January 2002

ANTITRUST
Diverse Group Opposes EchoStar-DirecTV Deal (NYT)
Microsoft, Opponents Make Cases To Judge (WP)

INTERNET
Online Publishers Struggle to Decide Where to Draw Line on
Advertising (WSJ)
Read All About It! Newspapers Lose Web War (HBS)

ANTITRUST

DIVERSE GROUP OPPOSES ECHOSTAR-DIRECTV DEAL
Issue: Merger
Satellite TV makes strange lobbying fellows. As EchoStar Communications
tries to win regulatory approval for its takeover of DirecTV, the formidable
forces arrayed against him include Rupert Murdoch, the Rev. Al Sharpton,
powerful members of Congress from both major parties and a Missouri soybean
farmer named Charles Kruse. Mr. Sharpton is arguing that the deal be
rejected unless EchoStar agrees to carry more religious programming and
programming aimed at minority groups. Mr. Kruse, president of the Missouri
Farm Bureau Federation is concerned that the EchoStar-DirecTV merger could
keep households in sparsely populated areas from having a choice of pay
television providers. Many members of Congress from rural and Western states
agree, and a coalition of state attorneys general may form to oppose the
merger. Scott C. Cleland, chief executive of the Precursor Group, an
independent research firm in Washington, estimated that "there is less than
a one-in-three chance," that the merger will be approved. "This is not a
close call. It's over the line of almost any traditional antitrust
analysis."
[SOURCE: New York Times, AUTHOR: Laura M. Holson And Seth Schiesel]
(http://www.nytimes.com/2002/01/30/business/media/30BIRD.html)
(requires registration)

MICROSOFT, OPPONENTS MAKE CASES TO JUDGE
Issue: Antitrust
Yesterday, a flurry of filings marked the end of a 60-day period during
which the public could comment on the proposed settlement between Microsoft
and the Justice Department. Efforts to sway the federal judge handling the
case played out in a public campaign yesterday as the company and its rivals
released thick reports and cited prominent legal and economic experts. Two
Noble prize winning economists said a proposed settlement between the
Justice Department and the company - which the judge must approve - would
not restore competition to the computer software marketplace. The Justice
Department now has 30 days to respond to the public comments. One criticism
of the agreement is that it does not incorporate a ruling by the appeals
court that Microsoft illegally commingled its Internet browsing software
with its core Windows operating system. Opponents are argue that enforcement
provisions of the agreement are too weak.
[SOURCE: Washington Post, AUTHOR: Jonathan Krim]
(http://www.washtech.com/news/regulation/14904-1.html)

INTERNET

ONLINE PUBLISHERS STRUGGLE TO DECIDE WHERE TO DRAW LINE ON ADVERTISING
Issue: Internet
The already fuzzy line between content and advertising on the Internet, may
blur even more in the future as advertisers struggle to get the attention of
Web surfers. "Some of these ads can be innovative, but they can also be
confusing to the reader," said Denise Garcia, media research director at the
consulting group GartnerG2. "It's a buyer's market because we're in a
recession now. If publishers want the money, they'll do what advertisers
tell them to do." Paid-for content and links are appearing more and more on
the Web, and in many cases are labeled as being "from our sponsors" or
"sponsored links." But the difference isn't always crystal clear. The New
York Times has drawn attention with a section on its site called the
"Tolkien Archives," a promotional package tied to the "Lord of the Rings"
movie, that contained articles from the paper's database, leading some
critics to say that it bore too close a resemblance to the news content on
the rest of the Times site. A study on credibility in online journalism due
out this week from the Online News Association
(www.onlinenewsassociation.org) raises the question of whether the site
should have more clearly explained that the Tolkien area was sponsored.
Howard Finberg, one of the study's authors, said more should be done to
ensure that the distinction between paid-for content and editorial is clear.
"We're not at the point of erosion, because the public hasn't totally made
up its mind about credibility on the Internet," he said. "We now have an
opportunity to strengthen the credibility of this new medium."
[SOURCE: Wall Street Journal, AUTHOR: Seth Sutel (Associated Press)]
(http://online.wsj.com/article/0,4286,SB1012338436993891400,00.html?mod=new%
5Fmedia%5Fprimary%5Fhs)
(requires subscription)

READ ALL ABOUT IT! NEWSPAPERS LOSE WEB WAR
Issue: Journalism
Newspapers have responded to the threat of the Internet by racing to move
their content online, but according to Harvard Business School professor
Clark Gilbert, papers have failed to take advantage of the Web as a unique
medium. In his research, Gilbert found that "most companies aggressively
'crammed' the new business into the old business model and sales processes."
He gave the example of newspapers attempting to make money online sites by
selling the same types of advertising to their traditional print
advertisers. Gilbert recommended that newspapers bring in people from
outside the newspaper business to help identify the emerging new markets.
[SOURCE: HBS Working Knowledge, AUTHOR: Sean Silverthorne]
(http://hbsworkingknowledge.hbs.edu/pubitem.jhtml?id=2738&sid=0&pid=0&t=inno
vation)

