July 2009

The Recession Is Over

[Commentary] We need a new type of recovery because the last several ones were based on bubbles. The Obama administration's strategy rests on what some might call industrial policy or excessive government intervention—or even creeping socialism. I call it "the smart economy." It means eschewing the blunt economic instruments we've always used and focusing resources and rhetoric on strategic sectors: renewable energy/green technology, infrastructure, broadband, and health care. It means making investments to run vital systems more intelligently and efficiently, thus creating a new infrastructure on which the private sector can work its magic. This philosophy, legislated in the $787 billion American Recovery and Reinvestment Act, holds that a mixture of targeted investments, tax credits, subsidies, reforms, and direct purchases can preserve or create jobs in the short term, improve America's economic competitiveness in the long term, and catalyze private-sector investment. The benefits from more investment in broadband and communications could extend far beyond elderly eBay sellers. As MIT researcher William Lehr says, "Broadband is a key ingredient to make the rest of this smorgasbord of projects work." For example, the stimulus package included $19 billion to computerize health information, which would allow doctors, patients, and insurers to share data easily. The move, intended to save billions of dollars, has already spurred private-sector investments. In July, the networking giant Cisco and the huge insurer UnitedHealth announced plans to build a technology network for health providers with the help of stimulus funds.

The Promise of Universal Broadband

[Commentary] Critics should read the Notice of Funds Availability from the USDA's Rural Utilities Service (RUS) Broadband Initiatives Program (BIP) and the Broadband Technology Opportunities Program (BTOP) administered by The Department of Commerce's National Telecommunications and Information Administration (NTIA). First, the NOFA requires that an access network be designed for 100% coverage. Broadband connections at minimum speeds, at least, must be available to every home and every business. Not just the ones closest to the CO. Not just the ones passed by FTTH. Not just the ones in nice neighborhoods. Every home and every business will have broadband access. From the get-go. Universal broadband! Second, the NOFA allocates funds for broadband "second mile" networks, i.e. broadband backhaul. The leased lines that connect rural areas to the Internet today are ruinously expensive - one of the reasons so many rural areas are "under-served". If the government is going to fund broadband access in the "first mile", it wants to be darn sure that those connections are not choked off in the "second mile"! Third, the NOFA requires that broadband networks be open and neutral. It requires that both first and second mile networks be available to multiple service providers at wholesale rates. Furthermore, it requires that services be handled in a "nondiscriminatory" manner, with no service provider's packets getting more favorable treatment others'.

How NTIA Dismantled the Public Interest Provisions of the Broadband Stimulus Package

On July 2, 2009, the National Telecommunications & Information Administration (NTIA) released the rules for the broadband stimulus program (called the Broadband Technology Opportunities Program or BTOP). While a plain reading of the statute language suggests that NTIA should decide on an individual basis whether a private profit making entity is in the public interest, NTIA instead a priori declared all private companies in the public interest. It simply acted as though the House legislation had prevailed over the Senate. NTIA justified itself by declaring that the Congress intended to "invite a diverse group of applicants to participate." NTIA thereby accomplishes a sleight-of-hand tactic- declaring that it is complying with the original intent of some in Congress rather than complying with the text actually passed by Congress. If Congress had intended all entities to be eligible on an equal footing, it would have adopted the House eligibility language. Congress explicitly did not do this. Rather, it chose a higher bar for private companies. They had to be judged in the public interest. The NTIA ruling did not explain what it meant by "public interest". Nor did it indicate that it would declare ineligible those companies that have violated the public trust previously. Instead, it put global companies driven to maximize profits on a level footing with public and non-profit corporations chartered to maximize benefits to the community.

A 'Cautionary Story' Sadly Comes True for Broadband Mapping

[Commentary] A month ago, we wrote a "cautionary story" about how the state of Texas was setting up the telecom front group Connected Nation to be the broadband mapper of choice. The state did it by the book, albeit with a Request For Proposals (RFP) that fit Connected Nation like a glove. Guess what? The state of Texas has declared a winner. Guess who it is? If you didn't guess Connected Nation, you're not paying attention. What will the National Telecommunications and Information Administration (NTIA) do when all of those Connected Nation proposals come flooding in full of confidentiality claims that give substantially less data than the intent of the legislation? Will NTIA reject them all? Where will that leave the states which sent them in? NTIA has told state officials the information doesn't have to come from carriers, but there is some difference of opinion about what the NTIA's broadband mapping announcement says and what it means. NTIA Dir. Larry Strickling was quoted by Broadbandcensus.com as saying he hopes carriers will waive confidentiality, and that there are other ways of collecting information. Check us off as skeptical for the first.

