1. Monthly archive
  2. March 2011

March 2011

The Dissent: Why One FTC Commissioner Thinks Do Not Track Is Off-Track

[Commentary] The media loves "do not track." In recent days, there has been a flood of news articles reporting that the Federal Trade Commission does, too. Some of those articles have even implied that the commission has endorsed particular do-not-track mechanisms. To some extent, that may be the fault of the FTC's own press releases. But in any event, this implication is wrong. The concept of do not track has not been endorsed by the commission or, in my judgment, even properly vetted yet. In actuality, in a preliminary staff report issued in December 2010, the FTC proposed a new privacy framework and suggested the implementation of do not track. The commission voted to issue the preliminary FTC staff report for the sole purpose of soliciting public comment on these proposals. Indeed, far from endorsing the staff's do-not-track proposal, one other commissioner has called it premature. I also have serious questions about the various do-not-track proposals. In my concurring statement to the preliminary staff report, I said I would support a do-not-track mechanism if it were "technically feasible." By that I meant that it needed to have a number of attributes that had not yet been demonstrated. That is still true, in my judgment.

First, there are a number of consequences if a consumer adopts a do-not-track mechanism.

Second, another issue is potential consumer confusion about the terminology "do not track."

Third, I am concerned that the recent rush to adopt untested do-not-track mechanisms might be based, in part, on a reluctance to take on the harder task of examining more-nuanced methods of providing consumers with choice.

Finally, the implementation of do-not-track mechanisms must not jeopardize competition by injuring potential competitors.

Was Google’s Fiber Plan Just Saber Rattling?

[Commentary] It has been almost 14 months since Google announced its plans to wire up an entire community with a fiber-to-the-home network that would be capable of gigabit speeds. More than 600 communities applied for the honor, but Google then changed its plans. It was going to make an announcement before the end of 2010, but Google delayed the news. Now, it is three months later and there’s nary a fiber to be seen. Higginbotham is left wondering if instead of wiring up a municipality, Google may have used its contest to win a fiber network as a threat to bring ISPs around to its way of thinking on issues such as network neutrality and tiered broadband.

HHS Announces open public comment period on the Federal Health IT Strategic Plan: 2011-2015

The Department of Health and Human Services' Office of the National Coordinator for Health Information Technology (ONC) announced an open public comment period on the Federal Health IT Strategic Plan: 2011-2015.

The Plan reflects ONC’s strategy, developed in collaboration with other federal partners, over the next five years for realizing Congress and the Administration’s health IT agenda. Despite evidence of the benefits of the use of health IT, today only 25-percent of physician offices and 15-percent of hospitals take advantage of electronic health records (EHRs). Two major pieces of legislation, enacted over the past two years, are dramatically changing the health IT landscape and providing an opportunity to modernize the way care is delivered and improve the health of all Americans – the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Affordable Care Act. The Plan, originally published in 2008, is being updated to reflect the significant impact of these two pieces of legislation. The Plan begins in 2011, when it became possible for eligible professionals and eligible hospitals that demonstrate “meaningful use” of certified electronic health record (EHR) technology to receive incentive payments under the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs as authorized by the HITECH Act. The Plan describes how ONC will work collaboratively with its federal partners and the private sector to usher in a new era of meaningful use that will allow the health care system to harness the power of health IT to bring information to bear in new ways to improve care and transform the health care system. Building on meaningful use, the Plan also addresses how ONC and its federal partners will increase protections to ensure that electronic health information is kept private and secure, empower individuals with access to their electronic health information, and enhance the ability to study care delivery and payment systems. Over the past year, ONC has worked closely with its federal partners and the private sector (through the HIT Policy Committee, a Federal Advisory Committee) to update the Plan.

ONC welcomes the public to submit comments on the Plan through April 22, 2011, in order to better inform its strategy.

Oregon Public Utility Commission Approves CenturyLink-Qwest Merger

The Public Utility Commission of Oregon (PUC) issued an order approving the pending merger between CenturyLink and Qwest Communications. This is the final approval needed to complete the merger. The PUC conducted a substantive review of the transaction, including agreements on wholesale matters the companies reached with several competitive carriers in Oregon and other states. When the merger is completed, the combined company will serve about 800,000 access lines in the state. As part of the approval process, the companies committed to investing a minimum of $45 million in broadband infrastructure in Oregon over five years.

Publicly Owned Broadband Networks: Averting the Looming Broadband Monopoly

Quietly, virtually unreported on, a new player has emerged in the United States telecommunications sector: publicly owned networks.

Today over 54 cities, big and small, own citywide fiber networks while another 79 own citywide cable networks. Over 3 million people have access to telecommunications networks whose objective is to maximize value to the community in which they are located rather than to distant stockholders and corporate executives. Even as we grow ever more dependent on the Internet for an expanding part of our lives, our choices for gaining access at a reasonable price, for both consumers and producers, are dwindling. Tragically, the Federal Communications Commission has all but abdicated its role in protecting open and competitive access to the Internet. Now more than ever we need to know about the potential of public ownership. To serve that need the Institute for Local Self-Reliance has published an interactive Community Broadband Map that gives the location and basic information for existing city owned cable and fiber networks.

Emergency Access Advisory Committee

Federal Communications Commission
Friday, April 8, 2011
10:30 a.m. to 4:30 p.m. (EST)


March 19-25: Is There Anything Else to Talk About?

