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April 2011

It’s Time to Realize Our Location Concerns Aren't Dumb

Steve Jobs may have tried to bat away concerns over the iPhone’s location data collection, but if you ever need a reminder why holding such information is something for public concern then look no further than Dutch navigation company TomTom.

It’s trying to weather the storm that has engulfed it since it emerged that the company was selling data about driving activity to police and local authorities. It’s anonymized data, but unsurprisingly, plenty of users are angry their movements have been used in this way, without their knowledge — something that happened, apparently, because personal navigation device makers are under pressure to keep up revenues as users started switching to GPS-enabled phones. TomTom CEO Harold Goddijn apologized, but there’s something about the apology that’s patronizing. TomTom doesn't really say selling its customers’ data is wrong, but that it was caught is uncomfortable.

Craig Newmark: Media Is the Immune System of Democracy

One of the themes of the Activate conference, put on by The Guardian Media Group at the Paley Center in New York on Thursday, was the power of the networked world — including what Guardian Editor-in-Chief Alan Rusbridger calls a “mutualised” or networked media — to change society for the better.

In a panel on that topic, Craigslist founder Craig Newmark talked about his views on the importance of a free and open media industry, which he called the “immune system of democracy,” and Harvard law professor Lawrence Lessig talked about his efforts to fight corruption in government with a web-based project he calls “Rootstrikers.” Newmark talked about how important a free and “verified” press was to a democracy. The man who some newspaper publishers have accused of destroying their business models by taking away classified revenue, also said what the media needs more of is “the traditional journalism ethics of fact-checking and the separation of advertising and editorial.” Newmark said he is working with the Center for Public Integrity to create crowdsourced networks of fact-checkers and curators.

Lessig, meanwhile, gave an impassioned presentation that approximated spoken-word poetry at times, painting a picture of the revolutionary fervor that accompanied the formation of the U.S. republic in 1776, and how that original vision has been corrupted by money and powerful vested interests. Lessig said his new effort to collect stories and information about corruption, called Rootstrikers, gets its name from a quote by Henry David Thoreau, who said that “there are a thousand hacking at the branches of evil to one who is striking at the root.”

What Do You Do Online? Commerce Wants to Know

The census supplement that's been tracking Americans' Internet use since the late '90s will begin probing deeper with the 2010 results due out later this year, asking how Americans spend their time online and what they pay for it, Commerce Economist Beethika Khan told colleagues.

If analog Americans cite the prohibitive cost of accessing the Internet, for example, the survey will ask if it's the fixed cost of buying a computer that's kept them offline or the recurring cost of broadband access, she said. The most commonly cited reason for staying offline in the 2009 supplement was that responders hadn't found anything on the Internet that interested them, Khan said. Americans who don't use the Internet tend to be older and more rural and are more likely to be black or Hispanic than white or Asian, according to a study prepared by Khan's office using the 2009 CPS data. According to that study, 64 percent of American households had Broadband access in 2009 and 5 percent used dial-up modems. Another 8 percent of households didn't have Internet access at home but used it outside the home and 23 percent didn't use the Internet at all, the report said.

Proposed Rules Guide States on Managing Student Privacy

Proposed changes to federal privacy rules likely to take effect this summer couldn't be more timely for education systems: They offer first-time guidance on managing student privacy in using longitudinal education data just as states and districts put the finishing touches on federally mandated data systems.

The rules would guide education officials on the delicate task of how to make use of these data systems, while also holding researchers and others responsible for protecting the information they use. Under grants received through the American Recovery and Reinvestment Act, states have until Sept. 30 to complete comprehensive longitudinal-data systems that can trace a student’s academic career from preschool through college. Experts say the linked data will be an unprecedented boon both to researchers and educators looking to pinpoint academic problems and successes.

EFF: We need an Open Wireless Movement

Would the world be a better place if open Wi-Fi was embraced by the masses? The Electronic Frontier Foundation thinks so and is looking for new open Wi-Fi security and privacy solutions, as well as making a case for why we need an open wireless movement.

What happens if you need to find an open wireless network? For instance, what if your mobile phone isn't working but you are lost in a strange place and need a map, or have an urgent need to access email to contact family in an emergency, or even need to meet a deadline? What if it's not an emergency at all, but simply a new Wi-Fi outlook that would ensure many people have opened their Wi-Fi networks? Then you could watch a high definition movie or make a video call anywhere without needing wires.

Twitter Gets Hit With Bizarre Class Action Lawsuit Over Unsolicited SMS Notifications

Two California residents, Drew Moss and Sahar Maleksaeedi, have filed a rather peculiar class action lawsuit against Twitter. Basically, they’re suing over the fact that Twitter sent a confirmatory SMS to their cellphone after they themselves used an SMS command (‘STOP’) meant to turn off all phone notifications.

