October 2005

For upcoming media policy events, see http://www.benton.org

* Sorry we're late this morning. And, yes, the ball obviously bounced!=20
(That's our story and we're sticking to it.)

TELEVISION
FCC Must Respond To Disney Rules Challenge
House DTV Bill Faces Likely Delay
Disney offers next-day iTune downloads of TV shows
CEA Disses NAB/MSTV Digital Box

COMPETITION
Cable Claims Plenty of Competition
To Ward Off New Competitors, Comcast Builds a Mini Internet
Big Hitters Said to Want Piece of AOL
Don't Let Fear Kill Muni Wi-Fi
Viacom-iFilm deal cued up
Qwest Seeks Five Merger Conditions
Martin Faces Tough Talks On Mergers
FCC Approves EchoStar Acquisition of Rainbow DBS Assets

INTERNET/BROADBAND
Record broadband growth moves Canada well ahead of the U.S.
Panel Report Critical Of E-Rate

QUICKLY -- Antispam push helping curb U.S. junk mail; How computer maps=20
will help the poor; Do Public Employees Enjoy Free-Speech Rights on the=20
Job?; Parents Concerned About Internet Usage in the Classroom; Kids and=20
Cell Phones; Do Mags Sell Editorial Plugs?; Your Brain on Video Games

TELEVISION

FCC MUST RESPOND TO DISNEY RULES CHALLENGE
The D.C. Court of Appeals has asked the FCC to respond to Disney's request=
=20
that the commission weigh in on various complaints about its new kids TV=20
rules before it implements them Jan. 1. The company had asked the court=20
Tuesday to force the FCC by Nov. 15 to rule on Disney and others' petitions=
=20
to change the kids regs, or alternatively to enjoin Disney from enforcing=
=20
them until the FCC did reply. Instead, the court gave the FCC until Oct.=
=20
25 to respond to the Disney court petition, then gave Disney until Nov. 1=
=20
to respond. While saying it remains "steadfastly dedicated to providing=20
creative, entertaining and compelling programming that enriches the lives=
=20
of children," Disney says the kids rules as written would cause=20
"irreparable harm to its First Amendment rights, as well as unrecoverable=
=20
economic losses." Disney says it would have to make major modifications to=
=20
its business in order to comply with the new rules, then would have to undo=
=20
those if the FCC ultimately decides to change the rules per the petitions=
=20
it has yet to rule on.
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
http://www.broadcastingcable.com/article/CA6271321?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)

HOUSE DTV BILL FACES LIKELY DELAY
Action by the House Commerce Committee on terminating analog-TV service=20
within a few years will likely be postponed by at least one week. The=20
Senate Commerce Committee scheduled Oct. 19 to hold key votes on the same=
=20
issue, but budget politics in the House are complicating the Commerce=20
Committee's effort to complete work on digital-television issues at the=20
same time. The House panel is unlikely to vote next week because House=20
Budget Committee leaders are coming under pressure to cut spending or find=
=20
new revenue to pay for Hurricane Katrina cleanup. The House Commerce=20
Committee was expected to find about $15 billion in savings under the=20
budget blueprint adopted before Katrina. The panel might be expected to=20
come up with billions of dollars more.
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
http://www.multichannel.com/article/CA6271395.html?display=3DBreaking+News
(requires subscription)
See also:
* A WINDOW OF OPPORTUNITY FOR UNLICENSED
Members of the Senate Commerce Committee are actively considering using the=
=20
digital television transition bill to open new spectrum to unlicensed=20
access. This could include opening current Channels 2-4 after the=20
broadcasters vacate it, or pushing the FCC to finish the =93white spaces=94=
=20
proceeding. It is supported by a number of tech companies, who want to see=
=20
broadband widely deployed so they can sell more stuff. It is also supported=
=20
by a number of public interest groups, community wireless networks, and=20
wireless ISPs, because this means cheap ubiquitous mobile broadband for all=
=20
Americans and all the social and economic benefits this brings. It is=20
opposed by the National Association of Broadcasters and cell phone=20
companies, who dislike the thought of wireless competitors and/or believe=
=20
that we haven't advanced much in radio technology to avoid interference=20
since God apparently made the TV allotment tables in the 1950s.
[SOURCE: Tales from the Sausage Factory, AUTHOR: Harold Feld]
http://www.wetmachine.com/totsf/item/361

