March 2006

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POLICYMAKERS
Senate Commerce Committee Agenda
House Franchise Bill on Hold

INTERNET
Net Losses
'Internet Neutrality' In Action
Chambers: No Net-Neutrality Regs
AEI-Brookings Economists=92 Statement on U.S. Broadband Policy
TIA Adopts Principles on Net Neutrality Issues
Municipal Wi-Fi Gets Backers
Plan would widen rural areas' access to high-speed service
Congress Mulls Web's Role in Politics

JOURNALISM
TV News Pounded in PEJ Study

OWNERSHIP
McClatchy to Resell 12 Papers It's Buying
Humpty-Dumpty? Competitive Effects of the AT&T=96BellSouth Merger

QUICKLY -- Sinclair Ending Local Newscasts;=20
Televisa Refutes Reports That Univision Bid Is in=20
Works; Comcast Reported in Talks for E=20
Entertainment Television; BBC told licence fee target is unrealistic

POLICYMAKERS

SENATE COMMERCE COMMITTEE AGENDA
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The Senate Commerce Committee has scheduled a=20
March 16 vote on the nomination of Robert=20
McDowell to be a FCC commissioner. He will likely=20
be approved in a voice vote on a block of=20
nominations that include Robert C. Cresanti, to=20
be Undersecretary of Commerce for Technology. No=20
word on when the leadership will schedule a full=20
Senate vote, but it could be within days. On=20
March 16, the Committee also plans to mark-up the=20
Protecting Consumer Phone Records Act (S. 2389).=20
The Committee will hold two hearings today. One=20
will be on wireless communications and spectrum=20
reform, while the other will be on Wall Street's take on telecommunications.
http://www.broadcastingcable.com/article/CA6315752?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)
* Full Committee Markup March 16
http://commerce.senate.gov/hearings/witnesslist.cfm?id=3D1814
* Senate Commerce Slates Two More Hearings
http://www.broadcastingcable.com/article/CA6315745?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)

HOUSE FRANCHISE BILL ON HOLD
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
The House Telecommunications and the Internet=20
Subcommittee is unlikely to vote this week on a=20
bill that would award a national cable franchise=20
to phone companies and impose so-called=20
network-neutrality rules on cable and phone=20
companies. A House aide involved in the drafting=20
indicated that staff work had not been completed=20
on the language. Even when that step is complete,=20
House Commerce Committee Chairman Joe Barton=20
(R-Texas), Rep. John Dingell (D-Mich.) and other=20
key members would need to review the provisions=20
to determine whether they accurately reflect the=20
various compromises that were struck, and the=20
timing surrounding that process was uncertain.
http://www.multichannel.com/article/CA6315773.html?display=3DBreaking+News
(requires subscription)

INTERNET

NET LOSSES
[SOURCE: The New Yorker, AUTHOR: James Surowiecki]
[Commentary] While =93tiered access=94 never=20
influenced the spread of the telephone network,=20
it is becoming a major issue in the evolution of=20
the Internet. The logic of the tiered-access=20
approach is simple: broadband companies do the=20
work of providing Internet access, so they should=20
be able to charge what they can for it. Telecom=20
executives say that the revenue from tiered=20
access would let them invest more in adding=20
bandwidth and improving download speeds, and=20
argue that Web sites are parasites taking, as=20
AT&T=92s chairman, Edward E. Whitacre, Jr., put it,=20
a =93free ride=94 on the pipes the broadband=20
companies own. But these companies have pipes=20
into people=92s homes in the first place only=20
because of a long history of government=20
regulation, and people want to use those pipes=20
only because of all the value the so-called=20
parasites have created. And it=92s that value which=20
tiered access=97even if it does improve the=20
Internet=92s infrastructure -- will put in harm=92s=20
way. Decisions that once were made collectively=20
by hundreds of millions of Internet users would=20
now be shaped in large part by a handful of=20
telecom executives. It used to be said that the=20
Internet was all about =93disintermediation.=94 With=20
the end of network neutrality, the middlemen are striking back.
http://www.newyorker.com/talk/content/articles/060320ta_talk_surowiecki
See also --
* Universities as Providers of Neutral Networks?
http://www.mediageek.net/?p=3D1365