Our Headlines have been dominated all week by AT&T's proposal to buy T-Mobile USA for $39 billion -- so much so, you may ask, Is there really anything else to write about it? Not to be too redundant, here's a look at what we've been reading this past week. Ryan Chittum at the Columbia Journalism Review noted that early coverage of this deal has done a good job of emphasizing:

  • the bold consolidation the deal would entail,
  • a very distinct impression that this deal could be bad news for consumers, and
  • a bold test of just how weak antitrust enforcement has really gotten in the US.

AT&T and Deutsche Telekom announced the deal on March 20 just ahead of the US wireless industry's annual confab in Florida. AT&T would gain T-Mobile's 34 million wireless subscribers, network infrastructure and spectrum licenses (AT&T would increase its spectrum holdings by almost 60 percent.). Deutsche Telekom will get an approximately 8 percent (but no less than 5 percent) ownership interest in AT&T -- and a seat on AT&T's board. Here's the benefits the companies are promising from the deal.

March 19-25: Is There Anything Else to Talk About?

Our Headlines have been dominated all week by AT&T's proposal to buy T-Mobile USA for $39 billion -- so much so, you may ask, Is there really anything else to write about it? Not to be too redundant, here's a look at what we've been reading this past week. Ryan Chittum at the Columbia Journalism Review noted that early coverage of this deal has done a good job of emphasizing:

  • the bold consolidation the deal would entail,
  • a very distinct impression that this deal could be bad news for consumers, and
  • a bold test of just how weak antitrust enforcement has really gotten in the US.

AT&T and Deutsche Telekom announced the deal on March 20 just ahead of the US wireless industry's annual confab in Florida. AT&T would gain T-Mobile's 34 million wireless subscribers, network infrastructure and spectrum licenses (AT&T would increase its spectrum holdings by almost 60 percent.). Deutsche Telekom will get an approximately 8 percent (but no less than 5 percent) ownership interest in AT&T -- and a seat on AT&T's board. Here's the benefits the companies are promising from the deal.

1. A fast, efficient and certain solution to AT&T's impending exhaustion of wireless spectrum in some markets.

The Washington Post's Cecilia Kang wrote a smart piece on March 22 noting that this deal isn't about merging two telephone companies: "It's about building a bigger mobile network for accessing the Internet." She writes that many of the features of traditional mobile phone service are now available as free applications (think Skype) and, increasingly, "the biggest game in town is mobile Web access."

An interesting, contrarian view comes from research firm SNL Kagan which posits that the deal is more about scale than spectrum for AT&T. Kagan believes AT&T is trying to improve operational efficiencies and wireless fiscal performance. T-Mobile's spectrum holdings, Kagan observes, are in the less valuable higher frequencies of 1.8GHz or higher.

2. Deployment of AT&T's next generation wireless service to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans.

In pitching the deal this week, AT&T cited this benefit as matching the goals set forth by President Barack Obama and the National Broadband Plan. But industry analyst Dave Burstein points out that the US is on track to have 94% LTE coverage in 2013-2014. Verizon alone is committed to 92%. Since Verizon and other companies plan to continue deploying after that, it's almost certain the US in 2016 will be at 96%-98% without any government subsidy or merger approval.

3. Improved service for AT&T and T-Mobile customers.

The Financial Times reports that T-Mobile USA’s spectrum is particularly suitable for improving mobile services in urban areas, where the company has its highest concentrations of iPhone customers.

4. Spectrum efficiency, increasing capacity and output which is "the best way to ensure competitive prices and services".

Competition will be a major theme for both proponents and opponents of the deal. If regulators let the deal go through, AT&T (42 percent) and Verizon (31 percent) would control 73 percent of the nation’s cellphone market. Sprint, which lost $3.5 billion last year, would be a distant third place with about 16 percent. But it is hard to think of beleaguered Sprint as much of a competitor as it has racked up billions in annual losses over the past few years. Sprint's revenue has tumbled 20 percent from four years ago and its stock is down 84 percent from 2006. Effectively, you'll now have a two-company market, plus one company waiting to be sold off for its assets. It is hard to imagine that that won't result in higher prices for consumers.

5. $8 billion in AT&T infrastructure investment over seven years.

In January 2010, AT&T announced it would spend $18 billion to $19 billion on to improve wireless broadband service, spending twice as much on the wireless network as it did in 2009. AT&T's network is often maligned with complaints centered on service in New York City and San Francisco where use of iPhones is high.

In AT&T's conference call with analysts to pitch this deal, however, Chief Financial Officer Richard G. Lindner said the merger would allow AT&T to reduce future capital outlays.

6. An impressive workforce that taps into the knowledge and experience of both companies' employees.

As the US struggles to recover from the recession and lower unemployment rates, the potential loss of jobs will be a major part of the debate around the deal. The Communications Workers of America are early supporters of the deal. AT&T is the only national carrier with a unionized workforce and CWA sees the deal as a way of adding T-Mobile workers to the union. But public interest groups are concerned that the deal could mean thousands of layoffs.

"There will be hundreds, or even more, of empty storefronts in malls all over the country, and a lot of customer service representatives will lose their jobs," said Andrew Schwartzman, senior vice president and policy director at the Media Access Project.

Public Knowledge legal director Harold Feld predicted that "redundant" staff will get pink slips: "Outlet stores and customer service centers will be consolidated, as will work crews that maintain the networks. I do not know the precise numbers, but I would expect, based on previous mergers, that it will result in the loss of thousands of jobs."

