April 2011

Recap: Using Spectrum to Advance Public Safety, Promote Broadband, Create Jobs, and Reduce the Deficit

On April 12, the House Commerce Committee's Communications and Technology Subcommittee held a hearing entitled “Using Spectrum to Advance Public Safety, Promote Broadband, Create Jobs, and Reduce the Deficit."

Subcommittee Chairman Greg Walden (R-OR) said: "We’re here today for a broad overview on how spectrum can help expand broadband availability, advance public safety, help broadcasters further innovate, create jobs, and reduce the deficit. Spectrum is a critical input for broadcast television, wireless voice and broadband services, and public safety communications. As a former radio broadcaster and licensed HAM radio operator, spectrum is a medium with which I am somewhat familiar. These critical uses of spectrum have shaped the way Americans live, work, and stay connected to their families and the world.... Today we begin discussing how we will get the next wave of spectrum deployed. There is growing consensus we need between an additional 100 MHz and 300 MHz in the short term -- say 5 to 10 years -- to meet the exploding consumer and economic demand for wireless broadband. Given the staggering growth in smartphone sales, app store sales, and demand for streaming video content, it is no surprise that the FCC’s National Broadband Plan and the President of the United States are calling for an additional 500 MHz of spectrum to be allocated for wireless broadband use in the next five years. There are a variety of options that could be used in combination to start addressing this need."

House Commerce Committee Chairman Fred Upton (R-MI) said: "One thing we will consider is the spectrum allocated to the federal government and whether those spectrum bands can be better allocated to both the government and commercial sectors. There is already legislation designed to help relocate government users and provide them with better communications resources, to be paid for with auction proceeds from spectrum they clear. And, there may be ways to make that legislation work even better."

Rep. Ed Markey (D-MA) emerged as a champion of broadcasting, at least when it came to providing emergency communications. He pressed the Federal Communications Commission's chief of the Office of Engineering and Technology, Julius Knapp, on what percentage of spectrum the government needs could be freed up by being more efficient with the spectrum already allocated. "A significant percentage," asked Markey. "A fair percentage," said Knapp, who, pressed by Rep Markey said it was probably somewhere between 10% and 50%, a range proposed by Rep Markey that Knapp said was probably about right. "Good," said Rep Markey. "We can get a big part of this problem solved just by ensuring there is more efficient use of the spectrum." Markey also pointed to public interest principles the FCC needed to abide by.

Then turning to another "Good," broadcast witness Robert Good, chief engineer at WGAL-TV, Markey asked whether if the spectrum reallocation and auction process was voluntary, if broadcasters were compensated, and if interference were not created for other stations who did not wish to participate, whether broadcasters were open-minded to reallocation. Good said that only if broadcasters were held harmless, by which he meant that "coverage areas are the same." Rep Markey asked whether that was something that could be worked out among engineers of common sense and good will. Good could not get there given the issue of repacking. "I am not confident we can achieve that type of coverage given that scenario."

The most pointed questions about the impact of the FCC spectrum reclamation plan on broadcasters came from Rep John Dingell (D-MI), famous for requiring one-word answers, though he allowed some leeway. Once he had determined that Knapp had helped draft the National Broadband Plan, he asked whether the FCC had failed to take into account the channel reservations of the Canadians, which are protected by treaty, in cities like Detroit. Knapp said that the plan had acknowledged that, and that the FCC has taken that into account and was talking to the Canadians. Dingell said that he understood that in order to get the 120 MHZ from broadcasters would, if the Canadian allocations were preserved, that would leave no available U.S. broadcast channels. Knapp said he did not believe that would be the case. But he also conceded that the FCC would not know exactly what channels would be available. "The repacking will depend on what stations participate in the incentive auction," Knapp said, "and we don't know which those will be."

US Lagging in Using Technology, Study Shows

The United States continues to lag other nations in its use of computing and communications technology, according to an annual study issued by the World Economic Forum. For the second consecutive year, the United States finished fifth in the study’s comparison of 138 countries that make up 98.8 percent of the world’s total gross domestic product. Sweden was first, followed by Singapore, Finland and Switzerland. These rankings, for 2010, are based on an index of 71 economic and social indicators, as diverse as new patents, mobile phone subscriptions and availability of venture capital.

