June 2011

June 18-24: AT&T/T-Mobile Update

We return this week to the story that's been dominating our Headlines since mid-March: AT&T's acquisition of T-Mobile.

First off, thankfully, there's no worries: the deal is on track to close by March 2012. No problems. No unexpected resistance. Nothing to see here behind the curtain. Or so says AT&T. The company's general counsel, Wayne Watts, met with DC reporters June 21 to reiterate that the deal will get done as things move along at both the Department of Justice and the Federal Communications Commission.

Typical of the support AT&T has gotten for the deal, the National Hispanic Foundation for the Arts sent a letter to the FCC this week citing the familiar arguments in favor of the merger from proponents: that it will speed the deployment of 4G wireless broadband to more than 97 percent of the population and increase the membership of the Communications Workers of America (CWA). The letter also touts AT&T's commitment to preventing online piracy of movies and music while T-Mobile's efforts have been "less than adequate." NHFA argues the acquisition of T-Mobile would benefit content creators because AT&T has gone much further than T-Mobile to ensure its networks aren't used to download pirated content.

But the NHFA's letter of support is also typical of a darker side of this debate. Much of AT&T's support has come from organizations with direct financial ties to AT&T. The Hill reported that NHFA received a total of $10,000 in contributions from AT&T over the past five years. In eWeek , Wayne Rash reports that AT&T is liberally distributing donations to non-profit organizations and making promises to them about rural broadband Internet service that it likely won’t keep to encourage them to say positive things to the FCC about the acquisition. AT&T’s own congressional testimony, Rash points out, about the merger has shown that T-Mobile’s wireless services are concentrated in urban areas. AT&T’s buyout of T-Mobile will have little effect on whether or not AT&T ever extends wireless broadband services to rural areas.

Rash focuses on support for the acquisition from the Internet Innovation Alliance and its new honorary chair, former Rep Rick Boucher. Last week Boucher managed a press call in which he gently reminded IIA members to promote the deal and this week The Hill reported him arguing that the deal will not adversely impact competition in the wireless market. Absent in the coverage, Rash points out, is that Boucher is now a partner with the law firm of Sidley Austin. Sidley Austin maintains both legal and lobbying offices in Washington. One of the companies that Sidley Austin represents, and has for over 100 years, is AT&T. And, of course, AT&T is also a major sponsor of IIA.

Art Brodsky, the communications director for deal opponent Public Knowledge, dove a little deeper into CWA's support for the deal after noticing the union's supportive advertisement at this month's Netroots Nation conference. CWA claims that the acquisition will give 20,000 current T-Mobile non-union employees “a real opportunity” to form a union.

CWA doesn't mention that T-Mobile in 2009 was named “one of the 100 best companies to work for” by Fortune magazine, the first telecom company to be so included. Avoiding layoffs and having generous child care subsidies were the reasons T-Mobile was included. And, more to the point, T-Mobile now has about 40,000 employees. So CWA took half of them right off the top, assuming that CWA partner, job-killing, but unionized AT&T, wouldn't keep them around.

Brodsky concludes: "The bottom line: for a chance – just a chance — to get 20,000 new members, CWA is willing to lead progressive organizations and Democrats into a world in which AT&T and the (nonunion) Verizon Wireless rule the air, creating an almost duopoly, setting up a GSM monopoly, squeezing out smaller players and setting the stage for higher prices, fewer features on phones, and more stringent bandwidth caps. Or just about anything else those two companies want to do as their protectors in Congress (hint: not usually Democrats) will resist regulation to the bitter end claiming the 'market' will solve all and that we couldn't possibly have regulation."

With the support of labor and many non-profit groups, AT&T is gaining the backing of many Members of Congress. At our deadline, a letter to Attorney General Eric Holder and Federal Communications Commission Chairman Julius Genachowski circulating in the House asks the regulators reviewing the merger to keep in mind AT&T's promised benefits of the deal.

This week also saw AT&T launch its first ad touting the network improvements that would result from the deal.

Even all this effort, however, can't seem to mask a heavy undertow working against approval of the deal. On June 18, Gay & Lesbian Alliance Against Defamation (GLAAD) President Jarrett Barrios resigned http://benton.org/node/78367 his post and quickly thereafter six board members stepped down as well. http://benton.org/node/79221 The resignations came in the wake the organization's letter in support of AT&T/T-Mobile.

On the ground, we're already seeing the impact of the proposed deal. The Wall Street Journal reported that with he outlook for retail stores uncertain, some T-Mobile dealers are selling out or slicing back expansion plans, creating new challenges for T-Mobile as it tries to hang on to subscribers and dealing another blow to landlords already coping with a string of retail bankruptcies. And Politico reported that, if the deal goes through, AT&T and Verizon could dominate the mobile backhaul market. The future of the independent backhaul business may be at risk. Under a new AT&T-Verizon pact, the two largest wireless companies have a reciprocal arrangement to provide infrastructure to connect each other’s wireless data traffic wherever one or the other is the incumbent wireline provider. Smaller companies could be squeezed out of the market as a result.

June 20 was the FCC deadline for public commenters to make their case against approving the deal.

The New York State Public Service Commission warned the FCC that the deal could significantly harm public interest and stifle competition for wireless services. NYPSC stopped short of calling on the FCC to deny the $39 billion merger, but it urged the commission to closely evaluate on a market-by-market basis how it could impact wireless concentration. New York can influence the transaction by successfully arguing that state residents, particularly those in New York City, will be "disproportionately" affected.

