March 2006

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INTERNET/BROADBAND/TELECOM
Telcos to Suffer $36B VoIP Revenue Hit by 2010
Stevens "Hopes" for Telecom Bill By July
The Broadband War of 2006
Verizon Says Deregulation Ruling Won't Unravel MCI Concessions
Martin Gives Public Interest Safeguards a "Pocket Veto"
Another view of "net neutrality"
Nuts and Bolts of Net Discrimination: Encryption
Freeing Cities From Telco and Cable Monopolies
Panel Suggests Canada Ease Telecom Restrictions

CONTENT
WB Censors Its Own Drama for Fear of FCC Fines
Young People Turn to the Web for News
TV, filmmaking look like the Internet's next conquests in its
march toward world domination

QUICKLY -- Marketers Lose Confidence in TV=20
Advertising; Comcast, Time Warner: We Sought No=20
Adelphia Deferral; NAB Announces Board Election=20
Results; Magazines Grapple with School Library=20
Liquor Ad Ban; New Media and the Future of Public=20
Service Advertising; Texas arresting people in bars for being drunk

INTERNET/BROADBAND/TELECOM

TELECOS TO SUFFER $36 BILLION VOIP REVENUE HIT BY 2010
[SOURCE: Telecommunications Online, AUTHOR: Ken Wieland]
According to a new report from Juniper Research,=20
worldwide VoIP revenue is projected to reach an=20
annual US$18 billion by 2010. This growth will be=20
driven, says Juniper, by a combination of=20
replacing existing business circuit-switched=20
leased lines; the lower cost of calls; massive=20
growth in the Chinese telecom market; businesses=20
reaping the network efficiencies of putting voice=20
and data over one network; and, in the words of=20
the Juniper press release, "the realization that=20
integrating voice functionality into business=20
critical IT applications will improve business=20
productivity." Other projections that Juniper=20
throws into the business VoIP mix is that small=20
business broadband connections will reach 40=20
million lines by 2010 and that hosted VoIP=20
business revenue will reach US$7.6 billion. But=20
despite this new VoIP revenue stream, telcos will=20
still make a net loss in revenue -- courtesy of=20
VoIP=92s arrival -- to the tune of an annual US$36=20
billion. This loss, presumably, is largely down=20
to the fading away of telcos=92 more lucrative=20
leased line revenue, although Juniper does not=20
say so explicitly in its press statement. It does=20
add, though, that =91losses incurred by traditional=20
service providers will be exacerbated by the rise=20
of Internet telephony service providers and VoIP peering houses=92.
http://telecommagazine.com/newsglobe/article.asp?HH_ID=3DAR_1875

STEVENS "HOPES" FOR TELECOM BILL BY JULY
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Senate Commerce Committee Chairman Ted Stevens=20
(R-Alaska) says he is still hoping to get a=20
telecom-reform bill passed this year, not wanting=20
to have to start all over in 2007. Following a=20
speech to the Comptel annual convention in San=20
Diego Monday, Sen Stevens said, "This is the=20
second year of the Congress. If we don't get=20
something finished this year, we'll have to start=20
all over again in =9207. We=92re going to try very=20
hard to get this finished this year. Bills like=20
this take about a year to get to the point where=20
we are now. You have to have hearings. You have=20
to have meetings. You have to have discussions=20
with almost everyone involved, and under the=20
circumstances, we=92re at the place now where we=20
should be able to get the bill out of our=20
Committee before the middle of April. And I hope=20
we'll be able to get it passed and to the House=20
before June, and get it passed in July." (The=20
sound of campaign cash registers hummed in the background.)
http://www.broadcastingcable.com/article/CA6317825?display=3DBreaking+News
* Stevens Says Commerce Panel Deeply Divided Over 'Net Neutrality'
http://www.njtelecomupdate.com/lenya/telco/live/tb-PKMQ1142371107278.html