7. Value for shareholders.

The deal will increases AT&T's total wireless revenues from $58.5 billion to $80 billion -- approximately 80 percent of AT&T's total revenues. AT&T has become more and more reliant on wireless revenues over the past few years. In 2008, Craig E. Moffett, an analyst with Sanford C. Bernstein & Company http://www.nytimes.com/2008/04/23/business/23phone.html?_r=1, told clients that he was concerned that the accelerating loss in AT&T's wireline business could destabilize the company, despite the growth in cellphone profit. “More than ever, wireless is AT&T’s engine,” Moffett wrote, “but wireline is its anchor. In 2009, GigaOm's Stacey Higginbotham http://gigaom.com/2009/05/07/wireless-scorecard-we-heart-data-edition/ noted that while overall subscriber growth at wireless carriers was staying pretty stable, wireless data revenue continued to climb. She pointed then at AT&T’s reliance on the iPhone. Back then, AT&T offered the iPhone exclusively. Just this past year, Verizon started offering iPhone services as well.

Bloomberg notes that AT&T is so determined to surpass Verizon Wireless that it’s willing to pay double its own valuation for the only US wireless operator losing customers. In T-Mobile USA, AT&T is getting a business that reported profit declines in four of the past five years as it trailed US rivals in building out a third-generation mobile network and missed out on sales of the iPhone. About 56,000 customers abandoned T-Mobile last year, while Verizon Wireless, AT&T and Sprint all boosted their subscriber counts. The $39 billion price tag is 28.8 times T-Mobile USA’s net income of $1.35 billion last year, according to data compiled by Bloomberg. T-Mobile USA’s earnings slipped 7.9 percent in 2010 as sales declined for a second straight year. The valuation was 121 percent higher than AT&T’s price- earnings ratio, 77 percent greater than Verizon and 5.3 percent pricier than Deutsche Telekom, data compiled by Bloomberg show. It’s also more than twice the median valuation of 11.9 times profit as of last week for 32 global cellular phone companies with market capitalizations of more than $1 billion, excluding those in Hong Kong or China. The purchase price represented a multiple of 7.1 times 2010 T-Mobile USA’s adjusted earnings before interest, taxes, depreciation and amortization, Deutsche Telekom said. That’s lower than the median Ebitda multiple of 9.3 for global telecommunications takeovers of more than $1 billion in the past five years.

8. Enhanced margin and long-term revenue growth potential.

AT&T has estimated an annual improvement in earnings before interest, taxes, depreciation and amortization of $3 billion, starting in the third year after the deal is completed. That comes from cost savings in areas like the companies' retail stores, advertising budgets, staffing and other administrative expenses. The cost-cutting opportunities will be great, but they point to the labor concerns noted above.

The Wall Street Journal also notes AT&T's hoped-for improvements in average revenue per user: T-Mobile contract users now generate $52 a month, well below AT&T's level of $62.57. AT&T's wireless margins are approximately 40% while T-Mobile's are just under 30%. AT&T also sees prospects for reducing T-Mobile's churn—the level of customers who switch out every year.

Tthere have to be questions about revenue synergies. Many people are on T-Mobile because it offers lower prices -- its price for an unlimited voice family package with two phones is $99.99 a month, compared with AT&T's $119.99.

AT&T says its synergies are achievable. It is offering to grandfather in T-Mobile customers' existing contracts, it will try to persuade them to upgrade to pricier plans by offering them better phones. For some, that might be attractive. But there is likely to be a good chunk of T-Mobile's 26.3 million customers on contract who defect, either before the deal closes or in the year or two afterward, to other cheap providers. Others might refuse to pay more. That would make it hard for AT&T to lift revenue per user as much as it wants to.

Although Deutsche Telekom CEO René Obermann and AT&T's Chairman and CEO Randall Stephenson are already meeting with officials at the Federal Communications Commission and making a public pitch to sell the deal, the paperwork needed to initiate the regulatory review of the deal will likely be filed in May. The FCC, the Department of Justice and the California Public Utilities Commission will be examining the deal. To follow the debate, keep reading Benton's Headlines. We've got all the coverage here or here for your RSS reader.


Subcommittee on Agriculture, Rural Development, FDA and Related Agencies
House Appropriations Committee
Thursday, March 31, 2011
10:15 am

Fiscal Year 2012 Rural Development

USDA Undersecretary for Rural Development Dallas Tonsanger will appear


March 25, 2011 (What's Good for AT&T is What's Good for...)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, MARCH 25, 2011

Here's a look at next week's agenda http://benton.org/calendar/2011-03-27--P1W/


AT&T|T-MOBILE (see all our coverage http://benton.org/headlines/at-t-t-mobile)
   FCC official: no way AT&T T-Mobile deal will go unaltered
   AT&T already pitching T-Mobile deal to FCC
   AT&T LTE Result on U.S. Coverage: ~ 0%
   70-90% of AT&T Spectrum Capacity Unused
   Lindner: AT&T's Backhaul +500% in 2011
   What's Good for AT&T Is Good for ... AT&T
   AT&T's Pitch for Free Mobile
   California to Review Proposed AT&T, T-Mobile Merger
   Analysis: AT&T mega merger bad sign for spectrum reform
   Handset Makers Stay Mum On Or Downplay AT&T/T-Mobile Deal
   Understanding the AT&T Takeover of T-Mobile
   Five Things Wrong with AT&T's Mega-Merger
   Quick Hits on AT&T/T-Mobile

