April 2011

Europe telecom groups target Google

Leading European telecoms companies want to levy significant charges on Google and other online content providers through an overhaul of the regime governing how data travel over the Internet.

Operators in Europe complain that they are contending with an explosion of data on their networks, much of which comes from US sites such as Google’s YouTube video service. Companies led by France Telecom, Telefónica and Vodafone favour the introduction of wholesale charges based on the volume of data traffic passing through their networks, which could result in online content providers making substantial payments to get their video material to consumers. The charging arrangements could result from reform of the so-called peering system, under which operators exchange traffic where their networks meet. Neelie Kroes, the European commissioner responsible for the European Union’s digital agenda, is concerned that telecoms companies are not investing enough to meet EU targets on improving broadband speeds. The companies have said they must be able to tap new revenue streams to help pay for those broadband speed investments. One such stream could result from the network operators’ interest in rewriting the peering agreements on data exchange.

Facebook's plans for Menlo Park HQ: 9,400 workers in next 6 years

Facebook wants to redevelop the former Sun Microsystems campus in Menlo Park and two adjacent parcels to eventually accommodate 9,400 employees, according to city documents.

The fast-growing social networking company, which currently employs about 1,400 people in Palo Alto, expects to reach full capacity at the Sun campus and nearby buildings on Constitution Drive by 2017. "We're just preparing for the future," Larry Yu, Facebook's director of corporate communications, said. In addition to acquiring the 57-acre Sun campus east of Bayfront Expressway, Facebook purchased 22 acres at 312 and 314 Constitution Drive, which it is calling the "Facebook West Campus." The company plans to demolish the buildings on Constitution and construct five separate ones for about 2,800 employees -- in addition to the 6,600 employees expected at the Sun site that will be known as the "East Campus," according to Menlo Park's public notice of the project's impending environmental study. Facebook is already trying to head off one problem at the pass. When Sun received permission to develop the campus, it was prohibited from locating more than 3,600 employees there because of traffic concerns. Justin Murphy, development services manager for Menlo Park, said the company plans to use buses and shuttles to transport a significant number of workers.

(Don't) Take Me Out To The Ballgame

[Commentary] Professional sports are simply more popular than ever on television. Now maybe it's all anecdotal, a temporary spike. It's been a brutal winter in most of the country, and gas prices are high, so maybe more people are staying home. But I'm convinced it's a much more significant trend, fostered by two factors. First, prices to too many sporting events are just too expensive. Second, as home television sets get larger and in clearer definition — even 3-D — people are more inclined to watch a game there in the family room, where they can see it free, and bigger and better, and in more comfortable surroundings. With today's monster-screen HDTV, if you give viewers — movies or sports — an option, they'll opt for the couch near the refrigerator at home.

AT&T and T-Mobile USA: the case against a merger

[Commentary] 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.

Why Verizon should acquire Sprint (or at least try)

[Commentary] How could Verizon block AT&T's proposed acquisition of T-Mobile? “If Verizon really wanted to kill this deal, it would only have to say it was buying Sprint.”

The Federal Communications Commission and the Justice Department are leaning toward approving the merger of the AT&T and T-Mobile, a similar proposal from Verizon Wireless and Sprint would stop them in their tracks. The government may be willing to winnow the competitive market down to the three nationwide operators, but it would take a gigantic political and philosophical leap to justify only two.

The lynch pin to AT&T’s argument is that a combined AT&T and T-Mobile won't reduce competition; rather it puts the two operators in a position to compete more effectively. And AT&T’s key exhibit is none other than Sprint. Sprint not only would be a third Tier I operator to balance out the market, but, unlike T-Mobile, it runs a next-generation mobile broadband service, WiMAX, which is competitive with Verizon’s current and AT&T’s future long-term evolution (LTE) networks. AT&T can argue that in the grand scheme of things, taking T-Mobile out of the market would be a wash. It can't really make that argument if Sprint were removed also.
AT&T is also claiming that the mobile broadband space has seen increased competition lately as new entrants like Clearwire and LightSquared enter the market, each loaded up with new spectrum. Well, a Verizon-Sprint merger would cut those new entrants in half, given Sprint’s ownership stake in Clearwire. To make its application credible, Verizon might offer to divest Sprint’s Clearwire assets, but Sprint is Clearwire’s largest wholesale customer and investor. If Sprint were to cut and run, Clearwire might simply fail. LightSquared’s future also is far from assured.

So in this outlandish scenario, could regulators allow an AT&T-T-Mobile deal to pass, but deny a Verizon-Sprint tie-up?