The two men allege that Twitter has engaged in unlawful conduct by contacting them on their mobile phones without their consent, which they say is a violation of the Telephone Consumer Protection Act of 1991 (TCPA) and an invasion of their privacy. Moss and Maleksaeedi say an “automatic telephone dialing system” was employed to deliver the confirmatory message, and that they incurred a charge for incoming calls as a result. This is illegal, the two men claim, because the message in question was not sent for emergency purposes and without prior consent given. According to the lawsuit documents, Moss and Maleksaeedi seek up to $1,500 in damages for each call in alleged violation of the TCPA, which, when aggregated among a proposed class number in the “tens of thousands”, would exceed the $5 million threshold for federal court jurisdiction. The suit is expressly not intended to request any recovery for personal injury.

April 23-29: News of the Wedding

No, not that wedding. The merger we telecommunications wonks care about will join the houses of AT&T and Deutsche Telekom AG/T-Mobile. On April 21, the bride and groom filed applications seeking the Federal Communications Commission’s consent to the transfer of control of the licenses and authorizations held by T-Mobile USA and its wholly-owned and controlled subsidiaries from Deutsche Telekom to AT&T. Since then there's been lots of analysis of the deal as well as some procedural maneuvers.

The Benton Foundation has set up an online home to track the regulatory review of the deal. There you'll find a brief description of the deal as described by AT&T, links to events where the deal will be considered (see, for example, an upcoming Senate hearing), important dates in the review, and links to the many, many Headlines about the deal we've summarized since it was announced. This page will be constantly updated over the next year or so, so come back often.

Mike Zapler and Brooks Boliek wrote an interesting piece for Politico last week saying the deal is both a big risk and possibly a big opportunity for President Barack Obama. The risk: allowing a deal that could, in time, leave Americans with just two choices for cellphone providers. The potential opportunity: extending high-speed wireless to virtually the entire country, which AT&T has promised if the deal goes through. The political implications don't end there: Blocking the acquisition would mean alienating a stalwart member of the business community. Approving it, critics warn, could lead to steep layoffs as the two phone companies merge overlapping operations. Those tensions lie at the heart of what's shaping up as one of Washington's fiercest regulatory and lobbying battles in recent memory.

In this light, let's weigh some of the arguments for the deal. AT&T claims the transaction will:

  • create immense network and spectrum synergies that will alleviate the capacity constraints that the applicants would otherwise be left to address, far less efficiently and effectively, on their own
    • increase capacity, enhance efficiency in the use of scarce spectrum resources, and significantly improve quality of service
    • increase total industry output and thus produce lower prices than would prevail in the absence of the transaction,
  • give the combined company the scale, resources, and spectrum it needs to increase its LTE deployment from AT&T’s current plans of 80 percent of Americans to more than 97 percent
    • this initiative will increase jobs and investment, particularly in rural areas, and enhance US global competitiveness and leadership in mobile broadband services,
  • promote America’s global leadership in mobile broadband innovation, and
  • enhance our country’s disaster preparedness and recovery capabilities.

In the filing, AT&T also talked up the nation’s second-tier and regional wireless carriers. The praise is hardly intended as flattery but is a critical element of AT&T’s strategy to persuade federal antitrust officials that the acquisition T-Mobile of will not harm competition in markets across the country.

AT&T CTO John Donovan said this week that the deal will spur, rather than squelch, innovation. The United States Distance Learning Association and The Latino Coalition both filed supportive statements at the FCC. Mark Lowenstein, in commentary for FierceWireless, writes that consumers are willing to sacrifice choice and some market competitiveness to get a better network now.

But, as during many weddings, the officiant will pause to ask if there is any reason why the two parties should not be brought together. The FCC did that this week, setting a pleading cycle for the proposal.

Los Angeles Times columnist David Lazarus sought help seeking the potential consumer benefits of the deal. He spoke with free-enterprise-minded economists who might be able to elaborate on the AT&T's position:

  • James Gattuso, a senior research fellow at the Heritage Foundation, compared a wireless market dominated by AT&T and Verizon to a soda market dominated by Coke and Pepsi. "There's still room for other providers," he said.
  • Douglas Holtz-Eakin -- president of the American Action Forum, a conservative think tank -- said the FCC should greenlight the merger and see what happens. If fixes are needed, he said, they can be made once any problems become clear. "I haven't seen anything yet that says this deal will be demonstrably bad for consumers."
  • AT&T paid a trio of economists affiliated with a consulting firm called Compass Lexecon for an analysis of the acquisition; they concluded that the deal will "promote competition by enabling the merged firm to achieve engineering-based network synergies that increase network capacity beyond the levels that AT&T and T-Mobile USA could achieve if the two companies continued to operate independently. Those synergies, they say, will create incentives to improve wireless service. For that reason, the merger "will not result in harm to consumer welfare."

AT&T, it seems, would prefer regulators not take into consideration any other pending or potential deals in the wireless marketplace. On April 27, public interest groups urged the FCC to group together the review of AT&T’s proposed acquisition of T-Mobile and AT&T’s acquisition of spectrum from Qualcomm. The point, the groups said, is to show that if both mergers are complete, AT&T will disproportionately own too much 3G and 4G radiowaves and give it too much advantage over other carriers. The mergers “would further empower an already dominant wireless carrier to leverage its control over devices, backhaul, and consumers in ways that stifle competition,” Free Press, Media Access Project, Public Knowledge, Consumers Union and the Open Technology Initiative of the New America Foundation said. “As with other mergers, the competitive impact of the two transactions in combination may be even greater than the impact of each separately.” AT&T quickly replied that the reviews should remain separate.