DISNEY OFFERS NEXT-DAY iTUNES DOWNLOADS OF TV SHOWS
Opening the door to a new revenue stream for television content, the Walt=
=20
Disney Co. said on Wednesday it will begin offering next-day digital=20
downloads of its biggest ABC prime time hits for $1.99 per episode. The=20
move, unveiled in conjunction with a new partnership between Disney and=20
Apple Computer Inc., marks the latest bid by a major broadcast network and=
=20
its parent company to shake up "old media" models and expand their avenues=
=20
of distribution. The move raised questions about whether instant Internet=
=20
access to current prime-time shows might diminish their future value in the=
=20
burgeoning DVD market and in broadcast syndication.
[SOURCE: Reuters, AUTHOR: Steve Gorman]
http://today.reuters.com/news/newsArticle.aspx?type=3DinternetNews&storyID=
=3D2005-10-12T215714Z_01_DIT278989_RTRUKOC_0_US-MEDIA-DISNEY-APPLE.xml
* Video iPod could change rules about TV content
http://www.usatoday.com/printedition/money/20051013/1b_ipodcov13.art.htm
* Deal has some ABC affiliates feeling uneasy
http://www.usatoday.com/printedition/money/20051013/2b_disney13.art.htm

CEA DISSES NAB/MSTV DIGITAL BOX
The Consumer Electronics Association Wednesday questioned whether the=20
digital-to-analog converter box broadcasters are commissioning would be the=
=20
low-cost solution Congress is seeking. It took the opportunity of its=20
filing in the FCC's annual inquiry on video competition, to claim that the=
=20
box being developed under the auspices of the National Association of=20
Broadcasters (NAB) and the Association for Maximum Service Television=20
(MSTV) will include "many additional features that consumers do not need or=
=20
want," that will make the box more expensive than it needs to be. Congress=
=20
is expected to propose a subsidy for a low-cost box ($50-$75) as part of=20
DTV transition legislation being teed up in both Commerce Committees. In=20
its filing, CEA predicted that by the expected 2009 date for the switch to=
=20
digital-only broadcasting, only 6.8% of viewers will be analog-only.
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
http://www.broadcastingcable.com/article/CA6271496?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)

COMPETITION

CABLE CLAIMS PLENTY OF COMPETITION
In a filing with the FCC on the state of video competition, the National=20
Cable & Telecommunications Association argues that there is plenty of video=
=20
competition, thank you, and that telcos should not get special treatment=20
when it comes to securing video franchises. NCTA argues that it already has=
=20
vigorous competition from two DBS services, and faces even more from=20
"well-financed" telcos. If the franchise process is to be eased, it argues,=
=20
it should be eased for everyone, not just the phone companies, which it=20
says are hardly small fries in need of the government's sheltering wing.
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
http://www.broadcastingcable.com/article/CA6271376?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)

