October 2009

Analysts: What A Comcast/NBC Deal Could Mean

Bucking current media industry trends, big cable operator Comcast wants to become a more vertical media company -- by buying NBC Universal's high-profile programming/content -- to avoid being just a "dumb" pipe, according to Richard Greenfield, co-head of Pali Research for media and cable systems equities. He says that Comcast "wants to have a seat at both ends of the negotiating table." He says this is especially true considering the threat of anyone with a HD video camera creating content and distributing it globally on the Internet for free. The result of the big media deal would significantly change many existing businesses between the two companies -- especially new digital efforts. For example, while Comcast has pushed its video on-demand service for years, Greenfield says VOD is no match for Hulu.com and other content that is more easily delivered through Net protocols. The downside: Greenfield believes Comcast will take content off Hulu and put it on Fancast.com, part of its "TV Everywhere" effort. In essence, the free site would be transformed into a pay-site for non-Comcast video consumers. The upside: big-time benefits will exist for Comcast's own media channel assets: networks such as E!, Versus, G4, Golf Channel, Style, etc. NBC big marketing machine, as well its cable networks (USA Network, Bravo, Syfy, Oxygen), will only improve the financial performance of Comcast's cable networks. Greenfield beliefs the deal is just the beginning. He predicts that General Electric will continue to sell off more of NBC Universal, and Comcast will be the buyer. Which won't be good news for Comcast shareholders.

Web TV could come with a price tag after Comcast-NBC

Free TV shows on the Internet could be harder to find if Comcast Corp succeeds in acquiring a majority stake in NBC Universal. Comcast would become a partner in Hulu, the video website which allows viewers to watch TV shows on the Web for free, a business potentially worth billions of dollars if consumers had to pay to watch the shows. The video website is jointly owned by NBC Universal, News Corp and Walt Disney Co. Hulu is the most popular site in the United States for watching TV shows, according to comScore. If Comcast has a stake in Hulu's future, as Mitchell suggests, it effectively reduces competition to the cable sector. Since web video is still a fledgling sector, however, it is unlikely to raise the hackles of US regulators, said analysts. Indeed, the Federal Communications Commission is likely to focus on other concerns if General Electric, which controls NBC Universal, decides to sell a 51 percent stake to Comcast, as sources have said the two sides are talking about. Namely, the FCC may be concerned about combining NBC Universal's national broadcast network, NBC, and its huge range of cable networks, like Bravo and USA, with the largest cable operator in the country.

Unfinished Symphony: What we don't know about the future of the Internet

This speech was given to the American stakeholders interested in the United Nations Internet Governance Forum. It explores four major areas of uncertainty whose resolution will shape the future of the Internet. The first involves the kind of Internet we have ­ from the standpoint of the Internet's architecture and its adoption. The second involves what kind of information policies we have ­ that is, the kind of rules we develop about information property such as copyright, patents, and trademarks and the marketplace norms that apply to property. The third involves the kind of policies and norms we develop about our online identities ­ specifically, the policies and practices we construct about online privacy, anonymity, and surveillance. The fourth area of uncertainty is that we do not yet know the full impact of the Internet when it comes to economic, medical, social, and political outcomes. The social science community is just beginning to tackle issues related to the value of the Internet ­ both good and bad ­ in empirical terms.

What shape will the wireless Web take?

The future of the Web is up for grabs—again. It was only a few years ago that the Internet made the leap from dial-up to high-speed broadband connections. Today, another transformation looms as those wired connections give way to the possibility of a wireless Web. At the helm of this change is a fast-evolving wireless ecosystem that combines the greater speeds and higher data volumes of today's wireless networks (such 3G-HSPA and, soon, LTE1) with the growing numbers of smart phones boasting bigger screens, better touch pads, and more processing power.

Study: US Fifteenth In Broadband Quality

A new study by the University of Oxford in England and the University of Oviedo in Spain measured broadband speed and latency in some 66 countries and 240 cities. The report claims top ranking countries saw "increasing investments in fiber and cable network upgrades, coupled with competition diversity, and supported by strong government vision and policy." Given many markets lack two or three of those, the country's ranking is once again not particularly surprising. Sure, the United States is larger than many of these other countries, and providing broadband to rural customers is an obvious challenge. But the United States also fails to break the top twenty best cities for broadband, five of which are in Japan. You'd think there'd be at least one U.S. city able to bump either Vilnius, Lithuania or Kocise, Sweden out of the top twenty. On the positive side, the United States has made some "significant, above average improvements" in infrastructure, according to the researchers. It's an obvious assumption that much of this improvement is courtesy of Verizon and Comcast's investment in fiber to the home and DOCSIS 3.0, respectively.

Broadcast Bankruptcies: The Solution to the Spectrum Crunch?

