July 2006

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TELECOM
Judge Looks Into Modifying Terms of 2 Phone Mergers
Making Book on the Bells' Promises
An Indirect Path to Mandate
Let's Educate, Not Castigate, Legislators
The Costs of the Video War

AT THE FCC
FCC Proposes Opening Up the High Frequency Spectrum "Desert"
for More Satellite TV
Verizon Wireless, T-Mobile OK'd for Wireless Auction
TV Networks Oppose FCC Indecency Move

DIGITAL CONTENT
'Sanitizers' of Home Video Lose in Court
We Aren't all Pirates
In YouTube Clips, a Political Edge
Networks Cool on Viewer News Video
The Marketing Maze

QUICKLY -- DJs to mount voter drive; FBI plans new Net-tapping push;
Univision Responds to Televisa Comments; Egyptian Journalists Protest
Proposes Law

TELECOM

JUDGE LOOKS INTO MODIFYING TERMS OF 2 PHONE MERGERS
[SOURCE: New York Times 7/8, AUTHOR: Stephen Labaton]
A federal district judge in Washington is considering the imposition
of major modifications to the two largest telephone mergers in
history: SBC Communication's acquisition of AT&T and Verizon's
purchase of MCI. In a surprising order issued Friday afternoon, Judge
Emmet G. Sullivan raised a series of questions about the Bush
administration's review of the two deals that he said should be
answered by the Justice Department and the phone companies at a
hearing next week. Both deals have already closed, and lawyers said
that the judge could not unravel them, although he could try to
impose significant conditions or divestitures. The proceedings will
probably shed light on the administration's antitrust enforcement
program at a time when officials have put up virtually no roadblocks
to deals and imposed few restrictions in other areas of antitrust
law. Still, the proceedings could affect the government's review of
BellSouth's proposed acquisition by AT&T, the name the company took
after AT&T was swallowed by SBC. The proceedings are also the first
significant test of changes in the law that have given federal judges
greater authority to scrutinize antitrust settlements.
http://www.nytimes.com/2006/07/08/business/08antitrust.html
(requires registration)

MAKING BOOK ON THE BELL PROMISES
[SOURCE: Multichannel News, AUTHOR: Kent Gibbons]
[Commentary] "The $200 Billion Scandal" is a 406-page e-book written
by Bruce Kushnick about how the biggest U.S. regional telephone
providers have extracted billions of dollars in rate increases while
failing to build out the advanced broadband networks promised to
Congress and to state regulators who passed the Telecom Act of 1996
and approved higher local rates. But as Congress considers telecom
legislation, net neutrality is the issue potentially derailing bills,
not whether the former Baby Bells should be told to go ahead and
build out ubiquitous broadband networks they've already promised
using money they've already pocketed and not be given any additional
incentives. "We, the people, paid for these networks, not the phone
companies, and we, not the phone companies, should decide on the
policies of these utilities. The pendulum has swung too far, and now
it needs to swing back," Kushnick writes. He wants to see U.S.
consumers get the fiber-optic based broadband services he figures the
Bell companies collectively promised to deliver to 86 million homes
by now, at 45 Megabits per second of two-way traffic, in exchange for
states approving or sustaining high service charges. Promising to
offer video services in competition with cable companies helped let
the Bells into the long-distance business. The Bells still have jobs
to get done, though, such as changes in federal and state law to let
them compete in video on their own terms, without enforceable
buildout requirements. Other analysts figure Verizon is dead serious
this time about fiber-based broadband and video services to the home,
given cable's competition for phone service. Kushnick said: "Yes, it
may be rolled out in rich neighborhoods. Do the rich really need
competition?" If some folks in Congress were among the 45,000 who
downloaded Kushnick's book, they'll probably have a better sense of
how to respond to the latest promises from the Bells.
http://www.multichannel.com/article/CA6350480.html?display=Opinion