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WIRELESS
Fast Hookup With Cellphone Is Expected From Verizon (NYT)

BROADCASTING
Russia's Regional TV Stations Suffer as Nationwide Broadcaster Stays
Dark (NYT)

INTERNET
Is Broadband the Answer? Unfortunately, Not Always (WSJ)
Most Web Sites on the Hill Unimpressive, Survey Finds (WP)

WIRELESS

FAST HOOKUP WITH CELLPHONE IS EXPECTED FROM VERIZON
Issue: Wireless
The largest wireless carrier in the United States, Verizon Wireless, is
expected to announce today the availability of the nation's first commercial
"third-generation" wireless service, which would provide users with fast
access to the Internet through cellphones, people close to the company said.
The 3G service, as it's called, will provide Internet access at speeds up to
144 kilobits a second, more than double normal connections. The service,
which will cost at least $30 a month in additional fees, will be available
on the East Coast from Maine to Virginia, in the Bay Area of Northern
California and in Salt Lake City in time for the Olympic Games. Rather than
focusing mainly on data services available on the tiny screens of
cellphones, as carriers in Japan and South Korea have done, Verizon Wireless
will probably try to sell its services to customers who want mobile Internet
connections on laptop computers.
[SOURCE: New York Times, AUTHOR: Simon Romero]
(http://www.nytimes.com/2002/01/28/technology/ebusiness/28CELL.html)
(requires registration)

BROADCASTING

RUSSIA'S REGIONAL TV STATIONS SUFFER AS NATIONWIDE BROADCASTER STAYS DARK
Issue: Broadcasting
Last week, a Russian court shut off the signal of TV-6, the independent
nationwide broadcaster, declaring it insolvent in proceedings the network
says were rigged. The day after, the network's partner in the Siberian city
of Surgut filled the void in its airwaves with a broadcast of the office
parrot. Regional stations are scrambling to fill giant gaps in their
broadcasts left when the authorities unexpectedly switched TV-6 off the air
at midnight on Tuesday. The 156 regional partners have contract agreements
to buy programming from the national network, whose closure is causing havoc
with their budgets . Beyond business, regional stations say they have lost a
worldview they valued. The state-controlled networks are similar in party
line, while other private national networks, like STS and TV-Center, offer
only entertainment programs - no news.
[SOURCE: New York Times, AUTHOR: Sabrina Tavernise]
(http://www.nytimes.com/2002/01/28/business/worldbusiness/28RUSS.html)
(requires registration)

INTERNET

MOST WEB SITES ON THE HILL UNIMPRESSIVE, SURVEY FINDS
Issue: E-Government
When it comes to Web sites, there is "a digital divide" within Congress,
according to a recent report by the Congress Online Project, a venture
funded by the Pew Charitable Trusts. After evaluating the Web sites of all
605 House and Senate personal offices, committees and leadership offices,
the Congress Online Project concluded that a small minority of offices boast
sophisticated sites while the majority offer unimpressive ones. Just 10
percent received grades of A or B, while 90 percent got grades of C or
below. The best sites, according to the project, correctly identify their
audience; provide up-to-date, targeted content; offer opportunities for
interaction; are easily used; and employ creative innovations.
[SOURCE: Washington Post, AUTHOR: Juliet Eilperin]
(http://www.washtech.com/news/govtit/14890-1.html)

IS BROADBAND THE ANSWER? UNFORTUNATELY, NOT ALWAYS
Issue: Broadband
TechNet, a technology-industry lobbying group, argues in a recent white
paper that "the most critical broadband policy issue" is encouraging
investment to bring high-speed Internet access to the home. Yet, according
to Tom Weber, in their haste to make broadband a new national priority, the
tech industry and policy makers are ignoring the fact that consumers are
just not very interested. Anywhere from 70% to 80% of U.S. households can
already sign up for high-speed cable-modem Internet access, but fewer than
10% have subscribed. Weber suggests that if "cable and telecom companies
want someone to blame for broadband's lackluster growth, how about the
record companies, which still aren't giving consumers what they want."
Referring to the recording-industry's attack on Napster. Lawrence Lessig, a
copyright expert and law professor at Stanford University, has urged
Congress to mandate a compulsory Internet licensing system that would let
start-ups offer music services without securing agreements from all the
record companies, but would still ensure that copyright holders were
compensated.
[SOURCE: Wall Street Journal, AUTHOR: Tom Weber]
(http://online.wsj.com/article/0,4286,SB1012170461714514200,00.html?mod=tech
nology%5Fcolumns%5Ffeatured%5Flsc)
(requires subscription)

