May 27, 2011 (AT&T, T-Mobile, and Competition)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, MAY 27, 2011
Headlines will return TUESDAY, MAY 31 -- enjoy the holiday weekend.
AT&T/T-MOBILE
Recap: How Will the Proposed Merger Between AT&T and T-Mobile Affect Wireless Telecommunications Competition?
California Regulators Move to Investigate AT&T, T-Mobile Deal
How wireless policy affects minorities - op-ed
NHMC To Oppose AT&T’s Acquisition of T-Mobile - press release
A Stand-Alone T-Mobile Isn't an Option for the Future. So What’s Best for Consumers and Workers? - op-ed
Boucher Backs AT&T/T-Mobile [links to web]
AT&T Wants to Give You an 80s Makeover - op-ed
MORE ON WIRELESS/SPECTRUM
Coming soon from Google: make your phone your wallet - press release
EBay Sues Google Over Mobile-Payments System [links to web]
CONTENT
Senate Judiciary Approves PROTECT IP Act, But Sen Wyden Throws Up Roadblock
E-Reader Usage Growing Much Faster Than Previously Predicted [links to web]
CYBERSECURITY
Cybersecurity Plan Faulted by US Chamber of Commerce
TELEVISION
Bloomberg: Comcast is cheating [links to web]
Comcast, NBCUniversal units form $750 million fund [links to web]
Cablevision Makes Its Case for Retransmission [links to web]
NAB on Retransmission: It Ain't Broke [links to web]
TV Networks See Key Audience Erode [links to web]
Florida Cuts Public Broadcasting Funding [links to web]
PTC Pushes High Court to Take Indecency Case [links to web]
PRIVACY
Industry-backed Group Looks to Help App Developers Create Privacy-Friendly Policies [links to web]
Chairman Rockefeller Says Children's Online Safety Should Be Top Priority [links to web]
UNIVERSAL SERVICE REFORM
FTTH Council to FCC: Preserve USF 'High Cost' fund
American Cable Association Recommends 16 Mb/s Broadband Target for USF
ADVERTISING
Congressional Group Calls On Online Ad Providers To Do More To Stop Piracy [links to web]
Google knocks off Yahoo as US display ad leader [links to web]
FTC Seeks Input for Revising Its Guidance to Businesses About Disclosures in Online Advertising - press release [links to web]
Zuckerberg in Paris [links to web]
HEALTH
Pentagon Plans to Consolidate Military Health Records [links to web]
Healthcare IT spending to hit $40B this year [links to web]
Mobile Phones Improve Diabetes Care in Rural Locations, Study Finds [links to web]
HHS Seeking Input on Boosting Health Data Exchange Security [links to web]
JOURNALISM
How Roger Ailes Built the Fox News Fear Factory [links to web]
James O'Keefe Wins Nonprofit Status From IRS [links to web]
POLICYMAKERS
New Members of President’s National Security Telecommunications Advisory Committee - press release [links to web]
White House tech booster knows the way to San Jose [links to web]
STORIES FROM ABROAD
Asia Will Become the New Center of the Internet [links to web]
Good News for Netflix: Shaw Raises Bandwidth Caps [links to web]
Companies in confusion over ‘cookie’ laws [links to web]
MORE ONLINE
Agencies identify 78 services for cloud transition [links to web]
Wisconsin Governor signs landline phone bill [links to web]
Tribune bankruptcy Fees Top $150 Million [links to web]
Literacy is about a lot more than reading and jobs [links to web]
The Rights of Students With Disabilities When Educational Institutions Use Technology - press release [links to web]
Pirate Radio Station Equipment Seized [links to web]
AT&T/T-MOBILE
AT&T HEARING RECAP
[SOURCE: House of Representatives Judiciary Committee]
The House Committee on the Judiciary's Subcommittee on Intellectual Property, Competition and the Internet held a hearing on AT&T's proposed acquisition of T-Mobile on May 26. Lawmakers from both sides of the aisle expressed skepticism that the transaction would lead to the consumer benefits that AT&T has promised.