THE BROADBAND WAR OF 2006
[SOURCE: Fortune, AUTHOR: Justin Fox]
[Commentary] Say you run a telephone company.=20
You're spending billions to string superfast=20
Internet connections to American homes. Why=20
wouldn't you want to use those broadband pipes --=20
which your shareholders paid for -- to block=20
competitors, to sell services, to sign sweetheart=20
deals with content providers? Then again, say you=20
run a company that has prospered (or hopes to do=20
so) on the open-access Internet. Why wouldn't you=20
want to keep things that way, to prevent the=20
cable and telephone companies that dominate=20
high-speed Internet access from unleveling a=20
playing field that has seen such stupendous=20
innovation and wealth creation? That's the gist=20
of the net neutrality debate. The economics of=20
the debate are not as straightforward as they=20
first seem. If our hypothetical telco executive=20
got his way entirely, he'd strangle the very=20
Internet he hoped to profit from. And if the Web=20
exec got everything he wanted, the telcos might=20
not build the true broadband links (vs. the=20
moderately fast ones available now) needed to=20
unleash a new explosion of online creativity and=20
profit. It's a war, then, that we should hope nobody wins.
http://money.cnn.com/2006/03/21/technology/pluggedin_fortune/index.htm?s...
ion=3Dmoney_mostpopular

VERIZON SAYS DEREGULATION RULING WON'T UNRAVEL MCI CONCESSIONS
[SOURCE: Wall Street Journal, AUTHOR: Amy Schatz Amy.Schatz( at )wsj.com]
Verizon making clear its view on some=20
implications of a confusing move by the Federal=20
Communications Commission earlier this week, said=20
regulators' decision to deregulate broadband data=20
services it provides to large business customers=20
won't free it from conditions imposed when it=20
acquired MCI. Verizon also said the decision=20
won't eliminate its obligation to continue=20
payments to a fund that subsidizes phone services=20
for low-income and rural customers. Verizon also=20
said this week's decision has no impact on=20
conditions the FCC and Justice Department imposed=20
when it acquired MCI last year. Most of the=20
conditions required it to continue to lease=20
high-volume lines in some markets and limited the=20
price it could charge to some customers. Although=20
the relief provided by the FCC involves some of=20
the same lines, the merger conditions are a=20
separate obligation and aren't affected, said Ed=20
Shakin, assistant general counsel at Verizon.=20
"You can have independent obligations on the same services," he said.
http://online.wsj.com/article/SB114307368128605775.html?mod=3Dtodays_us_...
ketplace
(requires subscription)

FCC CHAIRMAN MARTIN GIVES PUBLIC INTEREST SAFEGUARDS A "POCKET VETO"
[SOURCE: Center for Digital Democracy]
[Commentary] In a quiet move full of implications=20
for the future openness of the Internet, the FCC=20
has granted Verizon relief from any common=20
carriage requirements in the company's broadband=20
offerings. But instead of conducting a full,=20
public inquiry into the issue, FCC Chairman Kevin=20
Martin elected simply to allow Verizon's petition=20
for forbearance from Title II (common carriage)=20
rules to expire without commission action,=20
effectively giving the company exactly what it=20
wanted. Chairman Martin apparently got what he=20
wanted, too, declaring in a joint statement with=20
Commissioner Deborah Taylor Tate that "promoting=20
broadband deployment is one of the highest=20
priorities of the FCC. To accomplish this goal,=20
the Commission seeks to establish a policy=20
environment that facilitates and encourages=20
broadband investment, allowing market forces to=20
deliver the benefits of broadband to=20
consumers.=85 This relief will enable Verizon to=20
have the flexibility to further deploy its=20
broadband services and fiber facilities without=20
overly burdensome regulations." Among those=20
allegedly burdensome regulations, Commissioner=20
Michael Copps pointed out in a spirited critique=20
of the commission's "inaction," are many of the=20
public interest safeguards that have long=20
governed telecommunications, including Universal=20
Service, privacy, disability access, consumer=20
rights, rural service, and interconnections with=20
other carriers and technologies. According to CDD=20
Executive Director Jeff Chester, "Instead of=20
protecting Internet users, consumers, and=20
citizens, Chairman Martin has further eroded the=20
public interest potential of digital=20
communications. He should resign. It's clear he=20
is more loyal to the interests of broadband=20
monopolist than the public at large."
http://www.democraticmedia.org/news/washingtonwatch/FCCVerizon.html
* Kevin Martin Is Dangerous to our Democracy=92s Health
http://www.democraticmedia.org/jcblog/?p=3D5