TO WARD OFF NEW COMPETITORS, COMCAST BUILDS A MINI INTERNET
Just 10 years ago, the cable industry had a virtual monopoly on the $56=20
billion market for piping TV into subscribers' homes. Now, a host of new=20
technologies is threatening that business. In addition to battling the old=
=20
enemy of satellite TV, cable operators are up against Internet companies,=
=20
telephone operators and even television programmers, who, in various ways,=
=20
are exploring how to sell TV to consumers. Their efforts suggest the=20
possibility that soon, consumers will be able to watch whatever they want,=
=20
when they want, without the help of the local cable company. To protect its=
=20
turf, cable giant Comcast Corp. has 400 software engineers building what=20
amounts to a TV version of the Internet, stocked with movies, archived=20
television programs and other interactive features, including a search=20
function. Now, to push into the online-video business, among other reasons,=
=20
the company is in talks with Google Inc. about teaming up to buy a stake in=
=20
the Web operations of Time Warner Inc.'s America Online. But advocates of=
=20
new TV-distribution technologies question how long programmers will stay=20
loyal to the cable giants. Offering programs and movies on the Web, which=
=20
is open to all, will be "too compelling from a content owner's=20
perspective," compared with being enclosed within Comcast's proprietary=20
system, argues Jeremy Allaire, founder of Brightcove Inc., a company that=
=20
helps businesses put TV programs online.
[SOURCE: Wall Street Journal, AUTHOR: Peter Grant peter.grant( at )wsj.com]
http://online.wsj.com/article/SB112916084343967256.html?mod=3Dtodays_us_...
e_one
(requires subscription)

BIG HITTERS SAID TO WANT PIECE OF AOL
Google and Comcast are in talks with Time Warner to buy a portion of=20
America Online. The joint bid was widely seen as a way to head off=20
Microsoft, which has also been negotiating to buy a minority stake in AOL.=
=20
The development means that Time Warner, which has long been under pressure=
=20
by Wall Street to sell off its AOL unit, now finds itself in the enviable=
=20
position of having multiple suitors, which may drive up AOL's value. Time=
=20
Warner believes that any deal must value AOL at more than $20 billion. But=
=20
the kind of minority stake Google and Comcast may be negotiating would have=
=20
a lower value because it would involve only AOL's Web portal and content,=
=20
and not its highly profitable but declining Internet dial-up business. Time=
=20
Warner's decision to sell a minority stake in AOL is driven by its need to=
=20
increase its sagging stock price, especially as it is being pressured to=20
restructure itself by Carl C. Icahn, the activist investor.
[SOURCE: New York Times, AUTHOR: Saul Hansell]
http://www.nytimes.com/2005/10/13/technology/13message.html
(requires registration)

DON'T LET FEAR KILL MUNI WIFI
[Commentary] Last week, the San Francisco Chronicle reported that the mayor=
=20
there expects a legal challenge from Internet service providers like SBC=20
and Comcast, who presumably prefer every San Franciscan to pay a monthly=20
access fee. Obviously, ISPs fear competition from a free service. But=20
people pay for bottled water, music downloads, open-source operating=20
systems and printed versions of free blogs. Companies can still make money=
=20
in cities with public Wi-Fi by selling even faster service or bundling=20
connectivity with subscriptions, software or support. Without legislation,=
=20
ISPs have no legal basis for stopping community Wi-Fi. But legislation is a=
=20
distinct possibility. The city of Philadelphia, for example, almost had to=
=20
scrap its Wi-Fi plan when the state governor threatened to sign a bill=20
barring cities from providing Internet service for a fee.
[SOURCE: Wired News, AUTHOR: Jennifer Granick, Stanford Law School Center=
=20
for Internet and Society]
http://www.wired.com/news/politics/0,1283,69175,00.html

VIACOM-iFILM DEAL CUED UP
Shareholders of privately held iFilm, a video-on-demand Web site, received=
=20
a letter in the last week announcing the anticipated buyout by media=20
conglomerate Viacom and seeking their approval. The deal is expected to be=
=20
worth about $50 million. The proposed deal would give Viacom further=20
exposure to a growing online advertising market. Also, it would provide an=
=20
online venue to feature video content from its many traditional companies,=
=20
including MTV Networks and Paramount Pictures. Los Angeles-based iFilm,=20
which hosts a collection of short video clips, TV show segments and movie=
=20
trailers, has attracted rising numbers of Web surfers and commercial TV=20
advertisers with the widespread adoption of broadband access to the Interne=
t.
[SOURCE: C-Net|News.com, AUTHOR: Stefanie Olsen ]
http://news.com.com/Viacom-iFilm+deal+cued+up/2100-1030_3-5894221.html?tag=
=3Dnefd.top

