Dissenting Statement of Commissioner James B. Quell0 Re: St. Louis City Communications, Inc., CSR-3137

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July 18th, 2017


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Trends in ISP Internet and Video Subscribership

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A number of colleagues and I recently completed work on a large grant proposal, and as is typical with grant proposals and research more broadly, a lot of worthwhile research that went in did not survive the final cut.  In this case, one of the core sources of data that motivated the identification strategy used in our proposal stemmed from Internet Service Provider (ISP) data on Internet and video subscribers.  Tables 1 and 2 below, which we did not ultimately submit, display this data for residential and non-enterprise business customers of major publically traded local exchange carriers (LECs) and cable companies for respectively, Internet and video subscriptions.


Table 1: Internet Subscribers for Major Public ISPs

ISP 2010 2011 2012 2013 2014 2015
Cable ISPs
Cable One Unavailable Unavailable Unavailable 473 489 501
Cablevision 2,653 2,701 2,763 2,780 2,760 2,809
Charter 3,385 3,655 3,978 4,640 5,075 5,572
Comcast 16,985 18,144 19,367 20,685 21,962 23,329
Mediacom 379 383 410 431 449 480
TWC 9,803 10,344 11,395 11,606 12,253 13,313
Local Exchange Carrier ISPs
AT&T 16,309 16,427 16,390 16,425 16,028 15,778
CenturyLink 2,349 5,655 5,851 5,991 6,082 6,048
Cincinnati Bell 256 257 259 268 270 287
EarthLink 2,029 1,636 1,350 1,139 976 821
Frontier 1,719 1,764 1,754 1,867 2,360 2,462
Verizon 8,392 8,670 8,795 9,015 9,205 9,228
Windstream 1,567 1,676 1,645 1,469 1,399 1,333

Notes: All subscriber numbers in thousands.  Data obtained from 2010-2015 SEC Annual Reports (10-K) for each firm.


Table 2: Video Subscribers for Major Public ISPs

ISP 2010 2011 2012 2013 2014 2015
Cable ISPs
Cable One Unavailable Unavailable Unavailable 539 451 364
Cablevision 3,008 2,947 2,893 2,813 2,681 2,594
Charter 4,520 4,314 4,158 4,342 4,419 4,430
Comcast 22,790 22,331 22,844 22,577 22,383 22,347
Mediacom 530 473 442 417 390 375
TWC 12,422 12,061 12,218 11,393 10,992 11,035
Local Exchange Carrier ISPs
AT&T 2,987 3,791 4,536 5,460 5,943 5,614
CenturyLink Unavailable 65 106 175 242 285
Cincinnati Bell 28 40 55 74 91 114
EarthLink 0 0 0 0 0 0
Frontier 310 225 347 385 582 554
Verizon 3,472 4,173 4,726 5,262 5,649 5,827
Windstream 427 441 426 402 385 359

Notes: All subscriber numbers in thousands.  For LEC ISPs, subscriber numbers generally do not include affiliated video subscription to satellite video programming.  Data obtained from 2010-2015 SEC Annual Reports (10-K) for each firm.

Casual observation of Table 1 shows that the number of Internet subscribers has continued to grow between 2010 and 2015 for most ISPs, whether cable or LEC.  In contrast, casual observation of Table 2 shows that the number of video subscribers has declined for most cable companies, but grown for most LECs over this time-frame, though LEC video subscribership remained substantially below that of the cable companies.

The general trend in Table 1 will not be surprising to Internet researchers or people who have not been living under a rock.  The Internet has been kind of a big deal the last few years.  For example, it has fostered business innovation (Brynjolfsson and Saunders 2010; Cusumano and Goeldi 2013; Evans and Schmalensee 2016; Parker, Van Alstyne, and Choudary 2016), economic growth (Czernich et al. 2011; Greenstein and McDevitt 2009, Kolko 2012), my ability to blog, and your ability to consume the items in the hyperlinks above.