"There are legitimate questions about whether this merger could move this market past the anti-competitive tipping point," said Rep Bob Goodlatte (R-VA). Rep Goodlatte, Rep Darrell Issa (R-CA), and others also expressed concern that AT&T would have the power to price "backhaul" -- the connections between cell towers and voice networks or the Internet -- so expensively that smaller carriers would be unable to compete. Rep Mel Watt (D-NC) expressed concern about the impact on innovation if just three major carriers remain. And he worried aloud about handsets, like the iPhone, being available only on major carriers.
AT&T Chairman Randall Stephenson painted the proposed transaction as a way to extend the company's reach into the countryside and other underserved areas. "It's about achieving this with private capital," Stephenson told the panel. "We continue to invest at a very aggressive pace."
Rep Ben Quayle (R-AZ) argued that prices had not gone up as the market consolidated and that higher prices would likely give new companies incentive to get into the market for wireless service. But Rep John Conyers (D-MI) dismissed At&T's arguments, saying there was a potential cost in terms of lost jobs, innovation and smaller competitors."Everything that we're talking about that's so great from this merger is really already accomplishable," he said. "I see absolutely no redeeming reason for this merger." Rep Conyers said AT&T did not need to buy T-Mobile to deliver on the promise to build out wireless broadband to 97% of the country. Stephenson begged to differ, saying they needed both the spectrum and the marketplace incentive to build out next generation mobile wireless service to 97% of the country that the deal would enable. He said that the company's business plan was based on getting a return on investment, and that expanding its customer base by T Mobile's 30 million subs would help justify the business decision to build out 4G wireless to 55 million additional customers, particularly in rural areas where there had not been an economic model.
Parul Desai of Consumers Union pointed out that AT&T had been cutting jobs for most of the last decade. Stephenson countered saying that was on the wireline side, not wireless, which had shown steady growth. He said, short-term, there could be some job loss, but that long-term it should create jobs, particularly union jobs.
George Mason University Professor Joshua Wright, who expressed generally pro-merger views, said the level of concentration in the backhaul market is sufficient to provoke scrutiny from the Justice Department, but doesn't reach the level where it would spur an automatic probe. Stephenson countered the special access concerns by saying that the market for backhaul includes a diverse array of choices, including cable companies.
Analysts widely expect AT&T will have to sell off pieces of its business if federal regulators decide they are going to approve the deal. Under pressure from Rep. Maxine Waters (D-CA), Stephenson promised to explore the ways that the company might be able to favor minority or women-owned businesses when it is making those sales. "Yeah, we would obviously look at considerations for the kinds of folks we could help in business development and economic development and folks who normally wouldn't have an opportunity to do this, we would give that evaluation," he said.
benton.org/node/69588 | House of Representatives Judiciary Committee | Reuters | B&C | The Hill | National Journal - Issa | AdWeek | National Journal | NYTimes | WashPost | The Hill
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CALIFORNIA TO REVIEW AT&T/T-MOBILE
[SOURCE: Wall Street Journal, AUTHOR: Shayndi Raice]
California state regulators moved to launch an investigation of AT&T's proposed $39 billion acquisition of T-Mobile USA, opening another front in the battle over the controversial deal. AT&T has notified five states that it is seeking to acquire T-Mobile USA and asking that those states not oppose or investigate the deal.
In three of those states, California, West Virginia and Louisiana, Sprint has requested that the states open a formal investigation. Louisiana's public utility commissioners have signaled they would like to investigate the deal. California's size gives the state more clout, however.