ANOTHER VIEW OF "NET NEUTRALITY"
[SOURCE: Skype Journal, AUTHOR: Hudson Barton]
[Commentary] Net Neutrality proponents sometime=20
make an analogy to a highway with a UPS truck and=20
a Wal-Mart truck where the UPS truck is serving a=20
public purpose while the Walmart truck is serving=20
a private purpose. Unfortunately, the analogy is=20
not helpful at all. It presupposes a world where=20
there are just a few trucks and one highway, and=20
I maintain it is exactly the world that the=20
proponents of "net neutrality" hope will develop.=20
It is a world of scarcity, controlled by a few=20
big telecoms, cablecos and ISPs. "Net neutrality"=20
is just a cover for the market protection that=20
these big companies will receive in exchange for=20
their commitment to a certain fairness doctrine.=20
As a result, Internet service will look=20
increasingly like a public utility. It does not=20
take a big company to be an Internet carrier any=20
more than it does to provide Internet content.=20
The current debate reveals the real intent of=20
"net neutrality" lobbyists... to destroy the very=20
competition that it purports to protect, to=20
reward the mediocre at the expense of the excellent.
http://www.skypejournal.com/blog/archives/2006/03/barton_another_view_of...
t_neutrality.php

NUTS AND BOLTS OF NET DISCRIMINATION: ENCRYPTION
[SOURCE: Freedom to Tinker, AUTHOR: Ed Felten]
[Commentary] Perhaps encryption can play a role=20
in the net neutrality debate. If users encrypt=20
their packets, the encrypted packets will all=20
look like gibberish to the ISP, so the ISP won't=20
be able to tell one type of packet from another.=20
This could force the ISP to handle all of the=20
user=92s packets in the same way. The ISP can still=20
penalize all of the user=92s packets, or it can=20
single out randomly chosen packets for special=20
treatment, but those are the only forms of=20
discrimination available to it. The user and the=20
ISP are playing an interesting game of chicken.=20
The ISP wants to discriminate against some of the=20
user=92s packets, but doesn't want to inconvenience=20
the user so badly that the user discontinues the=20
service (or demands a much lower price). The user=20
responds by making his packets indistinguishable=20
and daring the ISP to discriminate against all of=20
them. The ISP can back down, by easing off on=20
discrimination in order to keep the user happy --=20
or the ISP can call the user=92s bluff and hamper=20
all or most of the user=92s traffic. But the ISP=20
may have a different and more effective strategy.=20
If the ISP wants to hamper a particular=20
application, and there is a way to manipulate the=20
user=92s traffic that affects that application much=20
more than it does other applications, then the=20
ISP has a way to punish the targeted application.=20
So it turns out that even using encryption isn't=20
necessarily enough to shield a user from network=20
discrimination. Discrimination can work in subtle ways.
http://www.freedom-to-tinker.com/?p=3D995

FREEING CITIES FROM TELCO AND CABLE MONOPOLIES
[SOURCE: Government Technology, AUTHOR: John M.=20
Eger, San Diego State University]
[Commentary] Right now in state capitols across=20
America, legislation is being discussed or=20
enacted to prevent the municipality [from=20
playing] any role whatsoever in shaping its new=20
information infrastructure. Over 100 other=20
American cities have expressed the desire to=20
provide such municipal services. Their city=20
councils, their mayors, as well as their state=20
legislators have threatened them. They have been=20
told in no uncertain terms that the=20
telecommunications business belongs to the=20
private sector. Read that: the existing cable or=20
telecommunications firms. Most cities -- already=20
subsidized in some small way by a cable franchise=20
-- are not willing to make the investment and=20
possibly lose that subsidy. I'm convinced most,=20
however, are simply afraid to act in the face of=20
such state and local obstacles. We must find a=20
way to free the cities. The city traditionally=20
has been the center of all commerce and in the=20
wake of a global knowledge economy, it is the=20
cities who could be the incubators of creativity=20
and innovation which will be the hallmarks of our success in the future.
http://www.govtech.net/news/news.php?id=3D98812
* Municipal Wireless: Social Good or Private Gain?
http://choicelearning.blogspot.com/2006/03/municipal-wireless-social-goo...
r.html