AN INDIRECT PATH TO MANDATE
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
Senate telecommunications legislation would "indirectly" provide the
Federal Communications Commission with a new opportunity to impose
broad digital broadcast-TV carriage requirements on cable operators,
according to Senate Commerce Committee chairman Ted Stevens
(R-Alaska) who sponsored the sweeping telecommunications bill (S.
2686, H.R. 5252) that passed his committee on June 28. He included
new language that addressed cable carriage of digital TV stations
that demand access without compensation, also called must-carry. The
new language states that cable operators have to carry "any digital
video signal requiring carriage;" existing law requires carriage of a
TV station's "primary video." The change has potential importance
because the FCC has twice determined that the phrase "primary video"
meant mandatory cable carriage of one programming service per
station. Broadcasters are hopeful the FCC could be persuaded to read
"any digital signal" more broadly than it did "primary video." Asked
if the addition of the words "any digital video signal" was aimed at
imposing must-carry on cable, Sen Stevens indicated that was his
intention. "I don't think it does directly. But indirectly it does,"
Sen Stevens said June 28. "Indirectly, it does, yes."
http://www.multichannel.com/article/CA6350826.html

LET'S EDUCATE, NOT CASTIGATE, LEGISLATORS
[SOURCE: IP Democracy, AUTHOR: Cynthia Brumfield]
[Commentary] The blogosphere castigated Sen Ted Stevens (R-Alaska)
for his limited knowledge of technology. The 80-year old Senator
betrayed his lack of understanding of high-tech matters over and over
again during the Commerce Committee's mark-up of his controversial
telecom bill. Senator Stevens made such laughable faux pas as
describing the Internet as a "series of tubes," which prompted
critics of his legislation to brand him as a luddite and out-of-touch
and worse. The real concern expressed by bloggers: how can someone
who is rewriting the nation's telecom laws be so ignorant of the
technology? But instead of snickering at the statesman, why not take
that ridicule and come up with a plan to educate Members of Congress,
Senators and other public officials on the new technological
realities? There's no way, of course, to make public officials and
lawmakers as conversant in technology as the industry is. But that's
not the point. The point is to enlighten them on the bigger picture
issues and why they matter.
http://www.ipdemocracy.com/archives/2006/07/07/index.php#001741

THE COST OF THE VIDEO WAR
[SOURCE: Broadcasting&Cable, AUTHOR: John M. Higgins]
The best place to get a snapshot of the costs of the cable-TV/telco
war is New York. To launch video and fast Internet services on
suburban Long Island, Verizon spent heavily on an extensive overhaul
of its telephone plant. Some estimates put the cost at up to $1,100
in capital for each home "passed" in its new FiOS TV optical-fiber
systems, and it will take an average of an additional $700 or so to
actually connect a new subscriber. Preparing to defend itself, local
cable operator Cablevision Systems tweaked its own plant. It boosted
its Internet service to even higher speeds than Verizon's and stepped
up its sales of cable telephone service, to steal Verizon's
residential customers before the telco's system was ready.
Cablevision's capital expenditure was lower. The Internet boost cost
it just $15 per home passed; each new phone customer cost around
$200. The yawning capital-spending gap shows how much of a
disadvantage telephone companies are at as they push into the video
business. Cable operators have largely been finished with their
gigantic rebuild for several years and have a big video and Internet
customer base already giving them a return on that investment.
http://www.broadcastingcable.com/article/CA6350838.html?display=News

