use their wireless cell phones. Telephone Landlines: General Before 1984: In 1946, AT&T introduced the first Mobile Telephone Service. It was expensive and time-consuming. The first practical mobile phones were used for cars. AT&T did not open the first commercial cell phone service until 1983.

1984-1996: On January 1, 1984, commercial cell service passed from AT&T into the hands of the RBOC's. In 1993, AT&T announced a merger with McCaw Cellular Communications Inc and became AT&T Wireless.

1996-Present: In 2006, AT&T owned 60% of the cell phone market, up from 40% pre-divestiture. Today, cell phone users are using more and more bandwidth, which is what caused the switch from 3G to 4G. Cell phone: General Broadcast TV: General Broadcast Radio: General Cable: General Laws that govern industry
Title of Communications Act (3 big issues)

Before 1984
1984-1996
1996-present

For each time period:
% Households
Revenues
Controlling Companies

Then...
How is this industry affected by:
Net Neutrality
Spectrum Allocation Considerations
(What to Look Into) Before 1984: Does not exist!

1984-1996: (1992) FCC sets aside radio frequencies to form Digital Audio Radio Service to create radio programming through satellites. They held an auction for rights to broadcast on these frequencies.

1996-Present: (1997) American Mobile Radio (XM Radio) paid $93 million dollars and CD Radio (Sirius Radio) paid $89 million for a license.

(2001) XM radio launched its first two satellites, "Rock" and "Roll." XM started its new satellite programming with the limited service to San Diego, California, and Dallas/Fort Worth, Texas and then nationwide.

Tim McGraw was the first artist to be played on satellite radio.

(2002) Sirius launched its satellite radio in February of 2002 in Denver, Houston, Phoenix, and Jackson, Michigan. Sirius launched to the rest of the country on July 1.

(2007) Merger between both companies. DOJ and FCC resisted it because of anti-trust and licensing problems.

(2008) DOJ declined to block the merger, leaving only the FCC to vote. FCC decided to vote in the companies' favors and the merger was completed. The new merger company is known as Sirius XM Radio. Satellite Radio: General Before 1984: Satellite TV: General Telephone Landlines: Revenues Before 1984: From 1963 to 1980, the percentage of household landlines jumped from 80% to 92%

1984-1996: By 1997, 95% of households had landlines.

1996-Present: From 2008 to 2011, the percentage of households that had landlines decreased from 79.1% to 63.6%. Telephone Landlines: Household % Before 1984 Revenues: Controlling Companies: ABC, CBS, NBC Laws That Govern the Broadcast TV Industry 1984-1996 Revenues: Controlling Companies: Spectrum Allocation
30MHz- channels 2,4, 5,67,-13
300MHz- 21-36,38-51 Net Neutrality
regulated by the FCC Telecommunications Act of 1996 - Title II
*FCC: -most influential
-can fine networks for inappropriate content
-establish ratings Communications Act of 1934 Before 1984: Landline revenue was $27.6 billion in 1980.

1984-1996: From '84 to '96, landline revenue grew from $40 billion to $77 billion.

1996-Present: Landline revenue peaked in 2000 at $98 billion, and slowly declined to $76.6 billion, where it has stayed relatively idle for the past several years.

(http://www.washingtonpost.com/business/economy/2012/04/12/gIQAqgOlDT_graphic.html) Cable television is a video delivery service provided by a cable operator to subscribers via a coaxial cable or fiber optics. Programming delivered without a wire via satellite or other facilities is not "cable television" under the Commission's definitions. (definition from the FCC website)

Before 1984:
1965: FCC first established rules for cable systems with
microwave signals.
1966: FCC established rules for ALL cable systems
1968: The Supreme Court affirmed the FCC's jurisdiction over cable in United
States v. Southwestern Cable Co. The Court found the Commission needed authority over cable systems to assure the preservation of local broadcast service and to effect an equitable distribution of broadcast services among the various regions of the country.

1984-1996:
1984: Congress amended the Communications Act of 1934 by adopting the Cable Communications Policy Act of 1984.
The 1984 Cable Act established policies in the areas of ownership, channel usage, franchise provisions and renewals, subscriber rates and privacy, obscenity and lockboxes, unauthorized reception of services, equal employment opportunity, and pole attachments. The new law also defined jurisdictional boundaries among federal, state and local authorities for regulating cable television systems.
After the 1984 Cable Act, the number of households with cable television increased, but competition among cable system distributors did not increase.

