August 2008

WSJ: The FCC Plays Racial Landlord

[Commentary] Among the conditions extracted by regulators before approving the Sirius XM satellite radio merger earlier this month was the company's promise to set aside a share of channels for minority programmers. Now we're finding out what these racial preferences mean in practice. Sirius XM informed the Federal Communications Commission that while it agreed to reserve the channels, the company doesn't want to choose the actual programmers. Sirius XM may think that this is one giant political headache, and that it's unlikely to be the final arbiter in any case. There will almost certainly be more applicants than available channels, and programmers who aren't chosen will inevitably turn to the courts and the FCC to complain. The government may as well pick the minority programmers directly. Apparently, FCC is developing procedures to determine what constitutes a "minority" programmer and which minorities are worthy of special treatment.

FiOS' Future Depends on New Broadband Applications

In many ways, the long-term success of FiOS will depend on what new services are developed that will take advantage of the vast bandwidth of the fiber and how much customers will pay for them. Despite prices that average well above $130 for a bundle of Internet, TV and voice services, 20 percent of the homes where FiOS is available have signed up for its video service, and 24 percent buy the Internet service, which offers speeds up to five times faster than cable competitors. Still, it might be a decade before anyone really knows whether Verizon's bet on FiOS is a smart investment in the future or a multibillion-dollar black hole. The company has had to spend more than it would like on advertising and expensive giveaways, like flat-screen TVs, to get new customers. Comcast and other cable companies are preparing to bolster their own Internet speeds and digital offerings. FiOS has been particularly popular among the more sophisticated customers attracted by higher Internet speeds, said Karl Bode, the editor of BroadbandReports.com. "Deliver quality technology and cutting-edge speed, and customers respond," he said. "I'm preparing to move into a new home, and FiOS availability actually played a part in where I was willing to move. And I've probably been one of Verizon's most outspoken critics over the years."

Webcasters Struggle Under High Song Fees

The transformation of words, songs and movies to digital media has provoked a number of high-stakes fights between the owners of copyrighted works and the companies that can now easily distribute those works via the Internet. The doomsday rhetoric these days around the fledgling medium of Web radio springs from just such tensions. Last year, an obscure federal panel ordered a doubling of the per-song performance royalty that Web radio stations pay to performers and record companies. Traditional radio, by contrast, pays no such fee. Satellite radio pays a fee but at a less onerous rate, at least by some measures. As for Pandora, its royalty fees this year will amount to 70 percent of its projected revenue of $25 million. Pandora is one of the nation's most popular Web radio services, with about 1 million listeners daily. Its Music Genome Project allows customers to create stations tailored to their own tastes. It is one of the 10 most popular applications for Apple's iPhone and attracts 40,000 new customers a day. Yet the burgeoning company may be on the verge of collapse, according to its founder, and so may be others like it.

Some Nonprofits Push for Increased Federal Involvement

In the world of philanthropy, where independence from government has long been sacred, a revolution is underway. Social entrepreneurs are clamoring for a realignment of the way the federal government and nonprofit groups work together to maximize the impact of American generosity. With the presidential campaign in full swing, nonprofit leaders are organizing what some call an unprecedented effort to boost the presence of philanthropy and community service in a new administration. They are calling for a White House office or an agency similar to the Small Business Administration to match nonprofit programs with government priorities, help successful community-based initiatives grow and organize a corps of service volunteers. Nonprofit organizations are a growing economic force, with about one in 10 U.S. workers employed by such organizations and Americans giving upwards of $300 billion a year to charities. Although they are relied on to fix many of society's problems, nonprofit groups often work in isolation and have virtually no strategic coordination with government.

Music, movie lobbyists push to spy on your Net traffic

[Commentary] Recording industry and motion picture lobbyists are renewing their push to convince broadband providers to monitor customers and detect copyright infringements, claiming the concept is working abroad and should be adopted in the United States. A representative of the recording industry said on Monday that her companies would prefer to enter into voluntary "partnerships" with Internet service providers, but pointedly noted that some governments are mandating such surveillance "if you don't work something out." "Despite our best efforts, we can't do this alone," said Shira Perlmutter, a vice president for global legal policy at the International Federation of the Phonographic Industry. "We need the help of ISPs. They have the technical ability to manage the flow over their pipes...The good news is that we're beginning to see some of these solutions emerge, in particular in Europe and Asia." (IFPI is the Recording Industry Association of America's international affiliate.)

States want outdated TVs out of landfills

As the switch to digital TV nears, concern about old TVs piling up in landfills has prompted state and local governments to develop recycling programs.