'INTERNET NEUTRALITY' IN ACTION
[SOURCE: San Jose Mercury News, AUTHOR: Editorial Staff]
[Commentary] Explaining the impact of government=20
regulations on everyday people and businesses can=20
be a challenge, especially in arcane areas such=20
as telecommunications policy. That's why a=20
conference about Internet telephones starting=20
today in San Jose is an excellent opportunity to=20
shine a spotlight on the brewing debate over=20
something called ``Internet neutrality.'' Its=20
outcome will shape the future of the Internet=20
itself. At the VON Conference (it stands for=20
"Voice on the Net'") some 320 companies will=20
showcase everything related to the burgeoning=20
world of Internet telephone calls: services for=20
consumers and businesses, new equipment and=20
technologies combining Net phones and wireless=20
Internet access. More than 8,000 people are=20
expected to attend, and for good reason. Internet=20
telephony is one of the most dynamic and exciting=20
sectors of the tech industry today. The Internet=20
owes its success and economic value to the myriad=20
innovators who create content and services on the=20
promise they will be immediately available to a=20
global audience. Allowing access providers to=20
become gatekeepers to those innovations would=20
kill that promise and zap the Internet of its very lifeblood.
http://www.mercurynews.com/mld/mercurynews/news/opinion/14094279.htm
* For more on VON Conference, see: http://www.von.com/

CHAMBERS: NO NET-NEUTRALITY REGS
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
In a March 9 letter to House Commerce Committee=20
Chairman Joe Barton (R-TX) and the panel=92s top=20
Democrat, Rep. John Dingell (MI), Cisco Systems=20
Inc. CEO John Chambers wrote, =93Broadband=20
Internet-access service providers should remain=20
free to engage in pro-competitive=20
network-management techniques to alleviate=20
congestion, ameliorate capacity constraints and=20
enable new services.=94 Chambers made it clear that=20
while Internet-access providers had an obligation=20
not to =93block, degrade or impair=94 Web services,=20
=93innovation inside the network is just as=20
important as innovation in services and devices connected to the Internet.=
=94
http://www.multichannel.com/article/CA6315769.html?display=3DBreaking+News
(requires subscription)
See also:
* Cisco: Arms Merchant For Net Neutrality
http://paulsblog.pulver.com/archives/2006/03/cisco_arms_merc.html

AEI-BROOKINGS ECONOMISTS' STATEMENT ON US BROADBAND POLICY
[SOURCE: AEI-Brookings Joint Center]
In this statement, a group of economists=20
assembled by the AEI-Brookings Joint Center makes=20
the following two recommendations to improve the=20
competitive provision of broadband services.=20
First, Congress should eliminate local=20
franchising regulations, which serve as a barrier=20
to new entry. Second, Congress and the Federal=20
Communications Commission should make more=20
spectrum available to private parties and allow=20
them to use it as they see fit or trade their=20
licenses in the market, so that spectrum will go to its highest-valued uses.
http://www.aei-brookings.org/admin/authorpdfs/page.php?id=3D1252

TIA ADOPTS PRINCIPLES ON NET NEUTRALITY ISSUES
[SOURCE: Telecommunications Industry Association]
On March 10, the Telecommunications Industry=20
Association (TIA) sent a letter to the leadership=20
of the United States Senate and House of=20
Representatives respective Commerce Committees=20
that sets forth principles, TIA Broadband=20
Internet Access Connectivity Principles, which=20
TIA believes should guide policy decisions=20
regarding "net neutrality" or "connectivity" --=20
generally construed as the ability for consumers=20
to connect any device or access any content=20
through their Internet connection, so long as it=20
does not harm or degrade the network. The two=20
principles are: 1) A competitive broadband=20
Internet access market offers consumers choices with respect to
=93connectivity=94 =AD that is, the ability to access=20
any lawful Internet content, and use any device,=20
application, or service over the public Internet=20
=AD so long as they do not harm the network. 2) A=20
competitive broadband Internet access market also=20
gives facilities-based broadband Internet access=20
providers competitive incentives to undertake=20
risky, new investments, while precluding=20
anticompetitive behavior against unaffiliated businesses.
http://www.tiaonline.org/business/media/press_releases/2006/PR06-23.cfm
* Broadband Internet Access Connectivity Principles
http://www.tiaonline.org/business/media/press_releases/2006/documents/TI...
oadbandInternetAccessConnectivityPrinciples.pdf

