April 2011

MERGERS AND ACQUISITIONS

GROUPS ASKED FOR COMBINED MERGER REVIEW
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
Public interest groups urged the Federal Communications Commission to group together review of AT&T’s proposed merger with T-Mobile and AT&T’s acquisition of spectrum from Qualcomm. The point, the groups said in a letter, 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 in their letter. “As with other mergers, the competitive impact of the two transactions in combination may be even greater than the impact of each separately.”
In a separate letter, Sprint, the Rural Cellular Association, Cincinnati Bell Wireless, MetroPCS and others also told the FCC to combine the proceedings. Steven Berry, the president of RCA, said: “It is clear that AT&T is doing everything possible to gain market dominance by making not one but two major spectrum grabs … Neither of these transactions will benefit consumers nor provide a path to restore competition to the wireless marketplace.”
benton.org/node/57199 | Washington Post | B&C | The Hill | AdWeek | Reuters
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CENTURYLINK BUYS SAVVIS
[SOURCE: Bloomberg, AUTHOR: Greg Bensinger, Brett Pulley]
CenturyLink, the Louisiana-based fixed-line phone and Internet company that just completed its acquisition of Qwest, agreed to buy Savvis for $2.5 billion to add services that let business customers store and access data and applications online. Savvis stockholders will receive $40 a share, consisting of $30 in cash and about $10 in CenturyLink shares, the companies said today in a statement. That’s 11 percent more than Savvis’s closing price April 26. CenturyLink will also assume about $700 million of debt. The purchase lets CenturyLink Chief Executive Officer Glen Post add so-called cloud-computing services as he seeks to offset declining home-phone demand and challenge larger rivals such as Verizon Communications Inc. Verizon agreed in January to buy Savvis competitor Terremark Worldwide Inc. for $1.4 billion.
benton.org/node/57188 | Bloomberg | Connected Planet
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NBCU THEME PARKS
[SOURCE: Wall Street Journal, AUTHOR: Jessica Vascellaro, Gina Chon]
Apparently, Comcast Corp.-controlled NBCUniversal is moving forward with discussions to acquire Blackstone Group LP's stake in the Universal Orlando theme parks. Blackstone put its stake up for sale in March, forcing NBCU to decide whether to pick it up or risk another bidder sweeping in to buy the whole thing. That outcome could complicate the parks' licensing contracts. Under the joint-venture, Blackstone has the right to seek someone to buy both stakes. However, NBCU has the right of first refusal on the stake and has until June 12 to make a decision. The discussions come as the Universal Orlando theme parks are showing strong momentum, riding the popularity of new attractions like the "Wizarding World of Harry Potter." In 2010, Universal Orlando reported revenues of $1.1 billion, up 41% from 2009, and a 50% annual increase in EBITDA to $391 million. Blackstone purchased its 50% stake from the Rank Group Plc in 2000 for $275 million in cash, in addition to a contingent payment of up to $75 million based on performance. Sanford C. Bernstein analyst Craig Moffett estimates Universal Orlando has an enterprise value of $3.1 billion and an equity value of $1.5 billion.
benton.org/node/57247 | Wall Street Journal
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ANTITRUST

MICROSOFT SETTLEMENT TO EXPIRE
[SOURCE: InformationWeek, AUTHOR: Paul McDougall]
Attorneys for the Department of Justice and several states told a judge that they would not raise any objections to next month's expiration of Microsoft's decade-old antitrust settlement with the U.S government. The plaintiffs' attorneys told US DC District Court Judge Colleen Kollar-Kotelly that they believed Microsoft has met the terms of the settlement, which mainly required the company to share Windows APIs and other key technical information with the broader tech industry and provide licenses on reasonable terms. The April 27 hearing was effectively the last chance for the DOJ or the states, which included California, New York, Massachusetts, and 14 others that sued Microsoft, as well as the District of Columbia, to raise objections to the May 12 expiration. In a brief filed prior to the hearing, the plaintiffs said Microsoft "has met the goals of the wind-down plan." The May 12 expiration will now kick in automatically, as no further court hearings are planned. The settlement's expiration isn't likely to have any immediate impact on Microsoft's product portfolio, and the company has stated that it plans to comply with most of its terms beyond May 12. But the fact that it no longer has to devote significant time and management resources to documenting its compliance should at the very least allow the company to make decisions more quickly and efficiently -- which is crucial as it comes under increased competitive pressure from Apple, Google, and other rivals.
benton.org/node/57241 | InformationWeek
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MORE ON SPECTRUM/WIRELESS

