Monday, July 28, 2008

Cable May Have Gained Broadband Share From Telcos In 2Q

NEW YORK -(Dow Jones)- Disappointing high-speed Internet numbers from the two largest U.S. telecommunications companies suggest the cable companies could post surprisingly strong customer growth when they report their second quarter results. The second quarter marks a difficult time for all broadband providers because college students tend to disconnect their lines as they go on summer vacation. The weakened economy and housing problems have also weighed on the service providers. Even with the lowered expectations, the telcos failed to match Wall Street's estimates, suggesting competition was a more worrisome issue than previously thought.

"When the chapter is closed on the second quarter, the cable industry will very likely have garnered the highest share in the history of the broadband market," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. LLC.

The telcos and cable providers are aggressively tustling over broadband customers because the Internet line is seen as the key service for customers. Consumers are more willing to forego phone service, where wireless is an alternative, or even television, which can be replaced by online videos, than their Internet connection.

Cable, however, still has an advantage in speed. While the telcos have been ramping up their faster fiber-optic-powered Internet service, the offering is limited. Cable, meanwhile, has pushed the advantage through aggressive marketing, with players such as Comcast Corp. (CMCSK, CMCSA) increasing the airtime for its Slowsky turtles commercials, which mock slower DSL customers. Moffett envisions a scenario where the cable companies gained as much as 75% to 80% of the net new broadband customers in the second quarter.

Wall Street will know if these trends play out according to his expectations when the cable companies report. Comcast Corp. (CMCSK, CMCSA) releases its results Wednesday. Cablevision Systems Corp. (CVC) reports Thursday. Time Warner Cable Inc. (TWC) reports on Aug. 6. Spokesmen for Comcast and Cablevision weren't immediately available for comment. Time Warner Cable declined to comment.

AT&T, which reported last Wednesday, set the tone by reporting 46,000 net new broadband connections, which analysts considered surprisingly weak. Chief Financial Officer Rick Lindner, speaking to analysts on a conference call, said that the company and its cable competitors have seen a fairly even split of the new customers. He blamed the weakness more on the seasonal factor and weaker economy than competition, but acknowledged the market share picture may have slipped in cable's favor.

"I don't think that's a big factor," he said, noting that AT&T had been ahead of cable in the last few quarters. Verizon, meanwhile, reported 54,000 net new high-speed Internet customers, with a decline of 133,000 DSL subscribers eating into the 187,000 net new FiOS Internet subscribers.

Verizon was more forthcoming on the disappointing figure. Chief Financial Officer Doreen Toben said in an interview with Dow Jones Newswires that in areas where FiOS isn't available, the company is unable to keep up with customers' demands for higher Internet speeds. She noted that a quarter of the DSL losses were from subscribers migrating to FiOS. Verizon has some reason to be optimistic. The company on Monday officially launched its rollout of FiOS TV in New York City. The bundling of television service with Internet is expected to drive growth in the lucrative market.

In addition to the economic issues and the seasonal impact, the companies are facing a maturing market where nearly everyone has a broadband connection.

"When you're starting to push on 90% broadband penetration, the growth rate was going to slow," Toben said. She declined to comment on whether she expects further DSL losses in the coming quarters.

The DSL numbers for Verizon have already been weak for the last several quarters, said William Power, an analyst at Robert W. Baird & Co. He doesn't expect the trend to change because the penetration rate is already at such a high level. Likewise, Moffett is pessimistic about the telcos. He expects the cable industry to continue to win market share in broadband and voice services at an accelerated rate.

"It's important not to get lost in the weeds from quarter to quarter and focus on the broader trend line," he said, which will continue to favor cable. Verizon slipped 1.8% to $33.84. AT&T fell 0.5% to $31.24.

-By Roger Cheng, Dow Jones Newswires

Monday, July 14, 2008

Mercedes to cut petroleum out of lineup by 2015

By Jaymi Heimbuch (Yahoo! Green)

In less than 7 years, Mercedes-Benz plans to ditch petroleum-powered vehicles from its lineup. Focusing on electric, fuel cell, and biofuels, the company is revving up research in alternative fuel sources and efficiency. The German car company has a few new power-trains in the line-up that European journalists have had the opportunity to test out in the Mercedes facility in Spain. One vehicle includes the F700, powered by a DiesOtto engine that combines HCCI and spark ignition to get nearly the same efficiency as diesel, but minus the expensive after-treatment systems. The engine can run on biofuels, and we may have a purchasable vehicle by 2010 -- a year that seems to be popular for the debut of a lot of new alternative fuel car models, making ’08 and ’09 simply thumb-twiddling years for consumers. I don’t know, maybe car makers just like the roundness of “2010.” The company’s next big step will be to launch a Smart electric car which is fuel and emission-free.

Anyway, Mercedes is looking into electric vehicles, both battery-powered and fuel-cell powered. Not only are models in development, but we’ve also seen the company making steps towards its zero-petroleum goal right now, from better cabs in London to li-ion battery improvements. The company also has about 100 Smart electric cars undergoing testing in London, with that favorite 2010 year as the projected market release date. Mercedes is making serious investments, already putting nearly $4 million into the pot of its long-term Sustainable Mobility plan, with another nearly $1.4 billion going in before 2014. While car models may be able to run on fuels other than gasoline or diesel, we have yet to find a method of both running and producing vehicles entirely free of fossil fuels. I’m waiting for a mainstream car line that creates renewable fuel, clean-running vehicles out of 100% recycled materials in plants run on 100% renewable, clean power … Will I even be alive when that finally happens? I have hope.

Friday, July 11, 2008

EPA chief says Congress should pass greenhouse gases legislation

(Los Angeles Times) Responding to a U.S. Supreme Court order, Environmental Protection Agency Administrator Stephen Johnson said today that the Clean Air Act was "the wrong tool for addressing greenhouse gases" because it would be too costly to the American public, and said that Congress should move forward with passing legislation to tackle the issue instead.

The high court had ordered the EPA more than a year ago to determine if greenhouse gases were a danger to the public. If so, the justices said, under the Clean Air Act, the agency was required to develop regulations to reduce the risk.

Instead, Johnson signed what he said was an unprecedented 1,000-page document this morning that included letters from numerous White House environmental and economic agencies detailing how such regulations could harm major sectors of the economy.

"One point is clear," Johnson said. "The potential regulation of greenhouse gases under any portion of the Clean Air Act could result in an unprecedented expansion of EPA authority that would have a profound effect on virtually every sector of the economy and touch every household in the land."

He said he would accept comments on the proposed EPA regulations in response to the court order, but stressed repeatedly that it was the wrong approach because of the costs.

The document also includes a sharply revised version of a May draft by EPA staff members in which they concluded as much as $2 trillion in savings to consumers at the gas pump could be achieved if greenhouse gas regulations were implemented. That number was slashed to $830 billion, and the price of gas was calculated at $2 a gallon for the next 30 years. EPA press secretary Jonathan Schradar said he did not know why the numbers had been changed, but said extensive review of the earlier draft had been performed by agency staff members.

Today's announcement once again effectively eliminates any likelihood of the Bush administration regulating greenhouse gases.

-- Janet Wilson

Tuesday, July 1, 2008

Scribe Fire

This is my first post with ScribeFire. It's a blog editing addon for FireFox. Looks interesting.