The trends in Table 2 are less well known outside the world of Internet research and business practice and are at least in part attributable to historical developments involving the Internet. As described by Greg Rosston (2009), LECs initially got into the business of high-speed broadband to improve upon their previously offered dial-up Internet services—they were not initially in the multichannel video programming distribution (MVPD) market.  In contrast, the cable companies became ISPs after it became apparent that coaxial cables used to transmit cable television signals could also be used for high-speed broadband.

Thus, whereas cable companies could use their networks to offer subscribers video and Internet bundles, many LECs have had to partner with satellite video programming distributors or resell competitors’ services to be able to advertise a bundled service.  Eventually, some LECs acquired their own video customers either through purchases of smaller cable competitors in certain areas, or by relying on Internet Protocol television (IPTV), either through construction of fiber networks that deliver service to the home as was the case with Verizon or by doing whatever it is that AT&T does. This has explained the growth of LEC video customers, whereas competition from LECs, video on demand, and mobile wireless service providers should at least partly explain the decline in cable video subscribership.

To put these trends into perspective, I have included one additional Table (Table 3), which displays the ratios of video to Internet subscribers for the ISPs above.  As the Table makes evident, the ratios have declined for most cable companies and increased for most LECs between 2010 and 2015. If I had to make an educated guess, the cable company trend will continue in the coming years, but I am less certain that the trend on the LEC side is sustainable as video on demand and mobile wireless continue to eat into the traditional video market.


Table 3: Ratio of Video to Internet Subscribers for Major Public ISPs

ISP 2010 2011 2012 2013 2014 2015
Cable ISPs
Cable One Unavailable Unavailable Unavailable 1.14 0.92 0.73
Cablevision 1.13 1.09 1.05 1.01 0.97 0.92
Charter 1.34 1.18 1.05 0.94 0.87 0.80
Comcast 1.34 1.23 1.18 1.09 1.02 0.96
Mediacom 1.40 1.23 1.08 0.97 0.87 0.78
TWC 1.27 1.17 1.07 0.98 0.90 0.83
Local Exchange Carrier ISPs
AT&T 0.18 0.23 0.28 0.33 0.37 0.36
CenturyLink Unavailable 0.01 0.02 0.03 0.04 0.05
Cincinnati Bell 0.11 0.15 0.21 0.28 0.34 0.40
EarthLink 0.00 0.00 0.00 0.00 0.00 0.00
Frontier 0.18 0.13 0.20 0.21 0.25 0.23
Verizon 0.41 0.48 0.54 0.58 0.61 0.63
Windstream 0.27 0.26 0.26 0.27 0.28 0.27

Notes: Ratios represent the fraction of residential and non-enterprise business customers who subscribe to a video service relative to those who subscribe to high-speed Internet.  For LEC ISPs, ratios generally do not include affiliated video subscription to satellite video programming.

If you want to reuse or make fancy graphs out of the data located in this post, please attribute the data to Aleksandr Yankelevich, Quello Center, Michigan State University.

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John D. Evans, Cable Hall of Fame, 2016

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Quello Advisory Board Member, John D. Evans, Chairman and CEO of Evans Telecommunications, was inducted on Monday night, May 16, 2016, into the US Cable Industry’s Hall of Fame. At a gala event held at the Westin Boston Waterfront Hotel, John was honored along with other inductees, including Tom Rogers, Chairman of TiVo; Bob Stanzione, Chairman and CEO of Arris; Mika Brzezinski and Joe Scarborough of MSNBC’s Morning Joe; Pat Esser, President of Cox Commmunications; and John O. “Dubby” Wynne, Retired President and CEO of Landmark Communications. Over the past 20 years, only 118 individuals have been so honored. Screen Shot 2016-05-23 at 22.11.12

John wrote to the Quello Center, that “I am both honored and humbled by my selection and induction Monday night. It was an extraordinary event with over 600 Cable Industry luminaries and leaders in attendance. I wanted to share the event video, pictures and my remarks with you given that Jim Quello played such an important role in my life.”

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image005A video about John’s career was shown before bringing him on stage to receive the award and share his own remarks. His remarks, recorded by CNN’s Javier Morgado, and highlighting the industry’s commitment to diversity, can be viewed here.