AT THE FCC

FCC PROPOSES OPENING UP THE HIGH FREQUENCY SPECTRUM "DESERT" FOR MORE
SATELLITE TV
[SOURCE: Truth, Justice and Telecom Policy, AUTHOR: Jim Snider]
[Commentary] Worldwide, consumer delivery of satellite TV (known as
"Direct Broadcast Satellite" or "DBS") is one of the most widely used
and profitable services provided with high frequency spectrum, which
is far less valuable than low frequency spectrum because it
relatively plentiful and requires line-of-sight communications. In
the U.S., DBS service has been equally successful. Since the
mid-1990s in the U.S. and much of the rest of the world, consumer
subscription to DBS service has increased by more than 2,000%. So it
should be no surprise that there has been a worldwide push to
increase the amount of spectrum set aside for this successful
service. On June 23, 2006, the FCC's International Bureau released an
NPRM (Docket 06-123) with a proposal to do exactly that. It proposes
allocating approximately 1 GHz of bandwidth for DBS type service,
essentially doubling the current allocation for that service. The
spectrum is located in the 17 GHz band (for downlinks) and 24 GHz
band (for uplinks). If the entire spectrum allocation were used for
DBS service, the consequence could be 500+ new broadcast TV channels
nationally or many thousands if delivered via spot beams.
Alternatively, the spectrum may be used for satellite broadband
service. Echostar and DirectTV are expected to seek to acquire the
spectrum. This allocation raises a host of important policy
questions. I am by no means an expert on this proceeding. But from
what I know, I do believe it deserves far more public scrutiny than
it has do date.
http://quixote.blogs.com/telecompolicy/2006/07/fcc_proposes_op.html

VERIZON WIRELESS, T-MOBILE OK'd FOR WIRELESS AUCTION
[SOURCE: Reuters]
Verizon Wireless and Deutsche Telekom AG's T-Mobile have qualified to
participate in an August sale of valuable wireless licenses, the U.S.
Federal Communications Commission said on Friday. They were among 81
applications accepted by the agency to participate in the sale.
Another 171 applications were deemed incomplete and those potential
bidders have until July 18 to address the issues. Cingular Wireless,
the No. 1 U.S. wireless carrier, was one of the bidders that failed
to initially qualify, according to forms filed with the FCC. The FCC
is scheduled to begin auctioning the licenses for advanced wireless
services on August 9 in a sale that analysts have said could raise
between $8 billion and $15 billion.
http://today.reuters.com/news/newsArticle.aspx?type=technologyNews&story...

TV NETWORKS OPPOSE FCC INDECENCY MOVE
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
NBC, Fox and CBS all weighed in on Friday in a court case concerning
FCC indecency fines. Television stations have challenged the fines in
court and the FCC has asked the courts for a second try at settling
the cases. But the networks have written the court saying they oppose
the FCC proposal. ABC filed a court motion backing the FCC's request
to review four "fleeting profanity" indecency findings from its March
omnibus order. ABC says it will back the FCC move so long as the
court retains jurisdiction over the case and will expedite it once
the FCC has made its decision on review. The FCC could do anything
from decide to propose fines, to reverse one or all of the decisions,
to simply strengthen its argument. NBC told the federal appeals court
for the second circuit that the FCC is just trying to delay judicial
review of its "supposed" indecency guidance. NBC points to the fact
that the FCC has not ruled on two-year-old network petitions
challenging and asking to stay enforcement of its decision in 2004
that "f-ing brilliant" from Bono on NBC's Golden Globes was indecent.
Fox and its affiliates told the court not to let the FCC take another
look at four profanity findings it issued last March. Two were for
f-words and s-words on the Billboard Music Awards on Fox. Fox called
it a "transparent attempt by the FCC to shield its new indecency
enforcement regime from judaical review" and "prolong its
unconstitutional suppression of broadcasters'protected speech." CBS
is strongly opposed to letting the FCC take another look at four
"fleeting profanity" rulings, including against CBS's morning news
Early Show. CBS says the FCC has had plenty of time to get its act
together on profanity and that the FCC's request to delay the court
case is unnecessary.
http://www.broadcastingcable.com/article/CA6350383.html
http://www.broadcastingcable.com/article/CA6350777.html?display=Breaking...
http://www.broadcastingcable.com/article/CA6350660.html?display=Breaking...
http://www.broadcastingcable.com/article/CA6350617.html?display=Breaking...
* CBS, Fox, NBC oppose delay to decency challenge
http://today.reuters.com/news/NewsArticle.aspx?type=televisionNews&story...
** For perspective on the indecency debate from the creative
community see: www.creativevoices.libsyn.com.

