July 2007

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er.

LEGISLATION
Capitol Hill Adds Telecom Heat To Washington's Summer

SPECTRUM
Google Pledges to Spend $4.6 Billion on FCC Auction
Wireless Spectrum for Safety Hits Roadblocks

INTERNET/BROADBAND
The French Connections
On a Tightrope Without the Net
YouTube role grows as U.S. election nears

OWNERSHIP
What if Murdoch Doesn't Get Dow Jones?
Internet entrepreneur details Dow Jones proposal

TELECOM
Big Subsidies for Big Phone Companies
U.S. telco results expected to prove video growth
AT&T to extend DSL to more customers

BROADCASTING
Some in Congress pushing for reinstatement of Fairness Doctrine

QUICKLY -- Journalist Chosen to Lead a Public=20
Policy Institute; Let the Sun Shine; DVRs drive=20
TV viewership into new territory; L.A.-area Web firms getting more funding

LEGISLATION

CAPITOL HILL ADDS TELECOM HEAT TO WASHINGTON'S SUMMER
[SOURCE: Telecom Web]
Consumers, business and agriculture all stand to=20
benefit from several congressional telecom=20
initiatives passed in committee during the last=20
two days. 1) The Broadband Data Improvement Act=20
(S.1492), passed unanimously by the Senate=20
Commerce Committee, would improve the quality of=20
federal and state broadband data collection while=20
encouraging initiatives that promote broadband=20
deployment. 2) The same committee approved=20
legislation to expand number portability rules.=20
The Same Number Act of 2007 (S.1769) expedites=20
the current number-portability process and helps=20
to ensure all voice services are covered in order=20
to help consumers take advantage of less=20
expensive and innovative choices. 3) The 2007=20
Farm Bill, marked up last week by the House=20
Agriculture Committee, includes key provisions=20
that invest in rural communities nationwide,=20
including economic development programs and=20
access to broadband telecommunication services.=20
The bill includes provisions to renew successful=20
programs that provide vital healthcare, emergency=20
and communications needs to underserved areas.=20
The proposed legislation also would expand 911=20
access in rural areas by making telephone loans=20
to public entities for facilities and equipment.=20
The bill also seeks to extend and revamp the=20
existing broadband program, in part to reduce the=20
level of loans going to areas that many think=20
already have sufficient broadband services, and=20
to help ensure a comprehensive rural broadband strategy.
http://www.telecomweb.com/tnd/24340.html

SPECTRUM

GOOGLE PLEDGES TO SPEND $4.6 BILLION ON FCC AUCTION
[SOURCE: Wall Street Journal, AUTHOR: Corey Boles=20
corey.boles( at )dowjones.com & Kevin J. Delaney kevin.delaney( at )wsj.com]
Google said it is prepared to spend at least $4.6=20
billion for wireless licenses if the Federal=20
Communications Commission adopts auction rules=20
that allow open access for users and wireless=20
resellers. The company said it would participate=20
in the auction if the FCC requires whoever wins a=20
large chunk of the spectrum -- roughly one-third=20
of the total to be auctioned -- to let consumers=20
use any compatible wireless devices and software=20
and open the network to resellers and others=20
service providers. Draft FCC rules for the=20
auction include the requirement for openness to=20
different devices and software and services,=20
though Google remains concerned they're not=20
enforceable or specific enough. In addition,=20
Google wants the spectrum owner to operate it at=20
least partly on a wholesale basis, requiring the=20
owner to offer access to its wireless networks to=20
other companies who want to sell wireless=20
services -- a condition the draft rules now don't=20
include. It remains unclear whether the=20
conditions for Google's bid, which Google Chief=20
Executive Eric Schmidt outlined in a letter to=20
FCC Chairman Kevin Martin Friday, will be met. It=20
is also unlikely that Google would build a=20
wireless network on its own if it were to win the=20
auction, but would make the spectrum available to=20
others who would build and also potentially partner in building a network.
http://online.wsj.com/article/SB118494147432873053.html?mod=3DdjemTECH
(requires subscription)
* 700 MHz Endgame: Martin Antes. AT&T Raises.=20
Google Calls. Does AT&T Fold or Call?
http://www.wetmachine.com/totsf/item/854
* Google to bid for U.S. airwaves if condition added
http://www.reuters.com/article/technologyNews/idUSHO12185020070721
* Google Pushes for Rules to Aid Wireless Plans
http://www.nytimes.com/2007/07/21/technology/21google.html?ref=3Dtodaysp...
* Google Is Poised To Enter Auction For Wireless Licenses
http://online.wsj.com/article/SB118494147432873053.html?mod=3Dtodays_us_...
ketplace
* Google May Bid Billions on Wireless
http://www.businessweek.com/bwdaily/dnflash/content/jul2007/db20070720_6...
44.htm?campaign_id=3Drss_tech
* Google press release
http://www.google.com/intl/en/press/pressrel/20070720_wireless.html

