July 2010

Where Do Telecom Lobbyists Come From?

The Federal Communications Commission (FCC) has a bit of a conundrum. Following an unfavorable court ruling on the extent of the FCC's powers to regulate Internet Service Providers (ISPs), the FCC has gone back to the drawing board to sketch out how "Internet Services" should be defined -- but they won't be making this decision alone. A multitude of parties with a stake in the (re)definition of these services have directed their resources toward Capitol Hill in an effort to influence lawmakers into seeing things their way.

To shine a little sunlight on this process, the Sunlight Foundation developed this network neutrality primer including a micro-history of the issue, a chart to introduce you to the major players, and some graphic-packed research into the lobbyists they've brought on board.

By an overwhelming majority, most lobbyists on both sides of the issue have had experience working in Congress.

Of the 274 lobbyists hired by AT&T, Verizon, Comcast, Time Warner Cable, National Cable & Television Association, and the US Telecom Association against net neutrality, 247 worked in some capacity in Congress — that's ninety percent of the lobbyists hired. Of that 247, 201 trace their work history back to Congress exclusively; the other 47 held positions with multiple branches of government.
For those hired by Google, Microsoft, Amazon, eBay, TiVo, and the Independent Film & Television Association (IFTA) to lobby in favor of net neutrality, ninety-three percent (147 of 158 lobbyists) had work experience in Congress. Of those, 121 worked only with Congress, and 26 lobbyists worked with multiple branches of government.

NTIA/FCC Web-based Frequency Coordination System

The National Telecommunications and Information Administration (NTIA) hosts a Web-based system that collects specific identification information (e.g., company name, location and projected range of the operation, etc.) from applicants seeking to operate in existing and planned radio frequency (RF) bands that are shared on a co-primary basis by federal and non-federal users. The Web-based system provides a means for nonfederal applicants to rapidly determine the availability of RF spectrum in a specific location, or the need for detailed frequency coordination of a specific newly proposed assignment within the shared portions of the radio spectrum. The Web site allows nonfederal applicants proposed radio site information to be analyzed, and a real-time determination made as to whether there is a potential for interference to, or from, existing Federal government radio operations in the vicinity of the proposed site. This Web-based coordination helps expedite the coordination process for non-federal applicants while assuring protection of government data relating to national security. The information provided by non-federal applicants will also assure the protection of the applicant's station from radio frequency interference from future government operations.

Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have a practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

Written comments must be submitted on or before September 20, 2010.

DHS outlines cybersecurity planning

Rand Beers, the Undersecretary for the National Protection and Programs Directorate with the Department of Homeland Security has a lot on his mind.

For one thing, he's currently overseeing completion of the National Cyber Incident Response Plan -- essentially, the playbook for how the federal government will respond to an attack on the nation's cyber infrastructure, part of what has been called the National Response Framework. "This will be the new plan. It is in the final stages of coordination," Beers told cybersecurity industry representatives at the Intelligence and National Security Alliance breakfast meeting yesterday in Arlington. "It was built as part of a broad outreach program within the government, and within the private sector. And it's absolutely critical to have that kind of input. As we try to move forward in trying to manage cyber-incidents, we can pretty much count on the fact that it's not going to be limited to the government, but it's going to have to involve the private sector."

Beers says also on his to do list: the newest version of a well-known test that will stress the National Cyber Incident Response Plan.

Officials Defend E-Health Standard As Work In Progress

Standards that define what constitutes an official electronic health record aren't strict enough to justify the billions of dollars in incentives the government plans to pay physicians and hospitals to install the systems, Republican lawmakers said on July 20.

In a hearing of the House Ways and Means Health Subcommittee, officials from the Health and Human Services Department defended the recently released standards, which are known as meaningful use and are requirements and expectations that health providers must meet when applying for funding to pay for the adoption of the e-records. The regulations were designed to accommodate diverse communities looking to move away from paper-based records systems, they said. Some lawmakers expressed concern that the final rule watered down the meaningful use requirements.

The regulations represent a missed opportunity to improve patient care and reduce waste because the standards are lower than expected, said Rep. Wally Herger (R-CA). He said he expected a better return on the $36 billion investment in incentive payments to providers. Witnesses agreed the expected outcome of electronic records adoption is to improve the quality and efficiency of care, but were unable to estimate how much it would cost Medicare and Medicaid. The technology is only one way to reduce waste and must be combined with other activities, they said.

Swept Away? How the Smart Grid Tsunami Could Destroy Utilities (And What to Do About It)

[Commentary] It's easy to figure a strategy for surviving a tidal wave ... run like hell for the high ground. It's more difficult to apply that thinking to the Smart Grid.

We can see the wave is about to hit the shore... but which way is the high ground? Should a utility start offering all sorts of new energy services behind the meter? Or become a wires-only utility and leave the new services to others? Or compete with the EnerNOCs of the world? Or partner with them? Or emigrate to New Zealand to herd sheep? Surviving this kind of turmoil requires a strategic re-adjustment, often best accomplished through the lens of the "Three Rs": 1) Recognizing the scope of the transformation, 2) Rethinking the organization's role, 3) Repositioning to optimize for the new role(s).