MUNICIPAL WI-FI GETS BACKERS
[SOURCE: RedHerring]
It=92s official: Citywide Wi-Fi in the United=20
States is going mainstream. Hundreds of cities=20
across the U.S. are looking for companies and=20
partners to build Wi-Fi networks -- leaving=20
latecomers a chance to snag business. The cable=20
industry is planning its own wide-area wireless=20
network. Dubbed CableRoam, the scheme will=20
feature citywide Wi-Fi among other technologies.=20
Telcos and cable operators didn't want to admit=20
the size of the opportunity at first, because it=20
undercuts their pricing. But now that citywide=20
Wi-Fi looks like it could be nothing less than=20
the future of broadband, they have to face it.=20
=93It will be ubiquitous and a monster=20
opportunity,=94 says Craig Mathias, an analyst with=20
Farpoint Group. It could also make for a massive=20
land grab for domestic Wi-Fi networks over the=20
next year. Cities in the U.S. spent some $76.5=20
million on wireless networks in 2005, according=20
to research firm MuniWireless. That number is=20
expected to soar 430 percent to $405.6 million in=20
2007. Internet service providers and portals,=20
cable companies, and even telcos are starting to brace for the new era.
http://www.redherring.com/article.aspx?a=3D16041

PLAN WOULD WIDEN RURAL AREAS' ACCESS TO HIGH-SPEED SERVICE
[SOURCE: USAToday, AUTHOR: Paul Davidson]
A proposal to allow wireless broadband providers=20
to use vacant frequencies between TV channels is=20
gaining support in Congress, a development that=20
could deliver high-speed access to underserved=20
rural areas. Two recently introduced Senate bills=20
would require the Federal Communications=20
Commission to issue rules to accommodate the=20
unlicensed services within six months. The=20
measures, which are garnering bipartisan support,=20
are likely to be discussed at a Senate Commerce=20
Committee hearing today. Yet, they're opposed by=20
TV broadcasters that fear the services would=20
disrupt the nation's transition to digital=20
television. A bill by Senate Commerce Committee=20
Chairman Ted Stevens, R-Alaska, tries to ensure=20
that broadcasters are protected from=20
interference. A similar bill by Sen. George=20
Allen, R-Va., is co-sponsored by Sens. John=20
Sununu, R-N.H., John Kerry, D-Mass., and Barbara=20
Boxer, D-Calif. Rep. Jay Inslee, D-Wash., plans a=20
similar measure in the House. The bills could be=20
added to telecom reform this year. Thousands of=20
providers use antennas and free, unlicensed=20
spectrum to deliver broadband to sparsely=20
populated rural regions that would be too costly=20
to serve with wires. But gearmakers such as Intel=20
are drooling at the prospect of using TV=20
airwaves, which are in low-frequency bands that=20
allow signals to travel farther and to better=20
penetrate buildings and foliage. That means=20
networks could be built with fewer antennas at a=20
fraction of what systems cost now. Lower expenses=20
could entice wireless providers to expand service.
http://www.usatoday.com/printedition/money/20060314/2b_wireless14.art.htm