WIRELESS SPECTRUM FOR SAFETY HITS ROADBLOCKS
[SOURCE: Washington Post, AUTHOR: Kim Hart]
In the 1980s and 1990s, Morgan O'Brien wove a=20
national wireless network called Nextel by=20
combining radio frequencies reserved for truckers=20
and taxi drivers. He then swapped those airwaves=20
for more desirable ones before selling the=20
company to Sprint for $35 billion in 2005. His=20
latest endeavor as an airwaves broker, however,=20
has run into daunting obstacles from Congress,=20
federal regulators and deep-pocketed competitors.=20
His plan hinged on setting aside a huge heap of=20
airwaves for public safety. Cyren Call would make=20
money by helping to oversee construction of the=20
network. Those same airwaves -- also coveted by=20
the nation's wireless carriers -- will be=20
auctioned by the Federal Communications=20
Commission in January. This year, O'Brien asked=20
Congress to set aside those airwaves, which are=20
about to be vacated by television broadcasters,=20
but was shot down. The FCC, not wanting to delay=20
the auction, which is expected to raise $15=20
billion, also dismissed his proposal. Those early=20
defeats put O'Brien on the fringe of the debate=20
swirling around the fate of the spectrum, but=20
they have not stopped him from intensely lobbying=20
FCC officials and public safety leaders.
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/22/AR200707...
1023.html
(requires registration)

INTERNET/BROADBAND

THE FRENCH CONNECTIONS
[SOURCE: New York Times, AUTHOR: Paul Krugman]
[Commentary] In the 1990s, America got some of=20
its economic swagger back, in part, because of=20
the rise of the Internet. Jacques Chirac=20
complained that the Internet was an =93Anglo-Saxon=20
network,=94 and he had a point =97 France, like most=20
of Europe except Scandinavia, lagged far behind=20
the U.S. when it came to getting online. What=20
most Americans probably don=92t know is that over=20
the last few years the situation has totally=20
reversed. As the Internet has evolved -- in=20
particular, as dial-up has given way to broadband=20
connections using DSL, cable and other high-speed=20
links -- it=92s the United States that has fallen=20
behind. What happened to America=92s Internet lead?=20
Bad policy. Specifically, the United States made=20
the same mistake in Internet policy that=20
California made in energy policy: it forgot -- or=20
was persuaded by special interests to ignore --=20
the reality that sometimes you can=92t have=20
effective market competition without effective=20
regulation. America=92s Internet flourished in the=20
dial-up era because federal regulators didn=92t let=20
that happen =97 they forced local phone companies=20
to act as common carriers, allowing competing=20
service providers to use their lines. Clinton=20
administration officials, including Al Gore and=20
Reed Hundt, the chairman of the Federal=20
Communications Commission, tried to ensure that=20
this open competition would continue -- but the=20
telecommunications giants sabotaged their=20
efforts, while The Wall Street Journal=92s=20
editorial page ridiculed them as people with the=20
minds of French bureaucrats. And when the Bush=20
administration put Michael Powell in charge of=20
the F.C.C., the digital robber barons were=20
basically set free to do whatever they liked.=20
It=92s too early to say how much harm the broadband=20
lag will do to the U.S. economy as a whole. But=20
it=92s interesting to learn that health care isn't=20
the only area in which the French, who can take a=20
pragmatic approach because they aren't prisoners=20
of free-market ideology, simply do things better.
http://select.nytimes.com/2007/07/23/opinion/23krugman.html
(requires TimesSelect subscription)