Martin Peers wrote in the Wall Street Journal about the spectrum AT&T will gain through the deal -- and the very real possibility that approval of the deal could mean Verizon would buy Sprint. There's no doubt T-Mobile would help AT&T better cope with rising data volumes in coming years. But the same logic would suggest future mergers will be necessary as other carriers confront capacity constraints. Unless regulators want to end up with a duopoly, they need to draw the line somewhere. Approval of this deal without huge divestitures, Peers writes, arguably would be rewarding AT&T for its missteps -- including technology choices and lack of investment in its network. Instead, regulators should redouble their efforts to free up extra spectrum from sources such as broadcasters ahead of the inevitable crunch for all wireless operators.

Peers isn't the first to suggest a Verizon-Sprint combination. Connected Planet's Kevin Fitchard wrote that “If Verizon really wanted to kill this deal, it would only have to say it was buying Sprint.” Could regulators allow an AT&T-T-Mobile deal to pass, but deny a Verizon-Sprint tie-up? Could regulators really allow the creation of two such giant behemoths in the wireless market?

Sprint has been a much more vocal critic of the AT&T|T-Mobile deal. The Kansas City Star reported that the company is signing up lobbyists to man its barricades and standing in alliance with consumer groups. The ramped-up lobbying charge would serve Sprint in two ways even it fails to stop the merger. First, lobbyists could push regulators to demand a larger sell-off. Second, it could give Sprint insight about, and perhaps influence over, what clusters of subscribers and spectrum land on the auction block. Sprint is one of the first parties to seek FCC permission to review confidential documents filed as part of transaction. In a document filed April 25 with the FCC, outside attorneys for Sprint signed confidentiality agreements in advance of possibly gaining access to filings that won't be available to the public. In public copies of its April 21 application filed with the FCC, AT&T omitted information it considered confidential, such as details of its service limitations and geographical market share. Sprint wants to be able to view the complete filings available to FCC staff. In that filing, AT&T essentially admits that its network wasn't ready for the iPhone, and won't be able to handle new smartphones and tablets as they come on board. Of course, AT&T didn't have great things to say about T-Mobile , either:

  • "T-Mobile is not an important factor in AT&T’s competitive decision-making."
  • "As a standalone company, however, T-Mobile USA would continue to face substantial commercial and spectrum-related challenges. It confronts increased competition from industry mavericks such as MetroPCS, Leap, and others; its percentage of US subscribers has been falling for nearly two years; and it has no clear path to LTE."
  • "T-Mobile USA, in contrast to others, does not have a differentiated network position. T-Mobile USA has admitted that it suffered from its late transition to a 3G network, and unlike Sprint, which first promoted a 4G network, T-Mobile USA’s HSPA+ launch appears to have been lost among other carriers’ 4G messaging."
  • "AT&T does not believe that T-Mobile USA has a particularly compelling portfolio of smartphone offerings as compared to AT&T, Verizon, and Sprint."
  • "To the extent that T-Mobile USA’s prices are lower than those received by AT&T and Verizon Wireless for otherwise comparable subscribers, T-Mobile USA’s lower prices have not stimulated growth in its share of retail subscribers. This indicates that other aspects of T-Mobile USA’s service are in some way lacking."

Art Brodsky at Public Knowledge likened AT&T's filing to science fiction. This world's AT&T is a colossus. It spends about $2 billion a year on ads to persuade everyone to "rethink possible" with its fabulous 4G network on which "sparks fly faster." The company's commercials boast that it covers 97 percent of all Americans. Its financials are as solid as a company's financials can get. Look at their first quarter numbers. The company made 57 cents per share, contrasted with 41 cents a year earlier. It collected $31.2 billion in revenues, up $700 million from the first quarter a year ago. There were "best ever" increases in wireless customers, smartphone sales, device adds, while the revenue per subscriber keeps going up and up for the ninth straight quarter. Wireless revenue was up almost 24 percent, which translates into about $1 billion. Broadband connections are up, business revenue is up. Dividends are getting paid. Yet the AT&T depicted in the FCC filing seems to be another company entirely. It faces "a growing capacity crunch." AT&T continued: "Absent a solution to this problem, AT&T’s customers would face a greater number of blocked and dropped calls as well as less reliable and slower data connections. And in some markets, AT&T’s customers would be left without access to more advanced technologies." This dire state of affairs is made more mysterious because AT&T declined to make public where it is having the most difficulty.

Chris Ziegler says some will argue for AT&T's purchase of T-Mobile because it has the potential to unify compatible spectrum in an open, fair way that encourages manufacturer participation and shifts control from operators to consumers. But the success of this plan hinges on a flawed foundation, which is that Americans are willing to pay $500 for their phones as a matter of course. They’re not. American carriers have trained us far too well into believing that a cheap phone should be free, and an awesome phone should generally be $150 to $250. So who blinks first? Carriers aren't about to remove subsidies from the devices they sell directly, of course — contracts and cheap hardware are key to keeping churn low from quarter to quarter. Manufacturers sporadically try to rage against the machine by offering their own pure, clean devices outside the carrier ecosystem, and they do so with very little success.