DIGITAL CONTENT

'SANITIZERS' OF HOME VIDEO LOSE IN COURT
[SOURCE: Los Angeles Times, AUTHOR: Roger Vincent]
A federal judge has issued final cut to studios, ruling that
companies that snip out potentially offending material from movies
for home viewing violate copyright laws. Businesses that edit sex,
profanity and violence out of DVD and VHS copies in an appeal to some
viewers' tastes are "illegitimate," said Richard P. Matsch of U.S.
District Court in Denver. Four companies that do so must stop and
turn over their copies of expurgated films to Hollywood's major
studios. "Audiences can now be assured that the films they buy or
rent are the vision of the filmmakers who made them and not the
arbitrary choices of a third-party editor," Directors Guild of
America President Michael Apted said. The studios and several
prominent directors -- including Steven Spielberg, Robert Altman and
Steven Soderbergh -- have been fighting movie sanitizers in court
since 2002, saying that retailers such as CleanFlicks had no right to
copy and distribute their own versions. Retailers asserted that their
cleaned-up copies made fair use of the movies under copyright law and
that they bought one copy of the original for each modified version
they rented or sold. That ensured more sales and exposure than such
movies would have received had they not been edited to be more
wholesome, the retailers argued. "We're disappointed," CleanFlicks
Chief Executive Ray Lines said. "This is a typical case of David
versus Goliath, but in this case, Hollywood rewrote the ending. We're
going to continue to fight."
http://www.latimes.com/business/printedition/la-fi-clean10jul10,1,794973...
(requires registration)

WE AREN'T ALL PIRATES
[SOURCE: Los Angeles Times, AUTHOR: Editorial Staff]
[Commentary] The Internet and digital technology have been both a
blessing and a curse for the entertainment industry, opening new
opportunities for selling music and video but also fueling rampant
global piracy. To attack the latter problem, industry lobbyists are
pressing Congress to adopt at least five different proposals that
would give them more control over their works as they flow through
new digital pipelines into living rooms and portable devices. But
these measures, like the technologies they would affect, have a hard
time distinguishing between illicit actions and legitimate ones. The
bills would pressure device makers and service providers to limit or
eliminate features from some products, such as the ability to record
individual songs off satellite radio. In essence, tech companies
would have to alter what they are selling to safeguard the
entertainment industry's wares. Protecting intellectual property is a
legitimate goal for Congress -- after all, the Constitution called on
Congress to give authors and inventors exclusive rights "to promote
the progress of science and useful arts." The task has grown more
urgent with the emergence of an Internet-fueled global information
economy. But what the entertainment industry is seeking in this
year's proposals isn't merely protection from piracy; it's after
increased leverage to protect its business models.
http://www.latimes.com/news/printedition/opinion/la-ed-piracy10jul10,1,7...
(requires registration)
See also --
* Internet providers urged to lock out file-sharers
[SOURCE: Reuters, AUTHOR: Jeffrey Goldfarb]
The British music industry stepped up its campaign against illegal
file-sharing on Monday by demanding that two Internet service
providers suspend 59 accounts it believes are being used to swap
copyrighted songs.
http://today.reuters.com/news/newsArticle.aspx?type=internetNews&storyID...