Smart Grid into the Home: The Battle Begins

[Commentary] Recent announcements illustrate that battle lines are forming over who, what, and how home energy management will be offered to consumers.

Demand-responsive homes that throttle their electricity consumption based on the real-time generation capacity are key to the Smart Grid vision of distributed renewable and plug-in hybrid electric vehicles (PHEVs). The big question is: Who will entice pesky consumers into "behavior change" - and be able to make money doing it? Whether supplied by utilities or within carrier quadruple-play services, do consumers really want any of this? A forthcoming Pike Research consumer survey indicates they do, but are uncertain how much they would pay, and are most open to utilities as suppliers.

[Bob Gohn is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.]

Do Consumers Really Care About the Smart Grid? Some Think Not

The "smart grid," or the way that the electric infrastructure can be enhanced with interactive, telecommunications- and broadband-related capabilities, may not be that important for consumers, said panelists at the July 20 Broadband Breakfast Club.

At the same time, Nick Sinai, the Federal Communications Commission Energy and Environment Director, said that intelligent electric infrastructure -- including consumer data about energy use -- could enhance competition in electricity and in broadband. "The federal government's role isn't to figure this out, neither is it the state role," said Sinai. However, "We need to set the conditions, so that utilities can continue to modernize, and deliver secure and reliable" electricity.

The State of Internet Music on YouTube, Pandora, iTunes, and Facebook

Of the some 100,000 albums released last year, 17,000 of them sold only 1 copy; more than 81,000 albums sold under 100 copies. In fact, just 1,300 albums sold over 10,000 copies, an astonishing figure given that these numbers combine physical and digital album sales. And for physical sales alone? Only 2% of new albums on Soundscan sold over 5,000 copies -- that's a skydiver's plummet from the golden era of the music industry. Physical sales of albums continues to plummet while digital singles sales grow.

Eric Garland, CEO of Big Champagne, says industry folks today are obsessed with "FFF numbers"--that is, an artist's friends, fans, and followers. "It's a race, but to what end?" he wonders.

Interestingly, it wasn't Apple that Garland viewed as the most important name in music, even though the company's iPods, iPhones, and iTunes indicate otherwise. "YouTube is increasingly the category killer," argued Garland. "When people ask me what is the biggest name in music in my opinion, they want me to say Apple. I usually answer: YouTube." Garland told audiences that if you actually look to where people are listening to music--not even just looking at videos--consumers are turning more and more to YouTube, which he calls the "largest catalog of on-demand music on the Internet." If only Google could make this service profitable, right?

Some Thoughts On Digital Media And The Future Of The Newspaper Business

[Commentary] The problem, in a nutshell, is this: A print newspaper is not just a vehicle for delivering news -- it's a vehicle for delivering a truckload of high-priced ads.

No one has any idea whether these ads are actually seen, of course, but for the $40 billion still spent on newspaper ads each year, that lack of accountability has never been a problem (in part because there was never an alternative.) What matters to newspaper advertisers is circulation--the number of folks who might -- might -- see those ads.

The print newspaper is such a good vehicle for delivering ads, in fact, that the New York Times generates about $55 per month of advertising revenue for every print subscriber it has ($650 million of annual print revenue divided by 1 million subscribers divided by 12 months). That's in addition to the $58 per month the New York Times induces subscribers to pay for the daily print ad-delivery vehicle ($700 million of annual circulation revenue divided by 1 million subscribers divided by 12 months). The New York Times web site, in contrast, only generates about $0.70 of ad revenue per month from each of the 18 million people who visit it--and zero (ZERO) circulation revenue.

As print circulation declines, the print newspaper becomes a less-miraculous vehicle in which to deliver ads--because fewer people might see them. Just as bad, as circulation declines, the cost of printing and delivering each newspaper goes up (thanks to the loss of economies of scale). Eventually, the cost of writing and printing and delivering the print newspaper more than offsets the revenue that can be generated from the print-based ads, and the print paper collapses. That's why the newspaper business is "all about circulation."

Don't give the press a bailout

[Commentary] Are government subsidies the cure for what ails the news business? Why should journalists be entitled to a multi-billion-dollar batch of media subsidies? Subsidies always amount, in the end, to confiscating money from many taxpayers in order to benefit relatively few. Those who call for keeping newspapers and other old media alive with injections of public funds are really saying that if people won't support those forms of journalism voluntarily, they should be made to do so against their will. The argument for most government subsidies is that the activity they support generates a larger public benefit — a benefit that would be lost if it were left up to the marketplace. But for the better part of two centuries, newspapers flourished in the market. They are struggling now not because there is no commercial value to "provid[ing] all the news coverage we need," but because tens of millions of consumers have come to prefer other vehicles for getting that news. There hasn't been a market failure, only a market transformation.

Benton

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