October 2005

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

TELECOM
Dept of Justice Approves Two Big Telecom Mergers
Mergers of Telecom Giants Ends Hope of Meaningful Competition in
Phone, High-Speed Internet Service
SBC's Embrace of AT&T Brand Brings History -- and Baggage
E-911 Measure Would Override FCC's Internet Telephony Rules

BROADCASTING/CABLE
As Verizon Enters Cable Business, It Faces Local Static
Rehr To Boost NAB Value To Members
TVs Hit With Proposed Kids Fines

QUICKLY -- Commerce Spectrum Management Advisory Committee; Post-Katrina
Press: Same as it Ever Was; Sorrell sees media industry 'panic' over
Internet; A Disconnect on School Internet Funds; Anti-Spyware Group Details
Spyware Risks; FBI Dealt Setback on Cellular Surveillance

TELECOM

TELECOM MEGA-MERGERS FACING ONE MORE HURDLE
[SOURCE: National Journal's Insider Update, AUTHOR: David Hatch]
The Department of Justice approved the SBC-AT&T and Verizon-MCI mergers
Thursday. The final hurdle now is approval by the FCC, which is scheduled
to take up the matter at a public meeting this morning. The Justice
Department's Antitrust Division did condition the deals on a relatively
modest requirement that the merged companies divest portions of their fiber
optic lines to competitors in 19 metropolitan areas. The department said
the transactions, as originally proposed, would have resulted in higher
prices for some business customers in eight metropolitan areas in Verizon's
territory and 11 in SBC's region. The department's decision requires
Verizon and SBC to each divest high-speed telecom connections to more than
350 buildings in their respective territories. The divested facilities
would be sold to single buyers in each city using long-term leases known as
"indefeasible rights of use" -- IRUs -- that are common in the industry.
The Washington Post reports that the Justice Department did not impose
conditions that directly affect residential consumers, a decision that
reflects the view that people increasingly can get local telephone service
from cable, Internet and mobile phone providers. Jonathan Rubin, senior
research fellow at the non-profit American Antitrust Institute, said the
conditions do not go far enough. "The [Justice Department] appears to have
failed to impose conditions aimed at preventing a duopoly of dominant
end-to-end networks from developing to the detriment of the ordinary
consumer," he said. Earl Comstock, president and CEO of CompTel/ALTS, an
association representing Bell competitors, complained that the Justice
Department's decree "promotes and protects the Bell companies at the
expense of American consumers." Noting that AT&T and MCI were Bell
competitors, he charged that the department's divestiture requirements are
a "fig leaf" that would benefit "a few businesses in a few hundred
buildings in the country." [For reaction from Consumers Union, see story
below.]
http://www.njtelecomupdate.com/lenya/telco/live/tb-IMUI1130452546559.html
* Mergers Win First Approval
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR200510...
(requires registration)
* DOJ approves telecom megamergers
http://news.com.com/DOJ+approves+telecom+megamergers/2100-1033_3-5918010...
* DOJ Approves Verizon/MCI, SBC/AT&T
http://www.broadcastingcable.com/article/CA6278635.html?display=Breaking...
(free access for Benton's Headlines subscribers)
* Justice Department Approves Purchases of MCI and AT&T
http://online.wsj.com/article/SB113043912830781497.html?mod=todays_us_ma...
(requires subscription)
* Justice Dept. Approves Two Big Telecom Deals
http://www.nytimes.com/2005/10/28/technology/28phone.html?pagewanted=all
(requires registration)

MERGERS OF TELECOM GIANTS ENDS HOPE OF MEANINGFUL COMPETITION IN PHONE,
HIGH-SPEED INTERNET SERVICE
[SOURCE: Consumers Union press release]
Consumer groups said Thursday's Justice Department approval of two
mega-mergers -- SBC Communications/AT&T, and Verizon/MCI -- signals the end
of national competition policy, as the newly formed telecommunications
giants will control about 90 percent of residential wireline, 70 percent of
long distance, and up to half of the wireless telephone service in their
respective regions. "Rubber-stamping these mergers is an embarrassing
milestone in this nation because it puts an end to any real hope of
head-to-head telephone competition," said Gene Kimmelman, Consumers Union's
senior director of public policy. "A Justice Department that 20 years ago
shattered the telephone monopoly known as Ma Bell is now coddling the very
phone giants who are again trying to create regional telecommunications
monopolies," Kimmelman added. Consumers likely will soon feel the impact of
the mergers, as the lack of regional competition could lead to increasing
or inflated prices for local, long-distance, high-speed Internet and
wireless service. "By allowing the top two telecommunications giants to buy
up their competitors, the Justice Department told consumers they deserve
little to no choice when it comes to phone, wireless and high-speed
Internet providers," said Mark Cooper, Consumer Federation of America
research director. The groups also said the mergers will stymie the
competition of Voice Over Internet Protocol (VOIP), which uses high-speed
Internet connections to offer consumers other choices in the local and
long-distance market. "These small companies that are aggressively trying
to offer alternative phone service will be big-footed by the new AT&T and
Verizon," Cooper said. "For the two-thirds of American consumers who can't
afford or do not take the bundle of voice, video and data services these
companies package together, prices for each of these services are likely to
climb."
http://www.consumersunion.org/pub/core_telecom_and_utilities/002801.html...