AIR WAR ESCALATES
[SOURCE: Variety, AUTHOR: Ted Johnson]
If wireless is the future, it'll surely mean a jump in demand for that most insubstantial yet precious of commodities: spectrum. Everyone wants in on the invisible electromagnetic waves that carry all forms of audio and video media. The problem is that the electromagnetic spectrum is finite. As a result, mobile operators are engaged in a tussle with TV broadcasters over who gets what. And in Washington the idea of a spectrum crunch or crisis has morphed into a complex debate over whether current holders of spectrum are squandering it or squatting on it (and there actually is a difference). At issue is a plan championed by the FCC to wrest as much as 120 MHz of spectrum from broadcasters, who would voluntarily give up portions of their airspace. The government would then put it up for auction, with the broadcasters sharing in the proceeds from the sale. Broadcasters -- miffed at the idea that their turf is being encroached upon and ceded to broadband -- are skeptical that such transactions will be truly voluntary. With many predicting that broadband will be the communications future, with mobile tech driving its growth, TV stations have wasted little time suggesting that a mad rush to wireless would jeopardize TV as we know it, including localism, public-interest standards, even the quality of the signal. While wireless firms have warned of America losing its competitiveness as a spectrum crunch worsens, the broadcast lobby has raised the idea that the problem isn't scarcity but hoarding.
benton.org/node/57176 | Variety
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STATION OWNERS SAY FCC PLAN UNLAWFUL
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
State broadcaster associations oppose the Federal Communications Commission's plan to reclaim spectrum for wireless broadband without enforceable guarantee broadcasters will be held harmless in all respects. A Who's Who of owners representing hundreds of TV stations have asked the FCC to withdraw its proposal, saying there is no spectrum crisis and that the move would be against the public interest and against the law. Representatives of state broadcast associations said they were equally unconvinced by the FCC's plan, despite a personal pitch from FCC Chairman Julius Genachowski during the National Association of Broadcasters convention in Las Vegas earlier this month. They stopped short of asking the petition to be withdrawn, but want an ironclad guarantee of "voluntary." In reply comments on various FCC proposals, Allbritton, Tribune, Meredith, Gray, McGraw-Hill, Nexstar, Granite and almost two dozen more station groups said flatly the FCC proposal to reclaim and auction broadcast spectrum was the wrong way to go and asked it to terminate the proceeding. The groups filed collectively as Local Television Broadcasters. The groups said that if the FCC pursues its present course, it would be "arbitrary, capricious, and contrary to the public interest." According to the Administrative Procedure Act, "arbitrary and capricious" agency decisions are unlawful.
benton.org/node/57216 | Broadcasting&Cable
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CABLE WANTS TO BE HELD HARMLESS IN SPECTRUM MOVES
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The National Cable & Telecommunications Association told the Federal Communications Commission that it is OK with TV stations being repacked or sharing channels, so long as that does not mean cable must carry obligations are increased in the process. NCTA says that must carry is already an intrusion on the First Amendment that hurts customers, but is not fighting that fight in this proceeding. "So long as the Commission remains mindful of the constitutional, statutory and policy limitations of must carry rules, NCTA's interests in this proceeding will be adequately addressed," the association said, the "adequate" making the point that it was no concession on the basic point. But what would be far from adequate, NCTA made clear, was any extension of must carry as part of a spectrum reclamation process. "NCTA does not oppose the channel-sharing proposal so long as it does not result directly or indirectly in the expansion of cable operators' ‘must carry' obligations" to high-powered or low-powered stations, said NCTA.
"[H]olding cable operators harmless means, at a minimum, that the Commission must make absolutely clear in any rules that it may adopt that, as proposed in the Notice, any channel sharing will be limited 'to television stations with existing applications, construction permits or licenses as of the date of the adoption of this Notice.' Moreover, in no event should any licensee's carriage rights be any greater than they are today. Finally, holding cable operators harmless also means ensuring that cable operators are compensated for any costs that they incur due to the implementation of channel-sharing."
benton.org/node/57214 | Broadcasting&Cable
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VERIZON'S LTE NETWORK DOWN
[SOURCE: Bloomberg, AUTHOR: Greg Bensinger]
Verizon Wireless, the largest US wireless provider (for now), said a connection problem with its fourth-generation (4G) network is preventing some mobile phones and other devices from accessing Internet services properly. “Customers are temporarily unable to activate any 4G LTE devices,” Jeffrey Nelson, a Verizon Wireless spokesman, said, referring to the carrier’s long-term evolution network. While the glitch affects data services, people with 4G handsets are still able to make voice calls, Nelson said. He said Verizon Wireless is working with vendors to restore service to affected customers and expects service to be restored market-by-market, without providing details.
benton.org/node/57224 | Bloomberg
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COURT LIMITS CLASS-ACTION SUITS
[SOURCE: USAToday, AUTHOR: Joan Biskupic]
The Supreme Court ruled that consumers can be bound by an arbitration clause in a cellphone deal or other contract even when state law permits a class-action lawsuit for claims arising from the deal. In a 5-4 vote, the justices divided along familiar ideological lines, with conservatives in control. Dissenting liberal justices said the ruling would make it harder for consumers with small-dollar grievances to band together and sue corporations. California law bars class-action waivers when a contract is particularly one-sided. The law applies when there are unequal bargaining power between the two sides in the deal and the dispute involves a small amount of money and complaint of a deliberate scheme to defraud. Justice Antonin Scalia, writing for the majority, noted that the Federal Arbitration Act, which bars states from discriminating against arbitration, was passed in 1925 in response to judges' "hostility" to such agreements. Scalia said the California law "stands as an obstacle to the accomplishment of the purposes and objectives to the FAA." If a state could block an agreement because it appeared one-sided, Judge Scalia said as he read portions of his opinion from the bench, "Nothing would stop states from declaring that all agreements for dispute resolution … are 'unconscionable'" in many circumstances. Judge Scalia also disputed the contention of dissenting justices that people with small-dollar grievances would end up dropping them. "The claim here was most unlikely to go unresolved," Judge Scalia wrote. "The arbitration agreement provides that AT&T will pay claimants a minimum of $7,500 and twice their attorney's fees if they obtain an arbitration award greater than AT&T's last settlement offer."
benton.org/node/57229 | USAToday | ars technica
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PRIVACY

