The U.S. appeals court decision about keeping government rules would levy new constraints on the way internet providers get user data. It could thus be a detriment to Verizon and AT&T’s pursuit of Yahoo Inc’s digital assets and new ad revenue, as per MoffettNathanson.
“If things continue on the current trajectory, we’re looking at a world where Verizon or AT&T’s hands could be tied with respect to how they use data that is the heart of the Yahoo strategy,” analyst Craig Moffett of MoffettNathanson commented to Reuters.
The U.S. court upheld the Obama’s administration rules restraining internet service providers from stalling or slowing down consumer access to web content. It affirmed the FCC’s effort to reclassify both wired and wireless broadband services as Title II “telecommunications” offerings, making them subject to open internet rules, making it necessary that all internet traffic be treated equally. The court’s decision for wired services was expected, but the stand for reclassifying wireless services was unexpected.
“Our informal view of consensus was that here, at least, the expectation was that the FCC would be overturned,” penned Moffett. “In short, the FCC won in a clean sweep…. No one could have expected an FCC victory as thorough as this one.”
The mobile and fixed-line internet service providers (ISPs) have opposed the FCC’s reclassification, stating that it provides non-ISPs an advantage in the expanding world of internet marketing, which is not fair. Facebook and Google are exempted from FCC’s rules regarding net neutrality.
Verizon and AT&T are the two largest mobile carriers that are preparing for a third and final round of bidding for Yahoo’s online business. Verizon topped by multiple bids in the range of $5 billion, with a second-round bid of nearly $3.5 billion. But the bidders may reconsider investing after the U.S. court’s decision.
“(O)ne wonders whether this ruling might give Verizon and AT&T pause in their pursuit of Yahoo,” as per Moffett. “Either’s ability to monetize Yahoo’s content through targeted advertising may now be impaired relative to non-ISP buyers. To the extent that the parties involved may have expected a DC Circuit reversal of at least the wireless portion of the FCC’s reclassification, today’s ruling could be viewed as a material change in circumstances.”
According to financial analysts at Barclays, AT&T does not seem to be serious about bidding for Yahoo, leaving Verizon to be the front runner buyer of the company.
A research note written by Barclays analysts says “We are hard pressed to see AT&T enter the Yahoo frenzy.” “Recent reports from Bloomberg suggest that AT&T might be interested in Yahoo’s Internet business. While it is premature to assume that AT&T is not interested, we find it hard to envision the carrier earnestly would move forward with a bid given it has its hands full integrating DTV, is participating in the broadcast spectrum auction and seems focused on asset optimization vs. augmentation.”
AT&T’s decision to buy Yahoo would depend on many aspects, such as the content included in the deal, the scalability of the deal in terms of subscribers, the additives available through transaction and the bidding amount.
Last month, AT&T emerged to be in direct competition with Verizon by submitting a bid for Yahoo. The internet company received nearly 10 offers ranging from $4 billion to $8 billion from the interested companies. AT&T was initially disinterested but later entered into the list of bidders by submitting a bid for the company’s core internet business. Other bidders include entities supported by Warren Buffett and Bain Capital.
AT&T is currently working to incorporate its $49 billion purchase of DirecTV. The company has committed to offer a refreshed DirecTV service with availability across AT&T’s networks as well as the networks of its competitors in the later part of this year.
The company seems interested in Yahoo’s advertising business, as it may help in AT&T’s strategy to increase its advertising technologies and offerings. The results of the cross-screen advertising trials for AdWorks business conducted with Opera Mediaworks, was announced by the company last month. Among the companies that participated in the trials, Walmart was also one and reported “a statistically significant lift in both brand and message favorability.” The trials pooled the advertising reach of AT&T’s 13 million TV households with 285 million mobile phones running the advertising technology of Opera.
As per Barclays analysts, the bidding for Yahoo is one of the rare major potential transactions in the telecom sector. “The combination of a presidential election year and the current broadcast spectrum auction process has diminished the prospect for larger scale M&A activity across the U.S. telecom sector, in our view,” commented analysts.
The act that would coerce service providers to enable customers to block unwanted automated and prerecorded robocalls was introduced two months ago by Jackie Speier, Congresswoman. Under the act, consumers would have the choice of whether or not they want to use a call blocker. The bill is currently lying indolently in committee. The reason cited by AT&T CEO Randall Stephenson, mentions that permission needs to be given from FCC and without its approval, robocall blockers cannot be deployed, which authorities have claimed to be wrong.
Chuck Schumer, New York Senator, announced at his weekly press event on Sunday that he would be reintroducing the ROBOCOP Act, which would instruct the FCC to necessitate that telephone service providers give their customers access to robocall-blocking technology without any charge.
“Despite the existing ‘Do Not Call’ registry, the robocall problem has returned in a serious way,” said Schumer. “It’s an epidemic that we’ve got to stop — whether it’s the landline or the mobile phone. It’s taking far too long for telecom companies to act.”
Chuck Bell from Consumers Union was also present to stand beside Schumer in demanding federal lawmakers do something about robocalls.
He said “Most Americans have signed up for the Do Not Call list, but the unwanted calls from telemarketers and scam artists have just gotten worse.”
The present mounting issue with robocalls is that the majority of them come from ID thieves and scammers, who care about very little about any laws against the practice. Most of these use spoofed numbers, which is legal if done without intention to defraud, such as protecting news sources. But it also makes it much more difficult for investigators to track culprits.
In spite of the availability of certain methods to reduce these calls, the number that has been deployed so far by telecom service providers on any large scale is very small.
Certain campaigns to end robocalls have been ongoing to compel companies to stop making excuses and block the infuriating robocalls.
As per the U.S. Labor Department, Verizon and its two unions extended an agreement on a new labor contract, flagging about 39,000 landline employees to resume work after a long strike of 44 days.
As per a statement passed by Labor Secretary Thomas Perez, the four-year deal is going to be put into writing and the union members will start working next week. It will be the first time that the agreement will be expanded to 165 Verizon wireless employees.
Union leaders are thankful to Perez who brought Verizon Chief Executive Officer Lowell McAdam and two union executives to Washington for discussion of alternatives to resolve the issue.
“This proves that when we stand together we can raise up working families, improve our communities and protect the American middle class,” said CWA President Chris Shelton.
IBEW President Lonnie Stephenson shared that the provisional contract is a significant advancement in bringing the six-week strike to an end and keep “good Verizon jobs in America.”
Chief Administrative Officer Marc Reed said in a statement “Verizon is very pleased with this ‘agreement in principle.” “We look forward to having all of our employees soon back at work in their regular positions and doing what they do best — serving our customers.”
The shares of Verizon grew less than 1 percent to $50.62 at the close Friday in New York.
Roger Entner, an analyst with Recon Analytics LLC said “In the end, it looks like everyone wins.”
“The employees will get an increase over four years, which is a year longer than originally proposed. And Verizon can get all its employees back to work, including those that had been filling in on the landline side.”
To fulfil business requirements during the strike, Verizon had dispatched non-union workers and managers to call centers and field-service assignments. As per Chief Financial Officer Fran Shammo, the strike has affected the company’s landline business. After-effects of the strike might result in non-inclusion of FiOS TV or broadband customers in the quarter.
In addition to FiOS business, the company has been casting off union-heavy operations in three states since last month.
“This might be the last big strike for Verizon because wireline will have less and less leverage in an increasingly wireless business,” said Entner.