benton.org/node/69616 | Wall Street Journal | Bloomberg
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HOW WIRELESS POLICY AFFECTS MINORITIES
[SOURCE: Politico, AUTHOR: Henry Rivera]
[Commentary] Latinos and African-Americans lead the way in mobile broadband use — subscribing at a rate of 53 percent and 58 percent, respectively, and both groups will be disproportionately affected if providers fail to keep up with the demand for more spectrum. The wireless industry is looking into market-based solutions. AT&T’s recently announced merger with T-Mobile is one example. The near future means a fully connected world, and to get there, both long and short-term solutions need to be considered. AT&T told the FCC that, if the merger is approved, the company will deploy next-generation 4G Long Term Evolution wireless networks — lightning-fast mobile Internet speeds comparable to wired broadband in the home — to more than 97 percent of Americans. AT&T said it can provide higher-quality and faster service while also closing coverage gaps. Given that minority communities rely on wireless services as their primary means for Internet access, the merger should offer these communities greater accessibility to reliable services. All communities can gain from a healthy wireless industry that will offer widespread options to the best technologies, create jobs through infrastructure upgrades, increase construction and deployment projects and foster online business opportunities — while allowing everyone to participate in a digitally connected society. [Rivera is a partner at Wiley Rein, a law firm serving as counsel to Deutsche Telekom on the proposed sale of T-Mobile USA. He is also chairman of the Minority Media and Telecommunications Council, chairman of the FCC’s Advisory Committee on Diversity in the Digital Age, and General Counsel of the Benton Foundation]
benton.org/node/69586 | Politico
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NHMC OPPOSES AT&T/T-MOBILE
[SOURCE: National Hispanic Media Coalition, AUTHOR: Press release]
The National Hispanic Media Coalition filed a petition to deny AT&T’s acquisition of T-Mobile.
NHMC’s decision was reached after extensive research and consideration of how this deal will impact the Latino community. To its credit, AT&T’s record in the Latino community is commendable. AT&T has a distinguished history of outreach to and philanthropic support of the Latino community, as well as an excellent record of hiring and retaining Latinos at all levels of employment. On balance, however, NHMC has determined that AT&T’s positive corporate responsibility is outweighed by the negative long-term harms that this acquisition will have on consumers, generally, and people of color in particular. “As so many Americans are struggling financially, particularly Latinos, over 25% of whom are in poverty, NHMC will ask the FCC to ensure that its decision protects the most vulnerable consumers so that they are not disproportionately harmed by higher prices,” said Jessica J. González, NHMC’s Vice President of Policy & Legal Affairs. “The evidence, unfortunately, points to the sad reality that this acquisition will lead to higher mobile phone prices, fewer consumer choices, poor customer service, and layoffs.” Latinos pay more for mobile service than any other demographic group. Latinos, on average pay $102 a month on T-Mobile, compared to $120 a month on AT&T, $117 on Sprint and $115 on Verizon. 25% of T-Mobile customers are Latino, and many of them choose T-Mobile because of its affordability, flexibility and excellent customer service.
benton.org/node/69583 | National Hispanic Media Coalition
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CWA BACKS AT&T/T-MOBILE
[SOURCE: BroadbandBreakfast.com, AUTHOR: George Kohl]
[Commentary] A stand-alone T-Mobile is not an option for the future. German parent company Deutsche Telekom had announced that it was seeking a deal and had considered a speculative offer, Sprint and AT&T for the sale. T-Mobile did not have the cash or spectrum to invest in a next-generation, 4G LTE wireless network. And without a 4G network, there could be no future for T-Mobile, its customers and employees. AT&T and T-Mobile use the same technology. Combining T-Mobile and AT&T spectrum turns two two-lane roads into a four lane superhighway. AT&T is willing to put up $8 billion in extra investment. And AT&T, a financially healthy company, will pay for the transaction in equity and internal cash flows. In contrast, a merged Sprint/T-Mobile is simply unable to use T-Mobile’s assets to best advantage of U.S. consumers. Sprint still has not integrated its 2005 Nextel purchase, and it uses a different wireless technology than T-Mobile. Sprint’s “BB minus” non-investment grade bond rating would have increased the cost of capital that Sprint would have had to borrow for the T-Mobile purchase and network investment. So the question that regulators must consider as they weigh the AT&T/T-Mobile transaction is not “how can we preserve the current wireless market structure?” but “will the consumer benefits from this transaction outweigh any potential reduction in competition?” In other words, will the combined spectrum and financial efficiencies of AT&T/T-Mobile enable it to build out its wireless infrastructure to more places, more quickly than would have happened without the merger? And will sufficient competition and regulatory oversight promote innovation and protect consumers? The answer is yes. [Kohl is Communications Workers of America senior director for legislation and policy.]