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TELEPHONY
Fair Local Phone Rates (NYT)

INTERNET
Catch It Before It Spreads (WP)
Judge Puts Napster Case on Hold (WIRED)
The New Medium for a New Media? (NTIA)

TELEPHONY

FAIR LOCAL PHONE RATES
Issue: Competition
[Editorial] Yesterday, the New York Public Service Commission yesterday
ordered Verizon to further discount the wholesale rate at which it leases
its lines to competing companies trying to enter the New York market. In
recent years, healthy competition has revolutionized the market for many
telecommunications products, from long distance to cellphone services. But,
despite the goal of the landmark 1996 Telecommunications Act to unleash
competition, the market for local phone service remains a near-monopoly,
firmly in the hands of the Baby Bells, including Verizon. The 1996 Act asked
the Baby Bells to lease parts of their networks to competitors for a
"reasonable and just" wholesale rate, in return for allowing them to enter
the long-distance market. There is concern, however, that Baby Bells are
being let into the long-distance market without honoring their obligation to
open their home markets to real competition. "Other states should follow New
York's lead to encourage meaningful competition," concludes the Times.
[SOURCE: New York Times, AUTHOR: New York Times Editorial Staff]
(http://www.nytimes.com/2002/01/24/opinion/24THU2.html)
(requires registration)

INTERNET

CATCH IT BEFORE IT SPREADS
Issue: Health
New Web-based systems could alert public health officials to disease
outbreaks nearly in real time. The Walter Reed Army Medical Center is
testing a surveillance system that is intended to mine data on multiple
health indicators across a population, helping epidemiologists spot trends
and spikes that a single hospital, doctor or pharmacist might not see. If
the new tools work as planned, they could cut the human cost of naturally
occurring disease outbreaks and biological attacks by 50 percent to 90
percent, estimates Dr. Alan Zelicoff, a senior scientist at Sandia National
Laboratories in Albuquerque. But some experts worry that such systems might
be useless if hospitals and doctors are unequipped to operate them. "The
doctors don't have time to load in the data," warns Dr. Tara O'Toole,
director of the Center for Civilian Biodefense Strategies at Johns Hopkins
University in Baltimore.
[SOURCE: Washington Post, AUTHOR: Laura Sivitz (Washington Techway)
(http://www.washtech.com/news/biotech/14779-1.html)

JUDGE PUTS NAPSTER CASE ON HOLD
Issue: Intellectual Property
The recording industry's suit against Internet song-swapping service Napster
was put on hold for a month after requests from both sides while they seek a
possible settlement. A federal judge's order, made public Wednesday, puts
the record labels' entire copyright infringement suit against Napster on
hold until Feb. 17. Napster chief executive Konrad Hilbers said he's
confident the legal downtime will lead to an accord with the labels. In
February 2001, Napster made a highly publicized $1 billion offer to settle
the case if the major labels would license their catalogs to the Redwood
City-based company. The record labels rejected the offer.
[SOURCE: Wired, AUTHOR: Associated Press]
(http://www.wired.com/news/business/0,1367,49977,00.html)

THE NEW MEDIUM FOR A NEW MEDIA?
Issue: Broadband
Commerce Assistant Secretary Nancy Victory spoke about the importance of the
government's role in broadband deployment earlier this week at the Broadband
Outlook 2002 Conference. Full speech available at URL below.
[SOURCE: NTIA]
(http://www.ntia.doc.gov/ntiahome/speeches/2002/outlook_012302.htm)

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INTERNET
GovNet: What Is It Good For? (WIRED)
Amazon Surprises Wall St. With First Quarterly Profit (NYT)

ANTITRUST
Anti-Trust Bust: Put a Stop to Secret DOJ-FTC Arrangement (CDD)

WIRELESS
FCC Expected to Put Hold on Cell Phone Numbers (USA)

TELEVISION
Saturday Mourning TV: Cable Captures the Kids (WP)

INTERNET

GOVNET: WHAT IS IT GOOD FOR?
Issue: Security
GovNet, the pet project of Richard Clarke, special assistant to the
president for cyberspace security, has yet to stir much excitement from
either government or industry. Clark pitched the project to President Bush
in October 2001, saying it was necessary to have a protected, ultra-reliable
network through which government agencies could share information. Clarke's
outline for GovNet called for a massive, completely private Intranet for
government agencies and authorized users. But critics say identical
protected networks are already available for use by federal agencies, and
Clarke's efforts would be better directed at revamping and revitalizing the
existing systems. Forrester Research released a report in October saying
that GovNet was a "pipe dream" that "simply won't work" due to the
complexity of the proposed project. GovNet, however, is not dead yet; more
than 170 proposals have been received from vendors who want to be involved
in the networks creation.
[SOURCE: Wired, AUTHOR: Michelle Delio]
(http://www.wired.com/news/politics/0,1283,49858,00.html)

