December 2006

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AT&T/BELLSOUTH & NETWORK NEUTRALITY
FCC And Mergers: ''Can You Hold?''
Sen Inouye Presses Martin on Recusal Issue
A Not-So-Merry Christmas for the FCC

VIDEO FRANCHISES
Martin Pushing 90-Day Franchise Clock

MEDIA OWNERSHIP
Broadcasters, Newspapers Encourage FCC To Reform Media Ownership
Lean Left? Lean Right? News Media May Take Their Cues From Customers
News Corp. Is Poised To Regain Liberty's Stake
MediaNews and 'SF Chron' Plan to Consolidate in Bay Area

BROADCASTING
FCC Defends Cussing Crackdown

BROADBAND/INTERNET
Muni Wi-Fi not just another utility
ICANN Reviews Revoking Outdated Suffixes

QUICKLY -- Iraq Study Group Settles Debate Over=20
'Negative' War Coverage; Democrats Set to Press=20
Bush on Privacy and Terrorism; Commercial Mobile=20
Service Alert Advisory Committee; Prices for=20
prepaid phones may go up; If Castro Had a Talk Show...

AT&T/BELLSOUTH & NETWORK NEUTRALITY

FCC AND MERGERS: "CAN YOU HOLD?"
[SOURCE: Forbes.com, AUTHOR: Tim Doyle]
[Commentary] AT&T Chief Operating Officer Randall=20
Stephenson says he doesn't understand the way the=20
network neutrality debate has been playing in=20
Washington. Four FCC commissioners are now at an=20
impasse over the AT&T/BellSouth deal, in large=20
part because of net neutrality. To get the merger=20
approved, AT&T has pledged that for 2 1/2 years=20
it won't provide Web sites that agree to pay a=20
premium either faster or more reliable service=20
over its Internet backbone. That is good enough=20
for two Republican commissioners, one of them=20
being Chairman Kevin Martin. But the two=20
Democratic commissioners, Michael Copps and=20
Jonathan Adelstein, want a four-year guarantee.=20
Chairman Martin is trying to get the fifth FCC=20
commissioner, Robert McDowell, to break the tie.=20
If McDowell is brought into the decision, Martin=20
would have the leverage to forge a bipartisan=20
compromise, and Democrats would have to scale=20
back their demands on network neutrality, Stifel=20
Nicolaus analyst Blair Levin predicts."It seems=20
like we're heading to a 3-2 vote," agrees Jessica=20
Zufolo, a telecom analyst at Medley Global=20
Advisors. "On net neutrality it seems like=20
[McDowell] would side with the Republicans." AT&T=20
sent a letter to FCC commissioners on Friday=20
sticking to its concessions and saying those=20
opposing the merger are seeking "broad conditions=20
to which AT&T and BellSouth simply cannot foresee=20
circumstances which we could or would agree." Of=20
course, even if AT&T gets its way at the FCC,=20
Congress could still mandate net neutrality. This=20
year, with Republicans in control, a network=20
neutrality provision was almost voted out of the=20
Senate Commerce Committee bill--it missed in an=20
11-11 tie. Next year, with Democrats in control,=20
who knows? In fact -- although AT&T would never=20
say it -- that's the best argument for approving=20
the BellSouth deal before year=92s end, on the=20
terms AT&T has offered. With the company agreeing=20
it won't charge Web sites for 2 1/2 years,=20
Democrats will have a full two years to legislate=20
"net neutrality"--if that's what they and the public really want.
http://www.forbes.com/2006/12/05/beltway-network-neutrality-fcc-biz-wash...
_td_1206fcc.html