The study showed the rapid progress of the so-called Asian Tigers, whose governments have invested heavily in technology. Besides Singapore, Taiwan was ranked 6th, South Korea 10th and Hong Kong 12th. Japan was 19th. China ranked 36th and India 48th, falling five places from 2009. Rounding out the large developing BRIC countries — Brazil, Russia, India and China — Brazil was 56th and Russia 77th. The country making the most progress in 2010 was Indonesia, which jumped 14 places to 53rd — in part because of high educational standards and in part because of the importance the government has placed on information and communications technology. Among Western nations, Canada was 8th, Norway 9th, Germany 13th, Britain 15th and France 20th. The two lowest countries were Burundi and Chad. The United States was uneven on many measures that affect economic competitiveness. For example, it ranked 76th in the rate of mobile phone subscriptions, 48th in low-cost access to business phone lines and 24th in percentage of households with a personal computer — behind Bahrain, Singapore and Brunei, among others. Professor Dutta said the United States ranked 52nd in math and science education.

AT&T Synergy Claims Should Be Taken With Grain of Salt

Merger activity is heating up, and with it talk of “synergies.” But what happens to those promises once a company has completed an acquisition?

Take AT&T. The telecom giant has claimed synergies from buying T-Mobile USA will more than offset the $39 billion purchase price. But AT&T has made similar promises alongside previous acquisitions, and it isn't clear it has achieved them. When AT&T announced the $67 billion purchase of BellSouth in March 2006, it said the deal would generate synergies with an annual run rate of $2 billion by 2008, rising to $3 billion in 2010. That was mainly from cost savings in areas like advertising and staffing. The deal closed at the end of 2006. AT&T’s filings show that its total earnings before interest, taxes, depreciation and amortization, or Ebitda, rose by about $2.5 billion between 2006, assuming the combination had been in effect all year, and 2008. That means if the synergies were achieved, profits from the organic business were barely up. As it has done with the T-Mobile acquisition, AT&T also promised the BellSouth deal would save money on capital expenditures. It estimated annual savings of $400 million to $500 million in capital expenditures by 2009, off a base of the combined companies’ 2005 capital-expenditure spending of $17.9 billion, about 15% of revenue. It is hard to see where those savings showed up. AT&T’s capital expenditures averaged $18.4 billion between 2007 and 2010, still about 15% of revenue. And it would have been higher if not for a big dip during the 2009 economic downturn. Indeed, last year it was $19.53 billion, 15.7% of revenue, and AT&T has projected it will be in the “low to mid-$19 billion range” this year.

Data thieves target e-mail addresses

In the past four months, caches of customer e-mail addresses, not banking and credit card information, have become the key target of data thieves. The goal: Use the legitimate e-mail addresses and the specific companies their owners have business relationships with to get people to buy worthless goods or to infect their PCs.

The recent theft of potentially tens of millions of consumer e-mail addresses from online marketing firm Epsilon followed a spate of similar hacks in December. Web marketing and cybersecurity experts say there are several ways cybercriminals can make profitable use of the stolen e-mail addresses. Just like legit advertisers, criminals can correlate a person’s demographics and shopping patterns “and use that to their advantage,” says Thomas Jelneck, president of Internet marketing firm On Target Web Solutions.

Cinemas in threat over TV screenings

The largest cinema chains in the US are preparing for a summer skirmish with Hollywood by threatening to withhold films from screens if the studios proceed with contentious plans to show movies “on-demand” in homes less than two months after release.

Warner Brothers and 20th Century Fox are working on a new premium video-on-demand scheme with DirecTV, the satellite operator, which would see films made available in the home between 30 and 60 days after screening in cinemas. The studios currently wait up to four months before releasing movies on-demand and on DVD. They hope premium video-on-demand, which will allow home viewers to watch relatively new movies for $30, will replace income lost by the decline of DVD sales, once Hollywood’s most lucrative revenue stream. The service is aimed at anyone who would rather not venture out to the cinema or for families where tickets may be costlier for larger groups. But John Fithian, chief executive of the National Association of Theatre Owners, which represents US cinema chains such as Regal, AMC and Cinemark, said that his members were fighting the plan and had indicated they would give more of their screens to summer movies released by studios not involved in the scheme.

Google Has Largest Share of US Searches as Microsoft Gains, Yahoo Slips

Google and Microsoft gained share in the U.S. online search market in March while that of Yahoo! Inc. declined, according to an analyst, citing data from ComScore.

