November 2011

FCC in uncharted terrain on AT&T-T-Mobile

Faced with an unprecedented turn of events, the Federal Communications Commission must figure out how to handle the AT&T/T-Mobile deal now that the companies have asked to withdraw their applications from the agency. FCC officials have three options:

They can allow AT&T and Deutsche Telekom to withdraw the applications without prejudice, meaning the companies could refile at any time.
They can allow the proceeding to end with prejudice. In that case, the companies would not be able to resubmit their applications later.
They can go forward with its process to send the case to an administrative law judge and deny the companies’ request.

If the FCC decides to continue on that path and publish its hearing designation order, it could be even more damning for AT&T and T-Mobile. The order likely contains the FCC staff’s conclusions about the anti-competitive effects of the proposed merger and how the deal would affect consumer choice and prices.

The FCC has never faced this situation in a merger proceeding. The last time the FCC chose to send a merger proceeding to an administrative hearing was in 2002, when EchoStar and DirecTV tried to merge. The companies ended up dropping the deal entirely.

FCC process reform, spectrum top year-end agenda for House Commerce

The House Commerce Committee will vote on legislation to reform processes at the Federal Communications Commission in the coming weeks. FCC process reform joins legislation to authorize voluntary incentive auctions of spectrum among the committee's top priorities before the end of the calendar year. The telecom subcommittee will mark up a spectrum bill on Dec 1. Noticeably absent from the committee's list of priorities is any mention of data security legislation.

Fliers Must Turn Off Devices, but It’s Not Clear Why

In 2010, no crashes were attributed to people using technology on a plane. None were in 2009. Or 2008, 2007 and so on.

New technologies are often greeted with fear and that is certainly true of a disruptive technology like cellphones. Yet rules that are decades old persist without evidence to support the idea that someone reading an e-book or playing a video game during takeoff or landing is jeopardizing safety. Nevertheless, Les Dorr, a spokesman for the Federal Aviation Administration, said the agency would rather err on the side of caution when it comes to digital devices on planes. The government might be causing more unnecessary interference on planes by asking people to shut their devices down for take-off and landing and then giving them permission to restart all at the same time. According to electrical engineers, when the electronic device starts, electric current passes through every part of the gadget, including GPS, Wi-Fi, cellular radio and microprocessor. It’s the equivalent of waking someone up with a dozen people yelling into bullhorns. As more and more people transition from paper products to digital ones, maybe it’s time to change these rules.

Horror Show: Hollywood vs. Silicon Valley

[Commentary] Washington regulating the Internet is akin to a gorilla playing a Stradivarius. Yet many legislators are being urged to play by lobbyists for Hollywood, perhaps the most technology-intolerant industry.

The Motion Picture Association of America is the leading proponent for legislative proposals with ostensibly benign titles—the Stop Online Piracy Act in the House and the Protect Intellectual Property Act in the Senate. These bills would go so far to protect copyright that they would strangle the Internet with regulation. The Web would be transformed from a permissive technology where innovation is welcome to one where websites are shut down first, questions asked later. The legislation has bipartisan support and could come up for a vote before the end of the year. If it passes, the government will take down an entire website when a copyright holder claims an infringement online. A violation could be a single link on a single page, such as user-generated content that includes a movie clip or song lyric. It would also be unlawful for a site to "avoid confirming a high probability" of infringement. This is legalese to make websites responsible for anything posted on them or potentially posted on them by third parties. Payment providers, ad networks and search engines would get infringement notices barring them from working with these sites, which would put the sites out of business before any violation is proven. Silicon Valley has belatedly realized it must fight the new proposals.

Piracy vs. an open Internet

[Commentary] To avoid the reach of U.S. copyright laws, numerous online pirates have set up shop in countries less willing or able to enforce intellectual property rights. Policymakers agree that these "rogue" sites pose a real problem for U.S. artists and rights holders who aren't getting paid for the rampant distribution of their music, movies and other creative works. The question is how to help them.

Lawmakers keep offering proposals, but they don't seem to be getting any closer to the right answer. The latest, HR 3261, comes from House Judiciary Committee Chairman Lamar Smith (R-Texas) and a dozen co-sponsors. Dubbed the Stop Online Piracy Act, it's designed to isolate foreign websites that commit or "facilitate" willful copyright infringements by cutting off their funding and shrinking their U.S. audience. In that sense, it's similar to its counterpart in the Senate, S 968, the PROTECT IP Act, which the Judiciary Committee has approved.

Both bills go to risky extremes, however, in their efforts to stop these sites from attracting an audience. Of the two, the House bill goes further down the wrong path, weakening protections for companies — including those based in the United States — that enable users to store, publish or sell goods online. The change could force such companies to monitor everything their users do, turning them into a private security force for copyright and trademark owners.