SEN INOUYE PRESSES MARTIN ON RECUSAL ISSUE
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Incoming Senate Commerce Committee Chairman=20
Daniel Inouye (D-Hawaii) says he, too, is not=20
happy with FCC Chairman Kevin Martin's=20
exploration of freeing up Commissioner Robert=20
McDowell to vote on the AT&T/BellSouth merger. In=20
a letter to Chairman Martin, Sen Inouye argues=20
that an unrecusal of McDowell to break a two-two=20
deadlock on the merger would "short-circuit the=20
negotiation of meaningful conditions that are=20
necessary to preserve competition and to prevent=20
unfair discrimination." He says he is disturbed=20
that the deadlock is seen as an impasse, pointing=20
out that the Adelphia merger review topped 400=20
days -- the present one is in day 230, according=20
to the FCC. "It is puzzling," he says, "that the=20
Commission would conclude so quickly that further=20
negotiations regarding conditions for this merger=20
-- which would represent the largest=20
telecommunications merger in our nation's history -- are at an impasse."
http://www.broadcastingcable.com/article/CA6397892.html?display=3DBreaki...
News
* Martin Gets Support McDowell Recusal Query
The current chairmen of the House Energy &=20
Commerce Committee and its Telecommunications=20
Subcommittee have weighed in with support for=20
FCC's Chairman Kevin Martin's exploration of=20
whether Commissioner Robert McDowell can vote on=20
the AT&T/Bell South merger. In a letter to Martin=20
on Wednesday, Joe Barton (R-Tex.) and Fred Upton=20
(R-Mich.), chairmen of the Commerce Committee and=20
Telecommunications Subcommittee said that the=20
commission has had "ample time" to review and=20
rule on the merger saying "mergers and=20
acquisitions should not be held hostage in order=20
to advance a particular policy agenda."
http://www.broadcastingcable.com/article/CA6397838?display=3DBreaking+News
* AT&T-BellSouth vote raises new concerns
http://news.com.com/ATT-BellSouth+vote+raises+new+concerns/2100-1036_3-6...
441.html?tag=3Dhtml.alert

A NOT-SO-MERRY CHRISTMAS FOR THE FCC
[SOURCE: Public Knowledge, AUTHOR: Art Brodsky]
[Commentary] Perhaps FCC Chairman Kevin Martin=20
should do lunch with former Chairman Reed Hundt,=20
just to get some idea of how to deal with a=20
Congress turned hostile in mid-term. Hundt had=20
that experience while serving as President=20
Clinton=92s FCC chairman at the time of the=20
Republican takeover of Congress in the 1994=20
elections. At the end of the day, the question=20
still remains whether even with all of this=20
opposition what, or whether, members of Congress=20
can do anything to affect the outcome of the=20
AT&T/BellSouth merger. Certainly the committees=20
can hold hearings and make life uncomfortable a=20
few hours for Martin and for Commissioner=20
McDowell, should he decide to reverse his=20
decision and to participate. Unless Congress is=20
willing to pass legislation or take revenge=20
during the appropriations process, unlikely=20
occurrences at best, the road to the conclusion=20
of the AT&T deal will be longer and rockier but=20
ultimately will arrive at the destination.
http://www.publicknowledge.org/node/753

VIDEO FRANCHISES

MARTIN PUSHES 90-DAY FRANCHISE CLOCK
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
Cities and towns would have 90 days to act on=20
cable-franchise applications filed by their local=20
phone companies, according to a proposal unveiled=20
Wednesday by Federal Communications Commission=20
Chairman Kevin Martin. Having waited for=20
cable-franchising legislation to fizzle on=20
Capitol Hill before going public with his own=20
plan, Chairman Martin said FCC pressure on cities=20
and towns to act promptly would produce several=20
benefits, including spurring broadband deployment=20
and lowering cable bills. The 90-day cap would=20
apply to entities that had existing approval to=20
occupy public rights of way -- presumably phone=20
companies initiating service and cable incumbents=20
seeking renewal. Those without rights-of-way=20
approval might have to wait up to six months.=20
=93When the local franchising authority=20
unreasonably delays action on a franchise=20
application, they obstruct and, indeed, in some=20
cases, completely derail a new entrant=92s attempt=20
to bring video competition into an area,=94 Martin=20
said. Chairman Martin=92s plan would not only=20
impose a shot clock, but also restrict cities=20
from extracting franchise fees on noncable=20
services and from demanding the construction of=20
cable facilities on a timeline that cable=20
incumbents never had to meet. Chairman Martin,=20
who has circulated his plan among the other four=20
FCC members, would like it voted on at the agency=92s Dec. 20 open meeting.
http://www.multichannel.com/article/CA6397884.html?display=3DBreaking+News
* Martin speech that outlines the plan:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-268845A1.doc
* Martin Pitches Telco-Aid Package
http://www.broadcastingcable.com/article/CA6397895.html?title=3DArticle&...
cedesc=3Dnews

