June 2011

Staff Changes at the FCC

Federal Communications Commission Chairman Julius Genachowski announced the appointment of Zachary Katz as Chief Counsel & Senior Legal Advisor. Katz will succeed Rick Kaplan, who recently became Chief of the Wireless Telecommunications Bureau. As Chief Counsel, Katz will manage the Commission’s overall policy agenda, and will be responsible for policy coordination among the Bureaus and Offices. In addition, he will continue to have specific responsibility for wireline, international and Internet issues, including universal service reform, Open Internet, and satellite matters.

In addition, Chairman Genachowski announced that Sherrese Smith, currently a Legal Advisor, will also become Senior Counsel; and Amy Levine, currently Special Counsel, will also take on a new role as a Legal Advisor. In her role as Senior Counsel & Legal Advisor, Smith will oversee the Media, Consumer, and Enforcement bureaus. Levine will take on new responsibilities overseeing the Wireless Telecommunications Bureau and Office of Engineering & Technology, adding to her portfolio that currently includes spectrum auction policy and public safety issues.

Katz currently serves as a Legal Advisor to Chairman Genachowski after serving as Deputy Chief of the Commission’s Office of Strategic Planning and Policy Analysis. He joined the FCC in 2009 from the White House Counsel’s Office and previously practiced law at Munger, Tolles & Olson in Los Angeles, focusing on transactional and litigation matters involving intellectual property. Katz served as a law clerk for the Honorable Kim M. Wardlaw of the U.S. Court of Appeals for the Ninth Circuit after receiving his law degree from Yale, where he was Editor-in-Chief of The Yale Law Journal and active in the Jerome N. Frank Legal Services Organization. Before law school he worked with technology companies at a strategy consulting and investment firm in Silicon Valley.

Meanwhile, FCC Commissioner Robert McDowell announced that Erin McGrath will be joining his staff as Acting Legal Advisor for media issues. Rosemary Harold, who has served as Legal Advisor for media issues to Commissioner McDowell since September 2008, has decided to begin considering other opportunities outside the Commission.

McGrath has worked at the Commission since March 2000, most recently as Assistant Division Chief in the Wireless Telecommunications Bureau’s Mobility Division. During this time, she engaged in numerous rulemaking proceedings, was instrumental in the review of several major wireless and media transactions, and managed post-auction licensing matters. She also served as the interim Legal Advisor to Commission Meredith A. Baker for wireless, international, and public safety issues. Ms. McGrath received her B.A. from the University of Pennsylvania and her J.D. from the Benjamin N. Cardozo School of Law.

Google’s $400 Million Admeld Deal to Get Justice Probe as FTC Reviews

Apparently, Google's planned purchase of Admeld, an Internet advertising company, will be subject to a probe by the Justice Department for its potential to hurt competition.

The review of the deal by the Justice Department comes at the same time the Federal Trade Commission is preparing a separate investigation of Google’s dominance of the Internet search industry. Simultaneous antitrust investigations of one company by the two agencies is “unusual,” said Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co., adding that probes by regulators are fast becoming the “new normal” for Google.

FTC Approves Skype Acquisition By Microsoft: Now For The Hard Part

Microsoft has received approval from the Federal Trade Commission for its $8.5 billion purchase of Skype. The FTC clearance is the latest, and a significant, bit of approval that Microsoft needs to complete the purchase. Although Microsoft has in the past faced regulatory problems for some acquisitions -- a $1.5 billion purchase of Intuit was blocked in 1994 -- this deal has so far gone relatively smoothly.

For Google, the search never ends

If you read newspapers or websites these days, it’s understandable if you conclude a couple of things about the search business: First, Google stands unchallenged; and second, search as a service is largely figured out. But you'd be wrong on both fronts.

In fact, as the person responsible for trying to make our search engine function better, I can attest to the fact that we face challenges — serious ones — all the time. Far from being a solved problem, search is constantly evolving. To understand where we are today, we need to go back to 2001. Back then, we had already built a better way to organize the online universe, making a wealth of information widely accessible. But when Al Qaeda attacked the U.S. on Sept. 11, we realized we were woefully inadequate.

Could MetroPCS take over T-Mobile's slot in the Tier I carrier ranks?

If AT&T succeeds in its bid to buy T-Mobile USA -- and it looks like it will -- the Tier I carrier ranks will shrink to just three operators. In today’s highly saturated mobile market, it’s hard to envision a new nationwide operator emerging, given the scarcity of spectrum and the difficulty of raising a voice and data network from the ground up. But MetroPCS seems to have just such intentions.

May 2011 US Online Video Rankings

comScore released data from the comScore Video Metrix service showing that 176 million U.S. Internet users watched online video content in May for an average of 15.9 hours per viewer.