As we noted in today's Headlines , Congress is returning to DC so there's a busy agenda. No honeymoon for us, we'll see you next week.

April 29, 2011 (Pleading Cycle Set for Review of AT&T's Acquisition of T-Mobile)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, APRIL 29, 2011

Congress returns next week. Preview of the agenda below and more at http://benton.org/calendar/2011-05-01--P1W/


AT&T|T-MOBILE
   Pleading Cycle Set for Review of AT&T's Acquisition of T-Mobile
   Spectrum of Choices Confront AT&T Review - analysis
   With AT&T's proposed takeover of T-Mobile, consumer and market benefits are an illusion - analysis
   Sprint would be ‘marginalised’ by AT&T deal [links to web]
   The Latino Coalition Backs AT&T's Acquisition of T-Mobile - press release [links to web]
   Distance Learning Association Backs AT&T's Acquisition of T-Mobile - press release [links to web]

INTERNET/BROADBAND
   Study questions federal spending on broadband

UNIVERSAL SERVICE REFORM
   FCC Probes Industry on USF Modernization
   Carriers spar over FCC’s plans for USF
   Sparks fly at FCC Universal Service reform workshop [links to web]

PRIVACY
   Wireless carriers: Apps are privacy threat
   Wrapping Up the Apple Location Brouhaha
   Google Sued For Android Location-Tracking [links to web]
   Suit charges Sony breach caused by poor security [links to web]

MORE ON WIRELESS/SPECTRUM
   FCC: We must not study spectrum issue 'to death' [links to web]
   Smartphones make up majority of cellphone sales for first time in last quarter [links to web]
   Verizon finds cause of LTE outage [links to web]
   Soon All Shoppers Will Be Mobile Shoppers - op-ed [links to web]
   Poll: 62% of Consumers Feel Their Smartphone Is Obsolete [links to web]
   7 Technologies to Solve the Spectrum Crisis - analysis [links to web]
   Is LTE really better than another 4G flavor? - analysis [links to web]
   Sprint ARPU jumps--is WiMAX the reason? [links to web]
   What 44 Billion Mobile App Downloads by 2016 Means - analysis [links to web]
   Cable Company iPad Apps Are Killing It [links to web]

ADVERTISING/MARKETING
   Interagency Working Group Seeks Input on Proposed Voluntary Principles for Marketing Food to Children - press release
   Seven Legal Issues That Agencies Should Be Thinking About in 2011 [links to web]
   Study: Social media has little impact on online retail purchases [links to web]

EDUCATION
   Consultant to NY City Schools Stole Millions

HEALTH
   HRSA announces $12 million rural health IT grant program [links to web]
   NeHC aims to engage consumer with health IT [links to web]
   The Rise of Social Media & Participatory Medicine - editorial [links to web]
   Healthcare Organizations Release Updated Guide to e-Prescribing [links to web]

AGENDA
   Senate Hearing on Mobile Consumer Protection and Privacy - press release [links to web]
   Senate Commerce Committee Hearing To Include Incentive Auction Bill [links to web]
   Chairman Issa to grill White House on Twitter, Facebook messages [links to web]

POLICYMAKERS
   Sun, Grace Top FCC's New Communications Team [links to web]
   Comcast Hires Former FCC Commissioner Rachelle Chong [links to web]

MORE ONLINE
   Are we talking "cyber war" like the Bush Administration talked WMDs? - analysis [links to web]
   Sources: Federal Trade Commission likely to lead any Google probe [links to web]
   In tough economy, Hollywood stars make novel arguments for arts funding [links to web]
   Pulitzer, Elisabeth Sladen Lead the Blogs - research [links to web]
   Big Newspaper Chains Still Hurting [links to web]
   Trying to Stir Up a Popular Protest in China, From a Bedroom in Manhattan [links to web]

