September 2010

Spending Stimulus Dollars Surprisingly Hard

When Obama Administration officials were selling the idea of a huge federal stimulus program to buoy the US economy, they talked about a plan that would get money into the economy quickly. Instead, spending stimulus dollars fast has turned out to be surprisingly hard.

The stimulus package, which has a current estimated price-tag of $814 billion, had three components. One was tax breaks for individuals and companies. Another was aid to states to fund unemployment benefits, Medicaid and schools. Nearly all this money has been spent. The third element was around $230 billion in funding for infrastructure projects ranging from road repaving to modernizing the electric grid. This was to be the most visible element of the job creation effort. Federal agencies have designated recipients for around 80% of the funds, but paid out only about a third of them to date. The result is that the Obama Administration is struggling to convince skeptical voters that the stimulus was effective. Among respondents to a Wall Street Journal/ NBC News poll in August, 30% thought the plan had "made things better," 30% thought it had "made things worse" and 40% said it was "too soon to tell" or had no opinion. The nonpartisan Congressional Budget Office estimates that the stimulus lowered the jobless rate by between 0.7 percentage point and 1.8 percentage points during the second quarter of 2010, compared with what the rate otherwise would have been. But for voters, those figures are being dwarfed by the actual jobless rate of 9.6% in August.

Private-Equity Firm Buys Internet Brands

Internet Brands Inc., which runs more than 100 websites on topics such as cars, careers, health, home, money and travel, said it has agreed to be bought by private-equity firm Hellman & Friedman Capital Partners for about for $640 million.

The purchase price of $13.35 per share represents 47% premium to Friday's close. Internet Brands doesn't advertise its websites, but names them to attract surfers looking for general information, such as gardens.com, doityourself.com, loan.com, mortgage101.com and ultimatecoupons.com. The small company reported second-quarter revenue of $28.1 million, up 21% from a year earlier, and net income of $4.6 million, up 80%. The company also reported a 30% increase in unique visitor growth from a year earlier. Idealab, a technology startup incubator that owns a two-thirds voting stake in Internet Brands, is backing the deal. The purchase is expected to close in the fourth quarter and comes as private-equity firms have been active on the merger-and-acquisition front of late, both selling and buying assets.

Hollywood sounds alarm as streaming video websites enable a new wave of piracy

Streaming video is the most visible sign of how Internet piracy has evolved since the days of Napster and its imitators. The new digital black market combines "cyberlockers," such as Megaupload and Hotfile, which piracy experts say hold stores of pilfered content, with linking sites such as TVDuck and TVShack.cc, which act like an underground version of TV Guide, helping people locate bootlegged TV shows and movies.

Some of these linking sites even contain reviews and recommendations that lend a patina of legitimacy. The growth of streaming pirate sites has been nothing short of arresting. One independent measurement service documented a 42% jump in the number of infringing sites with streaming capability from July to August, sounding alarms throughout Hollywood. "Accessing stolen content by streaming has become increasingly widespread," said Rick Cotton, general counsel for NBC Universal. "So the challenge of reducing digital theft online now has a second major focal point."

Google Says Its Web Search Service Partially Blocked in China

Google says its search service is partially blocked in China.

The world gets a national broadband plan

The United Nation's International Telecommunications Union has released a broadband plan for the world.

"In this brave new world of 'digital opportunity', we believe the burning issue is what price will be paid by those who fail to make the global, regional, national and local choices for broadband inclusion for all—choices which must be made sooner rather than later," the "Outcomes" section of ITU's world Broadband Report warns.

ITU estimates that there are now over 1.8 billion Internet users and over five billion mobile device subscribers, most located in the developing world. All governments should build upon this to extend broadband to half the world's population by 2015, the organization says (the current human population of the globe is getting close to 7 billion folks, by the way). In an accompanying press statement, the survey asks global leaders to make broadband access a "basic civil right." "Broadband is the next tipping point, the next truly transformational technology," declares ITU Secretary-General Dr Hamadoun Touré. "It can generate jobs, drive growth and productivity, and underpin long-term economic competitiveness. It is also the most powerful tool we have at our disposal in our race to meet the Millennium Development Goals, which are now just five years away."

