May 2006

** Headlines will next publish Tuesday May 30 **

LEGISLATION
House Judiciary Passes Net Neutrality Measure
US to repeal phone tax, refund billions
House to Adopt Senate Indecency Language
House Judiciary Committee approves Internet gambling ban

TELEVISION
FCC's Martin Orders Probe of TV Stations That Air Ads as News
Give the telcos a video hook-up
Smithsonian Hands Over TV Contract

INTERNET
New Tech Alliances Signal More Scrambling Ahead
Google=92s Tangled Wireless Push
BBC's Internet Ambitions Raise Hackles of Rivals

GOVERNMENT & COMMUNICATIONS
Secrets Claims In NSA Case May Stop Suits

LEGISLATION

HOUSE JUDICIARY PASSES NET NEUTRALITY MEASURE
[SOURCE: Reuters]
The House Judiciary Committee on Thursday=20
approved legislation aimed at preventing=20
high-speed Internet network providers from=20
discriminating against unaffiliated services,=20
content and applications. Content providers like=20
Google, Microsoft and Yahoo have expressed=20
concerns that they would be forced to pay=20
Internet service providers extra to ensure=20
consumers can access their content. The measure,=20
approved by a vote of 20-13, would amend U.S.=20
antitrust law. It would also counter a rival bill=20
from another House committee that wants to=20
encourage network providers to preserve=20
consumers' ability to freely surf the Internet=20
instead of adopting stricter rules. "The lack of=20
competition in the broadband marketplace presents=20
a clear incentive for providers to leverage=20
dominant market power over the broadband=20
bottleneck to pre-select, favor or prioritize=20
Internet content over their networks," said=20
Judiciary Chairman James Sensenbrenner (R-WI).=20
"We are optimistic that the majority in Congress=20
will see this legislation as an attempt to solve=20
a problem that does not exist," said Tim McKone,=20
AT&T executive vice president for federal relations.
http://today.reuters.com/news/newsArticle.aspx?type=3DtechnologyNews&sto...
D=3D2006-05-25T211828Z_01_N24310259_RTRUKOC_0_US-INTERNET-CONGRESS.xml
* See Committee press release:=20
http://judiciary.house.gov/media/pdfs/Ifreedomcmtepass52506.pdf
* House Panel Backs Net Access Bill
http://www.latimes.com/business/printedition/la-fi-neutral26may26,1,5755...
.story?coll=3Dla-headlines-pe-business
* House panel votes for Net neutrality
http://news.com.com/House+panel+votes+for+Net+neutrality/2100-1028_3-607...
7.html?tag=3Dnefd.lede
* Judiciary Passes Net Neutrality Bill
http://www.broadcastingcable.com/article/CA6338103?display=3DBreaking+News
* House Panel Approves Network Neutrality
http://www.multichannel.com/article/CA6338177.html?display=3DBreaking+News
* Net Neutrality -- aka "Saving the Internet"
http://www.creativevoices.us/php-bin/news/showArticle.php?id=3D156&PHPSE...
D=3D9cd028afc264fa131527e9e378db2e3a
* Bipartisan Majority Supports Internet Freedom in the House
http://www.hearusnow.org/other/newsroom/internetbroadband/bipartisanmajo...
ysupportsinternetfreedominthehouse/
* House Judiciary Passes Net Neutrality Bill
http://www.publicknowledge.org/node/403
* Bipartisan Victory in the House
http://www.savetheinternet.com/blog/2006/05/25/bipartisan-victory-in-the...
usebipartisan-majority-supports-internet-freedom-in-the-house/
* Statement from USTelecom
"We agree with the views expressed today in the=20
House Judiciary Committee by the majority of=20
Republicans and many committee Democrats who=20
raised significant concerns about regulating the=20
Internet in the name of so-called net neutrality.=20
The committee members understand that this=20
misguided and reckless legislation could hamper=20
investment and innovation and limit consumer=20
choice. We will continue to work with Congress to=20
enact legislation that will bring real video competition to consumers."
http://www.ustelecom.org/news_releases.php?urh=3Dhome.news.nr2006_0525_1