MORE ON WIRELESS/SPECTRUM
   Spectrum fight: Mobile broadband vs. TV broadcasts
   What The Road To 4G Will Look Like
   Best Buy to offer 4G mobile broadband
   Swiping Is the Easy Part
   Carriers disagree over definition, metrics for embedded wireless
   Are Mobile Device Makers Finally Ready To Swear Off Carrier Subsidies

INTERNET/BROADBAND
   Rural Internet solution found
   Interview with Jonathan Adelstein on New $700 Million Broadband Program
   Pentagon seeks $3.2 billion for revised cyber budget
   The Facts and Fiction of Broadband Caps and Congestion

CONTENT
   Kerry Privacy Bill Could Impose 'Major' Obligations On Ad Networks
   Paying For Anything On The Internet? No One Is Really Buying -- Or Selling It -- Too Well Yet
   No Sharing Allowed
   USA Today rewrites strategy to cope with Internet
   Italian Ruling on Piracy Puts Websites on Notice

OWNERSHIP
   Walgreen to acquire online retailer drugstore.com for about $429 million
   Zell Fights to Avoid Legal Claims Over Tribune Buyout
   Brill Sells Fledgling Company Journalism Online

TELEVISION
   Television: Inflated assets
   CBS Proposes New Model for TV Planning and Buying Based on Viewer Behavior and Attitudes Instead Age and Sex
   Broadcast Losing Ground, Cable Gains
   TV Networks Cry Foul as Time Warner Cable Offers Channels via iPads at Home

GOVERNMENT & COMMUNICATIONS
   How China and Others Are Altering Web Traffic
   State Department official: Internet freedom work won't be rushed
   E-government fund could be cut, group warns
   Australian government bans free email services over security concerns
   Rep Issa wants details on FCC White House visits
   A New Tool For U.S. Intelligence: Google?

COMMUNITY MEDIA
   Defunding Public Media: Disaster Or Opportunity?
   Defunding Public Media Would Stifle Digital Innovation
   Publisher puts new limits on public libraries' e-books
   New Agendas for Media Literacy
   Blueskin Resilient Communities Trust

MORE ONLINE
   Survey: Teachers want more access to technology, collaboration
   Google launches Think Quarterly
   Attention to Japan's Earthquake Dominates Social Media
   A boom for those who cover Congress
   Telefónica reveals $14 billion Brazil investment plans

back to top

AT&T|T-MOBILE (see all our coverage http://benton.org/headlines/at-t-t-mobile)

FCC: DEAL WILL NOT BE UNALTERED
[SOURCE: electronista, AUTHOR: ]
An anonymous FCC official said that the proposed AT&T buyout of T-Mobile would very likely go through major changes if it were to be approved at all. He was careful to note the deal hadn't yet been under formal investigation but was confident FCC chair Julius Genachowski would either require conditions or ban the deal. The WSJ didn't learn which of the two was the more likely but was told a greenlight was a virtual impossibility. "There's no way the chairman's office rubber-stamps this transaction," the FCC staffer said. "It will be a steep climb to say the least."
benton.org/node/53882 | electronista | Wall Street Journal
Recommend this Headline
back to top


AT&T STARTS THE PITCH AT FCC
[SOURCE: Politico, AUTHOR: Eliza Krigman]
Deutsche Telekom CEO René Obermann and AT&T's Chairman and CEO Randall Stephenson met with Federal Communications Commission members Robert McDowell, Michael Copps and Meredith Attwell Baker on March 23. The telecom executives made an initial pitch for regulatory approval of the deal, according to a source close to the situation. Apparently, the CEOs came with some of their staff and appeared confident as if they were trying to create an air of inevitably. The US telecom giant plans to file its formal application for merger approval from the agency within roughly 30 days.
benton.org/node/53907 | Politico
Recommend this Headline
back to top


DEAL WILL NOT IMPROVE LTE DEPLOYMENT
[SOURCE: Fast Net News, AUTHOR: Dave Burstein]
[Commentary] AT&T says it will cover 46M more people with LTE by about 2015-2016 if allowed to swallow T-Mobile. That's about 95% of the U.S. population. (They probably would do about 95% anyway to keep up with Verizon, but that's a different story.) The net result in improved U.S. LTE coverage: 0%-2%, probably closer to 0%. The U.S. is on track to have 94% LTE coverage in 2013-2014. Verizon alone is committed to 92%. Since Verizon and other companies plan to continue deploying after that, it's almost certain the US in 2016 will be at 96%-98% without any government subsidy or merger approval. About 98% of the U.S. is covered by towers. LTE is 2x to 4x more efficient and cheaper than what's on the towers today, so it's reasonable to expect nearly all of them to be upgraded. As AT&T President Ralph de la Vega notes, LTE has "the best spectral efficiency at the lowest cost." CEO Stephenson says the schedule will be to cover about 80% by the end of 2013, which he believes is about as fast as practical. That's on track, with thousands of towers upgraded already and service beginning this year. That leaves AT&T about a year behind Verizon, scheduled for 92% in 2013. Randall says they will then work on the next 15% and apparently will reach 95% in 2015-2016. When AT&T reaches 95% in 2016, the country will likely be at 96-98%, with Verizon easily at 95% alone. Carrier coverage will likely be highly overlapped. They all seek population density, tower availability, and road coverage. So nearly all of T's 95% coverage will already be served by others. Burstein's guess is that AT&T will provide less than an additional 1% of coverage, and probably less than 1/2 of 1%, which will round down to 0%.
benton.org/node/53881 | Fast Net News
Recommend this Headline
back to top