IN YOUTUBE CLIPS, A POLITICAL EDGE
[SOURCE: Washington Post, AUTHOR: Howard Kurtz]
YouTube.com posts 60,000 new videos per day. The site that has
exploded in popularity over the past year. And while many of the most
widely viewed videos are merely intended to entertain or titillate --
rants, parodies, pet tricks, soccer brawls, singing, dancing and
booty shaking -- company executives say politics is on the rise.
While bloggers played a role in the last presidential election, most
advertising and message delivery still comes from campaigns,
political parties and interest groups with enough money to bankroll a
television blitz. But the YouTube revolution -- which includes dozens
of sites such as Google Video, Revver.com and Metacafe.com -- could
turn that on its head. If any teenager can put up a video for or
against a candidate, and persuade other people to watch that video,
the center of gravity could shift to masses of people with camcorders
and passable computer skills. And if people increasingly distrust the
mainstream media, they might be more receptive to messages created by
ordinary folks.
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/09/AR200607...
(requires registration)
See also --
* Use of Internet Video Is Growing at a Faster Clip
Moving pictures are taking over as tools to teach and sell, thanks to
the rise of broadband.
http://www.latimes.com/business/printedition/la-fi-video10jul10,1,695750...
* Student energizes the news blog biz
http://www.usatoday.com/printedition/life/20060710/mediamix10.art.htm

NETWORKS COOL ON VIEWER NEWS VIDEO
[SOURCE: Broadcasting&Cable, AUTHOR: Anne Becker]
When the London subway was bombed a year ago, the work of "citizen
journalists," the often grainy footage shot on personal digital
cameras and cellphones, was everywhere. Almost immediately,
mainstream TV news organizations began a quest to fill their
broadcasts with such freelance firepower. But a year later, none of
the major TV news organizations have included citizen journalism as a
major part of their newscasts. The news networks' hesitancy to
embrace content from viewers on-air has less to do with concern about
video authenticity than with a desire to keep a certain level of
quality and control. TV news organizations' success depends on
building trust with their viewers and establishing themselves as a
dependable destination for viewers to learn the events of the day,
and camcorder clips of stories, however newsworthy, aren't
necessarily reliable or always ready. So far, networks' efforts to
ride the current wave of popularity for viewer-submitted video have
been mainly for promotional reasons.
http://www.broadcastingcable.com/article/CA6350836.html?display=News
* Citizen Journalists Break News
http://www.broadcastingcable.com/article/CA6350788.html?display=News

THE MARKETING MAZE
[SOURCE: Wall Street Journal, AUTHOR: Brian Steinberg]
A look at the spaghetti-on-the-wall approach that defines marketing
in the new-media world. Consumers have a lot more than a handful of
TV channels to watch, and are a lot less patient about sitting
through ads. So advertisers are trying to win back their attention
with a grab bag of new strategies. Companies are plowing money into
the Internet, and finding creative ways to take advantage of the
medium's strengths. For instance, they're targeting sales pitches to
particular audience segments with unprecedented precision, and
creating ads that don't look like ads, such as humorous Web sites
that people pass along to their friends. Advertisers are also
following their audience away from the TV screen and computer
monitor, creating public displays that seem to be part of the scenery
instead of an obtrusive sales pitch. They're even trying to grab
customers in the aisles, placing ads on the shelves of supermarkets.
Behind all this experimentation is a rapidly changing media
landscape. A world dominated by three TV networks is a relic of a
simpler age. Now, marketers have to contend with a vast array of
entertainment options, from hundreds of TV channels to
video-on-demand services, videogames and the Internet. Even when some
people watch TV, they often skip ads with the help of digital video
recorders. Complicating matters is that people have become inured to
hard-sell marketing after years of messages blasting out of the TV
screen. All of which makes life a lot more complicated for
advertisers. The good news is that these new media choices mean new
ways for companies to spread their message. Consider the
possibilities the Internet offers. Companies can place video ads
before online news clips, and viewers can't skip them as they do
regular commercials. Advertisers can also use the Internet to market
in a much more targeted way than in traditional media. Car companies,
for example, can have their ads appear on search engines when people
are hunting for information about buying autos. On the other hand,
the Web has made it easier for companies to create buzz about a
product without using traditional sales pitches. Companies can create
an attention-getting Web site and tell people about it by email --
relying on word of mouth to bring in more viewers.
http://online.wsj.com/article/SB115221616550299854.html?mod=todays_us_th...
(requires subscription)
See also --
* Advertisers retain confidence in television
[SOURCE: Financial Times, AUTHOR: Carlos Grande ]
Many of the world's biggest advertisers have ignored concerns about
the waning power of the traditional television commercial and
increased their spending on TV over the past five years.
http://www.ft.com/cms/s/749e7882-0f5b-11db-ad3d-0000779e2340.html
(requires subscription)