1996-Present: As of June 2012 there are 1,141 cable operating companies. Before 1984: $7,000

1984-1996: $340,000 in 1985- $44 million in 1996

1996-Present: Apple alone is $16 billion for the iPhone. Cell phone: Revenue Before 1984: Around 9%

1984-1996: Around 15-20% in 1996

1996-Present: Around 80% in 2010 Cell Phone: Household % Cell phone: Net Neutrality Before 1984: No regulatory authority clear between government and cable networks; public access channels (including government and educational networks) required

1984-1996: Granted a balanced regulatory authority between federal, state, local governments. Competition between networks ruled after PEG regulation was softened. Lifted rules and subscription fees

1996-Present: Less federal oversight, PEG's suggested, not required. Ratings system developed. Broadcast ownership limits lifted. Before 1984:

1984-1996:

1996-Present: Broadcast Radio: Revenues Before 1984:

1984-1996:

1996-Present: Broadcast Radio: Household % Broadcast Radio: Controlling Companies Before 1984:

1984-1996:

1996-Present: In 1996, total cable revenue reached $27.1 billion. In 2011, total cable revenue rose to $97.6 billion.




Sources:
http://www.ncta.com/Stats/CustomerRevenue.aspx Cable: Revenue Cable: Household % Cable: Net Neutrality Before 1984: Does not exist.

1984-1996: Does not exist.

1996-Present:
1. Sirius XM reported net income of $15.27 million, rebounding from a loss of $159.64 million in the 2009 second quarter. In the third quarter of 2010, Sirius XM announced a $67.6 million profit.


Terrestrial radio company faces a negative 7% growth rate while satellite radio increases revenue every year Satellite Radio: Revenues Before 1984: Does Not Exist

1984-1996: Does Not Exist

1996-Present: 4.5 Subscribers in 2004, up 150% from 2003

SiriusXM grew from 18.8 million subscribers in 2009 to 20.2 million in 2010, and 21.9 million in 2011.

3. Currently makes up 15% of all audio in the United States. Satellite Radio: Household % Satellite Radio: Net Neutrality Before 1984:

1984-1996: generating a total of $39.5 billion in revenue, a 29 percent increase over 1996($29 billion)

1996-Present: Since 2002 Satellite TV has experienced about 11.7% annual growth rate globally; in 2004 there was $82.7 Billion, 2008 there was $144.4 Billion, and 2009 there was $160.9, and in 2011 over $200 Billion in revenues. It is estimated that by 2017 there will be around $173 Billion in revenue. Satellite TV: Revenue Before 1984:

1984-1996: Before 1990 Television was dominated by cable networks. By 1996 Satellite services claimed only 4 percent of the television market. The fastest growing segment of the satellite service industry was direct broadcast satellite (DBS), which grew from 2.3 million subscribers in 1995 to 8.2 million subscribers in 1998

1996-Present: There are about 14.337 million customers in the US today; by 2017 it is expected to grow to over 115 million subscribers worldwide. Satellite TV: Household % Net Neutrality could harm Satellite TV because in the next 10 years Satellite TV wants to be involved in internet, video, and phone for both home and mobile apps. In addition, in order to Satellite TV to grow it is expected that more of the spectrum will have to be used, therefore, bringing up the issue of spectrum allocation. Satellite TV: Net Neutrality Cell Phones Telephone Land Lines Broadcast TV Broadcast Radio Cable Satellite Radio Satellite TV  - 46 million households or approximately 15% of Americans rely exclusively on Broadcast Television as of 2011 CBS, Comcast, Gannett Co., News Corp.,
Time Warner, Tribune Company, Viacom, Walt Disney Company, Washington Post In 1932, radio revenues were at $80 million. By 1990, radio revenues were up to $8.4 billion In 2011, radio revenues rose to $17.4 billion. Radha Allard Satellite TV: Laws Satellite TV: Laws •1984 to end of decade - The 1984 Cable Act established a more favorable regulatory framework for the industry, stimulating investment in cable plant and programming on an unprecedented level. The deregulation that the cable act provided had a strong positive effect on the rapid growth of cable services. By the end of the decade, nearly 53 million households subscribed to cable, and cable.•1992 – end of decade - approximately 7 in 10 television households, more than 65 million, had opted to subscribe to cable.•2000 – Present - the number of digital cable customers had grown to 27.6 million. •End of the 1970s – In 1972, Charles Dolan and Gerald Levin of Sterling Manhattan Cable launched the nation’s first pay-tv network, Home Box Office (HBO). This venture led to the creation of a national satellite distribution system that used a newly approved domestic satellite transmission. Satellites changed the business dramatically, paving the way for the explosive growth of program networks. Growth resumes so that nearly 16 million households that subscribe to cable. 25% in 1980 •1962 to 1972 – 6,000,000. 9.7% Local television stations viewed the growth of cable through the importation of distant signals as competition. Due to this concern, the FCC enabled restrictions on the cable system’s ability to import distant television signals. As a result, there was a “freeze” effect on the development of cable systems in major markets. Satellite Home Improvement Act of 1999
*Promotes competition among multichannel video programming
*Satellite companies has to provide local broadcast service
*Satellite companies has to provide distant network broadcast stations Before 1984:

1984-1996: PrimeStar (1991) and Direct TV

1996-Present: Dish Network and Direct TV Satellite TV's Controlling Companies "The Big 3" Time Warner- TBS, TNT, CNN, Cartoon Network, TruTV, Adult Swim
Viacom- MTV
Walt Disney- ABC, Disney Channel
News Corp.- Fox News, 20th Century Fox, FOX % of Households: Cell Phone Acts and Laws % of Households: Revenues: Controlling Companies: 1996 - Present Cable: Controlling Companies Wireless PhonesFCC’s Truth in BillingTelephone companies are required to provide clear and concise billing information to the consumer and identify the service provider associated with each charge as well as distinguish between charges. (1) Telephone Consumer Protection ActIn most cases, telemarketing phone calls to cell phones are and always have been illegal. You can register your cellphones to the national Do-Not-Call list. You can register online as well as file a complaint online if you receive an unwanted telemarketing phone call. (1) Wireless Backhaul ReformMonitoring microwave frequencies to further deploy mobile broadband service. “Actions will reduce costs of providing wireless broadband services in rural and underserved communities.” (1)Communications Act Section 309 (j)(3)(B)Competition is the fundamental goal for the wireless mobile market. (1)Citations:(1)FCC.govTruth About Wireless Phones and the National Do-Not-Call-List Access Accessed on: 10/1/12800 MHz Cellular Licensing Reforms Accessed on: 10/1/12. Phone Bills Accessed on: 10/1/12 Before 1984: In 1962, Westinghouse, TelePrompTer and Cox began investing in the industry.

1984-1996:

1996-Present: Based off their market share by Dec. 2011, the top five controlling cable companies are as follows; 1) Comcast, 2) Time Warner Cable, 3) Cox Communications, 4) Charter Communications, 5) Cablevision.

Sources:
http://en.wikipedia.org/wiki/List_of_cable_television_companies#United_States Time Warner, News Corp., Viacom, Comcast, CBS,
Walt Disney Company Net Neutrality: Internet service providers do not discriminate between types of web content; level playing field. Net neutrality has no real effect on the way cable operates when it comes to the basic use of television. Cable operators generally were not in favor of net neutrality rules and believed they were unnecessary. However, the most obvious way net neutrality would affect cable providers is through websites like Netflix and Hulu. What is this?? Please find the right slide for it. 2004 - 35,599 million
2005 - 34,743 million
2006 - 36,276 million
2007 - 35,998 million
2008 - 35,976 million
2009 - 31,415 million -Television broadcasters are not in favor of the new spectrum allocation. They are now required to give up a portion of their spectrum for wireless broadband companies to use.
-They argue that broadcast television is even more important now then in the past since it is now digital. With the use of smartphones and tablets, everyone is basically carrying a device that can receive broadcast television signals. -Net neutrality creates more competition for broadcasters due to the availability of online media such as Netflix, YouTube, Hulu, etc. Cable: Spectrum Allocation Title of Communications Act (Cell) - Issues The interference problems that affect cable TV operation are primarily manifested as interference to the subscriber's TV reception.
Cable systems make use of spectrum allocated to over-the-air services, relying on the inherent shielding of coaxial cable to allow cable operators to use spectrum assigned to broadcasting and other users.

When the shield integrity is compromised, the result can be interference and an unhappy subscriber. It must be stressed that FCC regulations require that a cable operator must not cause interference to the licensed users of this spectrum.
The resultant service costs (or a lost subscriber) represent a financial loss to the cable operator Mobile Services Direct Access to Long Distance Carriers - Mobile Services Access -depending on the FCC's ruling, whether commercial mobile services should provide equal access to common carriers for the provision of telephone toll services. (Sec. 705 (8))
Commercial Mobile Service Joint Marketing - in spite of previous ruling a wireless service can jointly market and sell commercial mobile service with telephone exchange service,exchange access, intraLATA telecom service, interLATA telecom service and information service. (Sec. 601 (d)) Radio Act of 1912
-First regulation of Radio
-All spectrum users legally required to have license
-Licensing authority is US secretary of Commerce
-Different sections of the spectrum allocated for different uses.
-Spectrum prioritized Radio Act of 1927-Spectrum could only be used with license-Electromagnetic spectrum declared formally as gov. property-License issuance authority changed form secretary of commerce to federal radio commission. Federal communications act of 1934-Created the FCC-Classifies radio stations-Prescribes the nature of the services to be rendered and each station within any class.-Assigns various frequencies to the various classes of stations. 1980s - 99% 1990 - 99% 1999 - 99% Commercial Mobile Service Providers - Rural Markets - It is not a violation, if a state requires a telecom. carrier seeking to provide services in a rural area, already serviced by a rural telephone company, to meet requirements in sect. 214 (e) (1) before being permitted into the area. (Sec. 252(e)(f)) Telecommunications Act of 1996
-Deregulation and an attempt to focus on market competition
-Removed 40 station cap on radio ownership
-Lead to more concentrated radio control and radio giants like Clear Channel
-Drop in minority ownership, less variety of music, and less local news
-Licenses good for 8 years Laws and Acts (Cell) 1980: Ad Revenue - 11.5 billion FCC’s Truth in Billing