APPLE BLAMES BUG FOR PRIVACY BREECH
[SOURCE: Washington Post, AUTHOR: Hayley Tsukayama]
Responding to accusations that the iPhone tracks users with an unencrypted file, Apple said the file is part of a crowd-sourced database of WiFi hotspots and cell towers that stores so much information — up to a year of location data — because of a bug in its latest version of iOS. Individual users cannot be located based on the data, the company said. Apple said it sees no reason to store data for more than seven days and will fix the bug in an upcoming update. Apple said it will update software to fix three issues in iOS 4: It will reduce the size of the database file on each individual handset, stop backing up the cache and delete the cache if users opt out of location services. The company will also encrypting the cache in its next major software release, making it more difficult to access the file should a phone fall into the wrong hands.
benton.org/node/57196 | Washington Post | Apple statement
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LAWMAKERS RESPOND TO SONY DATA BREACH
[SOURCE: National Journal, AUTHOR: Juliana Gruenwald]
Members of Congress say they are very worried about news that someone hacked the accounts of 77 million Sony PlayStation users and say the issue shows Congress needs to do something more about cybersecurity. "I am deeply troubled by this latest data breach. It reinforces my long-held belief that much more needs to be done to protect sensitive consumer information," said Rep. Mary Bono Mack (R-CA), chairwoman of the House Subcommittee on Commerce, Manufacturing and Trade. "Most importantly, Americans should be quickly informed when their personal information has been hacked, especially in instances like this where there is an obvious potential for large scale identity theft." Rep Bono Mack said she will be introducing legislation, possibly as soon as next week, that would provide consumers with additional safeguards to protect against such data breaches. Rep. Bobby Rush (D-IL), who also sits on the House Commerce Committee, said he plans to reintroduce a data breach bill he offered before. The bill, which passed the House, would have required for-profit entities that hold personal information about consumers to adequately secure the data and notify the Federal Trade Commission and the affected consumers when a breach occurs. "Sony touts its PlayStation platform's real-time and networking capabilities to consumers," Rep Rush said. "The laws of this country should call, similarly, for consumers to be notified in as close to real-time as possible--not according to Sony time--whenever their sensitive information falls into the hands of intruders, hackers, thieves and information resellers."
benton.org/node/57223 | National Journal | The Hill
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PRIVACY ACCOUNTABILITY
[SOURCE: New York Times, AUTHOR: Nick Bilton]
It’s become almost a weekly occurrence: Another online company letting customers personal and private information leak because of an Internet breach. Sometimes this sensitive data is stolen by hackers who gain access through holes in a network that customers unwittingly trust companies to protect. Lately, there are more instances of companies procuring data without customers’ knowledge and using it for — well, who knows what they’re using it for? People hand over their names, addresses, passwords, birth dates and sometimes credit card information in exchange for access to online services and technologies that they hope will better their lives or business. In many instances these services do that, but increasingly the companies tend to disregard the importance of protecting personal and sensitive information. Yet there seems to be no real repercussions for these companies when a person’s information stored online is exposed. “Today the only real hit a company takes when these data breaches happen is to the company’s image,” said Alex Halderman, an assistant professor at the University of Michigan who specializes in data privacy. “It seems that with the frequency these events happen, a simple P.R. hit is not working to force these companies to protect people’s privacy.” Marc Rotenberg, executive director of the Electronic Privacy Information Center, an advocacy group in Washington, said the continual flurry of breaches shows that companies are collecting too much personal information about customers that can too easily fall into the wrong hands. Rotenberg said that he tells companies, “If you can't protect it, don't collect it.”
benton.org/node/57220 | New York Times
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APPS LACK PRIVACY POLICIES
[SOURCE: PC Magazine, AUTHOR: Mark Hachman]
A study jointly performed by TRUSTe and Harris Interactive indicates that just 19 percent of the top 340 free applications contain a link to a privacy policy, a problem as mobile privacy issues come to the fore. App endors can also collect their own information, and the Harris poll indicated that 74 percent of the 1000 smartphone users the poll surveyed indicated that they do not like advertiser tracking, 77 percent don't want to share their location with app owners, and that 85 percent would like the choice to opt in or opt out of targeted mobile ads. "This survey makes it crystal clear that privacy concerns are a huge stumbling block to consumer usage of applications and websites on smartphones," said Fran Maier, president and executive chair of TRUSTe. "As growth of the mobile market continues to surge, the industry needs a dedicated approach to educate consumers about how their data is being used and lets them make choices whether or not to engage. Overcoming consumer hesitancy and addressing increased lawmaker and regulator concerns require privacy practices that include notice and choice." Half of those surveyed actually said they have read a mobile privacy policy; with 51 percent saying that they actively seek them out.
benton.org/node/57194 | PC Magazine
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INTERNET/BROADBAND