US TO REPEAL PHONE TAX, REFUND BILLIONS
[SOURCE: Reuters]
The U.S. Treasury Department on Thursday conceded=20
a legal dispute over the 3 percent federal excise=20
tax on long-distance telephone service and said=20
$13 billion would be refunded to taxpayers. The=20
telecommunications industry hailed the decision=20
in the long-fought battle to kill a 1898 law,=20
established as a luxury tax on wealthy Americans=20
who owned telephones and to help finance costs of=20
waging the Spanish-American war. The U.S.=20
Treasury Department said it would end its=20
litigation to defend the tax and taxpayers will=20
be able to reclaim the money on their 2006 tax returns filed next year.
http://today.reuters.com/news/newsArticle.aspx?type=3DpoliticsNews&storyID=
=3D2006-05-25T174140Z_01_WAT005650_RTRUKOC_0_US-ECONOMY-TELECOMS-TAX.xml&ar=
chived=3DFalse
* Wireless Industry Comments
http://www.ctia.org/news_media/press/body.cfm?record_id=3D1613
* Comment from USTelecom
http://www.ustelecom.org/news_releases.php?urh=3Dhome.news.nr2006_0525
* U.S. to End Contentious Phone Tax
http://online.wsj.com/article/SB114860210611563715.html?mod=3Dtodays_us_...
ketplace
* 'Antique' Phone Tax Dropped
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/25/AR200605...
0720.html
* Phone Tax Laid to Rest at Age 108
http://www.nytimes.com/2006/05/26/business/26excise.html

HOUSE TO ADOPT SENATE INDECENCY LANGUAGE
[SOURCE: TVNewsday]
The office of House Majority Leader John Boehner=20
(R-Ohio) says that the House is expected to=20
consider and pass the Senate version of the=20
broadcast indecency bill in a vote during the=20
week of June 6 when the House returns from its Memorial Day recess.
http://www.tvnewsday.com/articles/2006/05/25/daily.5/

HOUSE PANEL APPROVES INTERNET GAMBLING BAN
[SOURCE: Reuters, AUTHOR: Jeremy Pelofsky]
House Judiciary Committee approved legislation on=20
Thursday aimed at banning Internet gambling, an=20
estimated $12 billion industry. The measure would=20
update and expand existing law to cover all forms=20
of interstate gambling in the United States and=20
would bar a gambling business from accepting=20
payment in the form of credit cards, checks, wire=20
and Internet transfers. It would also prohibit=20
gambling on an estimated 2,300 Internet gambling=20
sites, many run by offshore companies, and also=20
require banks to block gambling transactions by=20
customers, which the industry has argued would be=20
difficult to identify. Despite the committee's=20
approval, 25-11, it remains unclear whether the=20
legislation will reach floor votes in the House=20
and Senate this year. Congress has a relatively=20
few work days left in 2006 because of the November congressional elections.
http://today.reuters.com/news/newsArticle.aspx?type=3DinternetNews&storyID=
=3D2006-05-25T174605Z_01_N25456293_RTRUKOC_0_US-LEISURE-GAMBLING-CONGRESS.x=
ml&archived=3DFalse

