May 2009

Cyber-Command May Help Protect Civilian Networks

The Pentagon is considering whether to create a new cyber-command that would oversee government efforts to protect the military's computer networks and would also assist in protecting the civilian government networks, the head of the National Security Agency said. The new command would be headquartered at Fort Meade, the NSA's director, Lt. Gen. Keith B. Alexander, told the House Armed Services terrorism subcommittee. Alexander, who is a front-runner to assume control of the command if it is created, said its focus would be to better protect the U.S. military's computers by marrying the offensive and defensive capabilities of the military and the NSA. Through the command, the NSA would also provide technical support to the Department of Homeland Security, which is in charge of protecting civilian networks and helps safeguard the energy grid and other critical infrastructure from cyber-attack, Alexander said. He stressed that the NSA does not want to run or operate the civilian networks, but help Homeland Security improve its efforts.

Details thin on stimulus contracts

Although President Obama has vowed that citizens will be able to track "every dime" of the $787 billion stimulus bill, a government website dedicated to the spending won't have details on contracts and grants until October and may not be complete until next spring — halfway through the program, administration officials said. Recovery.gov now lists programs being funded by the stimulus money, but provides no details on who received the grants and contracts. Agencies won't report that data until Oct. 10, according to Earl Devaney, chairman of the Recovery Accountability and Transparency Board, which manages the website. Devaney told a House subcommittee Tuesday that it will be a challenge to have the site ready to present spending data in five months. He said after the hearing that the board doesn't have enough data storage capacity, for example.

Bill Would Grant Artists, Record Labels Some of Radio's Take

Congress is considering a bill that could upend the way money gets distributed in the music business by giving artists and record labels a share of broadcasters' take. The legislation would force radio companies to pay royalties of as much as $500 million a year to record labels and artists whose music they play. Radio already pays about that same amount in royalties to songwriters and music publishers. The House Judiciary Committee could vote on the bill as early as next week; the Senate Judiciary Committee is likely to advance its version of the bill in the next few weeks. At that point, the full chambers could vote on the bill, or more likely, congressional leaders could ask that the broadcasters and the music industry negotiate a resolution themselves, to be ratified by Congress. If the deal goes through, it could change the economics in the struggling music industry. Though many radio companies still record sizable profits on an operating basis, they have come under growing pressure recently as the advertising market dwindles. With many of them struggling to maintain various financial targets to avoid breaching debt covenants, any additional expenses could send them one step closer to financial restructuring. Record labels, meanwhile, have been fighting for survival as sales of recorded music have plummeted in recent years. Extra royalty income, while doing nothing to solve the underlying challenge of declining sales, could represent a modest increase in revenue on top of the $8.5 billion in shipments to physical and digital retailers reported last year by the Recording Industry Association of America, or RIAA. It would also restore some momentum to an industry that is suffering severely from image problems.

Few Match Google; Does That Make It a Monopoly?

[Commentary] Why would the US government be so eager to punish Google, the country's most successful and innovative start-up in recent memory? Google is indisputably a victim of its own success. Its market share of Internet search has continued to rise steadily, encompassing roughly two-thirds of total searches. At 76%, its share of search advertising is even higher, thanks to Google's technological prowess at matching ads to people's search queries. Given the accompanying high profit margins on this lucrative business, Google displays the telltale characteristics of a monopolist: high, even dominant market share, with high profits and pricing power that are evidence of high barriers to entry for competitors. Of course, this is exactly what makes Google so attractive to investors. [James B. Stewart is a columnist for SmartMoney magazine.]

Getting Sirius: Satellite Radio Broadens Reach

In releasing the new Sirius iPhone application, which will allow customers to stream satellite radio over their iPhones, Sirius XM appears to be tacitly conceding that the satellite-delivery system that once was cutting edge now has competition far beyond what its founders imagined. Sirius must prove it can hold its own in a world where cars have iPod jacks and phones can go online, allowing people to stream free music stations. And cars, where many people do most of their radio listening, are expected increasingly to have built-in Internet access. That's good news for consumers, who will have another way to listen to Sirius, which for a $12.95-a-month subscription offers 130 channels of music and talk programming, including stations created by artists.