McCain's Tech Policy Silent on his former pro-Internet Initiatives

Missing from Sen John McCain's technology plan are two McCain pro-Internet initiatives -- the McCain Lautenberg Community Broadband Act and Spectrum Re-regulation. The time is ripe to develop cognitive radios with the ability to use spectrum a bit more intelligently than 1920s technology would permit, but the plan simply nods to stillborn past efforts on this critical issue; it provides no way forward. The plan lavishes lip service on "innovation," and this masks the fact that the first two things the U.S. Internet needs have nothing to do with innovation. We need (a) fiber-optic access for everybody, and (b) a free and open Internet. In other words we need a "Fat Pipe, Always On" and we need the telcos and cablecos (and their deep packet snooping) and the government citizen-spies, and the content police to "Get Out of the Way." To the McCain plan's credit, there are nine mentions of "citizen" and only five mentions of "consumer." But the Plan's treatment of the Four Freedoms, which guarantee that "consumers" can buy any device or service they want, is more about shopping than citizenship. Deliberately missing from the Four Freedoms is the ability to say whatever you want to say on line. In summary, the McCain plan says, "What's good for AT&T and Comcast and Cisco and the RIAA is good for America." It's about their Internet, not ours.

McCain Adviser/Former eBay CEO Meg Whitman Silent On Campaign's Opposition To Net Neutrality

[Commentary] Some have suggested that Sen John McCain (R-AZ) could still put forward sound technology policy because he surrounds himself with tech-savvy advisers, such as former Hewlett-Packard chairman and CEO Carly Fiorina and former eBay president and CEO Meg Whitman. But it's unclear how much he is listening to them. Whitman has stayed silent about McCain's opposition to Network Neutrality, and apparently, Sen McCain is refusing to listen to Whitman as well. In 2006, McCain sided with the telecom industry and voted against legislation sponsored by Rep Ed Markey (D-MA) that would have prevented broadband providers from creating a pay-for-play system. McCain sided with the telecom industry and voted against this bill. On April 5, 2006, technology industry leaders wrote to Congress and asked it to preserve net neutrality. Although these companies would be more than able to pay any fees the telecoms might charge, they recognized that it would hamper future entrepreneurship on the Internet. One of the signers to the letter? Meg Whitman, who was then heading eBay.

McCain "Working the Refs" at NBC

Sen. John McCain's (R-AZ) campaign manager Rick Davis asked Sunday for a meeting with Steve Capus, the president of NBC News, to protest what the campaign called signs that the network is "abandoning non-partisan coverage of the presidential race." Specifically the campaign is objecting to a statement by NBC's Andrea Mitchell on "Meet the Press" questioning whether Sen McCain might have gotten a heads-up on some of the questions that were asked of Sen Barack Obama (D-IL), who was the first candidate to be interviewed Saturday night by Pastor Rick Warren at a presidential forum on faith. Warren told the audience that Sen McCain was being held in "a cone of silence" so he wouldn't hear the questions, which were similar for both candidates. Mitchell reported that some "Obama people" were suggesting "that McCain may not have been in the cone of silence and may have had some ability to overhear what the questions were to Obama. He seemed so well prepared." A McCain aide said that is not the case: "Senator McCain was in a motorcade led by the United States Secret Service and held in a green room with no broadcast feed." NBC responded saying, "We welcome any opportunity to speak with officials from both campaigns, and many of us at NBC News are in contact with the McCain campaign literally on a daily basis. With all due respect to the campaign leadership, they are viewing our coverage thru a political prism. We stand by our reporting, our journalism and our journalists."

FEC Says Political Blogs Exempt From Finance Restrictions

The Federal Election Commission has reaffirmed that online media outlets can advocate on behalf of particular candidates without falling subject to campaign finance restrictions. The agency said last week it dismissed a complaint by a Hillary Clinton supporter alleging that a pro-Barack Obama blog was actually "a direct arm" of the Obama campaign, and therefore subject to campaign finance restrictions. In its ruling, the FEC reiterated that whatever costs are incurred by running a political blog need not be disclosed as a campaign contribution. "Political blogging is exactly the type of Internet activity that the Commission exempted from the definition of 'contribution' and 'expenditure,'" the FEC stated. The complaint was brought last October by Clinton supporter Kirk Tofte, who alleged that the blog Iowa True Blue, operated by former Iowa Democratic Party chairman Gordon Fischer, had coordinated with Obama's campaign. Tofte alleged that Fischer endorsed Obama in September, after which he began posting critical items about Clinton.

Benton

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