SBC'S EMBRACE OF AT&T BRAND BRINGS HISTORY -- AND BAGGAGE
[SOURCE: Wall Street Journal, AUTHOR: Dionne Searcey dionne.searcey( at )wsj.com
and Brian Steinberg brian.steinberg( at )wsj.com]
SBC Communications confirmed that it would adopt AT&T's moniker as its new
name once its $16 billion takeover of AT&T is complete. The merged company
will embark on a world-wide marketing campaign to spread the word about its
new brand. Consumer awareness of the AT&T brand is 98% and business
awareness is virtually 100%, while global awareness is nearly as high.
While SBC could benefit from AT&T's name recognition, the company is sure
to inherit at least some of the brand's worse-for-the-wear corporate
baggage. In 2000, AT&T stood as one of the world's 10 largest global
brands, valued at $25.5 billion, according to an annual survey by
Interbrand, a branding consultant. By 2002, however, the company's brand
value tumbled 37% to $16.06 billion. And AT&T dropped off the list in 2003.
http://online.wsj.com/article/SB113041435841581110.html?mod=todays_us_ma...
(requires subscription)
* AT&T Brand to Endure in Deal
http://www.latimes.com/business/printedition/la-fi-phones28oct28,1,49903...
(requires free subscription)

E-911 MEASURE WOULD OVERRIDE FCC'S INTERNET TELEPHONY RULES
[SOURCE: Technology Daily, AUTHOR: Drew Clark]
An FCC requirement that Internet telephone companies provide emergency 911
services would be overruled by a new draft bill authored by Senate Commerce
Chairman Ted Stevens (R-Alaska). The committee draft revises S. 1063,
introduced by Sen. Bill Nelson (D-FL) which would require Voice over
Internet Protocol, or VoIP, companies to provide location-based --
so-called enhanced -- 911 service. Unlike the Nelson bill, the new Stevens
language relieves "nomadic" VoIP providers from the need to comply with a
May order by the FCC. The agency had required all VoIP Internet telephony
providers connecting to traditional telephone wires to provide E-911
service. The E-911 legislation had originally been scheduled for a vote on
Oct. 20; it is now expected to be considered the week of Oct. 31. Both the
Nelson and Stevens versions would require the modernization of the public
safety 911 system. Voice on the Net Coalition's Jim Kohlenberger said it
was better to have VoIP with 911 service -- but without location
information -- than to be denied VoIP services because of an E-911 mandate.
http://www.njtelecomupdate.com/lenya/telco/live/tb-ZRJF1130450768656.html

BROADCASTING/CABLE

AS VERIZON ENTERS CABLE BUSINESS, IT FACES LOCAL STATIC
[SOURCE: Wall Street Journal, AUTHOR: Dionne Searcey dionne.searcey( at )wsj.com]
All over the country, Verizon is squaring off against local governments, as
it embarks on a high-stakes upgrade of much of its network. Aiming to offer
Internet, phone and television services, Verizon plans to spend up to $20
billion to lay thousands of miles of fiber-optic wires across its East
Coast service area from Maine to Florida and into parts of Texas,
California and elsewhere. Budget-strapped local officials, who have the
final say over granting cable-TV-service franchises, are greeting the phone
giant with expensive and detailed demands. The battle is crucial for
Verizon, which is rapidly losing its traditional customers in a new
telecommunications free-for-all. The rivals include wireless phone
companies, cable companies offering low-priced phone service, and Web
companies such as Google offering voice services via the Internet. Verizon
is betting that its new fiber network, which it dubs "FIOS," will help it
turn the tables on competitors. Fellow phone giant SBC Communications is
also launching a new video technology. But it is gambling that its
Internet-based system won't require approval in each locality. Verizon,
which is using a technology similar to cable television, decided it
wouldn't risk a big fight with the cities and is seeking approval from each
one.
http://online.wsj.com/article/SB113046249277282084.html?mod=todays_us_pa...
(requires subscription)