The total U.S. Internet audience engaged in more than 5.6 billion viewing sessions during the course of the month. Google Sites, driven primarily by video viewing at YouTube.com, ranked as the top online video content property in May with 147.2 million unique viewers, followed by VEVO with 60.4 million viewers and Yahoo! Sites with 55.5 million viewers. Facebook.com came in fourth with 48.2 million viewers, while Viacom Digital ranked fifth with 46.5 million viewers. Google Sites had the highest number of viewing sessions with more than 2.1 billion, and highest time spent per viewer at 311 minutes, crossing the 5-hour mark for the first time.

Suit demands CNN offer online captions for deaf

As increasing numbers of Americans get their news online, the owner of CNN.com was accused in an Alameda County lawsuit of discriminating against the hard-of-hearing by failing to provide closed captions for videos posted on the Internet.

CNN's refusal to offer computer users the captions it provides to its television audience "excludes Californians who are deaf or hard of hearing from a wealth of critical information regarding current events," said the suit, a proposed class action in Superior Court on behalf of the state's hearing-impaired residents. More than 100,000 Californians are functionally deaf, lawyers said. They said the suit is the first in the nation to seek equal treatment for the deaf from a commercial content provider on the Internet. The refusal of Time Warner, CNN's owner, to offer closed captions is "astounding, given how central the Internet is in today's communication environment," said attorney Anna Levine of Disability Rights Advocates.

National Association of the Deaf Files Complaint against Netflix for Lack of Online TV and Movie Captioning

The National Association of the Deaf filed a lawsuit against Netflix alleging Netflix violates the Americans with Disabilities Act (ADA) by not providing equal access to its “Watch Instantly” Streaming Content.

This major federal lawsuit was filed in the U.S. District Court, District of Massachusetts, Western Division in Springfield, MA (Case No. 3:11-cv-30168). The lawsuit charges the entertainment giant with failing to provide closed captioning for most of its “Watch Instantly” movies and television streamed on the Internet. As a major player in the online-only video subscription business, Netflix has over 60% of the streamed video services market share. NAD is asking the court to declare that Netflix’s behavior constitutes a violation of Title III of the ADA, and to require that Netflix provide closed captions on all of its streaming content.

Average U.S. Smartphone Data Usage Up 89% as Cost per MB Goes Down 46%

The mobile Data Tsunami is still growing at an astounding pace. According to Nielsen’s monthly analysis of cellphone bills for 65,000+ lines, smartphone owners – especially those with iPhones and Android devices — are consuming more data than ever before on a per-user basis.

This has huge implications for carriers since the proportion of smartphone owners is also increasing dramatically. (Currently, 37% of all mobile subscribers in the United States have smartphones.) In just the last 12 months, the amount of data the average smartphone user consumes per month has grown by 89 percent from 230 Megabytes (MB) in Q1 2010 to 435 MB in Q1 2011. A look at the distribution of data consumption is even more shocking: data usage for the top 10 percent of smartphone users (90th percentile) is up 109 percent while the top 1 percent (99th percentile) has grown their usage by an astonishing 155 percent from 1.8GB in Q1 2010 to over 4.6GB in Q1 2011. Even as data usage has almost doubled, most users are paying around what they did a year ago for data. That translates to a lower cost per unit of data consumed. The amount the average smartphone user pays per unit of data has dropped by nearly 50 percent in the last year, from 14 cents per megabyte (MB) to a mere 8 cents.

Bold Analysis, Weak Solution

The Federal Communications Commission has finally released its much anticipated report on the “Information Needs of Communities” (aka the “Future of Media Report”). The 400-page report is a wide-ranging look at the media landscape with an eye toward two questions: whether people and communities are getting the news and information they need, and whether current media policy is furthering local public interest goals.

The Future of Media Report is significant in a number of respects. First, the analysis is one of the most comprehensive to come out of the FCC or any other agency on this topic. This is in large part due to the open and inclusive process staked out by Steve Waldman, the report’s author, as well as to the countless hours that the entire Future of Media team spent listening to diverse stakeholders.

Also remarkable is that the FCC (an agency that generally avoids criticizing the powerful industries it regulates) was so candid in its critique of the media industry, broadcast television and the agency itself. Indeed, the report’s findings vindicate what media reform groups, consumer groups and citizens themselves have been saying for years: Many broadcast stations aren't doing local news; paid propaganda is rampant on the airwaves; and the FCC doesn't always protect the public interest. But on balance, the report disappoints. The report recognizes problems, but punts on concrete proposals to fix them and on the FCC’s general responsibility to promote a vibrant media system.

Benton

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