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AT&T|T-MOBILE

COMMENT SCHEDULE FOR AT&T/T-MOBILE COMMENTS
[SOURCE: Federal Communications Commission, AUTHOR: ]
On April 28, the Federal Communications Commission released a schedule for the public to comment on AT&T's proposed acquisition of T-Mobile. Petitions to Deny the merger are due Tuesday, May 31, 2011. Oppositions to those petitions are due Friday, June 10. Replies to those filings are due Monday, June 20.
To allow the FCC to consider fully all substantive issues regarding the Applications in as timely and efficient a manner as possible, petitioners and commenters should raise all issues in their initial filings. New issues may not be raised in responses or replies. A party or interested person seeking to raise a new issue after the pleading cycle has closed must show good cause why it was not possible for it to have raised the issue previously. Submissions after the pleading cycle has closed that seek to raise new issues based on new facts or newly discovered facts should be filed within 15 days after such facts are discovered. Absent such a showing of good cause, any issues not timely raised may be disregarded by the FCC.
benton.org/node/57375 | Federal Communications Commission
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SPECTRUM OF CHOICES
[SOURCE: Wall Street Journal, AUTHOR: Martin Peers]
As regulators begin their review of AT&T's proposed purchase of T-Mobile USA, they should consider that approval might logically mean letting Verizon Wireless buy Sprint Nextel one day. That might sound counterintuitive, given the T-Mobile deal would reduce the number of national operators from four to three and remove a low-priced competitor. But the deal is all about wireless spectrum. With data usage exploding, AT&T said in a filing with the Federal Communications Commission last week that it was using up its spectrum "at an accelerating rate." The deal would lead to more efficient use of spectrum, it said. Otherwise, AT&T and T-Mobile customers will see more dropped calls and slower data speeds. All carriers eventually will face capacity constraints. AT&T, though, faces a more immediate crunch, thanks partly to its early offering of the data-heavy iPhone. But AT&T already has more spectrum than its closest rival, Verizon Wireless. On average in the top 20 markets, AT&T has about 100 megahertz, including spectrum it has agreed to buy from Qualcomm, while Verizon has about 90, estimates Spectrum Management Consulting. T-Mobile has about 55, so the deal could give AT&T as much as a 60% spectrum advantage over Verizon. Is that necessary? AT&T hasn't begun to use about a third of its spectrum, even excluding Qualcomm's. It is reserving this extra spectrum, an average of 30 MHz in the top 20 markets, for its next-generation LTE network. That new network will help meet exploding demand for wireless broadband. So why hasn't AT&T rolled out LTE, when Verizon launched its LTE network last December? If AT&T had moved faster, it would have begun to reduce the strain on its 3G network by shifting some heavy data users off it. Similarly, there is a question of whether AT&T has invested aggressively enough. Given its congestion problems, AT&T should have spent significantly more. There's no doubt T-Mobile would help AT&T better cope with rising data volumes in coming years. But the same logic would suggest future mergers will be necessary as other carriers confront capacity constraints. Unless regulators want to end up with a duopoly, they need to draw the line somewhere. Approval of this deal without huge divestitures arguably would be rewarding AT&T for its missteps. Instead, regulators should redouble their efforts to free up extra spectrum from sources such as broadcasters ahead of the inevitable crunch for all wireless operators.
benton.org/node/57400 | Wall Street Journal
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CONSUMER BENEFITS AN ILLUSION
[SOURCE: Los Angeles Times, AUTHOR: David Lazarus]
AT&T says its $39-billion acquisition of T-Mobile would be good for consumers. In a nearly 400-page filing with the Federal Communications Commission, AT&T essentially argues that bigger is better when it comes to wireless service. James Gattuso, a senior research fellow at the Heritage Foundation, compared a wireless market dominated by AT&T and Verizon to a soda market dominated by Coke and Pepsi. "There's still room for other providers," he said. Sure, I just can't get enough Royal Crown Cola. Similarly, Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank, said the FCC should greenlight the merger and see what happens. If fixes are needed, he said, they can be made once any problems become clear. "We need vigorous competition — no one disputes that," said Holtz-Eakin, a former economic advisor to President George W. Bush. "But I haven't seen anything yet that says this deal will be demonstrably bad for consumers." Unless, that is, you count the disappearance of the country's fourth-largest wireless company and its focus on offering plans that are cheaper than AT&T's and Verizon's packages. For me, the real heart of AT&T's filing with the FCC is an ostensibly unbiased analysis of the merger by a trio of economists affiliated with a consulting firm called Compass Lexecon. "We conclude that the proposed transaction will promote competition by enabling the merged firm to achieve engineering-based network synergies that increase network capacity beyond the levels that AT&T and T-Mobile USA could achieve if the two companies continued to operate independently," they write. Those synergies, they say, will create incentives to improve wireless service. For that reason, the merger "will not result in harm to consumer welfare." What the economists neglect to mention, but AT&T acknowledged, was that AT&T paid them for their insights. By AT&T's logic, this would be even better for consumers. By AT&T's logic, we'd actually be much better off if there was only one dominant wireless provider. This would allow for the most efficient use of resources while providing consumers with the best service at the lowest price. Impossible to believe? Not with a little practice.
benton.org/node/57399 | Los Angeles Times
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INTERNET/BROADBAND