MEDIA OWNERSHIP

BROADCASTERS, NEWSPAPERS ENCOURAGE FCC TO REFORM MEDIA OWNERSHIP
[SOURCE: National Association of Broadcasters
A broad coalition of radio, television and=20
newspaper companies and associations sent a=20
letter to FCC Chairman Kevin Martin and other FCC=20
Commissioners today, urging the Commission to=20
recognize the pressing need for reform of media=20
ownership rules to ensure Americans can continue=20
benefiting from the services of free, local=20
broadcast stations and local daily newspapers.=20
Pointing to increased competition from=20
non-regulated media such as cable networks,=20
satellite operators, alternative print=20
publications and the "virtually unlimited voices=20
available on the Internet," the group asserted=20
the landscape in which FCC media ownership rules=20
were originally adopted has been "fundamentally=20
altered." Preserving such arcane regulations=20
hampers broadcasters' ability to compete=20
effectively and to continue offering free,=20
over-the-air entertainment and informational=20
programming =AD including news, emergency=20
information and other local programming.
See press release:=20
http://www.nab.org/AM/Template.cfm?Section=3DNews_Room&CONTENTID=3D7397&...
PLATE=3D/CM/ContentDisplay.cfm
See letter:=20
http://www.nab.org/xert/corpcomm/pressrel/120606_OwnershipLetter.pdf

LEAN LEFT? LEAN RIGHT? NEWS MEDIA MAY TAKE THEIR CUES FROM CUSTOMERS
[SOURCE: New York Times, AUTHOR: Austan Goolsbee]
Most people expect spin from politicians. When=20
they perceive partisan slant in the news itself,=20
they typically interpret it as evidence of=20
underlying bias by reporters or media owners. But=20
one of the most interesting things coming out of=20
research on the economics of the media industry=20
has been the notion that media slant may simply=20
reflect business rather than politics. New=20
research by two University of Chicago economists,=20
Matthew Gentzkow and Jesse M. Shapiro, entitled=20
=93What Drives Media Slant? Evidence From U.S.=20
Daily Newspapers=94 compiles some compelling and=20
altogether unusual data to answer the question.=20
Papers like The Washington Times or The Deseret=20
Morning News of Salt Lake City used Republican=20
phrases while papers like The San Francisco=20
Chronicle and The Boston Globe used Democratic=20
ones. But more important, once the authors had=20
this measure, they showed that the main driver of=20
any slant was the newspaper=92s audience, not bias=20
by the newspaper=92s owner. A comparison of=20
circulation data (per capita) to the ratio of=20
Republican to Democratic campaign contributions=20
by ZIP code showed that circulation was strongly=20
related to whether the newspaper matched the=20
readers=92 own ideology. Their measure indicates=20
that The Los Angeles Times, for example, is a=20
liberal paper. Its circulation suffers in=20
Southern California ZIP codes where donations to=20
Republicans are especially high. The authors=20
calculated the ideal partisan slant for each=20
paper, if all it cared about was getting readers,=20
and they found that it looked almost precisely=20
like the one for the actual newspaper. As Dr.=20
Shapiro put it in an interview, =93The data suggest=20
that newspapers are targeting their political=20
slant to their customers=92 demand and choosing the=20
amount of slant that will maximize their sales.=94
http://www.nytimes.com/2006/12/07/business/media/07scene.html
(requires registration)
* See the research www.nber.org/papers/w12707.pdf