PANEL SUGGESTS CANADA EASE TELECOM RESTRICTIONS
[SOURCE: New York Times, AUTHOR: Ian Austen]
A Canadian government panel has called for the=20
elimination of foreign ownership restrictions on=20
telecommunications companies as well as the=20
deregulation of telephone and Internet services.=20
The report by the Telecommunications Policy=20
Review Panel, released Wednesday, outlines a plan=20
for gradually reducing the limits on foreign=20
control of telephone companies, after an=20
examination of similar restrictions on Canadian=20
broadcasters and cable operators. The review=20
panel broadly adopted recommendations from=20
Telusthe dominant telephone company in western=20
Canada, and BCE, which is based in Montreal and=20
owns Bell Canada, for the elimination of price=20
regulation and other restrictions on telephone=20
companies. Many of the policies were originally=20
intended to increase competition in the=20
telecommunications market from new companies.=20
Although the panel recommends methods for=20
protecting consumers, including harsher penalties=20
for unfair competition, and the development of=20
Internet services in rural areas, Lawson A. W.=20
Hunter, BCE's chief corporate officer, said that=20
it largely reflected his industry's viewpoint.=20
"This report is very, very strong on that stuff," he said.
http://www.nytimes.com/2006/03/23/business/worldbusiness/23dereg.html?pa...
anted=3Dall
(requires registration)

CONTENT

WB CENSORS ITS OWN DRAMA FOR FEAR OF FCC FINES
[SOURCE: New York Times, AUTHOR: Bill Carter]
Concerned about the recent decision by the=20
Federal Communications Commission to fine=20
television networks for material deemed indecent,=20
the WB network will broadcast a new drama next=20
week that it has censored over the objections of=20
the program's creator. But first, the network=20
will offer the uncut version of the pilot episode=20
on its Web site, starting today =97 a further=20
example of the new strategies network television=20
may be pursuing, both to escape=20
government-imposed restrictions and to find=20
alternative ways of reaching viewers. It is the=20
first time a network has offered on another=20
outlet an uncut version of a program it has been=20
forced to censor. The show, "The Bedford=20
Diaries," was created by Tom Fontana, whose long=20
r=E9sum=E9 includes award-winning shows like "St.=20
Elsewhere" and "Homicide" for network television=20
and the far more graphic prison drama "Oz" for=20
HBO, a pay-cable channel with no content=20
restrictions. The pilot episode of "The Bedford=20
Diaries," which concerns a group of college=20
students attending a class on human sexuality,=20
had already been accepted by WB's standards=20
department. After the F.C.C. decision last week=20
to issue millions of dollars in fines against=20
broadcast stations, the network's chairman, Garth=20
Ancier, contacted Mr. Fontana and asked him to=20
edit a number of specific scenes out of the show,=20
including one that depicted two girls in a bar=20
kissing on a dare and another of a girl=20
unbuttoning her jeans. "I said no," Mr. Fontana=20
said in an interview Wednesday. "I told him I=20
found the ruling incomprehensible. He said the censor would do the edit."
http://www.nytimes.com/2006/03/23/arts/23bedf.html
(requires registration)