ON A TIGHTROPE WITHOUT THE NET
[SOURCE: Washington Post, AUTHOR: Jose Antonio Vargas]
There exists "two Americas," an America for the=20
rich and an America for the poor. And there are=20
the two Americas online: one that's connected to=20
high-speed Internet -- socializing, paying bills,=20
uploading debate questions to presidential=20
candidates on YouTube -- and one that's not. This=20
is the digital divide, now more than a decade=20
old, a rarely discussed schism in which the=20
unconnected are second-class citizens. In some=20
parts of this so-called Internet ghetto, the=20
screech of a telephone modem dialing up to get=20
online is not uncommon. And with dial-up, YouTube=20
is impossible to use. "I would argue that the=20
digital divide is worse than it was 10 years ago.=20
Back then everyone -- schools, businesses -- was=20
trying to get online. These days every single=20
Fortune 500 company has its employees, its=20
customers and its suppliers connected 24 hours a=20
day, seven days a week. In the meantime, while=20
our students have online access at school, many=20
of them don't have it at home," says Andrew=20
Rasiej, a member of a panel studying universal=20
Internet access in New York, and co-founder of=20
TechPresident, a nonpartisan blog that tracks the online campaign.
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/22/AR200707...
1278.html
(requires registration)

YOUTUBE ROLE GROWS AS US ELECTION NEARS
[SOURCE: Reuters, AUTHOR: Deborah Charles]
In 2004, YouTube didn't exist. Three years later,=20
politicians have learned to fear and revere the=20
video-sharing Web site that has become a vital=20
part of the campaign for the 2008 U.S.=20
presidential election. From rapid dissemination=20
of political blunders, often with funny tunes, to=20
a new wave of music videos featuring scantily=20
clad women singing the praises of their=20
presidential favorites, YouTube.com has sparked a new interest in politics.
http://www.reuters.com/article/technologyNews/idUSN2033910820070721
* Debates to Connect Candidates and Voters Online
The first of a new kind of presidential debate is=20
scheduled for tonight, one in which members of=20
the general public pose questions to the=20
candidates via homemade video. The debate is the=20
latest front in the candidates=92 running battle to=20
keep up with the fast-paced changes wrought by the Internet on politics.
http://www.nytimes.com/2007/07/23/us/politics/23youtube.html
* Officially the First, Democrats' Debate Feels Like Anything But
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/22/AR200707...
0818.html
* YouTube makes leap into politics
http://www.usatoday.com/printedition/news/20070723/a_youtube23.art.htm
http://www.usatoday.com/printedition/news/20070723/a_youtubebox23.art.htm

OWNERSHIP

WHAT IF MURDOCH DOESN'T GET DOW JONES?
[SOURCE: Associated Press, AUTHOR: Seth Sutel]
Just a few weeks ago, it seemed inevitable to=20
many on Wall Street and in the media industry=20
that Rupert Murdoch would prevail in his campaign=20
to add Dow Jones & Co., publisher of The Wall=20
Street Journal, to the media empire he has spent=20
a lifetime building. But with the sudden=20
departure of a director in protest of the deal=20
with News Corp. and more signs of dissent in the=20
family that controls Dow Jones, that outcome=20
seems less assured now as the monthslong process=20
comes to a head. The first consequence of a=20
failed deal would surely be a sharp decline in=20
the shares of Dow Jones, most likely to around=20
the mid-$30s level they had been trading at prior=20
to Murdoch's $60-per-share offer becoming public=20
in early May. Investors are increasingly=20
accounting for the risk of the deal failing,=20
sending Dow Jones shares steadily below Murdoch's=20
offering price since late June. A collapse in=20
Dow Jones' stock in turn would leave a lot of=20
shareholders unhappy, which could lead to the=20
possibility of shareholder lawsuits. However,=20
given that investors already knew full well that=20
the company has controlling shareholders, it's=20
not clear that there's much they can do to=20
legally challenge a decision not to sell the company.
http://www.chicagotribune.com/business/sns-ap-dow-jones-murdoch,0,540990...
tory?track=3Drss
* A Family Meets Today to Hear the Complexities of a Bid for Dow Jones
http://www.nytimes.com/2007/07/23/business/media/23bancroft.html
* Barron=92s, With Less Insulation, May Nicely Survive Murdoch
http://www.nytimes.com/2007/07/23/business/media/23barrons.html
* Life Under Murdoch
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/22/AR200707...
1282_2.html