TELEVISION

FCC'S MARTIN ORDERS PROBE OF TV STATIONS THAT AIR ADS AS NEWS
[SOURCE: Bloomberg, AUTHOR: Neil Roland]
Federal Communications Commission Chairman Kevin=20
Martin ordered a probe of dozens of television=20
stations after a report found they aired=20
advertisements as if they were news reports,=20
people familiar with the inquiry said. The April=20
report by the non-profit Center for Media and=20
Democracy found at least 77 stations, including=20
23 affiliates of Walt Disney Co.'s ABC network=20
and seven Sinclair Broadcast Group stations,=20
ignored an FCC warning to disclose sponsors. The=20
maximum fine for each violation is $32,500,=20
rising to $325,000 for multiple infractions, said=20
FCC spokesman Clyde Ensslin. "If the=20
investigation leads to significant fines, the FCC=20
could cause stations to put disclosures in place=20
that make clearer the corporate role in local=20
news,'' said analyst Blair Levin of Stifel=20
Nicolaus & Co. in Washington. "It depends how hard Martin wants to push it.=
''
http://www.bloomberg.com/apps/news?pid=3D10000103&sid=3DaIeR2Prf88nE&refer=
=3Dus
* FCC probing complaint on video news releases
http://today.reuters.com/news/newsArticle.aspx?type=3DtechnologyNews&sto...
D=3D2006-05-25T204442Z_01_N25355690_RTRUKOC_0_US-MEDIA-FCC-NEWSRELEASES.xml=
&archived=3DFalse
* FCC Probes Corporate VNRs
http://www.broadcastingcable.com/article/CA6338316?display=3DBreaking+News

GIVE THE TELCOS A VIDEO HOOK-UP
[SOURCE: Los Angeles Times, AUTHOR: Editorial Staff]
[Commentry] Like Lucy urging Charlie Brown to=20
take another run at the football, telephone=20
companies are saying that they really mean it=20
this time. They promise to hold the ball steady=20
-- that is, to play nice with the public -- if=20
only lawmakers will agree to let them in the=20
game. The game here, broadly speaking, is TV=20
service. The prospect of providing more=20
competition to the local cable TV operator is so=20
enticing, it's tempting to forget all those times=20
the Bells yanked the ball away. They're certainly=20
right about the need to streamline the=20
franchising process, which can stretch on for=20
years as cities demand a profusion of=20
public-access channels, TV studios and other=20
perks. A better approach would be to create a=20
package of public benefits that telecoms and=20
cable operators would have to provide, tied to=20
the size of the community served. And as long as=20
they don't discriminate within neighborhoods, the=20
telecoms should be free to pick the communities=20
where they compete for customers for these new=20
services, just as cable operators choose where=20
they offer telephone and data services.=20
Widespread demand -- more than 80% of U.S.=20
households pay for cable or satellite TV today --=20
should draw the telecoms' new service to=20
lower-income markets. So too should the=20
competitive threat posed by the cable operators'=20
expanding phone services. Still, given the Bells'=20
track record, lawmakers should be careful not to=20
give telecoms and cable operators carte blanche.=20
With the issue bogging down in Congress, chances=20
are that Sacramento will move on a bill,=20
coauthored by Assembly Speaker Fabian Nu=F1ez=20
(D-Los Angeles), that would allow them into the=20
market for TV services before Washington acts.=20
Here's hoping that Californians actually get to kick the football.
http://www.latimes.com/news/printedition/opinion/la-ed-video26may26,1,12...
96.story?coll=3Dla-news-comment
(requires registration)

SMITHSONIAN HANDS OVER TV CONTRACT
[SOURCE: Washington Post, AUTHOR: Jacqueline Trescott]
The Smithsonian Institution is locked into its=20
semi-exclusive television contract with Showtime=20
Networks for 30 years, Smithsonian Secretary=20
Lawrence M. Small told a House oversight=20
committee yesterday. Small disclosed several=20
other details about the deal: 1) The Smithsonian=20
is guaranteed $500,000 a year, and can earn=20
additional money if Smithsonian on Demand,=20
Showtime programming based on Smithsonian=20
holdings, is popular with cable subscribers. 2)=20
Showtime invested "tens of millions of dollars=20
upfront" to start Smithsonian on Demand. 3) The=20
Smithsonian can do six television programs a year=20
with other filmmakers outside the Showtime=20
contract. With the deal, the Smithsonian said,=20
researchers and scholars would continue to have=20
access to the archives and other Smithsonian=20
resources. But commercial filmmakers could make=20
only "incidental" use of the materials unless=20
they were working with Showtime or got special=20
approval. Smithsonian officials have said only a=20
very small number of filmmakers would be=20
affected. Small said that of the 900 media=20
contracts signed between 2000 and 2005, only 17=20
had more than an incidental use of Smithsonian=20
resources. Small explained that the Showtime=20
project was one way that Smithsonian was trying=20
to bring in extra revenue. It receives 75 percent=20
of its money from Congress. Its other funds come=20
from a private account that includes an $800=20
million endowment. Small said yesterday the=20
Smithsonian had raised $1 billion from private=20
sources since 2000. But he also reminded the=20
panel that the Smithsonian has a backlog of=20
repairs that would cost billions of dollars.
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/25/AR200605...
2242.html
(requires registration)