Google had 65.7 percent of searches last month, an increase from 65.4 percent in February, Heath Terry, an analyst at Canaccord Genuity in New York, wrote in a note, citing data from Reston, Virginia-based ComScore. Microsoft’s Bing search engine had 13.9 percent, up from 13.6 percent. Yahoo’s share slipped to 15.7 percent, from 16.1 percent. Google, which gets most of its revenue from search-based advertising, has been trying to improve the relevance of results with updates and new features. In February, the company changed the way it carries out Web searches to feature more “high- quality” sites, affecting 12 percent of queries.

CBS Chief Says Industry Needs To Battle Together

It was a coming home of sorts for CBS President and CEO Leslie Moonves at the National Association of Broadcasters annual show.

During a question and answer session with Moonves, NAB President Gordon Smith said one of his greatest achievements in his two-year tenure with the broadcast industry's lobbying group was bringing CBS and Fox back into the NAB fold last May. All four networks quit NAB during the last decade over policy disputes but CBS and Fox were the last to return. When asked why CBS returned, Moonves said he felt that given the issues facing the industry, such as the battle over broadcasters' spectrum, it was important for the industry to work together. "I looked at how cable was operating, they were operating with a bigger voice than we were," Moonves said. "We need the power of being together." Moonves also credited Smith for his role in CBS's decision to return to NAB. He said Smith's speech at NAB's 2010 show helped persuade Moonves that the association was focused on the same issues the network cared about. "I want to follow you into battle," Moonves told Smith.

FCC's Baker Finds Herself Playing 'This Is Your Life'

Federal Communications Commission member Meredith Attwell Baker found herself playing a mini version of the old "This Is Your Life" television game show during her appearance at the broadcasters' annual convention.

While many of the regulatory sessions at the National Association of Broadcasters' annual show were focused on weighty policy issues, the audience at Baker's session had the chance to learn a little bit more about the Republican FCC member than just where she stands on retransmission consent and spectrum allocation. After the audience got a chance to weigh in with their guesses, Commissioner Baker revealed these key details about herself: She was voted most optimistic by her high school class mates; dedicated the Air Supply hit song "All Out of Love" to her junior high school boyfriend and owns six televisions. After being quizzed on which Air Supply song she chose for that dedication, Commissioner Baker quipped, "This is what happens when I am the only commissioner who comes."

Apple's iPad: Kindergartners getting tablet computers in Maine

Next fall, nearly 300 kindergartners in the central Maine city of Auburn will become the latest batch of youngsters around the country to get iPad 2 touchpad tablets to learn the basics about ABCs, 1-2-3s, drawing and even music.

The iPad is a powerful education tool with hundreds of teaching applications, said Superintendent Tom Morrill. With its touchpad screen, it's simple to use and can bring learning to life with imagery and sounds, he said. "It's a revolution in education," Morrill said. The $200,000 that Morrill is proposing to spend on iPads -- which retail for around $500 -- might be better spent on some other school program, said Sue Millard of Auburn, who has children in the fourth grade and high school. She also questions whether kindergartners are old enough to appreciate the effort.

Rebels Hijack Gadhafi's Phone Network

A team led by a Libyan-American telecom executive has helped rebels hijack Col. Moammar Gadhafi's cellphone network and re-establish their own communications.

The new network, first plotted on an airplane napkin and assembled with the help of oil-rich Arab nations, is giving more than two million Libyans their first connections to each other and the outside world after Col. Gadhafi cut off their telephone and Internet service about a month ago. That March cutoff had rebels waving flags to communicate on the battlefield. The new cellphone network, opened on April 2, has become the opposition's main tool for communicating from the front lines in the east and up the chain of command to rebel brass hundreds of miles away. While cellphones haven't given rebel fighters the military strength to decisively drive Col. Gadhafi from power, the network has enabled rebel leaders to more easily make the calls needed to rally international backing, source weapons and strategize with their envoys abroad. To make that possible, engineeers hived off part of the Libyana cellphone network -- owned and operated by the Tripoli-based Libyan General Telecommunications Authority, which is run by Col. Gadhafi's eldest son -- and rewired it to run independently of the regime's control. Government spokesman Moussa Ibrahim, asked about the rebel cellphone network, said he hadn't heard of it.

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