AT&T'S UNUSED SPECTRUM CAPACITY
[SOURCE: Fast Net News, AUTHOR: Dave Burstein]
[Commentary] AT&T has enough spectrum today to deliver about 150 megabits from most towers, most of which deliver less than 10-12 because of backhaul. Some of the spectrum is also used for 2G voice, and can easily carry twice as much voice when AT&T switches to voice over LTE/IP. Some goes for 2G/3G data carrying a fraction of what the same spectrum carries with LTE. Across the vast bulk of the country, AT&T has plenty of spectrum not used at all right now. Upgrade inefficient uses and put the fallow spectrum to use, and AT&T can easily handle four times the current demand and probably ten times. More spectrum is a good thing, but engineers at AT&T, Verizon, and almost all the other big carriers are confident they can handle anything likely for years without breaking the budget. FCC sources tell Burstein there's a massive efficiency improvement possible if more carriers shared spectrum, but none were willing. AT&T Wireless & Cingular did a joint build in New York City that saved $100s of millions according to CFO Ron Dykes. AT&T and T-Mobile could do the same and get most of the spectrum advantage of the merger while staying independent.
benton.org/node/53879 | Fast Net News
Recommend this Headline
back to top


AT&T WIRELESS BACKHAUL
[SOURCE: Fast Net News, AUTHOR: Dave Burstein]
[Commentary] AT&T Chief Financial Officer Rick Lindner said, "We expect 65%, 70% of our traffic to be covered under fiber backhaul as we get towards the end of '11. We're in the low to mid-20s in terms of deployment currently." That kind of improvement could handle most, if not all, of AT&T's network capacity problems. The typical 3G cell site is today served with T-1's, often 4-5 T-1's with 6-8 megabit capacity. AT&T's fiber is based on Gig-E's, with 100 meg a typical provision. That's about a 13x increase for almost half the network, which represents about a 500% increase in total network capacity. That's on top of a 2-4x increase in the last two years, yielding a 2009-2012 increase in tower backhaul of probably 2,000%. The Gig-E's can be upped to 200 and 300 meg without any construction (i.e. very cheaply and quickly).
benton.org/node/53877 | Fast Net News
Recommend this Headline
back to top


WHAT'S GOOD FOR AT&T
[SOURCE: Bloomberg, AUTHOR: Brendan Greeley]
[Commentary] A talking point is a carefully constructed edifice, and no one builds an edifice without placing something behind it. On Mar. 21, the day after AT&T announced its intent to buy T-Mobile, three AT&T executives spoke to analysts on a conference call and converged on a set of terms. "Infrastructure," they said, and "investment," and "the President's wireless broadband goals." And they all agreed: A merger would bring high-speed LTE, or 4G, wireless access to 95 percent of the U.S. population. AT&T's purchase would offer unambiguous benefits to its shareholders and to those of Deutsche Telekom, the German former state monopoly that had been unable to fix T-Mobile, its underperforming U.S. wireless subsidiary. T-Mobile and AT&T use compatible technology, and the latter can more efficiently use the spectrum that would have soon proved inadequate for T-Mobile alone. It's a good fit, which means the real sport in this merger has never been in AT&T's hometown of Dallas or in Bonn, where Deutsche Telekom is based, but in Washington, where the Justice Dept. and the Federal Communications Commission must approve the merger. When the FCC looked at Comcast's purchase of NBCUniversal, the negotiations swung on network neutrality and conflicts of interest. This time around, look for one word: infrastructure. Before agreeing to anything, FCC Chairman Julius Genachowski should ask some pointed questions about this 95 percent. Where will it be rolled out? When? What average speed can users expect in each market? And he should get the answers in writing.
benton.org/node/53948 | Bloomberg
Recommend this Headline
back to top


AT&T'S PITCH
[SOURCE: Wall Street Journal, AUTHOR: Martin Peers, Liam Denning]
Deflation has truly arrived: Big, profitable companies are going for free. That is, at least, what AT&T is claiming in relation to its T-Mobile USA acquisition from Deutsche Telekom. AT&T says the $39 billion cost of the deal is more than offset by the present-day value of synergies. What are those synergies? AT&T has estimated:
An annual improvement in earnings before interest, taxes, depreciation and amortization of $3 billion, starting in the third year after the deal is completed. That comes from cost savings in areas like the companies' retail stores, advertising budgets, staffing and other administrative expenses.
Improvements in average revenue per user. (T-Mobile contract users now generate $52 a month, well below AT&T's level of $62.57.)
AT&T says its synergies are achievable, but there have to be questions about revenue synergies. Many people are on T-Mobile because it offers lower prices—its price for an unlimited voice family package with two phones is $99.99 a month, compared with AT&T's $119.99. AT&T will try to persuade T-Mobile customers'to upgrade to pricier plans by offering them better phones. For some, that might be attractive. But there is likely to be a good chunk of T-Mobile's 26.3 million customers on contract who defect, either before the deal closes or in the year or two afterward, to other cheap providers.
Even if AT&T hits targets, the net present value of $3 billion in annual synergies, after deducting $7 billion of up-front integration costs and using an 8% discount rate, is only $16.3 billion. AT&T, in its $39 billion-plus synergy calculation, is including capital expenditures that won't have to be made as a result of the integration of the two companies' cell networks. In addition, it is counting wireless spectrum that won't have to be acquired by either company. Unquestionably, the value of the deal is T-Mobile's spectrum, which will be particularly useful for AT&T as it rolls out the next generation of wireless technology, called LTE. So the deal has brought forward spending that would be necessary in the future. But whether AT&T really gets T-Mobile's existing cash flows for "free" is debatable. It depends on getting the deal through regulators without crippling concessions. And on holding on to T-Mobile's cost-conscious customers, while persuading some to pay more.
benton.org/node/53945 | Wall Street Journal
Recommend this Headline
back to top


