Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), wanted the additional spectrum to accommodate future growth. That was no particular show-stopper as other wireless companies have been allowed to accumulate spectrum against prospective future needs. SpectrumCo, jointly owned by Comcast Corp. (NASDAQ: CMCSA) and Time Warner Inc. (NYSE: TWX) among others, and Verizon Wireless had also agreed to a cross-licensing deal where the two cable providers would be able to bundle Verizon Wireless’ service and the wireless carrier would be able to sell the cable companies’ content in a bundle.

Smaller rival wireless providers like MetroPCS Communications Inc. (NYSE: PCS), Sprint Nextel Corp. (NYSE: S), Deutsche Telekom AG’s (OTC: DTEGY.PK) T-Mobile USA division, and Leap Wireless International Inc. (NASDAQ: LEAP) complained about the hoarding of spectrum. As a result, the Federal Communications Commission (FCC) is considering requiring Verizon Wireless to divest some of its current spectrum before the deal is approved. A report at Bloomberg News cites “people familiar with the matter” for the information.

The FCC and the US Department of Justice, which must also approve the deal, want to maintain competition in the wireless and cable markets to protect consumer choice and prevent monopolistic pricing. But depending on how much spectrum Verizon Wireless must shed, there may be only one potential buyer — big rival AT&T Inc. (NYSE: T), which has stayed out of the fray so far, probably because it has equally big plans now that its $39 billion deal for T-Mobile has been killed.

The cross-licensing deals are also being investigated by the DoJ to determine if they threaten competition. The threat to competition and monopolistic pricing for consumers may be greater here than in the actual spectrum purchase. The nationwide reach of wireless networks and consumer demand for mobile resources opens up a whole new profit potential for Comcast and Time Warner. At the same time Verizon gets to offer programming that makes the company’s network a more attractive option, particularly if it can undercut competitive pricing.

The nuts and bolts of this acquisition and its fallout are nearly impossibly arcane. But the government’s decision will touch nearly everyone in the US. And that’s why the deal is so important.

Paul Ausick

We get more evidence of the switchover today from Charter Communications Inc. (NASDAQ: CHTR), which reported results this morning including miss on an already awful estimated EPS loss of -$0.57. Charter’s EPS loss came in at -$0.95. The company added a scant 20,000 customers for video in the first quarter compared with 141,000 new customers for Internet service.

As we noted last week in our look at earnings from Comcast Corp. (NASDAQ: CMCSA), bundling of services and content is becoming the new way of doing business in the space once dominated by cable providers. For example, Time Warner Cable Inc. (NYSE: TWC) and Comcast both have long-term deals with Walt Disney Co. (NYSE: DIS) to offer WatchESPN, the online and mobile version of Disney’s ESPN network. The cable providers are hoping that the offer of free mobile content will stem the flow of unsubscribers.

Verizon Communications Inc. (NYSE: V) and AT&T Inc. (NYSE: T) also offer high-speed digital content and are working on deals to offer new bundles to customers. Verizon’s attempt to acquire more wireless spectrum in its $3.6 billion deal for SpectrumCo gives the company’s wireless carrier, Verizon Wireless, the opportunity to bundle programming from Comcast and Time Warner Cable along with access to mobile broadband.

The cable providers, in turn, are able to offer a bundle to their customers that now includes Verizon’s high-speed mobile broadband. It should be no surprise that smaller carriers like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and Frontier Communications Corp. (NASDAQ: FTR) are struggling.

Research firm Convergence Consulting recently released studies on broadcast and cable TV and bundling. Between 2000 and 2009, cable TV subscriber additions averaged 2 million a year. In 2010 additions totaled 272,000 and in 2011 additions totaled just 112,000. The firm estimates that 2.65 million cable subscribers “cut the cord” between 2008 and 2011, choosing instead to rely on “over-the-top” services from Netflix Inc. (NASDAQ: NFLX) and others. By the end of this year, the firm estimates there will be 3.58 million cord cutters.

Convergence Consulting estimates that the audience for free online/mobile viewing has plateaued at 19% of all TV viewing. But that seems low, especially in light of the cross-licensing deals between the wireless carriers and the content providers like Disney and the cable networks.

The other thing that could raise that plateau is another technological wonder from Cupertino. Rumors of an “insanely great” Internet TV box from Apple Inc. (NASDAQ: AAPL) have been rampant for months, if not years. There are already several options available for these ‘over-the-top’ boxes, but if Apple were to come up with a killer piece of hardware, the ground could shift in a hurry.

Of course the TV and movie industries have learned from the music industry that Apple drives a hard bargain, and they can’t let themselves give up currently large broadcast revenues in exchange for much smaller online sales. What Apple should hope for is that a game-changing device with one or two significant content partners will convince consumers to force the rest of the media moguls to toe the line.

The transition from wired high-speed broadband connections to wireless connections is just starting. There are lots of different companies involved and the one or two with the deepest pockets or that are able to discern what the future holds will prosper. As for the rest, who knows?

Paul Ausick

Dish agreed to broadcast the channels for 15 years, but stopped after just 3 years charging Cablevision with failing to support the new channels. Cablevision sued Dish for $2.5 billion.

The Wall Street Journal reports that in a pre-trial ruling, the court found that Dish had “in bad faith” destroyed e-mail evidence. Dish appealed the ruling twice and lost twice, most recently last week. The ‘VOOM’ channels were canceled in 2009.

Normally the threat to withdraw programming is a negotiating ploy when the content provider, in this case AMC, wants more money than the cable or satellite system wants to pay. This case is slightly different, though, given the rulings against Dish. This time Dish is no doubt hoping that AMC will drop the suit in exchange for Dish’s agreement to continue carrying the AMC channels, which include AMC, Sundance, IFC, and We TV. Problem is, Dish has a lot more to lose than AMC does.