A coalition of public interest groups blasted the deal , arguing the transaction would harm consumers and curtail competition in the wireless market. "Removing one of three direct competitors with AT&T from the nationwide market — and its only competitor in the GSM submarket — would leave a void that no other carrier is capable of filling," the groups state. "Removing T-Mobile, in particular — a consumer-friendly, price-disciplining, maverick provider of low-cost and innovative mobile wireless products in an increasingly consolidated market — implicates the public interest even more palpably. "No amount of rhetoric or economic gerrymandering of markets can change that fact." The public interest groups claim AT&T has previously resisted investing to improve capacity and deploy next generation wireless networks as competitor Verizon Wireless has done. The groups argue AT&T shouldn't be rewarded by attaching its willingness to build out its network to the government's approval of the merger. "'Maximizing AT&T's wealth' is not, and never has been, a public interest benefit justifying any merger, much less a legally cognizable merger-efficiency that could justify increasing concentration in an already highly-concentrated industry," the groups state.

Free Press disputed at the FCC (and Congress http://benton.org/node/79275) AT&T’s claims that the merger will bring better broadband coverage and improved service to consumers, create jobs and increase investment, and lower prices. "AT&T's argument basically boils down to the proposition that what's good for AT&T is good for the country. Of course, the FCC and the Department of Justice cannot accept this self-serving claim," said Free Press Policy Director Matt Wood. Free Press says AT&T's promises exaggerate any minimal benefit associated with the merger.

First, even if AT&T does not merge with T-Mobile, competitive pressure will force to AT&T to serve these areas with its own LTE network. According to public statements, Verizon’s LTE network will cover these areas in the next several years.2 If AT&T fails to offer the fastest speeds to consumers, there is no doubt that it will lose significant market share to Verizon. Thus, AT&T cannot afford to delay significantly its deployment of LTE.
Second, all of these areas will be served by AT&T’s “4G” HSPA+ service by the end of 2012. The HSPA+ service will delivers speeds exceeding 7 megabits per second. At that point, the incremental value of the transition to LTE will be negligible: real world speed tests indicate that the difference in downstream speed between 4G HSPA+ and 4G LTE is not particularly significant, and studies suggest that consumers may not perceive significant value in moving from one 4G technology to another.
Third, even if AT&T never builds out its LTE network to 97% of the population, Verizon’s network will reach those citizens, so they will still have the opportunity to subscribe to LTE service. Thus, the merger is clearly not necessary to bring next-generation broadband to all Americans.

Public Knowledge's analysis of the deal finds it to be illegal (see also). PK finds that AT&T’s acquisition of T-Mobile violates Section 314 of the Communications Act because the merger will reduce the competitors for international wireless subscribers' roaming services in the US. A number of foreign carriers and governments have raised the international roaming question and protested that losing T-Mobile means going from 2 national GSM-based networks down to 1. Even if we adopt AT&T’s standard of only looking at local markets, ignoring national markets, and assuming all carriers are equal, you still have many local markets where you drop from 2 GSM-based carriers networks to just AT&T. And in the markets where you have another local GSM-based carrier, the number drops from 3 to 2. Why does that matter? Because GSM is the standard for almost every other country in the world. To do international roaming with most of the world, at least until we have broader LTE deployment here and in other countries (where LTE deployment is even slower than here), you need a GSM-based partner. So the presence of Sprint, Verizon, or any other CDMA-based carrier is irrelevant to the impact on international roaming. Post merger, in most markets, it’s either AT&T or no one.

So even as AT&T continues to offer the "inevitability" story line, there's still a long way to go in this drama. Although AT&T is touting the support of unions and non-profits, as noted above, there's more and more scrutiny of the claims those groups are making.

The National Hispanic Media Coalition's Jessica Gonzalez points out how important this debate is for the Latino community -- nearly 25% of T-Mobile’s 34 million customers are Latino. Why? More affordable service, flexible plans, and customer service. Gonzalez also points to the jobs at risk if the deal is approved.

ColorOfCahnge.org launched a campaign to raise awareness of the deal's potential negative consequences for African Americans. The group also questions the major civil rights groups that have come out in support of the merger. “The deal is likely to destroy jobs, raise the price of cellular service and threaten net neutrality for wireless high-speed Internet,” the group claims. “Protecting net neutrality for wireless broadband in increasingly important as more and more people use their phones to access the Internet, especially African Americans,” says a new report from the group. Color of Change’s study says that combining the two companies would effectively get rid of the competition, causing a snowball of other problems to gather, and that false and deceptive arguments have been used to support the merger.

We continue to monitor all the coverage of the deal and you can track it. We'll see you next week in Headlines.