INTERNET ENTREPRENEUR DETAILS DOW JONES PROPOSAL
[SOURCE: Reuters, AUTHOR: Kenneth Li and Robert MacMillan]
Internet entrepreneur Brad Greenspan outlined a=20
new proposal on Friday to keep Dow Jones & Co Inc=20
out of Rupert Murdoch's hands, saying his plan=20
could help boost the stock price to above $100.=20
Urging shareholders to reject Murdoch's $5=20
billion takeover bid, Greenspan offered to lend=20
members of the Bancroft family, which controls=20
Dow Jones, $400 million to $600 million to buy=20
out other Bancrofts who want to cash out at $60=20
per share -- the price Murdoch's News Corp has=20
offered. In exchange, Greenspan said he would get=20
two board seats and the rights to all value=20
created in the stock above $60 per share. Family=20
members are expected to signal whether they=20
support the deal on Monday, but the outcome is=20
uncertain as an undetermined number of Bancrofts=20
worry Murdoch would meddle with Dow Jones's news=20
operations in an attempt to further his business interests.
http://www.reuters.com/article/internetNews/idUSWEN951520070721

TELECOM

BIG SHOULDERS FOR BIG PHONE COMPANIES
[SOURCE: Associated Press, AUTHOR: John Dunbar]
A decade-old telephone tax intended to help bring=20
affordable service to rural areas has instead=20
turned into something quite different: a=20
bottomless and politically protected well of cash=20
for cell phone companies that do big business in=20
rural America. Over the past four years, there=20
has been nearly a tenfold increase in=20
government-ordered subsidies paid to a few=20
"competitive" providers - cellular phone=20
companies paid by the fund to offer service in=20
rural areas where an existing carrier already=20
receives a subsidy. The Universal Service Fund=20
has collected $44 billion over its 10-year=20
lifetime from a surcharge on the phone bills of=20
nearly every American. Regulators and lawmakers=20
have long viewed the fund as inherently flawed.=20
Even a member of the federal-state board that=20
runs the program calls it "bizarre." But efforts=20
to change it have been derailed repeatedly by=20
companies that benefit from the largesse and by=20
supporters in Congress who represent sparsely=20
populated states. Now there are new calls for=20
change, driven by the dramatic increase in money=20
flowing to the cellular companies competing for rural business.
http://www.baytownsun.com/wire.lasso?report=3D/dynamic/stories/T/TELEPHO...
TAX?SITE=3DTXBAY&SECTION=3DHOME&TEMPLATE=3Dblank.html&CTIME=3D2007-07-22-12=
-03-23

US TELCO RESULTS EXPECTED TO PROVE VIDEO GROWTH
[SOURCE: Reuters, AUTHOR: Ritsuko Ando]
When AT&T and Verizon report quarterly results=20
later this month, investors will be looking for=20
proof that their expensive video strategies are=20
starting to pay off. The top two U.S. phone=20
companies had worried Wall Street by investing=20
billions of dollars in building advanced=20
high-speed networks to compete with cable=20
companies' all-in-one packages of video, Internet=20
and phone services. But if Verizon can show that=20
subscriber growth to its FiOS video service is=20
picking up, and if AT&T can report the same for=20
its U-Verse service, that would help remove=20
overhang on their share prices. Both AT&T and=20
Verizon face declining fixed-line phone sales and=20
increasing competition from cable and online=20
services, a trend likely to be underscored in the quarterly reports.
http://www.reuters.com/article/technologyNews/idUSN2035662220070720