INTERNET

NEW TECH ALLIANCES SIGNAL MORE SCRAMBLING AHEAD
[SOURCE: Wall Street Journal, AUTHOR: Kevin J.=20
Delaney kevin.delaney( at )wsj.com, Mylene Mangalindan, Robert A. Guth]
Yahoo and eBay unveiled a broad partnership under=20
which eBay will display ads brokered by Yahoo on=20
its U.S. online auction site and marketplace.=20
Yahoo will promote eBay's PayPal=20
electronic-payment system as a way for consumers=20
to pay for Yahoo services. Separately, Google and=20
Dell confirmed an agreement to install Google=20
software on Dell PCs before they are shipped to=20
users. The deal, which Dell says could include as=20
many as 20 million computers a year, will get=20
Google's search services and ads in front of more=20
users. The agreements are the result of=20
behind-the-scenes efforts by tech companies big=20
and small to form alliances that strengthen their=20
efforts to own a bigger piece of the Web=20
landscape. At stake are huge future profits from=20
Internet users and advertisers, whose buying and=20
spending habits are still in flux. EBay's=20
decision to tie up with Yahoo appeared to be a=20
tacit acknowledgement that it didn't feel=20
comfortable more closely aligning itself with=20
long-time partner Google, which has begun efforts=20
over the past year that some believe compete with=20
eBay in areas such as payment services and=20
listings. Meanwhile, Google's Dell pact was=20
driven partly by Google's desire to keep a leg up=20
on Microsoft, say people familiar with the=20
matter. The deals come amid growing ambitions of=20
the Internet companies that increasingly have=20
them encroaching on one another's turf. Rivalries=20
are building as Internet penetration in the U.S.=20
has reached a mature, slower-growth phase. That=20
augurs more battles over attracting and retaining=20
current Internet users, who are increasing the=20
time they spend online. At the same time,=20
relationships among many Internet companies exist=20
already, complicating rivalries and prospective=20
alliances. More scuffles for new alliances appear=20
to already be underway. Google and Microsoft, for=20
example, are competing to provide search=20
technology and related advertising to News=20
Corp.'s Fox Interactive Media division, which=20
includes the popular MySpace social networking=20
site, according to people familiar with the=20
matter. A Fox Interactive spokeswoman declined to=20
comment. EBay itself could be a further object of=20
heated courting by rivals. The Yahoo-eBay ad=20
agreement is exclusive to the U.S., leaving open=20
the possibility of eBay doing an ad deal with=20
Google or Microsoft in Europe and Asia.
http://online.wsj.com/article/SB114855928978662961.html?mod=3Dtodays_us_...
ketplace
(requires subscription)
* Yahoo and EBay Join to Fight The Giants
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/25/AR200605...
0505.html

GOOGLE'S TANGLED WIRELESS PUSH
[SOURCE: RedHerring, AUTHOR:=20
KFehrenbacher( at )RedHerring.com, LGannes( at )RedHerring.com]
The hurdles Google faces as it becomes involved=20
in building citywide Wi-Fi networks. Building=20
infrastructure and acting as a service provider=20
isn't something with which Google has much=20
experience. Already Google is facing hurdles in=20
the slow-moving, very political process of=20
building what some perceive as a public service.=20
To start with, Google=92s local advertising revenue=20
from the network won't come anywhere close to the=20
estimated $15 million in infrastructure costs.=20
That=92s because neither the technology nor=20
business model is yet in place to start driving a=20
location-based advertising economy around local=20
businesses. First Google must overcome the layers=20
of bureaucracy surrounding city politics and the=20
real-world intricacies of building a citywide=20
network. The search giant, which prides itself on=20
its =93bottom-up=94 innovation process and flexible=20
approach to development, now has to contend with=20
hiring union workers for network construction and=20
attending endless meetings with public committees and review boards.
http://www.redherring.com/Article.aspx?a=3D16991&hed=3DGoogle%E2%80%99s+...
gled+Wireless+Push&sector=3DIndustries&subsector=3DInternetAndServices