CONGRESS MULLS WEB'S ROLE IN POLITICS
[SOURCE: Wall Street Journal, AUTHOR: David Rogers david.rogers( at )wsj.com]
As the Internet looms larger in American=20
politics, Congress faces a fight over how to=20
balance campaign-finance restrictions and the=20
free speech rights of bloggers. Hoping to=20
influence a Federal Election Commission=20
rule-making this week, House leaders are=20
promoting a bill to exclude the Internet from=20
restrictions on public communications under=20
campaign law. But critics say the real goal is to=20
knock a hole in the 2002 ban against using=20
unlimited "soft money" contributions from=20
corporations and labor unions for political=20
advertising. The conservative Redstate and=20
liberal Daily Kos blogs have joined forces,=20
saying the FEC must "tread lightly" for fear that=20
new campaign reporting rules will chill=20
free-spirited discourse online. With the number=20
of Web sites multiplying rapidly, proponents=20
argue that money can't dominate the market as it=20
might with broadcasts for a single candidate or=20
point of view. But opponents argue that online=20
political advertising is a potential force, and a=20
blanket exemption for paid content on blogs would=20
invite abuse as well as efforts to unravel=20
campaign-finance limits. Unlike many debates in=20
Congress these days, this fight is about big=20
ideas and one where both sides boast bipartisan=20
support. Senate Democratic Leader Harry Reid of=20
Nevada last year introduced a bill similar to the=20
current House measure; Senate Majority Leader=20
Bill Frist (R., Tenn.) wants to add the Internet=20
measure to a pending lobbying-overhaul bill. But=20
Republican Sen. John McCain of Arizona says the=20
measure is an end-run around the campaign-finance=20
rules he helped to write four years ago. House=20
Republicans admit they are so divided themselves=20
that to advance their bill in the name of "free=20
speech" they may have to run over the rights of=20
opponents to offer a substitute.
http://online.wsj.com/article/SB114230884613497473.html?mod=3Dtodays_us_...
e_one
(requires subscription)

JOURNALISM

TV NEWS GETS POUNDED IN PEJ STUDY
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
"At many old-media companies, though not all, the=20
decades-long battle at the top between idealists=20
and accountants is now over. The idealists have=20
lost." That is one of the sobering conclusions of=20
the Project for Excellence in Journalism's annual=20
report, The State of the News Media 2006. The=20
study looked at a range of media, including=20
network, local station, and cable news, and found=20
much wanting. Of, cable, the report generalized:=20
"It is thinly reported, suffers from a focus on=20
the immediate, especially during the day, is=20
prone to opinion mongering and is easily=20
controlled by sources who want to filibuster." As=20
for network news: "the underlying=20
problems...continue without apparent=20
interruption," the study says. Viewership=20
continued to decline, the nightly newscasts "skew=20
old" while advertisers are going the other=20
direction. While the talk in the industry was=20
about the absence of the three long-time anchors,=20
the study suggested that one of the more=20
significant hires was billionaire Larry Kramer=20
taking over CBS digital. "Five years from now, we=20
may look back and think the most important=20
changes of the year in network news were about=20
other things," the study suggests. "Did the three=20
news divisions really begin to innovate=20
television news on the Internet? Did they start=20
to see broadcasting as no longer their core=20
delivery platform for news? To what extent did=20
they start to see their TV channels as a way to=20
drive traffic to the next generation of=20
television news, online?" In the local TV news=20
race, the study found declining early evening=20
news ratings, and possible trouble brewing in=20
early morning, the explosive growth area for=20
local news in the past few years. The upside is=20
that late local news "may be improving its=20
audience appeal." Pointing out that the local TV=20
business is still a license to print money -- 40%=20
or 50% profit margins in many cases--the study=20
warned that there was a risk to continuing to=20
demand "such huge profit margins and year-to-year=20
growth in earnings when the audience is=20
stagnant," particularly if the casualty is=20
investment in the product even as the competition=20
heats up. The study found that " roughly half of=20
all the news hole on local TV news that was not=20
given over to weather, traffic and sports was=20
devoted to crime and accidents. Stories about=20
local institutions, government, infrastructure,=20
education and more were generally relegated to=20
brief anchor reads in the middle of the=20
newscast," and war news got less time than lifestyle stories.
http://www.broadcastingcable.com/article/CA6315346?display=3DBreaking+Ne...
referral=3DSUPP
(free access for Benton's Headlines subscribers)
In a related story...
* Local TV News Covers Health a Lot, But Not Always Well
Local television newscasts, where most Americans=20
get most of their news, are packed with medical=20
stories and health information. But the=20
first-ever national study of that coverage finds=20
many problems with it, and sees room for=20
improvement by both TV stations and the health=20
experts whose work fills the news. In the March=20
issue of the American Journal of Managed Care,=20
researchers from the University of Michigan and=20
the University of Wisconsin-Madison report=20
results from an in-depth analysis of health=20
coverage on local TV newscasts from across the=20
country. In all, health and medical stories=20
comprised 11 percent of the news portion of=20
late-evening newscasts in the one-month period=20
studied, with 1,799 such stories carried on 2,795=20
broadcasts captured from the representative=20
sample of 122 stations in the nation's top 50=20
media markets. The average story was 33 seconds=20
long, and most did not give specifics about the=20
source of the information presented. Items about=20
specific diseases tended not to contain=20
recommendations for viewers, or information about=20
how common the disease was -- which could help=20
put the news into perspective with other health=20
issues. But most disturbing, the study's authors=20
say, were the egregious errors contained in a=20
small minority of studies -- errors that could=20
have led to serious consequences.
http://media.prnewswire.com/en/jsp/main.jsp?resourceid=3D3160886