AT&T TO EXTEND DSL TO MORE CUSTOMERS
[SOURCE: Chicago Tribune 7/20, AUTHOR: Jon Van]
YouTube's political parodies and sports replays=20
on ESPN.com are little more than empty dreams to=20
thousands of Illinois computer users who still=20
limp along with dial-up connections because they=20
cannot get low-cost broadband from their phone=20
company. Customers who have more than 14,000 feet=20
of copper line between their residence and the=20
phone company's central office aren't able to get=20
digital subscriber line service because the=20
signal deteriorates over longer distances. AT&T=20
estimates that 87 percent of its Illinois=20
customers can now buy DSL service, but that means=20
13 percent still cannot get it. Network upgrades=20
will extend coverage so that, by the end of 2008,=20
90 percent of customers will be covered, Kirk=20
Brannock, AT&T's Midwest network services senior=20
vice president, said Thursday. AT&T is extending=20
fiber deeper into neighborhoods so that customers=20
who have been too far from the central office to=20
get broadband will be close enough to a fiber-fed=20
remote station to get DSL, Brannock said. The=20
company is also starting to offer a high-speed=20
service to people who are just a few thousand=20
feet beyond the previous limit of 14,000 feet.
http://www.chicagotribune.com/business/chi-fri_atampt_0720jul20,0,759099...
rint.story

BROADCASTING

SOME IN CONGRESS PUSHING FOR REINSTATEMENT OF THE FAIRNESS DOCTRINE
[SOURCE: Los Angeles Times, AUTHOR: Jim Puzzanghera]
In 1987, the Federal Communications Commission=20
stopped requiring broadcasters to air contrasting=20
views on controversial issues, a policy known as=20
the Fairness Doctrine. The move is widely=20
credited with triggering the explosive growth of=20
political talk radio. Now, after conservative=20
talk show hosts such as Rush Limbaugh, Sean=20
Hannity and Michael Savage helped torpedo a major=20
immigration bill, some in Congress have suggested=20
reinstating the Fairness Doctrine to balance out=20
those powerful syndicated voices. That has=20
unleashed an armada of opposition on the=20
airwaves, Internet blogs and in Washington, where=20
broadcasters have joined with Republicans to=20
fight what they call an attempt to zip their=20
lips. Opponents of the Fairness Doctrine said it=20
would make station owners so fearful of balancing=20
viewpoints that they'd simply avoid airing=20
controversial topics -- the "chilling effect" on=20
debate that the FCC cited in repealing the rule=20
two decades ago. "Free speech must be just that=20
-- free from government influence, interference=20
and censorship," David K. Rehr, president of the=20
National Assn. of Broadcasters, wrote to=20
lawmakers. There's little chance the fairness=20
doctrine will return in the near future, as FCC=20
Chairman Kevin J. Martin publicly opposes it and=20
the White House wrote to broadcasters last week=20
assuring them that Bush would veto any=20
legislation reinstating it. But the issue has=20
renewed debate about how far the government=20
should go in regulating the public airwaves.
http://www.latimes.com/business/printedition/la-fi-fairness23jul23,1,281...
7.story?coll=3Dla-headlines-pe-business
(requires registration)
* The Dangers of the Fairness Doctrine
[SOURCE: New York Sun, AUTHOR: Former FCC=20
Commissioner Harold Furchtgott-Roth hfr( at )furchtgott-roth.com]
[Commentary] Broadcast investments in Disney,=20
CBS, Clear Channel, and thousands of smaller=20
companies would suffer if the Fairness Doctrine=20
were revived. If a local sportscaster calls Alex=20
Rodriguez the best baseball talent in New York,=20
fans of Jeter, Reyes, Wright, and Maine might=20
want equal time. Anyone not happy with Katie=20
Couric's statements about the beauty of a town=20
could demand time to respond. Successful=20
programming rife with opinion, such as Rush=20
Limbaugh's show, could not easily be broadcast.=20
Even ordinary, day-to-day broadcast operations=20
would be affected. Broadcast owners would not=20
necessarily accommodate every request for=20
response time, but disgruntled viewers could and=20
would make their dissatisfaction known to the FCC=20
at the time of license renewal. Companies owning=20
stations up for license renewal could be forced=20
to confront a large number of complaints simply=20
due to the content of their programming.
http://www.nysun.com/article/58938