June 24, 2011 (Congress May Fast-Track Spectrum Auctions)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, JUNE 24, 2011

Another Cybersecurity hearing today http://benton.org/calendar/2011-06-24/

AT&T/T-MOBILE
   Lawmakers wooed on mega-merger
   Netroots Nation and Others Led Astray on AT&T Takeover Of T-Mobile - editorial
   National Hispanic Foundation for the Arts cites IP protection in backing AT&T/T-Mobile merger

MORE SPECTRUM/WIRELESS
   Congress May Fast-Track Spectrum Auctions
   House Panel Suggests More Testing for LightSquared
   Appropriations Amendment Aims To Protect GPS
   The Future According to Eric Schmidt
   Companies begin to set policies for mobile devices [links to web]
   Restrictions on GPS Data Use Considered in Congress [links to web]
   NetAmerica Alliance Extending 4G LTE Services in Rural Areas [links to web]
   Study: Within Four Years, 70 Percent Of All Mobile Ads Will Be Local [links to web]
   Apple Files Patent Suit Against Samsung [links to web]

INTERNET/BROADBAND
Broadband stimulus status report: Fiber Shortage - analysis
How PARC wants to reinvent the Internet

CYBERSECURITY
   Hacker behind AT&T iPad breach pleads guilty [links to web]
   China says no cyber warfare between it, US [links to web]
   Survey: 90% of Companies Say They've Been Hacked [links to web]

CONTENT
   Top ISPs poised to adopt graduated response to piracy
   The nation's new digital divide - analysis
   China a Concern as Senate Judiciary Reviews IP Law Enforcement Efforts [links to web]
   Viacom sues Cablevision over iPad streaming [links to web]
   Harry Potter and the amazing exploding book industry
   comScore: the iPad Owns 97 Percent of US Tablet Traffic [links to web]
   AT&T Scales Up Its Content Delivery Ambitions [links to web]
   The Web Is Shrinking - op-ed
   Copyright Lobby Takes Subtle Approach [links to web]

OWNERSHIP
   FTC to Serve Google With Subpoenas in Broad Antitrust Probe
   Google eyeing further display ad acquisitions
   Google Probe Stirs Echoes of Microsoft Antitrust Case
   Playing It Close in Wireless, With an Eye for Satellite Deals
   Apple Gets Antitrust Approval for Nortel Bid [links to web]
   Lessons from Mormon TV denial of Playboy program - op-ed

JOURNALISM
   Climate of Denial - op-ed
   Risen’s gripping affidavit
   Is Fox Rewriting Campaign Finance Rules? - op-ed
   46% Say Average Reporter Is More Liberal Than They Are
   When big data meets journalism [links to web]
   Associated Press gets Knight funding to create journalistic tool [links to web]
   Missing Iraq War Money Dominates Blogs [links to web]
   Newspapers battle falling advertising

TELEVISION
   Average Pay-TV Bill Is Up 3% From Last Year To $73.35 Monthly: Leichtman [links to web]
   SNL Kagan: Cable Subs Fall In 15 Biggest Markets [links to web]
   Lessons from Mormon TV denial of Playboy program - op-ed

PRIVACY
   Supreme Court strikes down Vermont data-mining regulation
   Drug Marketing and Free Speech - editorial
   Cloud computing requires new thinking on privacy [links to web]

TELECOM
Consumers Gain New Protections Against Fraudulent Caller ID “Spoofing” [links to web]

HEALTH
   Health care’s move from paper to pixels slow [links to web]
   The 12 Elements of a Successful Health IT Project - op-ed [links to web]
   Supreme Court strikes down Vermont data-mining regulation

CHILDREN & MEDIA
The Saga of Sister Kiki - editorial [links to web]
Technology keeps kids tethered to their parents longer than previous generations [links to web]

POLICYMAKERS
   Senate kills measure to defund policy 'czars' [links to web]
   OSTP's Deutchman to Join Neustar [links to web]
   A 21st Century Regulatory System - press release [links to web]

MORE ONLINE
Smart meter skirmish: Maine PUC explains opt-out fee decision [links to web]