QWEST SEEKS MERGER CONDITIONS
Even as the FCC appears to be nearing approval of two major=20
telecommunication mergers, Qwest Communications International is urging the=
=20
agency and the Justice Department to impose five conditions on both=20
combinations. The merged entities should have to divest competing=20
telecommunications within their respective regions and should be prohibited=
=20
from discriminating in favor of themselves, their newly acquired affiliates=
=20
and each other, Qwest contends. SBC and Verizon should have to offer=20
stand-alone high-speed Internet service over digital subscriber lines=20
without customers having to purchase telephone service from the same=20
company =96 so-called naked DSL. The goal would be to help "some other firm=
=20
[that] might replicate the VoIP [voice-over-Internet protocol] threat=20
previously offered by AT&T and MCI," the company said in a list of its five=
=20
recommendations. The Qwest officials also said the FCC and the Justice=20
Department should require the telecom giants to "reduce their prices to=20
levels that would have been compelled through future competition from AT&T=
=20
and MCI" and that "SBC and Verizon must not be allowed to refuse customer=
=20
requests to move services to an SBC or Verizon competitor."
[SOURCE: Technology Daily, AUTHOR: Drew Clark]
http://www.njtelecomupdate.com/lenya/telco/live/tb-QHES1129153979670.html

MARTIN FACES TOUGH TALKS ON MERGERS
The emphasis of FCC Chairman Kevin Martin on reaching consensus among his=
=20
colleagues on the commission could face its toughest test during=20
closed-door negotiations over pending telecommunications mergers. Martin, a=
=20
Republican, recently outlined his initial bargaining position to fellow=20
commissioners. He wants the combinations of AT&T with SBC Communications=20
and MCI with Verizon Communications approved with no significant=20
conditions, an industry source said. But observers speculated that the=20
FCC=92s two Democrats -- Commissioners Michael Copps and Jonathan Adelstein=
=20
-- would seek restrictions. "I'd be stunned if the Democrats went along=20
with that," said Gene Kimmelman, director of Consumers Union=92s Washington=
=20
office. "They ought to have enormous concerns about how consumers get other=
=20
[communications] choices." Another source predicted the Democrats would=20
offer counterproposals and Martin would seek a compromise to secure=20
unanimous approvals. Sources said the magnitude of the transactions -- and=
=20
the potential for a public backlash if telecom rates rise -- would propel=
=20
Martin to get all commissioners on board. One source suggested that=20
unanimous approval would insulate the Republicans from potential political=
=20
fallout during the 2006 mid-term elections if telecom rates skyrocket. And=
=20
the Democrats, with the commission evenly split, have an incentive to=20
cooperate. Watchdogs hope the Democrats will press for the sale of=20
overlapping facilities in the companies' core services. They are also=20
seeking "naked DSL," which is broadband service sold separately from phone=
=20
service, and "network neutrality" safeguards designed to prevent companies=
=20
from discriminating against competing content offerings.
[SOURCE: Technology Daily, AUTHOR: David Hatch]
http://www.njtelecomupdate.com/lenya/telco/live/tb-UPVP1129153576037.html

FCC APPROVES ECHOSTAR ACQUISITION OF RAINBOW DBS ASSETS
The FCC gave EchoStar approval to operate the Rainbow DBS satellite, once=
=20
Cablevision=92s Voom bird. EchoStar has said it will use the satellite to=
=20
compliment its existing fleet, including EchoStar 3 by increasing high=20
definition and local-into-local capabilities. According to the order,=20
consumers backing the acquisition said EchoStar operation of Rainbow 1=20
might improve Voom=92s =93inconsistent service, poor management, substandar=
d=20
technology and consumer support services.=94 Consumers filing against the=
=20
transaction said by acquiring Voom=92s service EchoStar would cut=20
competition, leading to higher prices for DBS service. EchoStar said it's=
=20
=93pleased to win approval of Cablevision=92s Rainbow satellite assets and=
=20
looks forward to using the satellite=92s flexibility to enhance Dish=20
Network=92s existing service.=94
[SOURCE: Communications Daily, AUTHOR: Adrianne Kroepsch]
(Not available online)
* FCC Order
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-177A1.doc