NCTA STUDY
[SOURCE: USAToday, AUTHOR: Jonathan Ellis]
More coverage of a study commissioned by the National Cable & Telecommunications Association, an industry trade group, which concludes that the federal government, through the broadband stimulus program at the Department of Agriculture, is subsidizing some companies to compete against others that didn't receive subsidies. The study evaluated projects in Kansas, Minnesota and Montana. "They were successful in getting Uncle Sam to subsidize them and make it cheaper to compete against their cable company competitors," said Jeffrey Eisenach, an author of the study who is an adjunct professor at George Mason University School of Law. One project is in Lake County, Minn., a remote county that borders Canada. Sponsored by the county government, the Lake County Fiber-Optic Telecommunications Project got $66.4 million in loans and grants. Initially, the project didn't receive funding because it didn't have enough customers. So officials expanded the project area to include two towns, Ely and Babbitt, in neighboring St. Louis County, according to project manager Jeff Roiland.
Midcontinent Communications already services the two towns, and officials at the company were surprised when the Lake County project entered their service area.
"Are customers getting a better deal?" asked Tom Simmons, the senior vice president of public policy at Midcontinent. "Is their ability to have a choice of providers worth the money the government spent?"
Jonathan Adelstein, the administrator for Rural Utilities Service, said the stimulus awards were fair and open, and they were for projects that lacked broadband for rural economic development.
House Republicans have questioned the program, noting that all of the awards had to be issued by Sept. 1, 2010, while the National Broadband Map, which charts broadband availability, wasn't published until this past February.
But Larry Sevier, CEO of Rural Telephone Service in Kansas, says the federal government was smart in allowing award recipients to create networks in some more-populated areas that already have service. The law allows the Rural Utilities Service to fund projects as long as 75% of the area lacks sufficient access to high-speed broadband to support rural economic development. His company received more than $100 million in grants and loans to bring broadband to unserved communities in northwestern Kansas. The company used some of the money to expand in Hays, which already had service providers. By establishing a presence in Hays, Sevier says, the company had access to a customer pool that will enable it to pay back its loans and reach communities without service. Ultimately, he added, broadband will enable young people to stay in rural areas.
benton.org/node/57397 | USAToday
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UNIVERSAL SERVICE REFORM

FCC PROBES USF MODERNIZATION
[SOURCE: BroadbandBreakfast.com, AUTHOR: Rahul Gaitonde]
The Federal Communications Commission gathered key industry experts on April 27 to explore the different ways that the Universal Service Fund can be modernized to effectively deploy high speed broadband to rural America. “The Universal Service Fund is at the heart of the Commission’s core mission,” said FCC Chairman Julius Genachowski at the start of the event. “The current system was largely successful in meeting the challenges of the 20th century challenges but cannot handle the needs of the 21st century; it does not work for broadband deployment.” Chairman Genachowski said that the current system disperses broadband funds inefficiently and wastefully. He went on to say that, the current system cannot provide long-term sustainable broadband deployment and reform is necessary.
“This is an issue with bipartisan support,” said Commissioner Robert McDowell. “It’s my hope that one day we won't need the USF because technology can bring affordable broadband to all Americans, but until then we need to work together to provide the necessary access.” Andrew Newell, General Counsel at Viaero Wireless, called wireless networks the best solution for bringing high-speed broadband to rural areas with minimal cost. David Russell, Solutions Marketing Director at Calix, agreed that wireless is a solution, but to support the wireless network, a fiber backbone needs to be deployed and consumers should be able to access this fiber when it comes close to their homes. Consumer Federation of America Research Director Mark Cooper and Park Region Mutual Telephone CEO Dave Bickett both echoed Russell’s statements on providing users with access to fiber where possible. “There is no doubt that mobile computing is more valuable than fixed computing,” said Cooper, “but there needs to be a shared infrastructure between wired and wireless to provide better access to consumers.”
benton.org/node/57373 | BroadbandBreakfast.com
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CARRIERS SPAR OVER USF
[SOURCE: Politico, AUTHOR: Tony Romm, Kim Hart]
On April 27, the Federal Communications Commission held a workshop on Universal Service Fund and intercarrier compensation (ICC) reform. The FCC’s goal is to expand broadband to unserved areas by asking private telecom companies to bid on particularly hard-to-reach areas of the country. But there is disagreement among wireless carriers about the best way to go about doing that. While large companies like Verizon agree with the competitive bidding idea, smaller carriers say an auction would undermine other efforts to reach unserved areas. In addition to defining broadband as a universal service, the Consumer Federation of America's Mark Cooper says the FCC should also define 4G wireless as a universal service. “Mobility will help the adoption problem,” Cooper said. To expand broadband to hard-to-reach areas, he said the FCC should think about adopting a model similar to electricity co-ops. “We serve a huge swath of the country with nonprofits – and there’s nothing wrong with that,” he said. “The unserved broadband problem is nothing compared to the New Deal problem of getting electricity to people.” Cox Communications’ Jose Jimenez told the FCC to keep its expectations reasonable for building out to unserved areas. “We are not going to be able to get broadband to everyone at the same time. That is just not feasible,” he said during the USF reform workshop. “We are going to get there eventually. This is an iterative process. To think you’re going to do it at once is not reasonable.”
benton.org/node/57371 | Politico
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PRIVACY