AT&T'S Quinn: We May Renege on 80%, 95% LTE Buildout

AT&T Senior Vice President Bob Quinn believes the recent Federal Communications Commission decision on mobile data roaming will "discourage investment and build out of broadband facilities." With U-Verse construction winding down, the only AT&T investment in broadband left to cut is the LTE network.

CEO Randall Stephenson has promised 80% LTE coverage in 2013 and 95% afterwards as encouragement for the T-Mobile deal. Even indirectly suggesting they might pull back on the buildout is risky given the likely struggle to get the T-Mobile approved. Stephenson's approach to their remaining broadband buildout is "about as fast as we can go." 80% coverage will require upgrading 10,000 or more cell sites, a big job even for a company the size of AT&T. It's easy to understand why he's pushing hard. AT&T is bleeding customers to Verizon since they lost iPhone exclusivity. They are a year behind on the LTE build. When the LTE iPhone comes out later this year, Verizon will have LTE in more than half the country and AT&T will be barely beginning. Verizon is going to 92% in 2013 and "all our territory" (95-99% of the U.S.) by a few years later. AT&T says its goal is 95% in 2016 or so. AT&T has already cut nearly all other "elective" capital spending on broadband.

House Republicans take aim at FCC on rules and reform

A key House subcommittee is planning a hearing on process reform at the Federal Communications Commission (FCC). Scheduled for May 3, the session will include the four FCC commissioners and chairman as witnesses, according to a committee aide.

Lehrer calls for PBS, NPR to invest more in news

The heads of PBS, NPR, Minnesota-based American Public Media and others gathered in Washington to discuss the most serious threats in Congress to their federal funding in 44 years.

Public Broadcasting Service anchor Jim Lehrer told public broadcasters that they must continue to defend their federal funding and raise more money to meet an increasing need for serious journalism as commercial newspapers and broadcasters see declines. Lehrer said public media needs to produce more local news and serious journalism because other channels are being used to "tease and to entertain and only to inform across the surface." "I have a good source on why this is a problem. The source is Thomas Jefferson," Lehrer said. "Thomas Jefferson told the folks back when this country was founded that the only way this democratic society we just created is going to work is if there is an informed electorate." Interim NPR chief executive Joyce Slocum said the Washington-based public radio network has rebounded from the controversy over its management. "Our journalism has not missed a beat," she said. Executive Editor Dick Meyer said NPR is working on a project to place two reporters in every state capital across the country through its Impact of Government initiative. "It's an area where commercial media is retreating with Custer-like force," Meyer said. Some PBS stations also are starting new local news programs, including WNET-TV in New York, which plans to launch its MetroFocus program online this summer and eventually on television.

FCC's Copps Wants Better and More Accountable Journalism

Federal Communications Commission member Michael Copps spoke at the Walter Cronkite Awards on April 26 saying, "the plight of journalism seems only to get worse. The situation has morphed from one about journalists not having the resources to do their jobs to one about them not having jobs at all. How much better America would be served if reporters were walking the beat in search of a story instead of walking the street in search of a job." He reiterated concerns about media ownership consolidation and its effect on journalism. "The overwhelming majority of news we citizens get still originates in newspaper and broadcast newsrooms-including the news we read online. It's just that there is so much less of it because so many resources have disappeared. How many stories go untold because there is no reporter on the beat? How many facts are never dug up? How many wrongdoers are not held accountable because investigative journalism is on the endangered species list in so many places? How do we hold the powerful accountable when 27 states don't have an accredited reporter on Capitol Hill?"

Don't Forget To Protect IP, Groups Urge On World IP Day

The folks that make their living off of intellectual property are using World Intellectual Property Day to remind the world - and especially Congress - about the need to provide additional protections for copyrighted content and trademarked goods.

"Respect for intellectual property is essential to the success of nations that aspire to greater development as well as key to maintaining the economies of developed nations," Motion Picture Association of America head Chris Dodd said. "World Intellectual Property Day is a time to reflect on the economic as well as cultural contributions intellectual creativity has produced and renew our commitment to value intellectual creation as we do physical creation." The House and Senate Judiciary committees are expected to offer legislation this year to give law enforcement officials extra tools to crack down websites that offer pirated content or counterfeit goods, particularly those based abroad. At a Capitol Hill event representatives from the Association for Competitive Technology and the Chamber of Commerce's Global Intellectual Property Center tried to persuade a room full of congressional staffers to push their bosses to support the legislation.

Commerce Sec Gary Locke said, "Innovation is at the heart of U.S. job creation, competitiveness and global strength, and today, in celebrating the 11th anniversary of World Intellectual Property Day, we are reminded of how critical intellectual property rights are to driving innovation and unleashing the ingenuity of the American people.... A strong intellectual property system enables successful inventors to secure access to capital and hire employees – creating new jobs, new industries and new economic opportunities for Americans."