INTERNET/BROADBAND

RECORD BROADBAND GROWTH MOVES CANADA WELL AHEAD OF THE US
Almost half of households (49%) in Canada are now connected to the Internet=
=20
via high-speed broadband, as the U.S. lags significantly behind =96 only 34=
%=20
of U.S. households have a high-speed Internet connection. Among the=20
research highlights: 1) 63% of Canadian households are now on the Internet=
=20
(49% broadband, 14% dial-up). In comparison, 57% of American households are=
=20
on the Internet (34% broadband, 23% dial-up). 2) Cable firms are slightly=
=20
ahead of telephone companies as the leading choice for broadband Internet=
=20
in both Canada and the U.S. 3) The percentage of Canadian homes with=20
broadband Internet grew rapidly between 2003 and 2005 =96 from 31% in 2003 =
to=20
40% in 2004 to the current level of 49% in 2005. 4) The number of broadband=
=20
Internet homes in Canada now exceeds the number of digital TV homes (i.e.,=
=20
homes with digital cable or satellite TV), while the reverse is true in the=
=20
U.S. 5) Internet activities that require high bandwidth are, not=20
surprisingly, more popular in Canada, especially among younger age groups.=
=20
25% of Canadian Internet users in the 12-29 age group have downloaded a=20
full-length movie or a 30- or 60-minute TV show off the Internet in the=20
past, compared to 16% of American Internet users in the same age group.
[SOURCE: Cablecaster]
http://www.cablecastermagazine.com/article.asp?id=3D48364&issue=3D10112005
* Canadian broadband use outpaces U.S.
http://www.globetechnology.com/servlet/story/RTGAM.20051011.gtbroadbando...
1/BNStory/Technology/

PANEL REPORT CRITICAL OF E-RATE
A House subcommittee has completed a yearlong investigation into fraud and=
=20
abuse involving the government's e-rate subsidy, and sources said that the=
=20
resulting bipartisan study is highly critical of the current system. The=20
subcommittee originally was slated last Friday to meet to consider adopting=
=20
the report. But the meeting was postponed until Oct.18 due to scheduling=20
conflicts, as legislators sought to leave town for the Columbus Day recess.=
=20
The $2.25 billion e-rate, which lowers Internet connection costs for=20
schools and libraries, is a component of the larger $6.5 billion universal=
=20
service program for subsidizing telecommunications service in rural and=20
low-income areas. House Energy and Commerce Committee spokesman Terry Lane=
=20
said the report documents ample evidence of wastefulness and misuse of=20
funds. The study, prepared by the committee's Oversight and Investigations=
=20
Subcommittee, will recommend ways to improve management, with the goal of=
=20
minimizing abuse.
[SOURCE: Technology Daily, AUTHOR: David Hatch]
http://www.njtelecomupdate.com/lenya/telco/live/tb-OQTL1129155386860.html

QUICKLY

REPORT: ANTISPAM PUSH HELPING CURB US JUNK MAIL
While the United States continues to be the world's worst source of spam,=
=20
computers there are relaying far fewer junk e-mails than a year ago,=20
according to Sophos. In contrast, the spam volume from South Korea and=20
China is substantially up, compared with the same period last year, the=20
security software maker said in a report released Wednesday. The report=20
covered Sophos's analysis of messages received in its scanning network=20
between April and September this year. The United States was the country of=
=20
origin for around 26 percent of global spam, down from 41.5 percent a year=
=20
ago. The share of spurious e-mails from South Korea and China, which held=
=20
the second and third position, has gone up to nearly 20 percent and 16=20
percent respectively, from 12 percent and 9 percent, Sophos said. The=20
company attributed the decline in U.S.-sourced spam in part to the nation's=
=20
crackdown against fraudulent e-mail. In particular, Sophos pointed to jail=
=20
sentences for spammers, tighter legislation and better system security.
[SOURCE: C-Net|News.com]
http://news.com.com/Report+Antispam+push+helping+curb+U.S.+junk+mail/210...
349_3-5894104.html?tag=3Dnefd.top