BBC'S INTERNET AMBITIONS RAISE HACKLES OF RIVALS
[SOURCE: Wall Street Journal, AUTHOR: Aaron O. Patrick aaron.patrick( at )wsj.co=
m]
In a recent letter to the British government=20
agency that oversees the British Broadcasting=20
Corp, newspaper publishers Telegraph Group Ltd.,=20
News Corp.'s News International and Associated=20
Newspapers Ltd. asked the government to force the=20
BBC to stop funding its Web sites with public=20
money and to limit further online expansion. The=20
BBC, the world's oldest public-service=20
broadcaster, has many times before faced rivals'=20
charges that its public funding gives it an=20
unfair advantage in entertainment and news=20
programming. At government hearings examining how=20
the BBC spends its money, the corporation also=20
has been faulted for imitating the entertainment=20
provided by other broadcasters, such as=20
reality-TV shows, and has promised not to do so=20
as much in the future. The BBC, through its=20
profit-making arm BBC Worldwide, is working on a=20
plan to sell advertising on its Web sites. About=20
5,000 volunteers in the U.S. and Canada have been=20
given access to BBC pages with mocked-up travel=20
and finance ads. If their feedback is positive,=20
BBC Worldwide says it could be selling Internet=20
ads by Christmas. U.S. readers would be the No.1=20
target, the BBC said. "Essentially [overseas=20
visitors to the Web sites] are getting a service=20
for free at the moment, while the UK visitors pay=20
through their license fee," said David Moody,=20
head of strategy for BBC Worldwide. "It seems=20
appropriate to earn revenue from it."
http://online.wsj.com/article/SB114860287038663739.html?mod=3Dtodays_us_...
ketplace
(requires subscription)

GOVERNMENT & COMMUNICATIONS

SECRETS CLAIMS IN NSA CASE MAY STOP SUITS
[SOURCE: Wall Street Journal, AUTHOR: Dionne Searcey dionne.searcey( at )wsj.com]
As lawsuits mount against phone companies from=20
plaintiffs who allege their call records were=20
handed over to the National Security Agency=20
illegally, the companies' defense may benefit=20
from a powerful force: the U.S. government. The=20
plaintiffs, who accuse Bell phone companies of=20
privacy violations and are seeking billions of=20
dollars in damages, would need to delve into the=20
depths of the NSA's surveillance program to make=20
their cases. But the government considers such=20
information top secret, and legal experts expect=20
the Bush administration to assert the "state=20
secrets" privilege in the 20 or more lawsuits=20
filed by privacy advocates in recent weeks. If=20
judges accept the claim, as has been the case in=20
nearly every instance in which it has been=20
asserted since the early 1950s, the suits will=20
dissolve. Senate Judiciary Committee leaders met=20
yesterday to consider issuing subpoenas to the=20
chief executives of AT&T, BellSouth, Verizon and=20
Qwest Communications International for a hearing=20
that would examine the NSA issue. No decision was=20
made, a committee aide said, but the senators=20
plan to meet again June 6. Earlier this week=20
Federal Communications Commission Chairman Kevin=20
Martin, citing the government's invocation of the=20
state's secret privilege in the AT&T suit, said=20
the agency wouldn't investigate allegations of=20
privacy violations by the phone companies.
http://online.wsj.com/article/SB114860694163363837.html?mod=3Dtodays_us_...
ketplace
(requires subscription)
--------------------------------------------------------------
... and we are outta here. Have a great holiday=20
weekend and we'll see you Tuesday.
--------------------------------------------------------------
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.
--------------------------------------------------------------