QUICKLY

JOURNALIST CHOSEN TO LEAD A PUBLIC POLICY INSTITUTE
[SOURCE: New York Times, AUTHOR: Patricia Cohen]
Steve Coll, whose r=E9sum=E9 as a journalist includes=20
two Pulitzer Prizes, a stint as managing editor=20
of The Washington Post and a job as a staff=20
writer at The New Yorker, is now ready to try his=20
hand at something else: a Washington public=20
policy institute. Mr. Coll plans to take over a=20
nonpartisan public policy institute, the New=20
America Foundation, in September, succeeding the=20
founding president, Ted Halstead. Mr. Coll said=20
he was drawn to the job by the caliber of ideas=20
coming from the group and its interest in finding=20
new ways to disseminate them.
http://www.nytimes.com/2007/07/23/arts/23coll.html
(requires registration)
* Author, Ex-Post Editor To Head D.C. Think Tank
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/23/AR200707...
0006.html

LET THE SUN SHINE IN
[SOURCE: New York Times, AUTHOR: David Carr]
[Commentary] We live in a nakedly transparent=20
age. Celebrities live out loud, companies=20
routinely have their business spilled all over=20
the Web and anybody can find out an awful lot=20
about you or me with a click of the mouse. Not so=20
in Washington, however, where the mechanism for=20
releasing information has all but ground to a=20
halt. Four decades ago, President Lyndon B.=20
Johnson reluctantly signed the Freedom of=20
Information Act (F.O.I.A.) into law, requiring=20
federal agencies to respond to any request for=20
documents within 20 days and provide them within=20
a reasonable time afterward. The law held that=20
information gathered on our behalf -- paid for=20
and owned by you and me, at least theoretically=20
-- should be ours for the asking. But it hasn't=20
worked out that way. While the mandate for=20
disclosure is still there, it is overwhelmed by a=20
Rube Goldberg apparatus that clanks and wheezes, but rarely turns up the da=
ta.
http://www.nytimes.com/2007/07/23/business/media/23carr.html
(requires registration)

DVRs DRIVE TV VIEWERSHIP INTO NEW TERRITORY
[SOURCE: , AUTHOR: Phil Rosenthal]
Everybody in the TV business frets about the=20
impact of digital video recorders on viewers'=20
exposure to commercials, because the DVRs make it=20
so easy to fast-forward past the ads that pay the=20
bills. Less obvious is the way DVRs, not yet in=20
20 percent of American homes, are affecting=20
viewing patterns, changes that will only become=20
more significant as the devices become more pervasive.
http://www.chicagotribune.com/business/columnists/chi-sun_phil_0722jul22...
2765522.column?track=3Drss

LA-AREA WEB FIRMS GETTING MORE FUNDING
[SOURCE: Los Angeles Times, AUTHOR: Michelle Quinn]
Los Angeles is gaining on Silicon Valley as=20
ground zero for the current Internet boom.=20
Southern California continued to rank second=20
nationally in overall venture funding, receiving=20
$1 billion in 2006, up from $625 million a year=20
before. The San Francisco Bay Area, which=20
includes Silicon Valley, received $2.5 billion.=20
The New England region, which ceded the No. 2=20
spot to Southern California late last year,=20
received $795 million. Nationwide, VC firms=20
invested $7.4 billion in the second quarter, up=20
8%. There were 717 rounds of financing in the=20
quarter, also up 8%, marking the highest=20
quarterly deal volume since 2001, according to=20
the report. Information technology firms, which=20
include software, electronics and semiconductors,=20
received the largest slice of the venture pie:=20
$4.18 billion, up 12% from $3.74 billion. Of=20
that, software companies received the biggest chunk at $1.5 billion, up 1%.
http://www.latimes.com/business/printedition/la-fi-venture23jul23,1,2417...
story?coll=3Dla-headlines-pe-business
(requires registration)
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Communications-related Headlines is a free online=20
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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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