HOW COMPUTER MAPS WILL HELP THE POOR
"Community mapping projects hold great potential for giving a voice to=20
community members who are typically underrepresented in planning and=20
development decisions," says Hollie Lund, assistant professor of urban and=
=20
regional planning at California State Polytechnic University in Pomona.=20
"These tools are a practical solution to a vexing problem. How does=20
democracy engage low-income residents to speak out on matters that are=20
vital to their communities so that government can understand and then=20
remedy neighborhood issues?"
[SOURCE: The Christian Science Monitor, AUTHOR: Thomas Ulrich]
http://www.christiansciencemonitor.com/2005/1012/p13s02-legn.html

JUSTICES GRAPPLE WITH WHETHER PUBLIC EMPLOYEES ENJOY FREE-SPEECH RIGHTS ON=
=20
THE JOB
The free-speech rights of public employees proved a thorny and elusive=20
subject for the Supreme Court in an argument on Wednesday.
[SOURCE: New York Times]
http://www.nytimes.com/2005/10/13/politics/politicsspecial1/13scotus.htm...
agewanted=3Dall
(requires registration)

PARENTS CONCERNED ABOUT INTERNET USAGE IN THE CLASSROOM
While many schools have strengthened their computer security, parents=20
across America are concerned about inappropriate content and information=20
theft when their kids log on in the classroom. Approximately 41 percent of=
=20
online households include school-age children (enrolled in Kindergarten=20
through college). At home and at school, in libraries and community=20
centers, an overwhelming majority of children regularly use a PC to=20
complete their schoolwork. Parents log on to communicate with their child's=
=20
teacher, as well as to access grades.
[SOURCE: The Conference Board press release]
http://media.prnewswire.com/en/jsp/main.jsp?resourceid=3D3054643http://me=
dia.prnewswire.com/en/jsp/main.jsp?resourceid=3D3054643

NEW RITES OF PASSAGE
More on cell phones to kids.
[SOURCE: New York Times, AUTHOR: Michael Barbaro]
http://www.nytimes.com/2005/10/13/technology/13toys.html
(requires registration)

65% OF READERS BELIEVE MAGAZINES SELL EDITORIAL PLUGS
While marketers are pushing for print=92s answer to product placement, it=
=20
turns out that most magazine readers already consider it rampant. A study=
=20
released this week by Starcom USA found that 65% of the consumers believe=
=20
that advertisers pay for editorial mentions. Moreover, Starcom found,=20
readers are receptive to reading about brands in articles. Nearly 83% of=20
the respondents, when they identified brand appearances in titles, found=20
that the mentions of specific brands "fit" the content and context of its=
=20
article, and that they expected to read about specific products.
[SOURCE: AdAge, AUTHOR: Nat Ives]
http://adage.com/news.cms?newsId=3D46354

VIOLENCE IN GAMES STIMULATES BRAIN FOR AGGRESSION
Violent video games appear to put the human brain in a mood to fight,=20
according to a new study from Michigan State University.
[SOURCE: C-Net|News.com, AUTHOR: Michael Kanellos ]
http://news.com.com/Violence+in+games+stimulates+brain+for+aggression/21...
1043_3-5893930.html?tag=3Dnefd.top
--------------------------------------------------------------
Communications-related Headlines is a free online news summary service=20
provided by the Benton Foundation (www.benton.org). Posted Monday through=
=20
Friday, this service provides updates on important industry developments,=
=20
policy issues, and other related news events. While the summaries are=20
factually accurate, their often informal tone does not always represent the=
=20
tone of the original articles. Headlines are compiled by Kevin Taglang=20
(headlines( at )benton.org) -- we welcome your comments.
--------------------------------------------------------------