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AT&T/T-MOBILE

WOOED BY MERGER
[SOURCE: Politico, AUTHOR: Kim Hart]
The Capitol Hill lobbying campaign surrounding the proposed merger of AT&T and T-Mobile continues to escalate. Proponents of the deal are circulating a letter on Capitol Hill that touts its potential benefits. They are seeking to persuade Democratic members — particularly those who represent rural districts — to sign on in support of the increased broadband coverage that advocates say will result from the acquisition. But public interest group Free Press has sent its own letter to House and Senate leaders, suggesting that AT&T’s promises to bring broadband to rural America as a result of its deal with T-Mobile are “greatly overstated.” The dueling letters underscore the massive lobbying operations at work on Capitol Hill to cajole members to take sides. Lawmakers in both chambers are spending a lot of time trying to find ways to allocate spectrum most efficiently in order to expand wireless broadband services to every pocket of the country. That emphasis bleeds into the debate on the $39 billion deal’s effect on rural consumers and wireless markets.
benton.org/node/79519 | Politico
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LABOR AND AT&T/T-MOBILE
[SOURCE: Public Knowledge, AUTHOR: Art Brodsky]
[Commentary] For sponsoring the Wi-Fi service at the Netroots Nation conference, the Communications Workers of America (CWA) get rights to the first screen that everyone at the event sees when signing on to the network. In past years, the opening message has been fairly innocuous, like a pitch for the union’s “speed matters” campaign for faster Internet service. Who can disagree with the need to invest in high-speed Internet connection, right?
This year was different. This year, without the knowledge of the conference organizers, attendees got something more potent and controversial — a pitch for the AT&T takeover of T-Mobile or, as the union characterized it on the home screen, “Fighting for collective bargaining rights at T-Mobile.” As the site said, “T-Mobile is up for sale, and a merger with AT&T will give more than 20,000 T-Mobile workers a real opportunity to form a union without fear of being fired.” Keep that 20,000 figure in mind. What that number doesn't tell you is that T-Mobile in 2009 was named “one of the 100 best companies to work for” by Fortune magazine, the first telecom company to be so included. Avoiding layoffs and having generous child care subsidies were the reasons they were included. More to the point, T-Mobile now has about 40,000 employees. So CWA took half of them right off the top, assuming that their partner, job-killing but unionized AT&T, wouldn't keep them around.
The bottom line: for a chance – just a chance — to get 20,000 new members, CWA is willing to lead progressive organizations and Democrats into a world in which AT&T and the (nonunion) Verizon Wireless rule the air, creating that almost duopoly, setting up a GSM monopoly, squeezing out smaller players and setting the stage for higher prices, fewer features on phones, and more stringent bandwidth caps. Or just about anything else those two companies want to do as their protectors in Congress (hint: not usually Democrats) will resist regulation to the bitter end claiming the “market” will solve all and that we couldn't possibly have regulation. It’s evident CWA is following an accepted path of enlightened self-interest. It’s not so evident why others who should know better follow them.
benton.org/node/79494 | Public Knowledge
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NHFA BACKS AT&T/T-MOBILE
[SOURCE: The Hill, AUTHOR: Gautham Nagesh]
AT&T has shown a commitment to preventing online piracy of movies and music while T-Mobile's efforts have been "less than adequate," according to a filing from the National Hispanic Foundation for the Arts. The group, which works to raise the profile of Hispanics in the entertainment industry, argued AT&T's proposed acquisition of T-Mobile would benefit content creators because AT&T has gone much further than T-Mobile to ensure its networks aren't used to download pirated content. "Through its corporate policies and internal operations, AT&T and its leadership have exhibited a commitment to safeguarding copywritten content and intellectual property such as music, movies, and images," wrote Chairman Felix Sanchez, who co-founded the group in 1997 with actor Jimmy Smits and others.
Sanchez acknowledged that NHFA has received a total of $10,000 in contributions from AT&T over the past five years, with no "substantial" contributions before that time period. He said AT&T promised nothing to his group during that time period and noted that the NHFA has regularly submitted comments on issues in front of the Federal Communications Commission.
benton.org/node/79492 | Hill, The
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MORE SPECTRUM/WIRELESS

FAST-TRACK FOR SPECTRUM AUCTIONS?
[SOURCE: TVNewsCheck, AUTHOR: Kim McAvoy]
Congress may grant the Federal Communications Commission authority to conduct incentive auctions of broadcast television spectrum sooner than expected — possibly this summer — by attaching the authorizing language to the critical debt-ceiling bill that appears headed for passage in the next few weeks. The National Association of Broadcasters has been closely monitoring the debt-ceiling discussions for months, understanding that it could be the vehicle for the spectrum auctions, says Dennis Wharton, executive vice president for media relations. At the same time, NAB has also been "working hard to ensure that spectrum-related provisions would include replication and interference protections for the vast majority of TV stations that will choose to remain in business," Wharton says. "The 46 million viewers who rely exclusively on free and local television for news, entertainment, sports, and life-saving weather information deserve nothing less,” he adds. Wharton says NAB wants to make sure that if a station is forced to relocate to another channel, that does not result in reduced coverage and hence a loss of potential viewers. "We also don't want our opportunity to do mobile DTV diminished,” he adds.
benton.org/node/79490 | TVNewsCheck
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LIGHTSQUARED HEARING
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The House Transportation Committee held a hearing on Global Positioning System (GPS) services and the potential impact of LighSquared's wireless broadband proposal. House legislators may require the FCC to hold off on considering LightSquared's revised plan for its proposed hybrid satellite/terrestrial nationwide 4G broadband network until "comprehensive new tests make sure the FCC is not approving a system that would pose risks to aviation safety." LightSquared counters that it can proceed without interfering with aviation or maritime operations. It also says that if opponents got their way and blocked FCC authorization of the service, it could undermine the value of broadcast and other spectrum at auctions, which the FCC is teeing up and Congress is looking at to help boost the Treasury. Aviation Subcommittee Chairman Tom Petri (R-WI) said that the revised plan had not been subject to a "full evaluation." He said that based on the witness testimony provided for the hearing about LightSquared, and the importance of protecting GPS for aviation safety and innovation, the subcommittee "may request that the FCC allow time for full, comprehensive testing of the plan" for "potential harmful interference impacts."
benton.org/node/79480 | Broadcasting&Cable
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LIGHTSQUARED AND FCC APPROPRIATIONS
[SOURCE: National Journal, AUTHOR: Juliana Gruenwald]
The House Appropriations Committee has waded into the controversy surrounding LightSquared's efforts to deploy its wireless broadband network and concerns that it will interfere with the use of global positioning systems used by both the government and private sector. The committee adopted an amendment to the fiscal year 2012 appropriations bill for the Federal Communications Commission that would bar the agency from allowing LightSquared or any other broadband provider to move forward with a service that would interfere with GPS services.
benton.org/node/79509 | National Journal | B&C
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THE FUTURE ACCORDING TO GOOGLE
[SOURCE: AdWeek, AUTHOR: Dylan Byers]
On stage at Cannes Lions, Eric Schmidt seemed like the kind of man—perhaps the only man, other than Steve Jobs—who could effortlessly convince an international crowd of 20- and 30-somethings to join a suicide cult and ascend with him to the heavens. Google’s executive chairman has that wealthy California brand of optimism that is as infectious as it is understated. He describes the future of human existence in the same calm way chef Thomas Keller might describe his roast chicken. Yes, it will change your life. But it’s only chicken. What does Schmidt’s future look like? “So I'm in Cannes and I want to buy a T-shirt,” he said. “My phone should be saying, ‘You can turn left here and go get 30 percent off your favorite brand.’ Then I go to the store and pay for it on my handset.” In other words, your phone will know what you want and it will allow you to pay for it without a credit card. “The best thing would be if Google knew what you wanted without you having to type it in,” Schmidt said. “With your permission, with a mobile phone we can trigger search queries about where you are.” But it gets better: In roughly a year, according to Schmidt, a third of all checkout stands in restaurants and retail stores will allow you to “tap and pay” with your mobile phone. “How big a market is that? We're talking trillions of dollars,” he said.
benton.org/node/79486 | AdWeek
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INTERNET/BROADBAND