Spectrum Policy in the Age of Broadband

The convergence of wireless telecommunications technology and Internet protocols is fostering new generations of mobile technologies. This transformation has created new demands for advanced communications infrastructure and radio frequency spectrum capacity that can support high-speed, content-rich uses. Furthermore, a number of services, in addition to consumer and business communications, rely at least in part on wireless links to broadband backbones. Wireless technologies support public safety communications, sensors, medicine and public health, intelligent transportation systems, electrical utility smart grids, and many other vital communications. Existing policies for allocating and assigning spectrum rights may not be sufficient to meet the future needs of wireless broadband and national broadband policy. A challenge for Congress is to provide decisive policies in an environment where there are many choices but little consensus.

The Web Is Flat: Why Time Spent Online Is Leveling Off

Time spent with the Internet, as it turns out, doesn't balloon indefinitely. That might sound obvious, but this is the year web surfing leveled off at 12 hours a week after growing from less than six hours a week in 2004, according to Forrester's annual survey of more than 40,000 American consumers' self-reported media habits. The report, released Monday, also indicates relative stabilization in other media channels, most notably newspaper and magazine reading. While there are myriad reasons why people's time spent with Internet media stayed flat over the past year -- chief among them is faster broadband speeds and more experience with the web allows people to be more efficient consumers -- the trend has implications for media companies and marketers. Ad Age interviewed Forrester Analyst Jackie Rousseau-Anderson to understand more about why we're seeing the stagnation and its implications for media.

FCC Inspector General Reverses Universal Service Fund Low Income Program Decision

The Federal Communications Commission Inspector General Tuesday reversed a decision that some $1.6 billion in Universal Service Fund payments to the Low Income Program in 2006-2008 were "100% erroneous." A December 2008 decision by the Inspector General under then-FCC Chairman Kevin Martin put the entire low-income fund "at risk" under Office of Management and Budget accounting standards, the IG's office had said at the time. On Tuesday, the IG withdrew that decision and said the program would be audited for potential waste, fraud and abuse. Acting Inspector General David Hunt pointed out that the previous IG determination had been based on the fact that source documentation could not be supplied to verify the amounts handed out and based on interpretation of OMB guidance. But since that December report, he points out, the Universal Service Administrative Company has responded to that Inspector General finding. Given that the Inspector General did not conduct an audit or "other structured examination," Hunt said his office had decided to withdraw that finding that the payment was totally off.

Apple blocks Google Voice app for iPhone

The long-awaited Google Voice application for the iPhone has been officially shot down by Apple. In addition, all third-party applications that use Google Voice have been pulled by Apple. The developer of one of those apps, GV Mobile, says he was told the decision came from Apple because his app "duplicates features that come with the iPhone." It's unclear why Apple is refusing the app to be sold in its store, though there are hints that it may have come at the behest of AT&T, the exclusive carrier for the iPhone in the U.S. Google Voice is a free application that lets users assign a single number to ring their home, work, and cell phones, and also get voice mail as text transcriptions. Google Voice has been described by some as an "end run" around wireless carriers because it allows for free texts, but users do still use minutes on their AT&T phone plan.

Rockefeller Subpoenas Web Marketer

Senate Commerce Chairman Jay Rockefeller (D-WV) issued a subpoena Tuesday to Vertrue for withholding information related to the company's allegedly deceptive online business practices. The subpoena requires the firm to produce documents that were explicitly requested by Chairman Rockefeller in May, including communications Vertrue had with business partners and credit card companies about "mystery charges" passed on to consumers as well as internal discussions regarding complaints about those unauthorized charges. The subpoena demands that Vertrue CEO Gary Johnson provide the files to the committee by August 18.

Fewer Minorities in Local News

The Radio-Television News Directors Association and Hofstra university have released data on the latest survey of the local television newsroom workforce. Minorities comprised 21.8% of local TV news staff in 2009, down from 23.6% last year. Hispanics in local news fell from 10.3% to 8.8% in the past year, while African Americans decreased by a half percentage point. The percentage of minority TV news directors dropped slightly in 2009. Women represent 41.4% of the local news workforce, according to a new study from RTNDA/Hofstra, an all-time high. A full 29.1% of the nation's TV news directors are female, also a record level.

Benton

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