Election ads on track to outpace 2008 spending

Political advertising goes into high gear this week: Money will be flying and inventory at TV stations will be tight. Three-quarters of the $3 billion expected windfall will be spent in the next seven weeks, Evan Tracey, president of Kantar Media's Campaign Media Analysis Group, told broadcasters at last week's TVB Forward conference in New York. Ad spending for this year's midterm political season is already pacing $160 million above the same period in 2006, and the final tally is likely to best the general election in 2008. "It's the most competitive political environment I've ever seen," Tracey said. Just about every media segment will see increases this year, led by local TV, with radio and cable also being up. Digital and social media will also be on the rise, but at a slower pace.

Sinclair Broadcast Group Inc. said Monday it expects its television stations to bring in less money from political advertising than previously forecast. The Hunt Valley broadcaster said it expects about $9 million in political advertising for the third-quarter ending Sept. 30. That is down from the $9.5 million in political advertising forecast previously. With two weeks remaining in the quarter, Sinclair's stations have brought in about $7.7 million from political ads, the company said.

Internet Radio May Threaten Terrestrial Drive-Time

While actual penetration remains fairly low, Internet radio poses at least a hypothetical threat to traditional radio listening in cars, according to a new national survey of 2,141 radio listeners, including cell-phone-only respondents, conducted from August 10-25 by Mark Ramsey Media and VIP Research.

MRM and VIP found that 34% of those surveyed said they would listen less to traditional local broadcast radio stations -- long the dominant drive-time medium for advertisers -- if they had access to Internet radio in their car. The proportion that would listen less to traditional radio was even higher among young adults ages 18-24, at 42%, and among fans of alternative music, at 50%. On a positive note, respondents were less likely to "give up" radio than other media and devices, with 5.3% saying they would give up radio compared to 39.1% for game consoles, 15.3% for iPods or MP3 players, 14.2% for DVRs, 12.9% for DVDs, and 5.9% for TV. However, these results may simply reflect the fact that there is no cost savings associated with forgoing free broadcast TV or radio.

Soldiers show some ingenuity during tests of next-generation radios

Contractors might have developed the advanced battlefield communications systems the Army is testing, but it was soldiers who adapted the technology to fit requirements only a warrior on the front lines would know, the kind of ingenuity that harkens back to the Civil War.

This month, soldiers are testing the new Rifleman Radio, an advanced handheld, software-based device the service believes will provide a generational leap in the way troops communicate on the battlefield. The radio, part of the Joint Tactical Radio System program, has been built for the data-rich environment that soldiers now operate in and is designed to send and receive data-rich images and to provide different ways to communicate, including chat room-like venues, to quickly exchange intelligence. So far during the two week, $12 million exercise that is scheduled to finish Sept. 28, soldiers had to devise a workaround to some of the inherent shortcomings of Rifleman Radio. For example, the extent of its reception is only about 3 miles. That range isn't enough to cover the 350 square miles that make up the exercise area inside White Sand's sprawling 3,200-square-mile base, which runs from north of El Paso, Texas, to south of Socorro, NM. To boost coverage, soldiers applied the simple rule that the higher an antenna, the longer its range, and they hung one of the devices from a blimp, or aerostat, and sent it up several thousand feet so it hovered over the exercise area.

More hotels offer 2-tiered wireless Internet access

Some upscale hotels are offering price options for going online: basic Wi-Fi service for free or at a reduced price to guests for checking e-mail, or better service at a higher cost for guests who want a faster connection. As airports and restaurants increasingly provide free wireless Internet access, upscale hotels face a backlash from guests, especially business travelers, who don't want to pay to connect. Under the two-tier offering, you pay less if you want to check e-mail and Facebook but more if you want to watch movies, YouTube videos or TV shows.

Europe calls for global Internet treaty

Europe has proposed a global Internet Treaty to protect the Internet from political interference and place into international law its founding principles of open standards, network neutrality, freedom of expression and pluralistic governance.

The draft law was compared to the 1967 Outer Space Treaty as the Council of Europe presented it to web luminaries from around the world at the Internet Governance Forum (IGF) in Vilnius, Lithuania, this week. Dignitaries warned that governments were threatening the Internet with fragmentation by bringing it under political control. The proposed Internet Treaty would require countries to sustain the technological foundations that made the network of networks possible. The proposed law would also require global co-operation in the protection of critical Internet infrastructure. It would similarly preserve the multi-stakeholder system of governance that has forced governments to subordinate their desires to regulate the net to forums that give an equal voice to engineers and representatives of commercial and civil society. The treaty would make the system of Internet governance overseen by ICANN adhere to international human rights law. The treaty's principles would furthermore uphold rights to freedom of expression and association and require states to preserve "human dignity" and the "free and autonomous development of identity" on the Internet.

Benton

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