I closing, John noted that “In many ways I share this honor with you, since I am the sum of all who have coached, mentored, taught and supported me … so thanks to many of my friends at MSU for their support, counsel and friendship over so many years.”

The video of John Evan’s career featured a photo of him with James Quello, who would have been so proud of his accomplishments. The Quello Center and all of his colleagues on the Advisory Board, congratulate him on this well deserved honor. We are as proud as ever to have him on the Board.

Watch

John Evans CHOF Remarks May 16 from Quello Center on Vimeo.

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Advisory Board Member John D. Evans Named to Cable Hall of Fame

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The Quello Center congratulates our Advisory Board Member, John D. Evans, Chairman and CEO, Evans Telecommunications Co., on being honored by inclusion in the Cable Center’s Hall of Fame Class of 2016. The Cable Hall of Fame ‘recognizes those ground-breaking leaders who have shaped and advanced our industry. Induction into the Cable Hall of Fame is one of the industry’s highest and most exclusive honors.’

John D. Evans

John D. Evans

John was happy for me to share this news with the Advisory Board and friends and colleagues of the Quello Center, noting that ‘… Jim Quello for over 40 years (from when I was a sophomore at the University of Michigan) was my friend, my mentor and my guide. He often gave me the courage and advice to do the right thing. His integrity was his honesty, driven by courage, and tempered by truth.’

On the very day we received this news about John being honored, the College of Communication Arts and Sciences (ComArtsSci) at Michigan State University (MSU) happened to have a full meeting of its faculty and staff, which focused on discussion of the importance of a student’s experience while attending university. John’s story is a great example of the central importance of a student’s experience in higher education. He was a graduate of the University of Michigan – the ‘other university’, illustrating the reach of Jim Quello’s influence on so many of our Michigan institutions. MSU, U-M and all other centers of learning and education need to keep this in mind. Its wonderful when a student’s experience shapes a person’s future in such a clear and demonstrable fashion as in John’s case. In reflecting on James Quello’s influence on his career, John told me that ‘Jim Quello played such an important part in my life … I would not be where I am today had he not believed, nurtured and mentored me.’

The Quello Center is honored to have John Evans and other major figures from industry, government and academia on its Advisory Board. And we are delighted that the Quello Center continues to be a legacy of James and Mary Quello at MSU and hold out the potential for Jim Quello to continue shaping the experiences of students and faculty through the center named in his honor by his friends and colleagues.

John Evans & James Quello

John Evans & James Quello

The full Class of 2016 honors went to:

Mika Brzezinski and Joe Scarborough, MSNBC’s Morning Joe
Pat Esser, President, Cox Communications, Inc.
John D. Evans, Chairman and CEO, Evans Telecommunications Co.
Tom Rogers, President and CEO, TiVo Inc.
Robert J. Stanzione, Chairman and CEO, ARRIS
John O. “Dubby” Wynne, Retired President and CEO, Landmark

Notes

Quello Center Advisory Board: http://quello.msu.edu/people/advisory-board/

The Cable Center’s Hall of Fame http://cablecenter.org/cable-hall-of-fame.html

Mulichannel News: http://www.multichannel.com/news/cable-tv-conventions/cable-hall-fame-selects-class-2016/394434

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Comparing Cable TV in Korea and the USA: Major Differences

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Following a presentation to visiting Korean executives, Professor Sung Wook Ji provided a brief summary of major differences between cable systems in the US and Korea. Professor JI was a Visiting Assistant Professor in the Department of Media and Information at Michigan State University, and has recently been appointed to an Assistant Professorship at Southern Illinois University. He received a Ph.D. from the Dept. of Telecommunications at Indiana University, Bloomington. This brief video focuses on these dramatic differences.

Ji interview from Quello Center on Vimeo.

Sung Wook Ji’s primary research interests center on the interdisciplinary intersections of Mass Communication, Economics, and Media Policy. As an economist of the media, he is interested particularly in the social and economic impact of new media technologies on the media industry, and how these technologies are shaping the media industries and society. At the Quello Center, he has contributed to a variety of research activities and organised a lecture series for the University’s International Studies and Programs that reaches out to professionals from abroad, called the Visiting International Professional Program (VIPP).

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