December 2010

Can America Afford FCC Chairman Genachowski?

[Commentary] Two years after he was nominated to chair the Federal Communications Commission, what does Julius Genachowski have to show for his efforts? Very little.

My problem with this FCC is not policy but its inaction and the uncertainty it engenders. The FCC has held dozens of public hearings. It passed a few decisions, often on issues that were extensions of Clinton/Gore or Bush era FCCs. It issued a report on broadband. It spent a lot of its time on the non-discriminatory use of the Internet infrastructure (“net neutrality”), which is important in the long run but secondary to the creation of a nationwide infrastructure in a recession. And in any event, after much spinning of wheels, it got nowhere on this issue.

Is Chairman Genachowski to blame? Yes and no. The problem today is that regulatory delay is costlier than ever. Not only is the information environment much larger than in the past, it is also much faster-moving, and more central to the national economy. The cause of this is technological change, which progresses at the sizzling rate of “Moore’s law”, while the policy process barely moves at all. If anything, the FCC has become, in recent years, more politicized and dysfunctional. And this is what is happening. While it polishes its elaborate proceedings, the economy is stagnating and the information sector, the growth engine in the 1990s, is on hold. The FCC is becoming the anti-stimulus agency.

What, then, should Julius Genachowski do in the next two years? The answers are short and simple:

In terms of procedure: Set policies and dates. There are a lot of good policy proposals out there and even more worthy opinions, but now, after two years of immersion, it is high time to pick a few, clear priorities, avoid distractions, and make decisions tirelessly under ambitious deadlines.
In terms of substance: focus on nationwide broadband infrastructure. One of the FCC’s few accomplishments, prodded by Congress, was a national broadband plan. But this excellent plan has been crawling along in its implementation. The FCC claims that it is pushing sixty proceedings to do so, but if one looks more closely, many of them are clean-up operations the agency was doing anyway. Missing in the bureaucratic detail is the big picture of a national purpose, and a sense of urgency. It is doubtful that countries like Korea or Japan, which upgrade their networks aggressively, go about it in this way.

Partnership for Innovation

[Commentary] While many government actions involve domestic policy, working together with the European Union we can launch a new trans-Atlantic era of innovation.

First, we should coordinate regulatory policies and standards for new products and conduct joint research and development. We have done this before. By coordinating standards for online privacy in the late 1990s we helped accelerate the growth of global e-commerce. Emerging technologies -- renewable energy, smart grids, health IT, electric cars -- offer promising areas for cooperation. In regulation and standard-setting for new technology platforms like smart grids or health IT, we can connect our markets through more unified rules, creating greater scale for innovation. We can create and connect trans-Atlantic innovation clusters. These are the discussions our leaders had in Lisbon, and these are the areas primed for progress, including at this week’s Trans-Atlantic Economic Council meeting.

If we get it right, we will give a boost to the trans-Atlantic economy, generating new jobs in sectors poised to lead our economies in the coming decades.

[Kennard is the U.S. ambassador to the European Union and a former chairman of the Federal Communications Commission.]

Air Force Blocks Media Sites

The US Air Force is blocking its personnel from using work computers to view the websites of the New York Times and other major publications that have posted classified diplomatic cables.

Air Force users who try to view the websites of the New York Times, Britain's Guardian, Spain's El Pais, France's Le Monde or German magazine Der Spiegel instead get a page that says, "ACCESS DENIED. Internet Usage is Logged & Monitored." The notice warns that anyone who accesses unauthorized sites from military computers could be punished. The Air Force said it had blocked more than 25 websites that contained the documents, originally obtained by the website WikiLeaks and published starting late last month, in order to keep classified material off unclassified computer systems.

Time to loosen Google's grip?

[Commentary] In case you hadn't noticed, Google isn't just a Web search company any longer.

In addition to online advertising, it's moving into operating system and application software, mobile telephone software, e-mail, Web browsers, maps, and video aggregation. It's also in the process of assembling the world's biggest digital library of books and visual materials. The question now is how much bigger and more dominant we want this innovative and ambitious company to become. Google has already achieved a near-monopoly in Web search and search advertising, and has cleverly used that monopoly and the profits it generates to achieve dominant positions in adjacent or complementary markets. Success in those other markets, in turn, further strengthens Google's Web search dominance and reduces the chance that any other competitor will be able to successfully challenge it. It's easy to see why Google would want to use well-chosen acquisitions to try to delay or prevent that next round of creative destruction. What's harder to understand is why we would let them do it.

Spectrum top priority for electronics trade group

Gary Shapiro, president and chief executive of the Consumer Electronics Association, said that pushing for regulatory and congressional action to free up airwaves to handle the burgeoning use of wireless devices will be the top policy initiative of his industry in 2011.

He would like to see next year's Congress take quick action on spectrum reform. Shapiro said telecommunications issues have traditionally been less partisan, and he believes Republican Representative Fred Upton, who will head the House Commerce and Energy Committee next year, intends to continue this bipartisan approach to the sector.