APPS ARE PRIVACY THREAT
[SOURCE: Politico, AUTHOR: Tony Romm]
The nation’s top wireless carriers have a message for Congress: Smarthphone apps — not the carriers themselves — pose the greatest threat to people’s privacy. That’s the common thread running between a series of letters this month from AT&T, Verizon, Sprint and T-Mobile to Reps. Ed Markey (D-MA) and Joe Barton (R-TX). The two members in March asked those top companies to detail how and why they track mobile phone location data. But the carriers pointed to app makers as the leading cause for concern. AT&T noted it “plays no role” in what kind of information smartphone apps collect, while T-Mobile pointed out the ways in which that data can be used. Sprint lamented “consumers no longer can look to their trusted carrier with whom they have a trusted relationship to answer all of their questions,” particularly on privacy. And Verizon Wireless called out smartphone app makers directly on the issue, stressing “location-based applications and services (whether provided by us or third parties such as Google) should give customers clear and transparent notice” and control. The carriers acknowledged in their responses that they also track consumers’ location — albeit to provide the best cell reception and data services, while maintaining the records required by federal law.
Rep Barton has a feeling of "uneasiness and uncertainty" about third-party use of location data and Rep Markey is pushing for more consumer control. "This is a huge problem," said Rep Barton of third-party use of the info. "They shouldn't have free reign over your location data and personally identifiable information," he said, pledging to work on legislation to hold third-party developers accountable. Rep Markey said consumer privacy protections must apply "across the entire wireless ecosystem - from wireless carriers, to mobile handset makers, to application developers."
benton.org/node/57368 | Politico | Broadcasting&Cable | Reuters
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LOCATION BROUHAHA
[SOURCE: New York Times, AUTHOR: David Pogue]
Apple is saying that the researchers were wrong. First, the “secret file” contains information about nearby Wi-Fi hot spots and cell towers, not your exact location. And second, your device is sending information to Apple, although in an anonymous, encrypted form. Now, one part of Apple’s response is a little unconvincing. Yeah, OK, the file includes the location of Wi-Fi hot spots and cell towers — near you. So no, it doesn't record what park bench you were sitting on. But it’s still tracking what city you were in, and is therefore keeping a record of your travels. Anyway, the whole thing is moot now. In a software update in the next couple of weeks, Apple will (a) stop backing up the location database to your computer, (b) store only a week’s worth of hot spot locations and (c) stop collecting hot spot locations if you turn off Location Services. In the next iOS update, furthermore, the location list will also be encrypted on the phone itself. Interestingly, Apple also performed a pre-emptive strike. It revealed something else your iPhone is tracking: traffic data. This is the second time Apple has found itself neck-deep in a PR brouhaha where it blamed the problem on a bug. Both times, Apple wasn't apologetic, but at least it took prompt action through a software update. In this case, at least, security consultants seem satisfied. Apparently, the Locationgate case is now closed.
benton.org/node/57367 | New York Times
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ADVERTISING/MARKETING

MARKETING FOOD TO KIDS
[SOURCE: Federal Trade Commission, AUTHOR: Press release]
In an effort to combat childhood obesity – the most serious health crisis facing today’s youth – a working group of four federal agencies today released for public comment a set of proposed voluntary principles that can be used by industry as a guide for marketing food to children. Led by former Sen. Sam Brownback (R-KS) and Sen. Tom Harkin (D-Iowa), Congress directed the Federal Trade Commission, together with the Food and Drug Administration, the Centers for Disease Control and Prevention, and the U.S. Department of Agriculture, to establish an Interagency Working Group of federal nutrition, health, and marketing experts to develop recommendations for the nutritional quality of food marketed to children and adolescents, ages 2 to 17. The working group seeks public comment on the proposed voluntary nutrition and marketing principles it has developed. After public comment, the working group will make final recommendations in a report to Congress. This is not a proposed government regulation. The proposed voluntary principles are designed to encourage stronger and more meaningful self-regulation by the food industry and to support parents’ efforts to get their kids to eat healthier foods. While the goals they would set for food marketers are ambitious and would take time to put into place, the public health stakes could not be higher. One in three children is overweight or obese, and the rates are even higher among some racial and ethnic groups.
The FTC has posted a request for comments on the proposed principles to its website. Interested parties will have 45 days to comment, during which time the working group will hold a half-day forum to provide stakeholders with a chance to comment in person. The forum will take place on Tuesday, May 24 in Washington, D.C. Additional details about the forum will be provided soon. Public comments will be considered by the agencies before the final report is submitted to Congress.
The working group proposal sets out two basic nutrition principles for foods marketed to children. Advertising and marketing should encourage children to choose foods that make meaningful contributions to a healthful diet from food groups including vegetables, fruit, whole grains, fat-free or low-fat milk products, fish, extra lean meat and poultry, eggs, nuts or seeds, and beans. In addition, the saturated fat, trans fat, added sugars, and sodium in foods marketed to children should be limited to minimize the negative impact on children’s health and weight. The working group proposes that industry strive to market foods by the year 2016 that meet the proposed nutritional principles and marketing criteria. For sodium, the proposal includes interim targets for 2016 and final targets for 2021. The proposed principles are voluntary and do not call for government regulation of food marketing. They are an opportunity for food and beverage manufacturers, public health advocates, the entertainment industry, academics, and other stakeholders to provide comments that will inform the working group’s final recommendations to Congress.
benton.org/node/57323 | Federal Trade Commission
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EDUCATION