OWNERSHIP

MCCLATCHY TO RESELL 12 PAPERS IT'S BUYING
[SOURCE: New York Times, AUTHOR: Katharine Seelye]
There was both joy and despair across the Knight=20
Ridder newspaper chain as employees learned that=20
the McClatchy Company, which announced plans=20
yesterday to acquire the company's 32 papers,=20
would promptly sell 12 of them. Those at the 12=20
papers to be sold -- including The Philadelphia=20
Inquirer and The San Jose Mercury News -- now=20
face continued uncertainty about who will own=20
them, and the prospect of a less desirable owner=20
than the one they had expected. McClatchy, which=20
owns 12 papers -- including the Bee papers in=20
Central California, The Star Tribune in=20
Minneapolis and The News & Observer in Raleigh,=20
N.C. -- will become the nation's second-biggest=20
newspaper company, behind Gannett, if it=20
completes the $4.5 billion acquisition. The=20
Gannett Company, which publishes USA Today, did=20
not make a bid for Knight Ridder, but analysts=20
said it remained a possible buyer for some of the=20
12 papers that McClatchy does not want. Other=20
possible buyers include William Dean Singleton,=20
chief executive of the MediaNews Group, which=20
publishes The Denver Post and The Salt Lake=20
Tribune, and who presided over the shutdown of=20
The Houston Post. Eight of the 12 papers are=20
unionized, which could make them less desirable=20
acquisitions. The Newspaper Guild has also expressed interest in buying the=
m.
http://www.nytimes.com/2006/03/14/business/media/14paper.html
(requires registration)
* Hey, Buddy, Wanna Buy A Newspaper? How About a Dozen?
http://online.wsj.com/article/SB114230605717297415.html?mod=3Dtodays_us_...
ketplace
* Was Death of Newspapers Greatly Exaggerated, or Is Verdict Still Out?
[SOURCE: New York Times, AUTHOR: Geraldine Fabrikant & Floyd Norris]
http://www.nytimes.com/2006/03/14/business/media/14sherman.html?pagewanted=
=3Dall
(requires registration)
* The Future in Black and White
[Commentary] Good and factual reporting and=20
independent commentary of the kind you can't get=20
elsewhere is where the successful journalistic=20
outlets will create value in the future, as they=20
have in the past. The trick will be adapting old=20
journalism standards to the new opportunities that technology offers.
http://online.wsj.com/article/SB114229930295597236.html?mod=3Dtodays_us_...
nion
(requires subscription)