FIBER SHORTAGE
[SOURCE: Connected Planet, AUTHOR: Joan Engebretson]
[Commentary] Engebretson checked in with some broadband stimulus winners to see how their projects were coming along. With the exception of some problems obtaining fiber that has caused some delays, all four of the stimulus winners are progressing well. A couple of them already have customers using broadband service that was made available as a result of the stimulus program -- and jobs clearly have been created as a result of the program. Three people mentioned the fiber shortage. “I heard from our fiber vendor that the tsunami took Sumitomo off line,” said Joshua Broder, president of Tilson Fiber Technology, the company that is managing a large middle mile fiber project in Maine for stimulus winner Maine Fiber Company. Broder said the shortage hasn't impacted Maine Fiber’s project, in part because the organization was a Round 1 stimulus winner and already had a lot of its fiber on hand or in the pipeline before the shortage arose. Not everyone has been so fortunate. Tom Lorenz, operations manager for Minnesota-based stimulus winner Federated Telephone Cooperative said Federated’s fiber-to-the-home project was supposed to start at the end of May but that date has been pushed out to the first week in July because of delays in obtaining fiber.
benton.org/node/79422 | Connected Planet
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PARC REINVENTING NET
[SOURCE: GigaOm, AUTHOR: Janko Roettgers]
Xerox PARC’s engineers developed the Ethernet, the mouse, the laser printer and many other staples of everyday computing back in the 1970s. Forty years later, the lab is back at it: Teresa Lunt, VP and director of the computing science lab at PARC, showed off a new networking technology dubbed Content-Centric Networking (CCN) at GigaOM’s Structure conference in San Francisco. Networks used to be about getting messages from point A to point B, Lunt said. Today’s networks, on the other hand, are all about collaboration and sharing, be it with Dropbox or iCloud. Existing network technology wasn't made for this purpose, and companies have come up with patchwork solutions to make these new kinds of services work. PARC wants to replace all of this by putting the emphasis on the content, not points on the network it travels through. Content is automatically encrypted and cached all over the network, and queried by name and description. “Information is self-organizing, and you don't have to search for it,” explained Lunt. Think of it like a giant, autonomous mesh network of data. “With today’s network, data moves explicitly,” Lunt said. “With CCN, the data just moves.”
benton.org/node/79475 | GigaOm
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CONTENT