benton.org/node/69581 | BroadbandBreakfast.com
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AT&T'S 80s MAKEOVER
[SOURCE: The Huffington Post, AUTHOR: Timothy Karr]
[Commentary] If you were around in the 80s, you might be experiencing a horrible flashback right about now because AT&T, that monopoly that once lorded over your rotary phone, has resurfaced with a scheme to rule your mobile phone as well. If regulators allow AT&T's takeover of T-Mobile, we would be left with a wireless market that is far more consolidated than the markets for oil, banking, automobiles and air travel. What does that mean? To achieve comparable consolidation in the oil industry, ExxonMobil would have to merge with BP, Shell, Chevron-Texaco and Citgo. And to make the comparison even more acute, these oil giants would not only be merged as ExxonMobil, but you would be required to buy only ExxonMobil gas for the next two years, or pay a steep termination fee. It means that a service that is becoming as critical to Americans as affordable, reliable water and electricity will be under the thumb of two companies that place their narrow profit incentive above the interests of everyone else.
benton.org/node/69578 | Huffington Post, The
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MORE ON WIRELESS/SPECTRUM
GOOGLE WALLET
[SOURCE: Google, AUTHOR: Rob von Behren, Jonathan Wall]
On May 26, along with Citi, MasterCard, First Data and Sprint, we gave a demo of Google Wallet, an app that will make your phone your wallet. You'll be able to tap, pay and save using your phone and near field communication (NFC). We’re field testing Google Wallet now and plan to release it soon. Google Wallet is a key part of our ongoing effort to improve shopping for both businesses and consumers. It’s aimed at making it easier for you to pay for and save on the goods you want, while giving merchants more ways to offer coupons and loyalty programs to customers, as well as bridging the gap between online and offline commerce. Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You'll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet. At first, Google Wallet will support both Citi MasterCard and a Google Prepaid Card, which you'll be able to fund with almost any payment card. From the outset, you'll be able to tap your phone to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync your Google Offers, which you'll be able to redeem via NFC at participating SingleTap™ merchants, or by showing the barcode as you check out. Many merchants are working to integrate their offers and loyalty programs with Google Wallet. With Google Wallet, we’re building an open commerce ecosystem, and we’re planning to develop APIs that will enable integration with numerous partners. In the beginning, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, we plan on expanding support to more phones.
benton.org/node/69545 | Google | paidContent.org | Bloomberg
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CONTENT
PROTECT IP UPDATE
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The Senate Judiciary Committee didn't waste any time passing the PROTECT IP Act in a markup May 26. The bill takes aim at rogue overseas web sites pirating content, including TV shows and movies. The bill builds on last year's proposed COICA legislation, which would have given the government power to go to court and get a website's domain name blocked from American DNS servers. Credit card companies and advertising networks would be forbidden to do business with such sites. It is supported by the major studios, unions, broadcasters and cable operators, but fair use fans still have issues with what they say are overbroad powers that could send the wrong signal to foreign governments.
Sen. Ron Wyden (D-OR) said he is placing a hold on the bill: "I understand and agree with the goal of the legislation, to protect intellectual property and combat commerce in counterfeit goods, but I am not willing to muzzle speech and stifle innovation and economic growth to achieve this objective," Sen Wyden said, arguing the bill takes an "overreaching approach to policing the Internet when a more balanced and targeted approach would be more effective. The collateral damage of this approach is speech, innovation and the very integrity of the Internet."