HUMPTY-DUMPTY? COMPETITIVE EFFECTS OF THE AT&T-BELLSOUTH MERGER
[SOURCE: Gregory Rosston, Stanford Institute for Economic Policy Research]
AT&T has made an offer to buy BellSouth. This is=20
not the first large telecommunications merger and=20
it is likely not to be the last. Of the proposed=20
telecommunications mergers since the passage of=20
the Telecommunications Act in 1996, only one, the=20
proposed MCI-Sprint merger, was challenged and=20
blocked on antitrust grounds -- all of the other=20
mergers have been approved, some with=20
divestitures to ameliorate competitive concerns.=20
This is also just one in a series of mergers that=20
have partially reconstituted the original AT&T=20
that was broken apart in 1984. There will be a=20
lot of talk in the press about the competitive=20
concerns surrounding the recreation of Ma Bell.=20
This brief will outline some of the competition=20
analysis the Department of Justice, the FCC and=20
state regulatory agencies will undertake in=20
evaluating the proposed merger. In addition to=20
analysis of potential competitive effects=20
resulting from the merger, much of the public=20
debate is likely to focus on competitive issues=20
unrelated to the merger because the review=20
process gives parties a chance to bring their=20
concerns to the forefront of the debate. While=20
those may enter into the debate, they should not=20
be a part of the competitive effects analysis and=20
the DOJ is unlikely to address those concerns.=20
The FCC has a broader mandate and has shown a=20
tendency to address nonmerger issues in the=20
context of mergers, so its reaction may be different.
http://siepr.stanford.edu/papers/briefs/policybrief_mar06.pdf

QUICKLY

SINCLAIR ENDING LOCAL NEWSCASTS
[SOURCE: St Petersburg Times & The Business Journal]
Proving once again it is all about localism,=20
Sinclair Broadcasting will end local newscasts in=20
Milwaukee, Raleigh, Buffalo and Tampa at the end of the month.
http://www.sptimes.com/2006/03/08/Artsandentertainment/Newscast_to_end.s...
http://milwaukee.bizjournals.com/milwaukee/stories/2006/03/06/daily22.html

TELEVISA REFUTES REPORTS THAT UNIVISION BID IS IN WORKS
[SOURCE: TVWeek, AUTHOR: Jay Sherman]
Mexican media company Grupo Televisa said Monday=20
that it is still considering whether to prepare a=20
bid for Spanish-language broadcaster Univision=20
Communications, refuting press reports that=20
Televisa had already teamed with a group of=20
private-equity firms to make an offer.
http://www.tvweek.com/news.cms?newsId=3D9537
(requires free registration)

COMCAST REPORTED IN TALKS FOR CHANNEL
[SOURCE: New York Times]
The Comcast Corporation, the cable giant that=20
controls E Entertainment Television, is in talks=20
to buy the 40 percent of the operation that it=20
does not own from the Walt Disney Company.
http://www.nytimes.com/2006/03/14/business/14cable.html?pagewanted=3Dall
(requires registration)

BBC TOLD LICENSE FEE TARGET IS UNREALISTIC
[SOURCE: Financial Times, AUTHOR: Ben Hall and Andrew Edgecliffe-Johnson]
The BBC has been told by the government that its=20
plans for an up to 40% increase in the licence=20
fee over the next 10 years are=20
=93unrealistic.=94 Negotiations between the=20
broadcaster and the government will begin in=20
earnest after Tuesday=92s publication of a white=20
paper with proposals to overhaul the BBC=92s=20
governance and subject its operations to an=20
independent =93market impact assessment." Ministers=20
will announce the new licence fee in June or=20
July. But the opening discussions have not gone=20
well for the BBC. The government has already=20
concluded that the corporation will have to=20
settle for an increase in the annual licence fee=20
significantly below the BBC=92s proposal of rate of inflation plus 2.3%.
http://news.ft.com/cms/s/ac144d3e-b2d4-11da-ab3e-0000779e2340.html
(requires subscription)
--------------------------------------------------------------
Communications-related Headlines is a free online=20
news summary service provided by the Benton=20
Foundation (www.benton.org). Posted Monday=20
through Friday, this service provides updates on=20
important industry developments, policy issues,=20
and other related news events. While the=20
summaries are factually accurate, their often=20
informal tone does not always represent the tone=20
of the original articles. Headlines are compiled=20
by Kevin Taglang headlines( at )benton.org -- we welcome your comments.
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