December 2008

House Telecommunications Subcommittee Chairman Ed Markey (D-MA) has asked the heads of the Federal Communications Commission and the National Telecommunications & Information Administration for a status report on the digital television transition. One of his concerns is the NTIA's digital-to-analog converter box coupon program -- 1) will there be a shortfall of those boxes as IBM estimates there are 11.2 million boxes currently in inventory, production, or shipping, while NTIA estimates the total demand at 33.5 million boxes and 2) is their sufficient funding for coupons and call centers. If NTIA's DTV coupon redemption rate remains at about 50%, there would technically be plenty of money for the program, with NTIA estimating being able to return several hundred million to the US Treasury. But an accounting lag between sending out coupons and their expiration dates, which frees up the money to be used for new coupons, could slow coupon distribution by mid-January, NTIA has said. Congress, which set the funding cap ($1.34 billion including administration costs), would likely have to lift it to make sure that the program was not delayed, though Chairman Markey said in his letter to NTIA chief Meredith Baker that there was "precious little time remaining to act legislatively." He also asked Baker whether she thinks the cap will need to be lifted to meet expected consumer demand. NTIA is said to favor that move. Chairman Markey asked a number of questions of both Baker and FCC Chairman Kevin Martin to be answered by Dec. 23, including whether Martin believes the transition is on track, whether he thinks there will be enough money for the converter box program, how the FCC plans to spend its remaining converter box education money, whether he thinks the FCC has enough folks and money to handle phone calls about the transition and whether he thinks private-sector call center efforts will make up the difference.

[Commentary] With the National Association of Broadcasters' latest commitment to set up a digital television transition hotline, Jessell now thinks the NAB "has finally done quite enough." Attention should now turn on the Federal Communications Commission which last September received an extra $20 million from Congress to educate Americans about the transition. NAB President David Rehr last month urged FCC Chairman Martin to use the money to make the FCC call center "as robust and prepared as possible for the massive number" of expected DTV calls. A "robust and prepared" FCC call center would be a perfect complement to the planned NAB hotline. The NAB automated system would relieve the FCC of having to deal with the initial flood of calls. Instead, the FCC center could perhaps focus on the toughest cases passed along by the NAB, the ones that cannot be quickly resolved elsewhere.

National Telecommunications and Information Administration Acting Director Meredith Baker called on the Internet Corporation for Assigned Names and Numbers this week to resolve a list of potential problems before making sweeping changes to the way top-level domains, such as .biz, .info, and .us, are assigned. In a Thursday letter to ICANN, Baker said the organization must carefully consider public comments received on their plan and initiate further consultations, including the creation of a revised guidebook for those wishing to apply for a flurry of new domains -- a process projected to start in 2009. Baker said ICANN must ensure the introduction of a potentially large number of new domains, including internationalized domains, will not jeopardize the stability and security of the Internet and said the group must prove it has the sufficient capacity to enforce contract compliance with an as-yet-unknown number of new contracting parties. ICANN should also state how it will conduct legal reviews of applications, consider objections from third parties, and ensure that the introduction of new domains complies with domestic and international law, including intellectual property rights statutes. She also argued that the ICANN board's October 2006 request for an economic study to address a variety of domain name market related questions needs to be completed and the results be considered by the Internet community before new domains are introduced.

[Commentary] Media faces a perfect storm in 2009—transitioning to a challenging new digital world and a very weak economy. Media giants will continue to move from traditional content distribution models to anytime, anywhere, content-on demand. While building new digital revenue streams they face a dramatic pullback in consumer spending, which means advertising threatens to fall off a cliff. Can entertainment prove recession resistant? Here's 9 predictions:

1) Media ownership faces mega shifts with GE and News Corp seen as buyers, CBS and Viacom as sellers.

2) Movie studios will focus and streamline to ride out financial downturn.

3) Movie theaters will pull out the stops to keep you buying tickets.

4) TV networks will fight to maintain their dominance.

5) You will treat the Internet like another TV set.

6) The music industry will find a new model, with concert tours and megastars at its core.

7) The publishing industry will continue to suffer and will shift more online.

8) Social networks will start translating their members into advertising dollars.

9) Video games and Hollywood will become more intertwined.