AT&T DEAL WILL SLOW SPECTRUM REFORM
[SOURCE: Reuters, AUTHOR: Jasmin Melvin]
AT&T's $39 billion bid to buy Deutsche Telekom AG's T-Mobile casts doubt on the US government's ability to swiftly deliver policy to meet the booming demand for wireless services. Wireless companies have long lobbied for help to deal with what they see as a looming "spectrum crunch" as more consumers turn to mobile devices. AT&T -- the No. 2 U.S. mobile carrier often criticized for dropped calls and slow connection speeds -- is not waiting for government remedies intended to free up airwaves for mobile broadband to help it meet ever-growing demands for video and data. But the move could slow legislation needed to free up spectrum for auction to wireless carriers, a potential thorn in the Federal Communications Commission's agenda. "The way things work in Congress, there's competition for what issues get the lawmakers' time and resources," Medley Global Advisors analyst Jeffrey Silva said. Top lawmakers have already signaled an interest in scrutinizing the large-scale transaction. Paul Gallant, an analyst with MF Global, said AT&T's bid for T-Mobile puts a dimmer outlook on the likelihood of lawmakers moving spectrum legislation this year. But the "win-win-win outcomes" of incentive auctions freeing up airwaves, funding a public safety network and reducing the deficit will prompt lawmakers to act by 2013, Gallant predicted. A senior FCC official, who spoke on condition of not being named, said any potential shifting of existing spectrum among wireless companies does nothing to solve the fundamental problem of making more spectrum available to ease the crunch the wireless industry faces.
benton.org/node/53905 | Reuters
Recommend this Headline
back to top


QUICK HITS
[SOURCE: Public Knowledge, AUTHOR: John Bergmayer]
Interesting tidbits about the proposed purchase of T-Mobile by AT&T:
1) When Cingular bought AT&T Wireless, they were required to divest spectrum as a condition of having the deal approved. T-Mobile bought a lot of it. So AT&T will have to re-divest spectrum it had already divested -- or it will get to keep spectrum the Federal Communications Commission already found would give it too much market power.
2) House Republicans have gone on the record calling for strong antitrust oversight of the telecommunications market, as an approach they prefer to regulation. Will they continue to press for enforcement of the antitrust laws when it comes to this merger? Mergers like this one “potentially raise significant competitive concerns and often warrant scrutiny.” This is magnified when you consider how difficult it is to enter the wireless market, since you need to wait for the FCC to free up spectrum. There’s little chance that some wireless upstart will come out of nowhere and steal AT&T’s lunch money.
3) Pointing to regional carriers to prove the wireless market is competitive is laughable. Companies like Cellular South serve their customers very well. But T-Mobile by itself is bigger than every other small or regional carrier combined.
benton.org/node/53902 | Public Knowledge | AT&T/Cingular Opinion and Order
Recommend this Headline
back to top

MORE ON WIRELESS/SPECTRUM

SPECTRUM FIGHT TO HEAT UP
[SOURCE: USAToday, AUTHOR: David Lieberman]
It’s hard to imagine a debate that might stupefy more people than the one that’s brewing over government policies for airwave spectrum. But hang in there: The subject’s important. It’s also about to become hot. Everyone’s starting to realize that the 547 megahertz of spectrum that can be used for mobile broadband isn't enough to accommodate the burgeoning number of consumers and businesses falling in love with smartphones, tablet computers such as Apple’s iPad, and other wireless communications devices. “If we don't act, the (wireless) consumer experience will be very frustrating,” Federal Communications Commission Chairman Julius Genachowski said. “The congestion will be very significant.” That means more dropped calls, slower transmission speeds, dead zones — and potentially high prices, with the heaviest mobile service users paying the most. AT&T said this week that it agreed to pay $39 billion for T-Mobile to avoid getting caught in a spectrum crunch. And you'll probably hear a lot more about airwave policy as the federal government prepares to coax some spectrum from one of the most potent forces in politics: television broadcasters. They collectively control some of the biggest blocks of airwaves but don't want to lose their ability to transmit video over the air and for free.
benton.org/node/53943 | USAToday
Recommend this Headline
back to top


THE ROAD TO 4G
[SOURCE: paidContent.org, AUTHOR: Tom Krazit]
There are four major wireless carriers in the U.S. (for now) and they each have a slightly different definition of what it means to be 4G. Most of the confusion stems from the fact that there is no true recognized standard for the use of the 4G term, only an initial recommendation from the International Telecommunications Union that such networks be capable of providing 1Gbps (gigabits per second) download speeds to a person standing still holding a phone and 100Mbps to someone traveling on a train or in a car. An awful lot of hot air was spilled this week about the wireless industry’s role in creating innovation, but it’s true to a certain extent. Better, faster tools allow talented people to create things that have never been attempted and make existing things with promise but challenges finally make sense. The only word spoken more than 4G at CTIA was spectrum. It’s one thing to build out a network of fast cell towers, but it’s another to actually make sure they can transmit their signals. It’s one of the primary drivers behind the AT&T/T-Mobile deal and was a key talking point from both industry representatives like the CTIA’s Steve Largent and FCC Commissioner Julius Genachowski: more spectrum needs to be opened up to the wireless industry to continue this growth.
Ask the people at your carrier two or three times to show you exactly where their 4G coverage extends, and how fast their average—not peak—download and upload speeds are at the moment. There’s perhaps something to be said for future-proofing your phone or tablet, but it might be easier to wait until you know 4G coverage is strong in your area before taking the plunge. And start thinking about things you can't do on your mobile phone but can do on your PC because of the network connection, then figure out how to make them possible on a smaller screen with constrained battery life.
benton.org/node/53872 | paidContent.org
Recommend this Headline
back to top