CONSULTANT STOLE MILLIONS
[SOURCE: New York Times, AUTHOR: Fernanda Santos]
Aided by lax oversight and by corporations that profited from his scheme, a former technology consultant stole $3.6 million over six years from the Department of Education to finance flashy cars and real estate speculation, federal authorities said. The investigation revealed another embarrassing lack of supervision in one of New York City’s technology projects, just four months after federal authorities charged seven people in what they called an $80 million scheme to steal from CityTime, an automated payroll system that ballooned in cost to more than $700 million, nearly 10 times over budget. It also comes as the Education Department plans to invest more than half a billion dollars next year to upgrade Internet access in every school. As in the CityTime case, the charges revealed the enormous responsibilities and power given to technology consultants working on city projects. The former consultant, Willard Lanham, 58, surrendered to federal authorities on charges of mail fraud and theft from a billion-dollar school-wiring and Internet-access project financed partly by the federal government. Lanham, who was being paid $200,000 a year by the city, used layers of contractors and subcontractors to hide his scheme, and each of them profited a little from it, according to the federal complaint. He hired several people, including a brother, to work on the city contract, then billed another company for those hires, marking up the invoices. The company, for its part, charged Verizon or I.B.M., the two major vendors, more than what it had paid Mr. Lanham. According to a report by Richard J. Condon, a special investigator for the city schools, Verizon and IBM, in turn, billed the Education Department, also marking up the amounts. Verizon marked up the bills by $800,000, and I.B.M. by $400,000, said Condon’s report, which he had forwarded to the federal authorities. “IBM and Verizon, by their silence, facilitated this fraud,” the report said.
benton.org/node/57392 | New York Times
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Spectrum of Choices Confront AT&T Review

As regulators begin their review of AT&T's proposed purchase of T-Mobile USA, they should consider that approval might logically mean letting Verizon Wireless buy Sprint Nextel one day.

That might sound counterintuitive, given the T-Mobile deal would reduce the number of national operators from four to three and remove a low-priced competitor. But the deal is all about wireless spectrum. With data usage exploding, AT&T said in a filing with the Federal Communications Commission last week that it was using up its spectrum "at an accelerating rate." The deal would lead to more efficient use of spectrum, it said. Otherwise, AT&T and T-Mobile customers will see more dropped calls and slower data speeds. All carriers eventually will face capacity constraints. AT&T, though, faces a more immediate crunch, thanks partly to its early offering of the data-heavy iPhone.

But AT&T already has more spectrum than its closest rival, Verizon Wireless. On average in the top 20 markets, AT&T has about 100 megahertz, including spectrum it has agreed to buy from Qualcomm, while Verizon has about 90, estimates Spectrum Management Consulting. T-Mobile has about 55, so the deal could give AT&T as much as a 60% spectrum advantage over Verizon. Is that necessary? AT&T hasn't begun to use about a third of its spectrum, even excluding Qualcomm's. It is reserving this extra spectrum, an average of 30 MHz in the top 20 markets, for its next-generation LTE network. That new network will help meet exploding demand for wireless broadband. So why hasn't AT&T rolled out LTE, when Verizon launched its LTE network last December? If AT&T had moved faster, it would have begun to reduce the strain on its 3G network by shifting some heavy data users off it. Similarly, there is a question of whether AT&T has invested aggressively enough. Given its congestion problems, AT&T should have spent significantly more. There's no doubt T-Mobile would help AT&T better cope with rising data volumes in coming years. But the same logic would suggest future mergers will be necessary as other carriers confront capacity constraints. Unless regulators want to end up with a duopoly, they need to draw the line somewhere. Approval of this deal without huge divestitures arguably would be rewarding AT&T for its missteps. Instead, regulators should redouble their efforts to free up extra spectrum from sources such as broadcasters ahead of the inevitable crunch for all wireless operators.

With AT&T's proposed takeover of T-Mobile, consumer and market benefits are an illusion

AT&T says its $39-billion acquisition of T-Mobile would be good for consumers. In a nearly 400-page filing with the Federal Communications Commission, AT&T essentially argues that bigger is better when it comes to wireless service.

James Gattuso, a senior research fellow at the Heritage Foundation, compared a wireless market dominated by AT&T and Verizon to a soda market dominated by Coke and Pepsi. "There's still room for other providers," he said. Sure, I just can't get enough Royal Crown Cola.

Similarly, Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank, said the FCC should greenlight the merger and see what happens. If fixes are needed, he said, they can be made once any problems become clear. "We need vigorous competition — no one disputes that," said Holtz-Eakin, a former economic advisor to President George W. Bush. "But I haven't seen anything yet that says this deal will be demonstrably bad for consumers." Unless, that is, you count the disappearance of the country's fourth-largest wireless company and its focus on offering plans that are cheaper than AT&T's and Verizon's packages.

For me, the real heart of AT&T's filing with the FCC is an ostensibly unbiased analysis of the merger by a trio of economists affiliated with a consulting firm called Compass Lexecon. "We conclude that the proposed transaction will promote competition by enabling the merged firm to achieve engineering-based network synergies that increase network capacity beyond the levels that AT&T and T-Mobile USA could achieve if the two companies continued to operate independently," they write. Those synergies, they say, will create incentives to improve wireless service. For that reason, the merger "will not result in harm to consumer welfare." What the economists neglect to mention, but AT&T acknowledged, was that AT&T paid them for their insights.

By AT&T's logic, this would be even better for consumers. By AT&T's logic, we'd actually be much better off if there was only one dominant wireless provider. This would allow for the most efficient use of resources while providing consumers with the best service at the lowest price. Impossible to believe? Not with a little practice.

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