CHATTANOOGA'S GBPS NETWORK
[SOURCE: ars technica, AUTHOR: Nate Anderson]
As the first US city to make 1Gbps fiber connections available to all, Chattanooga (TN) has been on the cutting edge of broadband deployment. Even fiber's backers admit there aren't many uses for a full 1Gbps connection at the moment, but they make a "build it and they will come" argument; provide the bandwidth and uses will materialize. Besides, once you've laid the fiber -- why not roll out 1Gbps service? Chattanooga's fiber network currently covers all 600 square miles serviced by the community-owned Electric Power Board (EPB), which has also provided electricity for decades. EPB rolled out a 1Gbps upgrade to the network last fall, but it "hasn't been flooded with calls" for the service, says David Wade, Chief Operating Officer of EPB. Indeed, even this may be overstating current demand; only 6 or 7 Chattanooga residents and "several businesses" have ordered the high-end service, which launched with a $350 per month price tag. Those who have ordered face challenges; if they want to experience the full 1Gbps speed they're paying for, standard WiFi connections aren't fast enough. Some customers have switched to wired gigabit routers in order to access their full bandwidth.
benton.org/node/57186 | Ars Technica
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TELEVISION

NEW BROADCASTING STANDARD
[SOURCE: TVNewsCheck, AUTHOR: Harry Jessell]
It’s been less than two years since television broadcasting switched off the last analog transmitter and went all digital. But the actual digital broadcast standard — ATSC DTV — is actually a lot older than that. In fact, it’s 15 years old if you start counting from when the Federal Communications Commission adopted it, 16 if you start counting from when the consortium of technology companies — the so-called Grand Alliance — put the system together and a few years older still if you go back to when the various components of the system were actually invented. That’s a long, long time ago given the lighting speed with which electronic media evolves these days. And that’s why far-sighted broadcasters and technologists, under the aegis of the Advanced Television Systems Committee, have begun work on the next-generation TV broadcasting standard. Even as some viewers still fiddle with DTV converter boxes, next-gen proponents say a new system is needed within the next several years so that TV stations can broadcast more programming, more reliably to more places and explore new business opportunities. The standards-setting work is still in its early stages, but already there seems to be a consensus that the third iteration of broadcasting — the first was 1941-vintage NTSC — should be far more efficient in its use of spectrum than today’s DTV system. Proponents talk of achieving it in a couple of different ways.
First, the standard would feature improved compression of video, audio and other content. “Broadcasters could use far fewer bits to deliver the same program at the same quality or deliver higher quality using the same bits we use today,” PBS’s Kutzner says. And, second, it would allow stations to pump more bits through any given bandwidth. How many more Kutzner couldn't say, but certainly, he says, “a substantial improvement” over the 19.4 mbps in 6 MHz now possible with DTV. “There are new techniques that approach Shannon’s Law, the theoretical limit of the ability to push bits through a channel,” he says.
benton.org/node/57190 | TVNewsCheck
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HEALTH