NEWS CORP IS POISED TO REGAIN LIBERTY'S STAKE
[SOURCE: Wall Street Journal, AUTHOR: Julia Angwin julia.angwin( at )wsj.com]
A two-year standoff between News Corp. and its=20
second-biggest shareholder, Liberty Media Corp.,=20
is nearing an end in a deal that will return=20
Liberty to a powerful position in the media=20
sector and solidify News Corp. Chairman Rupert=20
Murdoch's control of his company. Under an=20
agreement, which could be finalized in the next=20
few weeks, News Corp. will buy Liberty's $11=20
billion stake in the media giant in exchange for=20
News Corp's 38.6% stake in satellite-TV firm=20
DirecTV Group Inc., some cash and some smaller=20
News Corp. assets. Selling the DirecTV stake=20
would be a turnabout for Mr. Murdoch, who spent=20
years pursuing control of the satellite-TV firm.=20
But in the past year or so, DirecTV's subscriber=20
growth has slowed markedly, as competition from=20
cable operators has intensified. Cable companies=20
are benefiting from their ability to offer a=20
bundle of telephone, high-speed Internet and=20
video. Satellite can't easily offer high-speed Internet.
http://online.wsj.com/article/SB116544470590142710.html?mod=3Dtodays_us_...
e_one
(requires subscription)
* Murdoch and Malone Find a Way to Make Up
http://www.nytimes.com/2006/12/07/technology/07cable.html
* Malone to Take Over DirecTV
http://www.multichannel.com/article/CA6397893.html?display=3DBreaking+News

MEDIANEWS AND 'SF CHRON' PLAN TO CONSOLIDATE BAY AREA
[SOURCE: Associated Press]
MediaNews Group Inc. and the San Francisco=20
Chronicle plan to consolidate some of the=20
business operations of their Bay Area newspapers,=20
but will refrain from doing so pending the=20
outcome of a federal antitrust trial challenging=20
the deal, both companies said Wednesday. Last=20
week, U.S. District Judge Susan Illston=20
tentatively blocked MediaNews and the Chronicle's=20
owner, Hearst Corp., from merging local=20
distribution and national ad sales. Illston said=20
such a deal could pave the way for "price=20
manipulation" and make it harder for new=20
competitors to enter the market. New York-based=20
Hearst Corp. has invested $300 million in a=20
complex deal that gives MediaNews three more Bay=20
Area newspapers =97 on top of the seven it already=20
owns, including the Oakland Tribune. Hearst's=20
investment helped Denver-based MediaNews finance=20
the purchase of Hearst rivals Contra Costa Times,=20
the San Jose Mercury News and Monterey County=20
Herald earlier this year. In issuing the=20
temporary restraining order against the alliance,=20
Judge Illston said she had been under the=20
impression that Hearst's investment was solely an=20
equity stake, but an April 26 memo had surfaced=20
suggesting it actually was a bid to merge operations.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...
t_id=3D1003494071

BROADCASTING

FCC DEFENDS CUSSING CRACKDOWN
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Saying broadcasters have "only limited First=20
Amendment protection," that the V-chip is=20
"ineffective," and that they gave the industry=20
notice it was changing policy on swear words, the=20
FCC Wednesday both defended its profanity=20
findings against cussing in Fox's Billboard Music=20
Awards and defended the underpinnings of its=20
entire indecency enforcement regime. That defense=20
came in its filing to the Second Circuit Court of=20
Appeals of a brief responding to a broadcaster=20
challenge of four profanity rulings issued last=20
March. Saying that the Pacifica case -- the=20
so-called Seven dirty words Supreme Court=20
decision -- upholding its indecency enforcement=20
powers was "good law," the FCC disputed Fox's=20
contention that its definition of indecency is=20
unconstitutionally vague. The FCC said that the=20
Pacifica decision "endorsed the same definition,"=20
and said that Fox's broadcast of the words=20
"fudge" and "shoot" [OK, maybe something a little=20
stronger than that] lie far from any zone of=20
uncertainty that might exist at the margins of=20
the indecency standard's application." The FCC=20
said it is free to change its policy if it=20
explains it, argues that it did explain it, and=20
says the broadcaster contentions are meritless.
http://www.broadcastingcable.com/article/CA6397889.html

