September 2011

This bitter Beltway divide over tax policy driving the coverage—which intensified with President Obama’s latest proposals for reducing the deficit—made the U.S. economy the top story on last week’s news agenda. From September 19-25, the economy accounted for 23% of the newshole, up modestly from 20% the previous week, according to the Pew Research Center’s Project for Excellence in Journalism. And half of that economic coverage focused on the jobs and taxes debate set in motion by Obama’s September 8 speech introducing a $447 billion dollar job-creation package.

Last week, the major newsmaking event was the president’s September 19 speech on deficit reduction in which he called for some tax increases targeted at the wealthy. That triggered a fierce ideological battle in which Obama talked about the rich paying their “fair share” while opponents branded the proposal “class warfare.” A related budget story, and one characterized in the press as another example of Washington’s political dysfunction, was the No. 5 subject, at 4% of the newshole. That is the threat of a looming government shutdown, largely because of a dispute over how to fund the Federal Emergency Management Agency (FEMA). The No. 2 story last week was the presidential campaign (11%).

A Q&A with University of California Berkeley’s School of Information Dean AnnaLee Saxenian, who shed some light on the culture of Silicon Valley as it relates to innovation.

Touring Silicon Valley and meeting with the area’s leaders, you see almost immediately that there is an hierarchy similar to a university class structure or a fraternity. There are the fraternity presidents or upperclassmen — established companies that have achieved both financial success and critical acclaim. In the middle are the junior and sophomore treasurers and secretaries — companies that are recovering from an initial spurt of funding and press attention, wondering how best to capi­tal­ize on their new-found fame. And then there are the freshmen pledges — start-ups that are struggling through the rigorous hazing period with or without the guidance of an emerging upperclassman via seed money, angel investment or free advice.

The Federal Communications Commission has created the Rural Call Completion Task Force to investigate and address the growing problem of calls to rural customers that are being delayed or that fail to connect.

Rural telephone companies have reported a 2000% increase in complaints between April 2010 and March 2011 regarding incoming calls that are delayed, never completed, of poor quality, or lack accurate caller ID information. Failed or degraded calls not only undermine the integrity of the nation’s telephone networks and frustrate consumers, but they also pose a serious risk to public safety and harm the rural economy. The problem appears to be occurring in rural areas where long-distance carriers pay charges to complete calls to the local telephone company, calls which may be delivered using specialized call routing providers. The FCC is working to comprehensively reform the system that sets these rates – the intercarrier compensation system – to reduce opportunities and incentives for arbitrage and other manipulation schemes. Reform proposals would also tighten rules that require carriers to provide accurate information about call origin for billing and other purposes.

The Task Force will hold a workshop – tentatively scheduled for October 18 – to identify specific causes of the problem and discuss potential solutions with key stakeholders. Details about the workshop are forthcoming.

Issues for the Task Force and Workshop include:

• The extent of the call termination problem in rural areas
• The causes of the problem, including whether carriers are violating the law by blocking or restricting calls to other carriers
• Actions that can be taken by the Commission to address the problem
• The Rural Call Completion Task Force includes staff from the agency’s Wireline Competition, Public Safety and Homeland Security, and Enforcement Bureaus

According to a CitiGroup market analysis, there is no shortage of spectrum and control -- not availability -- of that spectrum is the constraint on mobile broadband. Citi says that U.S. carriers have 538 MHz of spectrum, but are only using 192 MHz, with another 300MHz "waiting in the wings" -- the amount the Federal Communications Commission is planning to free up.

"Too much spectrum is controlled by companies that are not planning on rolling out services or face business and financial challenges," said Citi. "And, larger carriers cannot readily convert a substantial portion of their spectrum to 4G services, because most existing spectrum provides 2G-3.5G services to current users." "We do not believe the US faces a spectrum shortage," Citi says. "However, unless incumbent carriers accelerate their 4G migration plans, or acquire more underutilized spectrum, upstart networks -- like Clearwire, LightSquared and Dish -- could have a material speed advantage over incumbent carriers provided that they can clear meaningful hurdles for funding and distribution." CTIA: The Wireless Association fired back, pointing out that the 300 MHz Citi presumes is in the wings includes 120 MHz of broadcast spectrum.