QUICKLY

POWERFUL LATINO DJ's TO MOUNT IMMIGRANT VOTER DRIVE
[SOURCE: Reuters]
Two Latino radio hosts credited for mobilizing hundreds of thousands
this year in pro-immigrant protests said on Friday they would join
the drive to increase the Hispanic and immigrant vote in the 2008
U.S. presidential election. Los Angeles disc jockeys Piolin
(Tweetybird) and El Cucuy (the Bogeyman) said they will work with the
National Council of La Raza and other organizations to push Latino
immigrants living in the United States to become U.S. citizens and
register to vote in time to cast ballots in 2008. Immigration
promises to be one of the big issues in the 2006 mid-term
congressional elections and the 2008 presidential election as the
future of some 12 million undocumented immigrants divides Congress
and President George W. Bush's Republican Party.
http://today.reuters.com/news/newsArticle.aspx?type=politicsNews&storyID...

FBI PLANS NEW NET-TAPPING PUSH
[SOURCE: C-Net|News.com, AUTHOR: Declan McCullagh]
The FBI has drafted sweeping legislation that would require Internet
service providers to create wiretapping hubs for police surveillance
and force makers of networking gear to build in backdoors for
eavesdropping. FBI Agent Barry Smith distributed the proposal at a
private meeting last Friday with industry representatives and
indicated it would be introduced by Sen. Mike DeWine (R-OH). The
draft bill would place the FBI's Net-surveillance push on solid legal
footing. At the moment, it's ensnared in a legal challenge from
universities and some technology companies that claim the Federal
Communications Commission's broadband surveillance directives exceed
what Congress has authorized.
http://news.com.com/FBI+plans+new+Net-tapping+push/2100-1028_3-6091942.h...

UNIVISION RESPONDS TO TELEVISA COMMENTS
[SOURCE: TVWeek, AUTHOR: Christopher Lisotta]
Spanish-language broadcaster Univision said Thursday that Televisa's
possible sale of Univision stock "has no bearing" on the production
company's deal with Univision to supply programming through 2017, so
that even if Televisa launched a rival service, its programming would
continue to air on Univision in the U.S. Televisa was partnered with
a group of investors who failed to purchase Univision in June after
the company went on the sales block. Instead, the deal went to a
rival group fronted by media mogul Haim Saban. Univision's statement
also noted that if Televisa does go forward with selling its shares,
it would "have no impact on Univision's business or on the pending
merger agreement" with Mr. Saban's investment group.
http://www.tvweek.com/news.cms?newsId=10321
(requires free registration)

STRIKE SHUTS 25 EGYPTIAN NEWSPAPERS; LAW AT ISSUE
[SOURCE: Associated Press]
Workers went on strike Sunday at 25 Egyptian newspapers, which did
not publish as the legislature in Cairo appeared ready to approve a
law that leaves journalists vulnerable to fines and jail time for
reports that criticize government officials. About 200 Egyptian
journalists gathered in front of the parliament building to draw
attention to the clampdown on opposition media, which they described
as the government backsliding on reforms promised by President Hosni
Mubarak. The president's ruling party appears to have the votes
necessary to enact the bill. A vote is expected today.
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/09/AR200607...
(requires registration)
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While the summaries are factually accurate, their often informal tone
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Headlines are compiled by Kevin Taglang headlines( at )benton.org -- we
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