Sherwin Siy, deputy legal director for Public Knowledge said: “We are disappointed that the Senate Judiciary Committee today approved legislation (S. 968) that will threaten the security and global functioning of the Internet, and opens the door to nuisance lawsuits while doing little if anything to curb the issues of international source of illegal downloads the bill seeks to address. We note that a paper on the technical aspects of the bill found that the provisions to allow Internet Service Providers to cut off access to web sites by failing to direct them via the Domain Name Service (DNS) would ‘undermine the universality of domain names,’ a fundamental building block of the Internet, would be only “minimally effective’ and would frustrate security initiatives online. The paper, by leading Internet engineers, said the bill would ‘promote development of techniques and software that circumvent use of the DNS. These actions would threaten the DNS’s ability to provide universal naming, a primary source of the Internet’s value as a single, unified global communications network.’”
benton.org/node/69576 | Broadcasting&Cable | ars technica | ars technica - Wyden hold | The Hill | National Journal | Public Knowledge
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CYBERSECURITY
CHAMBER OF COMMERCE VS CYBERSECURITY
[SOURCE: Wall Street Journal, AUTHOR: Siobhan Gorman]
The US Chamber of Commerce rejects as "regulatory overreach" the core of a new White House proposal for protecting America's computer systems from cyberattacks, according to an internal draft document. The criticism comes as a blow to the White House, where officials thought they had secured the influential business group's support. The Chamber's stance could threaten the prospects for the administration's approach, cybersecurity specialists said. "You need the Chamber to be supportive," said James Lewis of the Center for Strategic and International Studies, who advised the administration on the issue. White House officials "thought they had gotten a fair degree of support from the Chamber and others." The Chamber issued a press release after the White House's plan was released last week, welcoming the proposal. But Chamber officials say they have found significant areas of concern. "The draft may be tough, but we are trying to be responsible and engage policy makers," a Chamber official said. "It's reflecting our concerns [about] potential regulation as we see them." The Chamber's main complaint is that the White House plan would require certain companies running the most-crucial infrastructure to submit to more rigorous outside oversight of their cybersecurity practices.
benton.org/node/69613 | Wall Street Journal
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UNIVERSAL SERVICE REFORM
FTTH USF COMMENTS
[SOURCE: LightWave, AUTHOR: Stephen Hardy]
The Fiber to the Home Council (FTTH Council) has told the Federal Communications Commission (FCC) that the “High-Cost” portion of the Universal Service Fund (USF) is essential to rural telecommunications providers and should be maintained. The FCC has proposed a reduction in the High-Cost USF allotment in favor of a “Connect America Fund” (CAF). The FTTH Council asserts that many rural telecom providers rely on the High Cost fund – both directly and as a means to acquire loans – to improve broadband services within their potentially underserved areas. Conversely, the CAF would only target unserved areas – and at a level the FTTH Council charges will be generally below what is available in most urban and suburban communities. The CAF would fund connections that would support 4 Mbps downstream and 1 Mbps upstream. However, the FTTH Council cited research that predicts that consumer demand for symmetrical bandwidth will “easily” surpass 25 Mbps within five years. The FTTH Council says it isn't against the establishment of the CAF. However, it believes the goals of the FCC and the CAF would be better served by combining the CAF with the existing High Cost USF funds. In this way, broadband would arrive for unserved areas, while the 8 million to 10 million people who live in areas where broadband providers receive High Cost fund support could hope for improved services.
benton.org/node/69550 | Lightwave
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ACA USF COMMENTS
[SOURCE: telecompetitor, AUTHOR: Joan Engebretson]
An association that represents small cable companies, including some owned by small rural telcos, advocates a minimum broadband speed of 16 Mb/s downstream and 4 Mb/s upstream for the proposed broadband Universal Service program. The American Cable Association (ACA) made its recommendation in comments filed with the FCC this week about Universal Service reform. The ACA is not the only organization filing comments with the FCC that has said the 4 Mb/s downstream – 1 Mb/s upstream minimum speed recommended by the commission is too low. But others arguing against that target have not specified an alternative speed.
Other recommendations made by the ACA in its filing include:
Funding for broadband should come from reductions in the high-cost Universal Service fund
Eliminating high-cost support where competition exists
Providing broadband support to unserved households on a competitively-neutral and objective basis
Providing a reasonable but not unlimited transition period
benton.org/node/69548 | telecompetitor
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