BROADBAND/INTERNET

MUNI WI-FI NOT JUST ANOTHER UTILITY
[SOURCE: NetworkWorld, AUTHOR: Jim Duffy]
A new report warns that cities considering=20
municipal Wi-Fi shouldn't fool themselves into=20
believing that the experience will be as routine=20
as running water, gas and electricity systems.=20
The study, conducted by the Reason Foundation and=20
written by a former deputy director and acting=20
director of the Federal Trade Commission=92s Office=20
of Policy Planning, outlines seven factors that=20
municipal officials should address before moving=20
forward with plans for municipal broadband and=20
Wi-Fi to ensure that the projects are technologically and financially viabl=
e.
http://www.networkworld.com/news/2006/120606-muni-wifi-utility.html?fsrc...
netflash-rss
* See press release:=20
http://www.reason.org/news/government_broadband_120506.shtml
* See report: http://www.reason.org/ps349.pdf

ICANN REVIEWS REVOKING OUTDATED SUFFIXES
[SOURCE: Associated Press, AUTHOR: Anick Jesdanun]
Over the past few years, the Internet has seen=20
new domain names such as ".eu" for Europe and=20
".travel" for the travel industry. Now, the key=20
oversight agency is looking to get rid of some.=20
Meeting in Sao Paulo, Brazil, the Internet=20
Corporation for Assigned Names and Numbers began=20
accepting public comments this week on how best=20
to revoke outdated suffixes, primarily assigned=20
to countries that no longer exist. The Soviet=20
Union's ".su" is the leading candidate for=20
deletion. ICANN wants to establish a formal=20
policy and is accepting comments online until=20
Jan. 31. Further deletions will likely take a=20
year or longer to give users time to change.=20
Reductions in the number of domains - now 265 -=20
are likely to be temporary. ICANN is crafting=20
rules on how to roll out additional domains,=20
including ones in non-English characters. ICANN=20
also is launching a review of eligibility rules=20
for ".int," a domain reserved for international organizations.
http://hosted.ap.org/dynamic/stories/I/ICANN_SUFFIXES?SITE=3DKTVK&SECTION=
=3DHOME&TEMPLATE=3DDEFAULT

QUICKLY

IRAQ STUDY GROUP SETTLES DEBATE ON 'NEGATIVE' WAR COVERAGE
[SOURCE: Editor&Publisher]
For years now, the debate has raged: Does the=20
press overstate the level of violence in Iraq and=20
ignore the overall positive aspect of the U.S.=20
involvement? The Iraq Study Group report today,=20
in its main claim that the situation in Iraq is=20
now "grave" and "deteriorating" would seem to=20
offer a clue to the answer, but more specific=20
details -- providing a "slam dunk" (if we may use=20
that phrase) on the side of the press -- are=20
found in the Intelligence section of the report.=20
There we learn, bluntly, that "there is=20
significant underreporting of the violence in=20
Iraq" by the U.S. military. "The standard for=20
recording attacks acts as a filter to keep events=20
out of reports and databases," the report=20
continues. Looking at one day, the report found=20
undercounting of violent attacks by more than 1000 percent.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...
t_id=3D1003493869

DEMOCRATS SET TO PUSH BUSH ON PRIVACY AND TERRORISM
[SOURCE: New York Times, AUTHOR: Eric Lichtblau]
Leading Senate Democrats put the Bush=20
administration on notice Wednesday that they=20
intended to press for a fuller accounting on a=20
wide range of counterterrorism programs,=20
including wiretapping, data-mining operations and=20
the interrogation and treatment of detainees. Sen=20
Patrick J. Leahy (D-VT), who will take over next=20
month as chairman of the Judiciary Committee,=20
made clear at a committee hearing Wednesday that=20
he wanted to investigate actively the=20
effectiveness and legality of many programs. =93The=20
administration=92s gone to unprecedented lengths to=20
hide its own activities from the public while at=20
the same time collecting an unprecedented amount=20
of data on private citizens,=94 Sen Leahy told=20
Robert S. Mueller III, the director of the=20
Federal Bureau of Investigation. As the sole=20
witness at the hearing, Mr. Mueller bore the=20
brunt of the Democrats=92 criticism. But their=20
sharp questions often went well beyond the=20
F.B.I.=92s purview, delving into areas like the=20
National Security Agency=92s eavesdropping program,=20
the Central Intelligence Agency=92s interrogations=20
of Qaeda suspects and the Department of Homeland=20
Security=92s use of profiling scores to assess the risks posed by travelers.
http://www.nytimes.com/2006/12/07/washington/07mueller.html?_r=3D1&oref=...
login
(requires registration)