ISPs AND PIRACY
[SOURCE: C-Net|News.com, AUTHOR: Greg Sandoval]
Some of the country's largest Internet service providers are poised to leap into the antipiracy fight in a significant way.
After years of negotiations, a group of bandwidth providers that includes AT&T, Comcast, and Verizon are closer than ever to striking a deal with media and entertainment companies that would call for them to establish new and tougher punishments for customers who refuse to stop using their networks to pirate films, music and other intellectual property. This has been in the works a long time. The Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA), the respective trade groups for the four major record companies and six top Hollywood film studios, have labored for years to persuade ISPs to take a tougher antipiracy position. Under the proposed plan, participating bandwidth providers would adopt a "graduated response" to subscribers who repeatedly infringe copyrights. ISPs would first issue written warnings, called Copyright Alerts, to customers accused by content creators of downloading materials illegally via peer-to-peer sites, the sources said. Should a subscriber fail to heed the warning, an ISP could choose to send numerous follow-up notices. The plan, however, requires ISPs to eventually take more serious action.
benton.org/node/79448 | C-Net|News.com
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THE NEW DIGITAL DIVIDE
[SOURCE: Minneapolis Star-Tribune, AUTHOR: John Rash]
[Commentary] The 'digital divide' seems wider than ever. No, not the differences in Internet access caused by income inequality. Great strides have been made bridging that gap ever since the issue was dramatized by a photo-op of President Bill Clinton and Vice President Al Gore wiring a California high school to make sure its lower-income students had equal Web access. No, today's yawning digital divide is between left and right, liberals and conservatives, Democrats and Republicans. That ideological gap -- a gulf, really -- separates the Netroots Nation and RightOnline confabs taking place in Minneapolis this weekend, almost within earshot of each other. This divide's impact is profound -- for digital media, sure, but just as much for politics, and thus for citizens, at a time when the state and the nation face enormous problems that polarization aggravates. Even media scholars and experts wonder whether digital media mirrors, or causes, these divisions.
benton.org/node/79431 | Minneapolis Star-Tribune
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ROWLING AND DIGITAL PUBLISHING
[SOURCE: GigaOm, AUTHOR: Mathew Ingram]
Despite the obvious demand, Harry Potter author J.K. Rowling has adamantly refused to offer electronic versions of her phenomenally popular series for young adults — until now. As part of the launch of an interactive website called Pottermore, the billionaire writer also announced that e-book versions of the novels will be available directly through the site for all major platforms. In one fell swoop, Rowling has cut both her publishers and booksellers such as Amazon out of the picture. Not everyone has that kind of power, of course, but Rowling’s move shows how the playing field in publishing continues to be disrupted. The author said the Pottermore site will offer extra content that she has written about the characters in the books, which have sold an estimated 450 million copies and made her one of the most successful authors of all time. There will also be a social network of sorts built into the site that allows readers to connect with each other, play games and share their thoughts about the novels and their characters. Rowling said the site will launch in beta at the end of July for a small group of users, and their feedback will be used to develop the full version that will launch in October.
benton.org/node/79441 | GigaOm | The Atlantic
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THE WEB IS SHRINKING
[SOURCE: Wall Street Journal, AUTHOR: Ben Elowitz]
[Commentary] Online video is exploding, with annual user growth of more than 45 percent. Mobile-device time spent increased 28 percent last year — with average smartphone time spent doubling. And social networks are now used by 90 percent of U.S. Internet users — for an average of more than four hours a month. But what’s happening to the rest of the Web? The Web Is Shrinking. Really. When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore. And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period. We've known that social is growing lightning fast — notably, Facebook consumption, which grew by 69 percent — but now it’s clear that Facebook is not growing in addition to the Web. Rather, it’s actually taking consumption away from the publishers who compete on the rest of the Web. In the last year, Facebook’s share of users’ time online grew from one out of every 13 minutes of use nationwide, to one out of every eight. In aggregate, that means the document Web was down more than half a billion hours of use (that’s more than 800 lifetimes) this March versus last March. And in financial terms, that represents a lost opportunity of $2.2 billion in advertising inventory that didn't exist this year.
[Elowitz is founder and CEO of Wetpaint]
benton.org/node/79512 | Wall Street Journal
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OWNERSHIP

FTC TO SUBPOENA GOOGLE?
[SOURCE: Wall Street Journal, AUTHOR: Thomas Catan]
The Federal Trade Commission is poised to serve Google with civil subpoenas signaling the start of a wide-ranging, formal antitrust investigation into whether the search giant has abused its dominance on the Web. The five-member panel is preparing within days to send Google the formal demands for information. Other companies also are likely receive official requests for information about their dealings with Google at a later stage. From Google's perspective, the FTC's embryonic antitrust probe is the most serious to date in the U.S. Although Google has faced numerous antitrust investigations in recent years, at least in the U.S., federal inquiries have so far largely been limited to reviews of its mergers and acquisitions. The new FTC investigation, by contrast, will examine fundamental issues relating to Google's core search-advertising business, which still accounts for the majority of its revenue. Those issues include whether Google—which accounts for around two-thirds of Internet searches in the U.S. and more abroad—unfairly channels users to its own growing network of services at the expense of rivals'.
benton.org/node/79464 | Wall Street Journal | paidContent.org
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GOOGLE EYES MORE ACQUISITIONS
[SOURCE: Reuters, AUTHOR: Kate Holton]
Google will buy more companies to boost its presence in the booming online display ad sector in a challenge to Facebook, even as European regulators examine its dominant web search position. Speaking to a small group of reporters on the sidelines of the Cannes Lions advertising festival, Executive Chairman Eric Schmidt said the group would continue to snap up companies that specialized in handling display ads such as banners and video. "It would be good to have more diversified revenue," Eric Schmidt said, just days after Google announced plans to buy AdMeld to grab a larger slice of the market for graphical display ads. "I would argue that we're doing really well there. We started off with largely text ads, and now we have this display business which is going to end up being a $10 billion, $20 billion kind of business. It will be very large." The vast majority of Google's revenue, which totalled roughly $29 billion in 2010, comes from the small ads that appear alongside its search results.
benton.org/node/79462 | Reuters
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GOOGLE AND MICROSOFT
[SOURCE: Wall Street Journal, AUTHOR: Don Clark, Ashby Jones]
In the 1990s, the US government accused Microsoft of hobbling competitors who wanted to be noticed on personal-computer home screens. Now, competitors want prominent rankings in Google's search-engine results -- and the government is again raising questions. Legal experts are divided about the merits of the Federal Trade Commission's investigation of Google. But most agree that the issues raised are similar to those that came up during the Justice Department's battle with the world's largest software company.
"It is Microsoft redux," said Gary Reback, a Silicon Valley antitrust lawyer who attacked Microsoft before and has pushed for action against Google. "It is almost exactly the same case."
Just as Microsoft's Windows operating system was seen as a crucial platform for rivals hoping to distribute add-on software, Google's search engine is seen as a tool that Internet companies can't do without. Specialized search engines and others—notably Microsoft—allege that Google manipulates its technology to lower the rankings of companies offering rival services. Other critics believe the company manipulates the auction process that determines how much companies pay to advertise in connection with specific search terms.
benton.org/node/79514 | Wall Street Journal
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WHAT ARE CHARLIE'S PLANS?
[SOURCE: New York Times, AUTHOR: Evelyn Rusli]
If Charles Ergen has a master plan for his deal-making, the 58-year-old founder and chairman of Dish Network and EchoStar isn't sharing the strategy publicly. The billionaire has been on a takeover tear this year, making $2.3 billion in acquisitions. While the businesses operate in similar industries, it is not clear how they will fit in Ergen’s empire. Through his loosely connected companies, he has bought DBSD North America, a bankrupt satellite operator; Blockbuster, a bankrupt movie rental chain; the assets of Move Networks, a once high-flying video service that has since sputtered; and Hughes Communications, a satellite Internet company. He is not done, either. He is closing in on a deal for TerreStar, another bankrupt satellite operator. With an offer of $1.38 billion, EchoStar has been named the stalking horse bidder, setting the floor for the purchase price. A rival will have to pay at least $1.44 billion to win TerreStar. If Ergen prevails, he will score a coveted piece of broadband spectrum. Analysts say the combination of TerreStar and DBSD could be even more valuable — if that is even his plan.
benton.org/node/79516 | New York Times
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KSL-TV AND NBC
[SOURCE: The Christian Science Monitor, AUTHOR: Bill Baker]
[Commentary] Last week, KSL-TV, the Mormon-owned NBC affiliate in Salt Lake City, decided not to carry “The Playboy Club,” a slick prime-time drama about the 1960s nightclub run by Playboy Magazine founder Hugh Hefner. KSL says the decision isn't about the show’s content, which is likely to be no racier than the usual network fare, but is instead about branding. Playboy’s values and KSL’s values are opposed, they say, and they want everybody to know it. KSL’s decision is proof that there is vitality in the longstanding affiliate system, which gives local station owners a say in which programs they decide to broadcast to their communities. Media consolidation has given Americans a world where decisions are increasingly made by conglomerate owners in offices far away from the communities their decisions affect. Some conglomerates are as big as 50 stations, which means that one decision made to benefit the bottom line can end up impacting tens of millions of viewers. More consolidation means that values and local taste are less and less a part of the equation that determines what ends up on TV.
benton.org/node/79511 | Christian Science Monitor, The
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JOURNALISM