CARRIER SUBSIDIES
[SOURCE: mocoNews.net, AUTHOR: Tom Krazit]
We’re beginning to see hints that mobile-device makers may be prepared to start weaning themselves off carriers handouts and pricing their products based on what they actually cost. What’s less clear is whether everyone -- not just Apple -- can be truly competitive and make enough money in the market without those juicy subsidies. So now, as challengers get ready to try and dent Apple’s runaway lead, do they need to accept heavy subsidies on 3G and 4G products in order to compete? The real question is what type of gross margin are those competitors willing to accept as they acknowledge that the amazing mobile growth of the past several years simply would not have happened without generous carrier subsidies that reduced the opening price of their wares, not to mention the heavy promotion as those carriers went about recouping their investment.
benton.org/node/53868 | mocoNews.net
Recommend this Headline
back to top

INTERNET/BROADBAND

RURAL INTERNET SOLUTION FOUND
[SOURCE: Reedsburg Times Press, AUTHOR: Ken Leiviska]
A little thinking outside the box will make it possible for the Reedsburg Utility to install fiber-optic Internet cable outside the city. A $5.2 million federal grant awarded to the utility in July was in jeopardy when bids to expand high-speed Internet to the rural northern third of Sauk County came in at more than $10 million. The project originally had been expected to cost $7.5 million, and the utility already had taken out a $2.3 million loan in August to supplement the grant. The Reedsburg Utility Commission approved moving forward with a plan to bid out rental contracts worth approximately $4 million to install the underground cables that provide wireless Internet. Superintendent Dave Mikonowicz said this measure will allow the utility to move forward on the project, which already has been delayed. The federal grant is part of the Department of Agriculture's Broadband Initiatives Program, funded by the American Recovery and Reinvestment Act.
benton.org/node/53911 | Reedsburg Times Press
Recommend this Headline
back to top


ADELSTEIN INTERVIEW
[SOURCE: Fighting the Next Good Fight, AUTHOR: Craig Settles]
A Q&A with the Department of Agriculture's Rural Utilities Services Administrator Jonathan Adelstein. RUS recently announced they’re hoping to make $700 million available for broadband projects through the agency’s Farm Bill Broadband Program. While not as substantial as the BIP program, nevertheless this is a sizeable enough payload to make a big difference in a fair number of communities. However, the actual money hasn't been appropriated yet, so RUS is doing a Notice of Solicitations of Applications (NOSA). NOSA = send us an application to hold your place in the queue so you get money when we get money. This is strictly a loan program, no grants involved. Big plus – it’s open to everyone including communities and public private partnerships. Other good news is that the baseline for what constitutes broadband is 5 Mbps symmetrical for wireline networks, and 3 Mbps symmetrical for wireless.
benton.org/node/53864 | Fighting the Next Good Fight
Recommend this Headline
back to top


BROADBAND CONGESTION
[SOURCE: GigaOm, AUTHOR: Eric Klinker]
[Commentary] AT&T recently announced the elimination of one of broadband Internet’s most prized features: unlimited use at a flat rate. While the trend toward metered bandwidth is not inherently pro-consumer, ISPs have staked out a singular public rationale: data caps are necessary to limit the consumption of “bandwidth hogs” in order to protect the network experience for everyone else. Such concepts are simplistic and easy to imagine. They are also completely wrong. In the fixed-cost network model (used by most ISPs here in the U.S.), there’s very little connection between raw consumption levels and the relative cost of serving consumers. The heaviest of users may often be the most profitable customers, depending on when they consume network resources. Wait. What? Heavy users are the most profitable? Yes. Because overall congestion, not individual consumption, is the single driver of network costs. It’s not the “how much” but the “when” that really matters. [Klinker is CEO of BitTorrent]
benton.org/node/53919 | GigaOm
Recommend this Headline
back to top

OWNERSHIP

WALGREEN BUYING DRUGSTORE.COM
[SOURCE: Associated Press, AUTHOR: ]
Drugstore operator Walgreen said it will spend about $429 million to buy online retailer drugstore.com in a deal that gives it access to 3 million online customers. The largest U.S. drugstore operator will give drugstore.com shareholders $3.80 in cash for each share of stock — more than double the $1.79 closing price of drugstore.com’s stock on Wednesday. In early trading Thursday, the stock jumped $2 to $3.79. The acquisition will add about 60,000 products to Walgreen’s online offerings, and the Deerfield (IL) company said it will significantly speed up its online strategy. Drugstore.com’s websites include Beauty.com, SkinStore.com and VisionDirect.com. Walgreen, like most retailers, is trying to develop an online presence, something that is imperative going forward, said Scotia Capital analyst Patricia A. Baker.
benton.org/node/53866 | Associated Press
Recommend this Headline
back to top