Disney looks beyond traditional studio model

Walt Disney Co is developing an Internet subscription service and may consider trimming studio output, executives said on Tuesday after the division posted a 97 percent decline in operating income. Disney said on Tuesday it will continue to reposition itself for a changing marketplace as industrywide DVD sales slump and as more and more consumers look online for content, even though a clear business model for online distribution has not yet emerged. "We realize that monetizing at a rate that is as robust as the traditional platforms doesn't exist yet, but we believe... that eventually it will," Disney chief executive officer Bob Iger said. Disney last week announced it would buy a 30 percent stake in Hulu.com, bringing popular TV shows such as "Lost" and "Grey's Anatomy" to the video Web site founded by General Electric's NBC Universal and News Corp. Disney became the third major U.S. broadcast network to take a stake in Hulu.

Spending the Stimulus:
How Should 'Unserved' and 'Underserved' Areas Best Be Defined?

Broadband Breakfast Club
BroadbandCensus.com
Tuesday, May 12, 2009 from 8:00 AM - 10:00 AM (ET)
Clyde's of Gallery Place
707 7th Street NW
Washington, DC 20001

Speakers:

Rep. Rick Boucher, Chairman of the House Energy and Commerce Communications Subcommittee
Randolph J. May, President, Free State Foundation
Jean Plymale, Virginia Tech eCorridors Program
James Bradford Ramsey, General Counsel, National Association of Regulatory Utility Commissioners
S. Derek Turner, Research Director, Free Press

Read more about Spending the Stimulus: How Should 'Unserved' and 'Underserved' Areas Best Be Defined? (Updated with location change)

British Telecom Chairman Says Open Access Key to Broadband Growth

Five years ago, Britain's largest telecommunication's service provider was forced to do what at the time seemed like a losing proposition. Regulators required BT, formerly called British Telecom, to open its networks to competitors to lease, and for use by any device and software application. By doing so, BT and many analysts at the time predicted the company's demise, saying it would lose its monopoly power over the industry and its revenue streams from proprietary hardware contracts. The company would become a network of dumb pipes, some feared. Today, BT generates annual revenues of about 20 billion British pounds, the same as five years ago. What's different is that many more competitors have entered into the wireless, phone, and broadband Internet markets in the U.K. The average speed for broadband access has nearly doubled to 2 megabits a second and the price for service has been reduced by an average of 50 percent from five years ago. And BT ? It was forced to reinvent itself and be more aggressive with new technologies like its current buildout of fiber optic networks across the U.K., said Sir Michael Rake, chairman of BT. He believes the lessons learned by BT could be useful for the U.S., which has more telecommunications service providers but is largely dominated by AT&T, Verizon Communications and cable operator Comcast. The best way to get more people to adopt high-speed Internet is to create competition through a regulatory framework that forces the biggest players to open their networks, Rake said.

Google Seeks Small Biz Help For Broadband Conditions

Google is urging small business owners to sign on to a letter to their congressman calling for open Internet conditions on the broadband money in the economic stimulus package. The company warns that "without safeguards that preserve an open Internet, the Internet could be shaped in ways that only serve the interests of broadband carriers, rather than US consumers and Web entrepreneurs." Google has created what it calls the Small Business Network to encourage small business owners to promote "business-friendly" policies in Washington and on the state level, starting with broadband stimulus and open Internet.

RUS Revises Rules on Fiber Optic Cable

The Rural Utilities Service is revising its regulation: on fiber optic cable specifications used by borrowers, their consulting engineers, and cable manufacturers; updates the specifications to meet current industry standards; includes additional requirements in the specifications to meet the construction requirements of fiber-to-the-home construction; clarifies certain existing definitions; separates the regulation into two distinct specifications for cables covering backbone and distribution plant, as well as for service entrance cables covering subscribers' drops; and includes new definitions.

Benton

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