AMAZON SURPRISES WALL ST. WITH FIRST QUARTERLY PROFIT
Issue: E-Commerce
Today, the Internet bookseller Amazon.com posted it's first-ever net profit
- out performing even the most optimistic forecasts - as strong turnout from
holiday shoppers fueled a 15 percent rise in sales. Revenues grew to a
record $1.12 billion from $972 million a year earlier. Analysts said the
results indicate that Jeff Bezos -- the company founder who was named Time's
Person of the Year amid the dot-com boom of 1999 -- was right when he pushed
the company to ``get big fast'' at the expense of immediate profits in the
late 1990s. ``E-commerce isn't an easy matter,'' said Jeetil Patel, an
analyst with Deutsche Banc Alex. Brown. ``It took the company $1.2 billion
in revenue to achieve a profit, so scale is definitely a critical success
factor. Not a lot of smaller companies will be able to pull this off.''
[SOURCE: New York Times, AUTHOR: ASSOCIATED PRESS]
(http://www.nytimes.com/aponline/technology/AP-Earns-Amazon.html)
(requires registration)

ANTITRUST

ANTI-TRUST BUST: PUT A STOP TO SECRET DOJ-FTC ARRANGEMENT
Issue: Antitrust
A recent plan to "streamline" the merger review process currently shared by
the FTC and Department of Justice was shelved before it was announced.
According to a planned Memorandum of Understanding (scheduled to have been
announced at a press event on 17 January), the Antitrust Division of the
Department of Justice would assume authority over all media,
telecommunications and entertainment industry mergers, while the FTC would
focus on lower-profile healthcare, energy and electricity cases. But Senate
Commerce Committee Chairman Ernest Hollings (D-SC), who objected to the
secrecy that surrounded the proposed arrangement, brought a halt to the
signing ceremony and press conference. FTC Commissioner Mozelle Thompson (D)
was also critical of the plan. "I am also concerned about the substance of
this private 'horse trading.'' he explained, "because it may deprive
consumers of the benefit of the Commission's independence, expertise, and
knowledge. The Commission is an independent, nonpartisan body made up of
five presidential appointees with varied expertise and professional
experiences."
[SOURCE: Center for Digital Democracy]
(http://www.democraticmedia.org/news/washingtonwatch/ftcdoj.html)

WIRELESS

FCC EXPECTED TO PUT HOLD ON CELL PHONE NUMBERS
Issue: Wireless
The Federal Communication Commission is poised to delay for up to two years
a requirement that cell phone companies let customers keep their phone
numbers when they switch carriers. Critics say the move will hamper
competition. The Commission, however, is likely to reject a request from big
mobile phone companies to do away with the mandate altogether. AT&T,
Cingular and Sprint want the delay because they say the software changes
would be especially onerous to make while they're making other changes to
comply with an FCC order aimed at conserving a dwindling supply of area
codes. But Consumers Union director Gene Kimmelman says, "It's outrageous
for consumers to have to wait any longer to be able to take their telephone
number to the cell phone company that offers them the best deal." He says
the big carriers are exaggerating the costs "to hold on to their customers."
[SOURCE: USAToday, AUTHOR: Paul Davidson]
(http://www.usatoday.com/life/cyber/wireless/2002/01/21/wireless-carriers.ht
m)

TELEVISION

SATURDAY MOURNING TV: CABLE CAPTURES THE KIDS
Issue: Television
If Fox goes ahead with plans to sell off its Saturday morning block of
programming to an independent producer of children's programming, none of
the four major networks will be left producing their own kids' shows.
Network-made children's programming used to be viewed as an important way
to hook the next generation of viewers, but competition form cable, rising
production costs and declining advertising revenue have caused them to
abandon the struggle for Saturday morning dominance. In fact, only a federal
law - the 1990 Children's Television Act - keeps some networks from ditching
children's programming altogether. The act led to the FCC's 1996 guidelines
requiring affiliate stations to provide three hours of educational or
informational television per week. It is the sole reason behind NBC's deal
with Discovery. Peggy Charren, whose Action for Children's Television group
spurred the creation of the Children's Television Act, is unfazed about the
networks getting out of the Saturday morning kid business. "It's hard to get
terribly upset since when they were in it they did so badly at it," she
said.
[SOURCE: Washington Post, AUTHOR: Frank Ahrens]
(http://www.washtech.com/news/media/14760-1.html)

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