YOUNG PEOPLE TURN TO WEB FOR NEWS
[SOURCE: USAToday, AUTHOR: Peter Johnson]
A study released by the Pew Internet & American=20
Life project finds that for young people the=20
Internet has become the primary news source on=20
the average day. Within a =93high-powered=94 group of=20
Internet users =97 those who use broadband four or=20
more times a day =97 71% go online for news on an=20
average day, while 59% get news from local TV,=20
just over half from national TV and radio, and=20
about 40% from local newspapers. But especially=20
for the under-36 age group, the local newspaper,=20
local television and national TV newscasts play=20
lesser roles in their newsgathering, the study=20
finds. The study paints a bleak outlook for=20
traditional ink-on-paper newspapers. But it also=20
finds that younger readers =97 those under 36 who=20
are often written off as not interested in news =97=20
are being drawn into the news habit earlier=20
thanks to the appeal of the Internet. =93For many=20
of these young broadband users, the Internet is=20
their main course for news, and they don't always=20
eat their vegetables or order dessert in the form=20
of using other media,=94 says study author John=20
Horrigan. Though this may not come as news to=20
anyone under 35, the results have profound=20
ramifications for mainstream media outlets, which=20
need to integrate an online presence as quickly=20
as possible or risk alienating the next=20
generation of news consumers, Horrigan says.=20
=93Mainstream media need to search for the right=20
business model that integrates the online=20
experience into what they do,=94 Horrigan says.=20
=93We're seeing the beginnings of a significant=20
segment of the population having their daily=20
newsgathering habits formed by what they see on=20
the Internet.=94 This compares with just five years=20
ago, he says, when Pew researchers found that=20
high-speed users =93were using the Internet to fill=20
in their newsgathering habits. Now, it governs=20
where they go and what they do=94 to get news.
http://www.usatoday.com/printedition/life/20060323/d_mediamix23.art.htm
See --
* Online News: For many home broadband users, the=20
Internet is a primary news source
http://www.pewinternet.org/PPF/r/178/report_display.asp
* Pew: Web Users Still Unlikely to Pay for News
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...
t_id=3D1002234825

TV, FILMMAKING LOOK LIKE THE INTERNET'S NEXT=20
CONQUESTS IN ITS MARCH TOWARD WORLD DOMINATION
[SOURCE: San Francisco Chronicle, AUTHOR: Ellen Lee]
From the dangerous to the crude to the=20
endearingly cute, Internet television has become=20
the latest rage on the Web. Hordes of Internet=20
users are tuning into sites such as YouTube.com=20
and video.google.com, where they can watch, post=20
and share millions of pieces of video footage.=20
Some are even taken straight off television, such=20
as "Saturday Night Live's" skit of waif-like=20
actress Natalie Portman doing gangsta rap and=20
spewing bleeped-out obscenities. The video clips=20
demonstrate how the Internet is reshaping how we=20
get our television entertainment.
http://sfgate.com/cgi-bin/article.cgi?f=3D/c/a/2006/03/23/ONLINEVIDEO.TMP

QUICKLY

MARKETERS LOSE CONFIDENCE IN TV ADVERTISING
[SOURCE: AdAge, AUTHOR: Abbey Klaassen]
Yes, the sky is falling, chicken. Major brand=20
advertisers responsible for $20 billion in ad=20
spending are losing confidence in the=20
effectiveness of TV advertising. More than three=20
out of four advertisers -- 78% to be exact --=20
said they have less confidence today in the=20
effectiveness of TV advertising than they did two=20
years ago, according to a survey released at=20
today=92s Association of National Advertisers TV Ad=20
Forum. Almost 70% of advertisers believe DVRs and=20
VOD will reduce or destroy the effectiveness of=20
traditional 30-second commercials. Instead, they=20
are looking at alternatives such as branded=20
entertainment within TV programs (61%), TV=20
program sponsorships (55%), interactive=20
advertising during TV programs (48%), online=20
video ads (45%) and product placement (44%).=20
Additionally, 80% will spend more of their=20
advertising budgets on Web advertising and 68%=20
are looking into search engine marketing.
http://adage.com/news.cms?newsId=3D48381
* RIP 30-Second Spot?
http://www.broadcastingcable.com/article/CA6318182?display=3DBreaking+News
* TV Ads Losing Power, Survey Shows
http://online.wsj.com/article/SB114307625668605827.html?mod=3Dtodays_us_...
ketplace