DirecTV To Pay $14.25M, Plus Restitution, To Settle Complaints

DirecTV has reached a settlement agreement with States Attorney Generals in all 50 states over consumer complaints about its advertising, customer service and third-party retailer policies.

A DirecTV spokesperson said the settlement included $14.25 million for court costs in all 50 of those states, plus an as-yet undetermined amount for restitution to consumers. The complaints date back to January 2007, according to Ohio Attorney General Richard Cordray in an e-mailed release about the settlement, which stems from allegations of deceptive and unfair business practices. For example, Cordray said his offices had received 1,714 complaints over that time, including that DirceTV did not clearly disclose prices, limitations on certain special pricing and automatic renewals on at least one seasonal deal. There were also allegations the company offered cash back, but provided only bill credit and enrolled customers in additional contracts without clearly disclosing the terms or when replacing defective equipment.

According to Cordray, DirecTV has promised to:

Clearly disclose all material terms to consumers;
Replace leased equipment that is defective at no cost except shipping costs;
Not require the consumer to enter into an additional contract when simply replacing defective equipment;
Clearly disclose when a consumer is entering into a contract;
Clearly notify consumers before a consumer is obligated to pay for a seasonal sports package;
Clearly disclose all limitations on the availability of local channels;
Not misrepresent the availability of sports programming;
Not represent that a consumer would receive cash back if the consumer would actually receive a bill credit; and
Clearly notify consumers that they will be charged a cancellation or equipment fee at least 10 days before charging
the fee."

DVR Penetration Means Time-Shifted Viewing Is Up

Television time-shifted viewing is growing this season -- for almost all shows.

Brad Adgate, senior vice president and corporate media director for Horizon Media, says throughout the season so far there are 19 shows that witnessed 3 million or more viewers after seven days of time shifted viewing. By comparison, in 2009, there were 11 shows and in 2008 there were only 3 shows. Much of this comes from higher penetration of DVR technology in U.S. TV homes, now at 37.2% in November 2010, according to Nielsen, versus 32.3% in November 2009 and 26.9% in November 2008. Still, despite this, Adgate says, some programs report a drop in their time-shifted audiences: Fox's "The Cleveland Show" went to 13.5% from 15.3% of its audience coming from time-shifting. Even CW's "Gossip Girl" dipped a bit, 35.3% from 36.0%, while CW' "Smallville" went to 31.5% form 35.8%.

Cablevision Completes Bresnan Acquisition

Cablevision, which spent years building its lucrative footprint in the New York area, is now operating in the Rockies.

The company has completed its acquisition of cable operator Bresnan Communications, which has about 300,000 TV customers in four Western states. The operator has a potential customer base of 629,000 homes in Montana, Wyoming, Colorado and Utah, giving Cablevision expansion opportunities. Cablevision serves 3 million TV customers in the New York region. The acquisition price is $1.37 billion from a group of owners led by Providence Equity Partners.

China Is Serious About Intellectual Property

[Commentary] The international media have recently been full of negative stories about China’s lack of protection for intellectual property. I would like readers to have a clear picture of China’s intellectual property protections.

The implementation of the intellectual property system in China is bringing tangible benefits to Western countries and their multinational corporations. Western corporations earn hundreds of billions of dollars from China by directly collecting patent, trademark and copyright fees. They also obtain additional brand benefits and technical gains by producing products in China and then selling them to their home countries. Facing this global challenge, and creating a sound international environment for intellectual-property protection, requires a constructive attitude on the part of all countries. A climate of complaints and denunciations doesn't help.

[Tian is commissioner of China’s State Intellectual Property Office]

UK local TV will need subsidy, report finds

UK ministers’ plans for a network of local television companies can be achieved, but a subsidy will be required if inevitable teething problems are to be overcome, a report commissioned by Jeremy Hunt, culture secretary, has concluded.

The government initiative to inspire dozens of companies to provide local television programmes in towns and cities across the UK was described as a “vanity project” by his Labour shadow, but those charged with investigating its chances in the market have signalled it is viable. Nicholas Shott, head of UK investment banking at Lazard, said in his report that local television could only succeed in the long run as an Internet-based service because of its limited size, and this was impossible until high-speed broadband was available more widely. In its early years, therefore, it would require subsidies to run on digital terrestrial television, or Freeview, he said. The plan envisages 10 to 12 local companies based in major cities, using a “backbone” in the form of a national channel broadcasting general content, which would slip in and out of local television. Two hours of low-cost but high quality programmes each day would be the norm, Mr Shott said. However, local television programming could not survive in isolation, the report says, because the costs of transmission are too great. Financial help would be required from existing broadcasters, while the backbone channel would need a prominent position on the electronic programming guides of Freeview, British Sky Broadcasting and Virgin Media, the report says.

Benton

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