CLIMATE OF DENIAL
[SOURCE: Rolling Stone, AUTHOR: Al Gore]
[Commentary] The news media is the referee in the current wrestling match over whether global warming is "real," and whether it has any connection to the constant dumping of 90 million tons of heat-trapping emissions into the Earth's thin shell of atmosphere every 24 hours. The contest over global warming is a challenge for the referee because it's a tag-team match, a real free-for-all. In one corner of the ring are Science and Reason. In the other corner: Poisonous Polluters and Right-wing Ideologues. The referee — in this analogy, the news media — seems confused about whether he is in the news business or the entertainment business. Is he responsible for ensuring a fair match? Or is he part of the show, selling tickets and building the audience? The referee certainly seems distracted: by Donald Trump, Charlie Sheen, the latest reality show — the list of serial obsessions is too long to enumerate here. But whatever the cause, the referee appears not to notice that the Polluters and Ideologues are trampling all over the "rules" of democratic discourse. They are financing pseudoscientists whose job is to manufacture doubt about what is true and what is false; buying elected officials wholesale with bribes that the politicians themselves have made "legal" and can now be made in secret; spending hundreds of millions of dollars each year on misleading advertisements in the mass media; hiring four anti-climate lobbyists for every member of the U.S. Senate and House of Representatives.
benton.org/node/79469 | Rolling Stone
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RISEN AFFIDAVIT
[SOURCE: Columbia Journalism Review, AUTHOR: Clint Hendler]
James Risen, one of The New York Times’s top national security reporters, filed an affidavit in a federal district court explaining why he refuses to comply with a subpoena demanding he give testimony that would identify his source (or sources) for a chapter in his 2006 book State of War. The chapter at question described a series of intelligence failures in the CIA’s attempts to keep tabs on Iran’s nuclear program. And while that’s the subject of record for this leak investigation, Risen suggests in the filing that that’s not what he thinks kicked off the chain of events that has led to the government’s quest to force him to testify:
“I cannot help but think that the fact that I had written earlier, both in the Times and State of War, about the administration’s legally questionable domestic eavesdropping program, had something to do with the selective attention that was being focused on the Times and me.”
That story, of course, exposed a highly-controversial Bush administration program, won a Pulitzer, and kicked off congressional reforms of the surveillance system. Risen’s 22-page affidavit is a stirring defense of the value of his reporting, and of the need for journalists covering national security to be able to protect the confidentiality of their sources so that they may bring matters of public interest to light.
benton.org/node/79467 | Columbia Journalism Review
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FOX AND CAMPAIGN RULES
[SOURCE: The Huffington Post, AUTHOR: Jim Jaffe]
[Commentary] Were I to attempt to influence Texas Gov. Rick Perry's decision on joining the 2012 presidential race by writing him a check for a million dollars, I'd probably get a lot of critical media attention and risk prosecution for violating campaign finance laws. Were I to write him a check for the same amount in return for being my personal advisor or a television host on my network -- conditional on his staying out of the race -- I'd simply be quietly influencing the race in much the same way that Roger Ailes, president of Fox News, has. There's a widespread belief that a major reason Mike Huckabee and Sarah Palin have stayed out of the race is to retain their generous stipends from Fox -- reputed to be $500,000 and $1 million respectively, well beyond what either made as governor -- which refuses to retain a network personality formally in the presidential race. The question here isn't whether Fox is doing anything improper or whether this is part of a scheme by Roger Ailes to become GOP kingmaker, a role he's long allegedly aspired to, or perhaps GOP kingkiller. It is merely musing about whether we see the development of a new political tactic -- history suggests that such ideas spread far more quickly than the rules can be changed -- and whether we'll next see others -- Hollywood liberals offering production deals, Wall Street consulting contracts, corporate America speaking fees -- that will divert credible candidates who aren't rich enough to spurn such offers or egocentric enough to be single-minded about their candidacy. Such a development probably wouldn't improve the candidate pool in the years ahead.
benton.org/node/79437 | Huffington Post, The
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PUBLIC PERCEIVES JOURNALISTS AS LIBERAL
[SOURCE: Rasmussen Reports, AUTHOR: ]
Voters still think most reporters are politically biased and tend to view them as more liberal than they are.
A new Rasmussen Reports national telephone survey finds that 67% of Likely US Voters believe that most reporters, when covering a politician campaign, try to help the candidate they want to win. Only 21% think most reporters put the emphasis instead on trying to offer unbiased coverage. Twelve percent (12%) are not sure. Forty-eight percent (48%) also believe that most reporters would hide any damaging information they learned to help the candidate they wanted to win. Twenty-nine percent (29%) disagree and 23% are not sure. A plurality (46%) of voters continues to feel that the average reporter is more liberal than they are. Eighteen percent (18%) say the average reporter is more conservative than they are, while 22% think their views are about the same. Fourteen percent (14%) are undecided.
benton.org/node/79428 | Rasmussen Reports
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NEWSPAPERS AND ADVERTISING
[SOURCE: Financial Times, AUTHOR: Ben Fenton]
In 1950, with television sets in only 9 per cent of homes, a UK street of 100 houses could be relied on to buy 140 newspapers a day and 220 on Sunday. In 2010, when each of those houses contains an average of 2.6 TVs, the same street bought just 40 papers a day, Monday to Sunday. Some advertising revenues fled to TV as it developed in the 1950s, 1960s and 1970s, but not in such great numbers as to ruin newspapers which could still rely on huge circulation sales income. According to the AA/Warc Expenditure Report, in 1998, the first year it recorded online advertising spend, advertisers spent £2.4bn ($3.8bn) buying space in newspapers, at today’s prices, and £19.4m online. It projects that by 2012, they will spend £4.7bn online and £1.7bn in newspapers.
benton.org/node/79502 | Financial Times
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PRIVACY