COMCAST, TIME WARNER: WE SOUGHT NO ADELPHIA DEFERRAL
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Comcast and Time Warner have told the FCC's=20
General Counsel that they have not asked the=20
commission to "defer action" on their planned=20
acquisition of Adelphia or "expressed a=20
preference for a date by which they hope the=20
proceeding will be resolved." The companies did=20
say they had provided "periodic updates to the=20
Commission on the status of the [Adelphia]=20
bankruptcy process, the conclusion of which is a=20
prerequisite to closing the Adelphia=20
transactions." The letter was prompted by one to=20
the general counsel by Media Access Project=20
Monday asking GC Robert Feder to look into=20
possible violations of ex parte rules. That MAP=20
letter, in turn, stemmed from a press conference=20
in which FCC Chairman Kevin Martin talked to=20
reporters about a variety of subjects. MAP cited=20
a number of press accounts, including B&C's=20
(which it quoted), reporting that Chairman Martin=20
"implied that he had been asked to defer action=20
on the Adelphia matter at the request of certain=20
parties." If so, said, MAP, that should have been=20
disclosed it as an ex parte communication.
http://www.broadcastingcable.com/article/CA6318093?display=3DBreaking+News
* Comcast, TW: MAP Request =91Reckless=92
http://www.multichannel.com/article/CA6318098.html?display=3DBreaking+News

NAB ANNOUNCES BOARD ELECTION RESULTS
[SOURCE: National Association of Broadcasters press release]
The NAB announced the results of the 2006 NAB=20
Board of Directors election. The two-year terms=20
of the newly elected board members will begin at=20
the June 2006 Board meeting. The TV Board=20
includes David Barrett, president/CEO=20
Hearst-Argyle Television; Lynn Beall, senior VP,=20
Gannett Broadcasting, KSDK St. Louis; Elizabeth=20
Murphy Burns, president, Morgan Murphy Stations,=20
Duluth, Minn.; William B. Peterson, senior VP, TV=20
Station Group, The E. W. Scripps Company,=20
Cincinnati; Doreen Wade, president, Freedom=20
Broadcasting; West Palm Beach, Fla.; and James=20
Yager, CEO, Barrington Broadcasting Co., South Barrington, IL.
http://www.nab.org/newsroom/pressrel/releases/032206_boardresults.htm
http://www.broadcastingcable.com/article/CA6318096?display=3DBreaking+News

MAGAZINES GRAPPLE WITH SCHOOL LIBRARY LIQUOR AD BAN
[SOURCE: AdAge, AUTHOR: Ira Teinowitz and Nat Ives]
The liquor industry is toughening some of its ad=20
standards for magazines, recommending that=20
spirits makers should cease running ads on the=20
back and inside covers as of July 1 in millions=20
of copies of five major titles, including Time=20
and Newsweek, unless the publishers can figure=20
out a way to send thousands of school-library editions without those ads.
http://adage.com/news.cms?newsId=3D48367

NEW MEDIA AND THE FUTURE OF PUBLIC SERVICE ADVERTISING: CASE STUDIES
[SOURCE: Kaiser Family Foundation]
The Kaiser Family Foundation released this=20
collection of case studies on public education=20
campaigns that use new media to help illustrate=20
ways to incorporate new strategies into ongoing=20
or new efforts at a forum on Tuesday, March 21, 2006, in Washington, D.C.
http://www.kff.org/entmedia/7469.cfm
http://www.kff.org/entmedia/upload/7469.pdf

TEXAS ARRESTING PEOPLE IN BARS FOR BEING DRUNK
Really, I don't make this stuff up.
http://today.reuters.com/news/newsArticle.aspx?type=3DdomesticNews&storyID=
=3D2006-03-22T230438Z_01_N22388344_RTRUKOC_0_US-BARS.xml&archived=3DFalse
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Communications-related Headlines is a free online=20
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