Shares of Dish are down about -3% at $31.64 in a 52-week range of $20.89-$35.64. Shares of AMC are down -2.4% at $43.48 in a 52-week range of $29.66-$46.69.

Paul Ausick

But both Amazon and Netflix face pretty tough competition from the likes of Walt Disney Co. (NYSE: DIS), Time Warner Inc. (NYSE: TWX) and its HBO network, CBS Corp. (NYSE: CBS) and its Showtime channel, and Viacom Inc. (NASDAQ: VIAB) and its Nickelodeon network, among others.

In its announcement today, Amazon said it will option one new project a month to add to its development list and to test with an audience. If the company picks up the option, the creator will receive a payment of $55,000 plus a share of merchandise licensing, royalties, and bonuses.

Like Netflix, Amazon’s streaming video offering needs a constant stream of good quality content. Licensing that content from the existing studios is getting more expensive as the studios get the idea that they can do it just as well or better, and keep more of the money.

Back in the early days of the World Wide Web, the mantra was, “Content is king.” But that content was generally static. Today’s streaming video and live Internet programming were a distant dream. But content is still king. The issue is whether that content can be licensed or created at a reasonable cost.

Amazon and Netflix are fighting an uphill battle here, and, as in all uphill battles, the odds favor the folks on the high ground.

Paul Ausick

TV advertising totaled nearly $61 billion in 2011, while online video advertising totaled $2 billion, double 2010 ad revenues.

Paul Ausick

It was in February of this year that EndZone Sports Management in San Diego announced that it had acquired The United States Football League, LLC (USFL).  When it announced the acquisition, the firm said in the press release that it was planning to relaunch the league in the Spring of 2013.

A FORM D was filed with the SEC on Thursday by the United States Football League, LLC looking to raise up to $30 million and the offering is listed as an equity offering.  So you may have read that the league intends to start back up, but now you know how much the league intends to raise to get off the ground.  This offering is also called a new notice and it was noted that the first sale is yet to occur.  Will this capital raise assure that the season will launch in 2013?  That is probably dependent upon too many issues to give a solid yes/no answer and we are awaiting comment from EndZone Sports Management.

The “use of proceeds” noted that $925,000 was being used for payments to any of the persons required to be named as executive officers, directors or promoters.  It should be no surprise that this filing noted “no revenues” considering that it has no current operations.

The USFL’s goal here is take football to more of a year-round event rather than just August to January.  As a reminder, this is not the first time around the block for the USFL.  It is also not the first competition for the NFL.  There was the experiment of the XFL from World Wrestling Entertainment Inc. (NYSE: WWE) founder Vince McMahon, but that effort lasted only one season.  There is still today the Arena Football League as well, and even an Independent Women’s Football League. And can we forget about the Lingerie Football League?

Will the USFL do better, and can it thrive?  It probably all depends upon its finances, what sort of rules and players it has, and ultimately on the overall attitude toward football by the time 2013 gets here. A little luck always help too.

JON C. OGG

Tablets and laptop computers are each on the shopping list for 14% of US consumers. Tablet purchases grew by 14% in 2011, the largest percentage increase of any consumer electronic device. Flat-panel plasma TVs, e-readers, and Internet-enabled TVs showed the least growth, each posting a gain of 6%.

The low increase in plasma-screen TVs should be no great surprise, but e-readers — which are cheaper than full-featured tablets — should be doing better. And Internet TVs are still not ready for prime time apparently.

Here are some other interesting nuggets from the CEA:

Of the 37 [consumer electronics] devices surveyed, the average U.S. household owns 24, the same number as last year, and spent $961 on consumer electronics over the past 12 months, down more than $200 from last year. The average adult individually reports spending $552 on [consumer electronics] in the past 12 months, down $100.

The CEA press release is available here.

Paul Ausick

YouTube and Google ware charged specifically with showing 79,000 videos without permission from the copyright holders and with doing nothing to stop the infringing behavior. The appeals court also said the lower court should also decide whether or not YouTube/Google developed a “willful blindness” by not removing the videos.

The interesting part of this is that Paramount, like the other studios, simply won’t give in on streaming. Movie rentals have to be downloaded and played as if from a DVD. How long do the studios think viewers are going to want to do that? These guys have had years to figure out a way to make money on streaming and the best they could do is Hulu. And the studios have even crippled that.

And of course, the studios are still fighting with YouTube and Google over copyright violations.

The studios know that content is king, but they appear to be determined to keep the king locked in an iron mask for as long as they can. Hey, that’s a great idea for a movie…

Paul Ausick

Under the plan, a pay-TV subscriber could stream purchased programming directly to a mobile device. Verizon’s CEO, Lowell McAdam, even used the frightening phrase (to cable operators at least), “a la carte” programming. Cable networks have long insisted that they cannot allow subscribers to choose only those networks they wish to view, but must choose from packages offered by the operators. The Wall Street Journal cites McAdam as saying that a number of content providers “have come to us and have said, ‘We are willing to do an à la carte approach here.’”

It’s important to note here that content providers are not cable service operators. The content providers — TV and movie studios — would be delighted to have another revenue stream. Cable operators believe a la carte programming would cannibalize their business and lead to their demise.

For mobile carriers like Verizon Wireless, the more data streamed to mobile devices, the larger their revenue streams. Just a couple of hours of video streamed to a high-definition mobile device like the new iPad from Apple Inc. (NASDAQ: AAPL) can eat up an entire $30/month 2-Gbyte data plan.

McAdam also said that mobile carriers are looking at making content providers pay for the streamed data, although that’s probably a non-starter. He thinks it is more likely that data plans will become cheaper and mobile users will be willing to pay the price.

Paul Ausick