REHR TO BOOST NAB VALUE TO MEMBERS
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Bill Novelli, AARP's CEO, should expect a call soon from National
Association of Broadcasters President Eddie Fritts. The House version of
digital television transition legislation, short on funds to subsidize
analog-to-digital converter boxes, could leave AARP members in the dark or
paying for the privilege of keeping their TV sets running. But as Mr.
Fritts battles on over DTV legislation, the lobbying organization is also
preparing to welcome a new leader, former National Beer Wholesalers
Association President David Rehr. One of DC's top lobbyist, this K
Street-connected Republican and big fund raiser will be taking over the NAB
December 5. He's vowed to "increase the value proposition for the
association's members." He told the NAB board, "What I do know is lobbying.
I know how to make a message simple to communicate with a busy policymaker;
I know how to form lasting relationships with members of Congress and ask
for support when I need it. As beer wholesalers can tell you, I don't take
no for an answer when it comes to advocating on behalf of my association on
Capitol Hill." He continued, "Some of you may be thinking: What does this
beer guy know about radio and television. Well, in all honesty, more than I
knew about beer when I went to the National Beer Wholesalers Association.
And if you ask beer wholesalers, they will tell you that I was a very
passionate advocate for their interests."
http://www.broadcastingcable.com/article/CA6278638?display=Breaking+News...
(free access for Benton's Headlines subscribers)
* Summary of Rehr's remarks to NAB board:
http://www.nab.org/newsroom/pressrel/Releases/102705_Rehr_to_Board.htm

TVs HIT WITH PROPOSED KIDS FINES
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
What does Libco have against kids? The TV station owner has been hit with
$14,000 in proposed FCC fines for "willful and repeated failures," to put
information on kids TV shows in its public file. But the FCC also has
decided to renew its station licenses anyway, saying the violations were
not serious or evidencing "a pattern of abuse." Keeping that public record
is one of stations' obligations under the Children's TV Act of 1990.
http://www.broadcastingcable.com/article/CA6278011.html?display=Breaking...
(free access for Benton's Headlines subscribers)

QUICKLY

COMMERCE SPECTRUM MANAGEMENT ADVISORY COMMITTEE
[SOURCE: National Telecommunications and Information Administration]
On Thursday Assistant Commerce Secretary Michael D. Gallagher announced the
formation of the Commerce Spectrum Management Advisory Committee to advise
the Commerce Department on key elements of President Bush's 21st Century
Spectrum Policy Initiative for improving management of the nation's
airwaves. This initiative incorporates and builds upon previous policy
breakthroughs such as the authorization of ultrawideband, a promising new
technology for innovative devices; the planned deployment of 90 MHz of
radio spectrum for advanced wireless services; globally-harmonized
allocation of 5GHz spectrum for unlicensed Wireless Local Area Network
systems; and responsible deployment of broadband over power lines, or BPL.
The committee will serve to facilitate increased understanding among all
spectrum users about their respective interests. It will act as a liaison
between the stakeholders represented by the membership and the federal
government, and also may provide a forum for stakeholders representing
current and emerging issues in spectrum management, spectrum policy, reform
and technology. The Committee will recommend approaches and strategies that
enable the United States to remain a leader in the introduction of new
wireless technologies, while at the same time providing for the expansion
of existing technologies and ensuring that the country's homeland security,
national defense, and other critical government needs are satisfied.
Persons wishing to submit nominations should send the nominee's resume to
the attention of Meredith Attwell, Designated Federal Officer, by mail to
Office of the Assistant Secretary, National Telecommunications and
Information Administration, 1401 Constitution Avenue N.W., Room 4898,
Washington DC, 20230; by facsimile transmission to (202) 501-0536; or by
electronic mail to spectrumadvisory( at )ntia.doc.gov.
http://www.ntia.doc.gov/ntiahome/press/2005/spectrumadvisory_10272005.htm
Committee charter:
http://www.fido.gov/facadatabase/docs_charters%5C25109_Charter_(2005-05-20-10-28-52).htm