[Commentary] Do the serial bankruptcies of multiple television broadcasters hold the answer to the broadband spectrum shortage? With almost 100 television stations now in bankruptcy and giant Sinclair Broadcasting warning its 30 stations may be there soon, the banks and hedge funds that own the broadcasters' debt will soon be the proud license owners of beachfront spectrum. It's hard to imagine they'll be content to sit on that beach. What if...the new owners just sold the spectrum directly to a wireless carrier? Or perhaps ran their own auction? The beauty of digital television is that in most markets the major broadcast outlets can be squeezed into one or two license allocations. This would assure continued access for the 10 percent of homes without cable or satellite connections while making the newly vacated spectrum available for sale. What if...the new broadcast owners could themselves provide mobile services based on the new ATSC-M/H standard for delivering video to handheld devices? It is not hard to imagine "mobile Hulu (News - Alert)" or a subscription service for time-shifting current programs for a fee. But, of course, the broadcaster will need someone with a subscriber billing arrangement to realize on that opportunity. That brings us back to the mobile carriers. What if...the local broadcasters offered their excess spectrum on a "carrier's carrier" basis? They wouldn't have to worry about subscriber relationships, just lease access to their capacity to wireless carriers the same way they lease access to their towers for wireless antennas. What if...a consortium of banks and hedge funds decided to pool their assets to create a nationwide footprint for any of the above options? Delivering national coverage of major population centers would mean the whole is greater than the sum of the parts. The valuation multiple of such a footprint would justify the major effort this would require.

Broadcasters Tackle Spectrum-Sharing Debate

There has been much debate of late over sharing TV spectrum with laptops and other mobile wireless devices. Broadcasters have heard a lot of talk from companies such as Dell and Google about the fallow spectrum being protected in the TV band. But the national broadband plan, due to Congress on Feb. 17, 2010, has created numerous new opportunities for those companies and other parties -- including the Federal Communications Commission and Congress -- to take aim at broadcast spectrum and to raise questions about how efficiently it is being used. One of the latest red flags involving the issue came two weeks ago, with the commission's decision to seek specific comment, as part of the broadband plan, on how spectrum could be put to better use, including whether efficient use of spectrum should be part of the FCC's public-interest test for spectrum holders. Then there was the request last week by CTIA-The Wireless Association (which includes AT&T, Verizon and Sprint/Nextel) that the FCC needed to find and reallocate another 800 MHz of spectrum given the coming demands of wireless broadband. Those demands have been a constant drumbeat at the FCC as it works feverishly on the February plan. Wireless broadband needs more spectrum to produce the higher speeds the FCC suggests will be required to deliver applications.

CBS Asks Court To Take Up Constitutionality Of Indecency Enforcement

CBS is asking the Third Circuit Court of Appeals "to assess the constitutionality of the indecency rules given current realities and find that most applications can no longer survive First Amendment scrutiny." At issue, again, is the 2004 Super Bowl incident during which Janet Jackson's breast was exposed for nine-sixteenths of one second. The Supreme Court has asked the Third Circuit to rethink its decision that the FCC's fine of CBS stations was arbitrary and capricious. That came after the High Court ruled that the FCC had justified citing Fox stations for fleeting profanity. The Second Circuit Court of Appeals had also found the defense of that policy "arbitrary and capricious."

Staff Changes at FCC

Federal Communications Commission (FCC) Chairman Julius Genachowski announced key senior staff at the agency, including: Wireline Competition Bureau Deputy Chiefs Catherine Seidel and John Branscome, Wireless Telecommunications Bureau Deputy Chief Monica Shah Desai, and Consumer and Governmental Affairs Bureau Deputy Chief Mark Stone.

1) Seidel has been at the FCC for more than 15 years. Most recently, Ms. Seidel served as Chief of the Consumer and Governmental Affairs Bureau, a position she held since January 2007. Previously, she was the Acting Chief of the Wireless Telecommunications Bureau (WTB), and also has served as a Deputy Bureau Chief and Chief of Staff for the WTB.

2) Branscome has been at the FCC for nine years. He most recently served as Chief of the Spectrum and Competition Policy Division, and for the past year, Mr. Branscome was detailed to U.S. Senator Amy J. Klobuchar as counsel for communications and intellectual property matters. He also has served as acting legal advisor both to Commissioner Michael J. Copps and to former Commissioner Kathleen Q. Abernathy.

3) Desai has worked at the FCC since 1999 in a variety of capacities. She previously served as Chief of the Media Bureau from January 2007 until June 2009, and as Chief of the Consumer and Governmental Affairs Bureau from April 2005 until January 2007. She most recently served as a special advisor to the General Counsel, and previously served as a legal advisor to then Commissioner Martin on spectrum and international issues.

4) Stone has held a variety of positions at the Commission since 1994. He recently served as Deputy Managing Director. Prior to that, he advised former Commissioner Jonathan Adelstein on wireline telephone matters and was an adviser to former Chairman Kevin Martin. Mr. Stone has also served as Deputy Chief of the Telecommunications Consumers Division of the Enforcement Bureau where he supervised investigations and actions to enforce the Commission's rules that protect people with disabilities and low income telephone subscribers.

Internet TV Could Boom in the Next Few Years

Internet-enabled TV sets could see wider adoption in the next few years as viewers get comfortable with the idea of running widgets on TV screens, according to a study released by Ernst & Young on Thursday. Widgets -- or mini-applications -- are already being used in devices like mobile phones and computers to run light applications, and those applications could reach TV sets, the analyst firm said in the study. TV widgets are designed to pull selective content from the Internet to complement TV watching. For example, users can view weather information on TV or buy products advertised on TV from online stores. Many consumers consider it an "appealing" idea to mesh TV with information from the Internet, according to the study. Web-connected TV shipments could total less than 500,000 in 2009, but top 6 million by 2013, E&Y said in the study, citing statistics from Parks Associates. Widgets could also be the glue that brings together Internet and TV content. Broadcast TV is already competing with the Web for viewership, and widgets could facilitate content searches through both mediums, giving more entertainment options to viewers.