DATA-MINING BAN STRUCK DOWN
[SOURCE: ModernHealthcare.com, AUTHOR: Joe Carlson]
In a victory for pharmaceutical and data-mining companies, the Supreme Court has struck down a Vermont statute that sought to outlaw the practice of pharmacies selling information to drugmakers about doctors' prescribing habits. In a 6-3 decision, the High Court ruled that Vermont's law violated constitutional protections on free speech even though lawmakers drafted it with the goal of preventing pharmaceutical companies from using direct marketing to convince doctors to prescribe more-costly drugs to patients. "While Vermont's goals of lowering the costs of medical services and promoting public health may be proper, (the contested law) does not advance them in a permissible way," Justice Anthony Kennedy wrote for the majority. Vermont's law sought to prohibit pharmacies from selling the information to drug companies for marketing purposes and to prevent data "detailers" from using the information to sell more drugs. However, the law continued to let healthcare researchers buy the information for research purposes.
benton.org/node/79425 | ModernHealthcare.com | Associated Press | Supreme Court
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DRUG MARKETING AND FREE SPEECH
[SOURCE: New York Times, AUTHOR: Editorial staff]
[Commentary] Pharmaceutical companies, which spend billions of dollars a year promoting their products to doctors, have found that it is very useful to know what drugs a doctor has prescribed in the past. Many use data collected from prescriptions processed by pharmacies — a doctor’s name, the drugs and the dosage — to refine their marketing practices and increase sales. The Supreme Court on Thursday made it harder for states to protect medical privacy with laws that regulate such practices. In dissent, Justice Stephen Breyer explains that the law’s only restriction is on access to data “that could help pharmaceutical companies create better sales messages.” He notes that any speech-related effects are “indirect, incidental, and entirely commercial.” By applying strict First Amendment scrutiny to this ordinary economic regulation, he warns, the court threatens to substitute “judicial for democratic decision-making.” The law would have been upheld, Justice Breyer says, if the court had treated it as a restriction on commercial speech, which is less robustly protected than political speech. The court’s majority unwisely narrows the gap between commercial and political speech, and makes it harder to protect consumers.
benton.org/node/79518 | New York Times | WSJ - 2 victories
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June 2011

June 18-24: AT&T/T-Mobile Update

June 24, 2011 (Congress May Fast-Track Spectrum Auctions)

Lawmakers wooed on mega-merger

Drug Marketing and Free Speech

Playing It Close in Wireless, With an Eye for Satellite Deals

Google Probe Stirs Echoes of Microsoft Antitrust Case

The Web Is Shrinking

Lessons from Mormon TV denial of Playboy program

Appropriations Amendment Aims To Protect GPS

Health care’s move from paper to pixels slow