MOSTASHARI LEANS TOWARD RELYING ON MARKET
[SOURCE: The Hill, AUTHOR: Sam Baker]
Farzad Mostashari, head of the National Coordinator for Health Information Technology at the Department of Health and Human Services, touted progress in encouraging doctors to switch from paper to electronic records and the development of regional systems for exchanging information. Noting that individual doctors rarely see the savings from electronic records because the effect is spread across the healthcare system, he said programs like the government's adoption incentives are essential. "We have to do the minimum government action, but no less," Mostashari said. HHS must ensure that strong privacy standards apply to every entity that handles electronic records, Mostashari said, adding that HHS will issue a regulation later this year on the "trusted intermediaries" who move data from one place to another. In addition to government-mandated standards, Mostashari said he expects the private market to respond to the demand for technology that protects the security of patients' records.
benton.org/node/57227 | Hill, The
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EDUCATION

ONLINE COURSES
[SOURCE: New York Times, AUTHOR: Sam Dillon]
The Bill & Melinda Gates Foundation, the world’s largest philanthropy, and the foundation associated with Pearson, the giant textbook and school technology company, announced a partnership to create online reading and math courses aligned with the new academic standards that some 40 states have adopted in recent months. The 24 new courses will use video, interactive software, games, social media and other digital materials to present math lessons for kindergarten through 10th grade and English lessons for kindergarten through 12th grade. Widespread adoption of the new standards, known as the common core, has provoked a race among textbook publishers to revise their current classroom offerings so they align with the standards, and to produce new materials. The Gates-Pearson initiative appears to be the most ambitious such effort so far. The Pearson Foundation is heading the course-writing effort. But Pearson Education, which owns textbook houses like Prentice Hall and sells an array of multimedia classroom tools, will market 20 of the new courses to schools and districts. The Gates Foundation, which has promoted the common core standards movement in its philanthropy, is providing $3 million so that four of the 24 courses can be offered free to schools, partly to give educators a taste of how the digital courses can be used in classrooms.
benton.org/node/57249 | New York Times
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GOVERNMENT PERFORMANCE

IMPROVING SERVICE DELIVERY WITH IT
[SOURCE: The White House, AUTHOR: President Barack Obama]
By Executive Order, President Barack Obama has ordered all Federal agencies to develop, in consultation with the Office of Management and Budget (OMB), a Customer Service Plan (plan) to address how the agency will provide services in a manner that seeks to streamline service delivery and improve the experience of its customers. As used in this order, the term "customer" refers to any individual or to any entity, including a business, tribal, State or local government, or other agency, to which the agency directly provides significant services. The plan shall set forth the agency's approach, intended benefits, and an implementation timeline for the following actions:
(a) establishing one major initiative (signature initiative) that will use technology to improve the customer experience;
(b) establishing mechanisms to solicit customer feedback on Government services and using such feedback regularly to make service improvements;
(c) setting clear customer service standards and expectations, including, where appropriate, performance goals for customer service required by the GPRA (Government Performance and Results) Modernization Act of 2010 (Public Law 111-352);
(d) improving the customer experience by adopting proven customer service best practices and coordinating across service channels (such as online, phone, in-person, and mail services);
(e) streamlining agency processes to reduce costs and accelerate delivery, while reducing the need for customer calls and inquiries; and
(f) identifying ways to use innovative technologies to accomplish the customer service activities above, thereby lowering costs, decreasing service delivery times, and improving the customer experience.
The plans are due in six months.
benton.org/node/57212 | White House, The
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April 2011

Pulitzer, Elisabeth Sladen Lead the Blogs

April 28, 2011 (Consumer groups urge combined merger reviews for AT&T)

Foundations Join to Offer Online Courses for Schools

NBCU Moving Ahead In Theme Park Talks