Telephone companies are required to provide clear and
concise billing information to the consumer and identify the service provider associated with each charge as well as distinguish between charges. (1) Telephone Consumer Protection Act

In most cases, telemarketing phone calls to cell phones are and always have been illegal. You can register your cellphones to the national Do-Not-Call list. You can register online as well as file a complaint online if you receive an unwanted telemarketing phone call. (1) Wireless Backhaul Reform

Monitoring microwave frequencies to further deploy mobile broadband service.

“Actions will reduce costs of providing wireless broadband services in rural and underserved communities.”(1) 1989 - 21.35 billion Communications Act Section 309 (j)(3)(B)

Competition is the fundamental goal for the wireless mobile market. (1) Telephone Landlines: Net Neutrality & Spectrum Allocation -Clear Channel Communications: 1200 stations Net neutrality: Landline carriers are against net neutrality because they are losing money. People are now using the internet for their conversations.

Spectrum Allocation: Cordless landline telephones have been allocated seven frequency bands. Spectrum Allocation: -The FCC regulates non-federal use of the spectrum. This includes commercial, private, and state and local government.

-Only frequencies between 9 kHz and 275 GHz have been allocated. Net neutrality affects Internet Radio more than Satellite Radio. Nevertheless, if Net Neutrality is revoked, higher regulations and/or user fees on Internet Radio would decrease competition for Satellite Radio. Roy Hornsby Source: 1. The Success of Satellite Radio by Max Engal, source 1. 20 million US households to use satellite radio by 2010, people.com
3. Hey Satellite Radio listeners: You make up 15% of all audio, Orbitcast.com Source:http://www.ncta.com/About/About/HistoryofCableTelevision.aspx Perhaps this was meant for the Cell Phone
section?? http://www.ncta.com/About/About/HistoryofCableTelevision.aspx The largest phone and cable companies, like AT&T for example, want gatekeepers for the internet.
The FCC has proposed new Network Neutrality regulations that will ban ISPs from blocking content, but they will be allowed to manage the network and discriminate packets "within reason." This is only for landlines, though.
These new rules only call for wireless and mobile ISPs to be transparent and not block content. These rules are flawed because they do not factor in mobile and wireless technologies, which are the future of the industry.
Cell phone companies are battling the FCC in lawsuits right now to get them to overturn these new laws. Spectrum Allocation The FCC designates and regulates certain parts of the electromagnetic spectrum to specified parties in order to maintain a level of efficiency and to ensure signals do not blend together.
The world is divided into three regions (Region 1-Europe and Asia; Region 2-The U.S. and Canada; Region 3-Southern hemisphere) Frequency Allocation ***State laws are changing and landlines might become a thing of the past soon.***
AT&T claims that deregulating land-line service will increase competition and allow carriers to invest in better technology rather than expand a dying service. (*As of last June, nearly 32% of U.S. households were wireless only, according to CTIA-The Wireless Association, up from 10.5% in 2006.)
Florida, North Carolina, Texas and Wisconsin have already repealed the obligation for telecoms to provide universal service. Telephone Landlines: Laws Cable companies that offer internet service could potentially be affected by net neutrality if there was government regulation. Let's get this finished up by class on Thursday.
Complete your group's section.
Review the materials from other groups.
If you have questions about some information they provided, you can insert a shape (red circle) to ask the question. This is looking GREAT! 1984-1996:
In the early 1980s vast majority of subscribers chose to subscribe to cable TV as an alternative because it was more cost effective, but starting in the 1990s four large cable companies launched a system called Primestar that offered an affordable service that advanced the popularity from the C-Band dishes. Satellite TV: General Satellite TV General 1996-Present: In March of 1996, EchoStar, a satellite equipment distributor, rebranded- itself as DISH and sold the first subscription TV services in the company. Then in 2008 the companies split apart. Some subsidiaries that DISH has are Blockbuster, LLC; DBSD North America (research company), and Liberty Bell Telecom. Satellite TV: Household % http://www.cybercollege.com/frtv/frtv029.htm Source: http://www.tvb.org/media/file/TV_Basics.pdf Source: http://www.tvb.org/media/file/TV_Basics.pdf source: http://ernestsewell.tumblr.com/post/32432172254
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