POST-KATRINA PRESS: SAME AS IT EVER WAS
[SOURCE: AlterNet, AUTHOR: Eric Alterman]
[Commentary] For a brief moment in early September, it looked like the
United States was about to have a long-overdue national conversation about
race and poverty. But after many horror stories about post-Katrina
conditions in New Orleans were found to be false, bloggers and talking
heads jumped all over the press, bashing news organizations over the head
with charges of anti-Bush bias for reporting rumors which made an already
horrific situation look worse than it was. Now, if you get a story wrong,
you ought to be called to account, but conservatives used the situation as
an attempt to shift blame from the Bush administration's egregious
performance to a game of "blame the media" instead.
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1139741

SORRELL SEES MEDIA INDUSTRY 'PANIC' OVER INTERNET
[SOURCE: Reuters, AUTHOR: Adam Pasick]
WPP Chief Executive Martin Sorrell, head of the world's second-largest
advertising and marketing company and one of the media sector's best known
prognosticators, told attendees at a Internet Advertising Bureau conference
that declining circulation, viewership and revenue figures had big media
companies running scared. Sorrell's dire warning that print and television
are steadily losing ground to their new media rivals was tempered by the
influential views of Microsoft Chairman Bill Gates, who said such
distinctions would soon disappear. "The notion of Internet versus
non-Internet advertising -- over the next decade that notion will be
obsolete," he said at the conference. Gates said the future lies in all
forms of content -- from movies to TV shows to news -- being distributed in
a customized form online, sponsored in part by advertising that will zero
in on specific demographics and interest groups. "We're taking it to a new
level, for advertisers to target specific audiences," he said. Microsoft's
new paid search system allows advertisers to indicate whom they want to
reach based on criteria such as geographic location and gender, in addition
to the keyword-based ads offered by companies like Google.
http://today.reuters.com/news/newsArticle.aspx?type=internetNews&storyID...

A DISCONNECT ON SCHOOL INTERNET FUNDS
[SOURCE: Washington Post, AUTHOR: Christopher Lee]
An oddly timed piece on a report released last week by the House Commerce
Committee's Oversight Subcommittee. The report suggested the E-rate program
is "extremely vulnerable to waste, fraud and abuse" and recommends that
Congress consider whether the FCC should continue to manage the program,
whether the money should continue to be disbursed by a nonprofit,
nongovernmental entity, and whether the program is spending too much money.
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR200510...
(requires registration)
See last week's coverage at: http://www.benton.org/index.php?q=node/399

ANTI-SPYWARE GROUP DETAILS SPYWARE RISKS
[SOURCE: Center for Democracy & Technology]
The Anti-Spyware Coalition (ASC), an alliance of technology companies and
public interest groups, announced several key developments in its ongoing
effort to help users combat the unwanted and often dangerous spyware
infesting their computers. The ASC, which the Center for Democracy and
Technology coordinates, finalized its uniform definitions of "spyware" and
other related terms, released a document which classifies the risk posed by
different sorts of unwanted software and announced that it would hold
public meetings in Washington and Ottawa in 2006.
Press release: http://www.antispywarecoalition.org/newsroom/20051027press.htm
ASC Documents5: http://www.antispywarecoalition.org/documents/index.htm

FBI DEALT SETBACK ON CELLULAR SURVEILLANCE
[SOURCE: Washington Post, AUTHOR: Jonathan Krim]
The FBI may not track the locations of cell phone users without showing
evidence that a crime occurred or is in progress, two federal judges ruled,
saying that to do so would violate long-established privacy protections. In
separate rulings over the past two weeks, judges in Texas and New York
denied FBI requests for court orders that would have forced wireless
carriers to continuously reveal the location of a suspect's cell phone as
part of an ongoing investigation. Other judges have allowed the practice in
other jurisdictions, but the recent rulings could change that.
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/27/AR200510...
(requires registration)
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Sure, these are dark days when there's no baseball to speak of until
February, but we'll be back to warm your heart with more telecom policy
news Monday. Have a great weekend. See you at the parade?
http://chicago.whitesox.mlb.com/NASApp/mlb/news/article.jsp?ymd=20051027...
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Communications-related Headlines is a free online news summary service
provided by the Benton Foundation (www.benton.org). Posted Monday through
Friday, this service provides updates on important industry developments,
policy issues, and other related news events. While the summaries are
factually accurate, their often informal tone does not always represent the
tone of the original articles. Headlines are compiled by Kevin Taglang
(headlines( at )benton.org) -- we welcome your comments.
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