COMMERCIAL MOBILE SERVICE ALERT ADVISORY COMMITTEE
[SOURCE: Federal Communications Commission]
FCC Chairman Kevin Martin has appointed persons=20
to serve as members of the Commission's=20
Commercial Mobile Service Alert Advisory=20
Committee; Martin will serve as Committee chair.=20
The Committee will develop and recommend=20
technical standards and protocols to facilitate=20
the voluntary transmission of emergency alerts by=20
Commercial Mobile Service (CMS) providers. The=20
Committee's recommendations must be submitted to=20
the Commission within one year from the date of=20
enactment of the WARN Act (i.e., October 12,=20
2007). The Committee includes representatives=20
from state and local governments, tribal=20
governments, communications service providers,=20
vendors, developers, manufacturers, commercial=20
and noncommercial broadcasters, the disability=20
community, FEMA and other organizations. The=20
Committee will meet Tuesday December 12.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-06-2474A1.doc

PRICES FOR PREPAID PHONES MAY GO UP
[SOURCE: USAToday, AUTHOR: Paul Davidson]
This week, TracFone, the No. 1 prepaid provider,=20
sued to overturn the Library of Congress's Nov.=20
22 decision granting new exemptions to copyright=20
law. Its ruling lets consumers remove software=20
locks that prevent cellphones from being used on=20
another carrier's network. The effect on carriers=20
such as Sprint and Cingular is minimal, because=20
subscribers get a free or discounted phone when=20
they sign a two-year contract. But prepaid=20
companies say the ruling has weakened their=20
ability to sue members of roving gangs that buy=20
truckloads of phones, remove the software and=20
sell them for mark-ups of 100% or more in markets=20
such as South America and Hong Kong. The black=20
market is possible because prepaid plans require=20
no contracts. Consumers simply buy the phones for=20
as little as $15 in stores and pay in advance for=20
cellphone service by using cards to load in=20
airtime. Prepaid companies typically pay $60 to=20
$80 for the handsets, recouping their losses when=20
consumers buy airtime. But when resellers scoop=20
up the devices and alter them, the providers lose=20
their entire investment. TracFone estimates that=20
more than 800,000 of its phones have been resold=20
this way, according to a court filing in a=20
federal criminal case, costing it tens of millions of dollars.
http://www.usatoday.com/printedition/money/20061207/1b_prepaid07.art.htm

IF CASTRO HAD A TALK SHOW, IT MIGHT SOUND A BIT LIKE THIS
[SOURCE: New York Times, AUTHOR: Andy Newman]
A look at =93Ayer en Miami (Yesterday in Miami),=94 a=20
radio show aired on WOCN-AM (1450) in Miami. It=20
includes advertisements from Cuba=92s state travel=20
agency, reports from last weekend=92s Fidel Castro=20
birthday parade in Havana, an admiring assessment=20
of Soviet-era tanks, and excerpts from speeches=20
by whichever Castro is running Cuba. It is not a=20
signal-jamming effort beamed from the Cuban coast=20
like some kind of reverse Radio Mart=ED. It is not,=20
compadre, a joke of any sort. It is Francisco=20
Aruca, onetime Cuban political prisoner turned=20
Castro admirer, speaking out from a little radio=20
station on the industrial north side of Miami or,=20
more often these days, from the comfort of his=20
home office in the lush suburb of Pinecrest. For=20
15 years, Mr. Aruca, founder of the first=20
American company to run charter flights to Cuba,=20
has doubled as on-air apologist for a man whom=20
the vast majority of Cuban-Americans in Miami=20
consider a despicable and murderous dictator. In=20
doing so, Mr. Aruca speaks to =97 and for =97 a tiny=20
community of committed Cuban-American leftists=20
who have endured years of public scorn, threats=20
and, in the not-too-distant past, violence.
http://www.nytimes.com/2006/12/07/us/07cuba.html
(requires registration)
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and other related news events. While the=20
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