TELEVISION/RADIO

TELEVISION ECONOMICS
[SOURCE: Financial Times, AUTHOR: David Gelles, Andrew Edgecliffe-Johnson]
From France to Mexico, televised sporting events are drawing unprecedented audiences, transforming the fortunes of networks that have sports rights. In the US, where the economic downturn and growing digital competition were weighing on viewing figures and advertising revenues just a year ago, this drove double-digit growth in networks’ profits in the fourth quarter. “Broadcasting right now . . . is about event television, live television, sports events,” Jeff Zucker, former chief executive of NBC Universal, the US network owner, told the Financial Times digital media conference this month. “That’s what is really attracting . . .the real eyeballs and the real advertising dollars.” Zucker warns that, for networks, sports rights could be growing too costly. Media revenues now account for 35 per cent, or €16bn ($23bn), of a €45bn global sports market that has averaged 6 per cent annual growth since 2005, according to Lagardère, the French media group. “The biggest fear I have is that those new fees [paid by cable and satellite operators to networks] will be taken in and just given to the sports leagues, and that kind of defeats the purpose,” he says. Yet, even as sports boost networks in an increasingly competitive media marketplace, the rising cost of securing rights to broadcast live events is threatening the basic economics of the industry.
benton.org/node/53936 | Financial Times
Recommend this Headline
back to top


CBS PROPOSES NEW TV AD MODEL
[SOURCE: AdAge, AUTHOR: Jack Neff]
Age and sex don't matter when it comes to TV ad effectiveness, said CBS Corp. Chief Research Officer David Poltrack, who has teamed with Nielsen to create what he called a historic move to replace demographics with a new model for TV planning and buying, based on viewer behavior and attitudes. The proposed model is a better predictor of what people buy and what makes them buy than demographics ever were, Poltrack said in a speech to the Advertising Research Foundation's Re:Think 2011 conference in New York. A growing amount of data that matches audience measurement with purchase information shows that using demographics to target commercials is "essentially invalid," he said, "resulting in a misallocation of television advertising investments." Although CBS paid for the extensive research and analysis used to create the new model, the data and analytics surrounding it will be available to all Nielsen clients, including CBS rivals, Poltrack said, "in the spirit of open source." Various parts of Nielsen pitched in, including recently acquired consulting firm Cambridge Group and Nielsen Catalina Solutions, a joint venture that combines data from Nielsen's TV, set-top box, consumer and online panels with Catalina Marketing's shopper loyalty-card purchase data. CBS is also running a series of experiments with advertisers to fine-tune the system, Poltrack said. CBS purchased Nielsen Catalina data for 20 categories in health and beauty, household, pet and food products and has studied 15 of them in depth so far. The data confirmed what other smaller studies have shown in the past, according to Mr. Poltrack: "There is no link, none, between the age of the specified demographic delivery of the campaign and the sales generated by that campaign."
benton.org/node/53860 | AdAge
Recommend this Headline
back to top

GOVERNMENT & COMMUNICATIONS

NEW ISSA LETTER
[SOURCE: The Hill, AUTHOR: Gautham Nagesh]
House Oversight Chairman Darrell Issa (R-CA) wants to know if top Federal Communications Commission officials were discussing network neutrality with the White House while formulating their rules, and how much the White House may have been directing the conversation. Chairman Issa wrote to FCC Chairman Julius Genachowski asking as much. In the letter, Chairman Issa informs Chairman Genachowski that his previous response to inquiries on the topic were incomplete, and asks for full records and logs of all meetings. "In the fourteen months since my initial request, the FCC has done little to demonstrate its independence from the White House," Chairman Issa wrote, noting Chairman Genachowski made 81 visits to the White House in less than two years — between January 2009 and November 2010 — according to White House records. "The large volume and timing of the meetings gives the appearance that they are more than coincidental. As such, the Committee requires more information about the nature and substance of these discussions," Chairman Issa said. In addition to a list of all participants and topics discussed at the meetings, Chairman Issa requested all e-mails between White House staffers and the FCC regarding the controversial network neutrality rules, which House Republicans recently voted to repeal. Chairman Issa's requested a reply by Wednesday, April 6.
benton.org/node/53923 | Hill, The | B&C
Recommend this Headline
back to top

COMMUNITY MEDIA
These headlines presented in partnership with:


DEFUNDING PUBLIC MEDIA
[SOURCE: National Public Radio, AUTHOR: Jim Zarroli]
Over the years, conservatives have often tried to eliminate money for public broadcasting — without succeeding. In 1995, for instance, congressional Republicans tried to zero out funding for the Corporation for Public Broadcasting. Within a few years, its budget was bigger than ever. This year Congress gave $430 million to CPB, most of which was funneled to public TV and radio stations. And Republicans are once again calling for funding to be eliminated. Pat Butler of the Public Media Association, which lobbies for PBS and public radio, says the odds against public broadcasting are greater this time. "There is a $1.6 trillion federal budget deficit that there wasn't in 1995. There is a much larger and more diverse media universe than there was in 1995," he says. With the proliferation of new media outlets in television and online it's tougher for public broadcasting to argue that it's indispensable. In this climate, the defunding effort is gaining steam, and Butler says people need to understand what's at stake if CPB money is gone. "The first thing that would happen is that hundreds of local public television and radio stations would go dark almost immediately," he says. "Many of the 21,000 jobs that are represented in public broadcasting would just disappear." The stations most at risk are small rural outlets.
benton.org/node/53909 | National Public Radio
Recommend this Headline
back to top

© 1994-2024 Benton Institute for Broadband & Society. All Rights Reserved.