Great Scott! Dunder Mifflin Morphs Into Real-Life Brand of Copy Paper

The struggles of fictional paper company Dunder Mifflin to compete with real-life office-supply chains like Staples Inc. are a running joke on NBC's "The Office." Now, an online outlet owned by Staples is using the Dunder Mifflin name to try to sell more copy paper.

Staples' Quill.com has struck a licensing deal with NBC's parent company to launch a Dunder Mifflin brand. Priced largely above private-label copy paper, the Dunder Mifflin packages will be emblazoned with slogans such as "Our motto is, 'Quabity First' " and "Get Your Scrant on," well-known phrases from the comedy series. The marketing deal is an effort to combat what Quill's chief marketing officer, Sergio Pereira, calls a "race to the bottom in the paper business." In the estimated $3 billion North American copy-paper market, sales have been declining at about 3% a year—even more during the recession, said Mark Connelly, an analyst at CLSA. The decline stems from a shrinking volume of workplace printing, in part due to the greater use of PDF documents and email. It doesn't help that consumers are most swayed by price when they buy paper, said Pereira. The Dunder Mifflin deal is an example of "reverse product placement." For decades, marketers have worked to embed their brands in the plots of TV shows and movies as a way to stand out in a crowded ad market. Nowadays, they are seeing value in bringing to life fictional brands that are already part of pop culture. That can be far cheaper than building brands from scratch.

When droids take your job

[Commentary] The stubbornly high unemployment rate has left policymakers wondering whether there's something more at work than just an unusually steep recession.

Have the country, its businesses and its markets changed in some fundamental way, leaving millions of Americans with skills that are no longer needed? Economists are sharply divided on that point, but two from the Massachusetts Institute of Technology make a compelling argument that the technology revolution is vaporizing careers faster than many Americans can embark on new ones. If the authors are right, there's no short-term fix to the fundamental problem U.S. workers face. But as lawmakers struggle to breathe life into the moribund economy and bring down budget deficits, they need to recognize that growth over the long term depends on how well the country harnesses the technology-fueled advances in productivity. That means equipping far more Americans with skills relevant to the new era. Otherwise, the stagnating wages and employment of the past decade will become the painful new normal.

Welcome to the first 'Twitter election'

Already, 2012 is shaping up to be the first “Twitter election,” but the social media site presents both pitfalls and opportunities for political campaigns.

The rise of new Internet services has been a game changer in recent campaign cycles. In 2006, a YouTube video of then-Sen. George Allen (R-VA) using the term “macaca” helped sink his reelection bid, and in 2008, then-Sen Barack Obama (D-IL), energized his young supporters through Facebook. In 2012, the Web phenomenon most likely to change the political dynamic is Twitter, the social networking site that creates a real-time loop of communication among its users. Patrick Hynes, a communications consultant who worked for John McCain’s 2008 presidential campaign and Tim Pawlenty’s Political Action Committee in 2011, said Twitter can be an effective tool for pushing stories onto the media’s radar.

GOP field running against the media

Media coverage of conservatives is again in the spotlight, with the furor over the treatment of presidential candidate Rep. Michele Bachmann (R-MN) on the “Late Night with Jimmy Fallon” TV show.

Fallon’s house band, The Roots, played a segment of Fishbone’s “Lyin’ Ass Bitch” to accompany Bachmann’s stage entrance night. Rep Bachmann was unaware of the musical reference at the time, but later described the incident as “an outrage” and “clearly a form of bias on the part of the Hollywood entertainment elite.” The controversy is the latest in a series of contentious media episodes that have marked the GOP presidential race, from a June Newsweek cover of a heavily photo-shopped Mitt Romney bearing the headline “The Mormon Moment” to the recent coverage of allegations of sexual harassment against Herman Cain. A number of GOP hopefuls — Bachmann, Cain and former House Speaker Newt Gingrich prominent among them — have responded with head-on attacks on the media. The attacks may be sincere but, experts say, they also have the advantage of having an electoral appeal, at least to the Republican electorate.

FCC Media Bureau Denies Complaint Against Raycom in Honolulu, But Says Combo Violates 'Intent' of Rules

The Federal Communications Commission’s Media Bureau has rejected Media Council Hawaii's (MCH) challenge to Raycom's combination of a duopoly and shared services agreement involving three stations in Honolulu, but it also signaled it agreed with MCH that the station combination violated the intent of FCC rules.

The bureau said it could take that into account at license renewal time and pointed out that the FCC was planning to look at shared services agreements in its quadrennial media ownership review. The bureau also fined Raycom $10,000 for not making its public inspection file available for public inspection on a timely basis.

"Media Council Hawaii is very disappointed with the Bureau's decision and will likely seek review by the full Commission," said Angela Campbell, counsel for the group. "The Bureau's failure to enforce the ownership limits here will been seen as a "green light" for others to evade the TV duopoly rule by entering into similar sharing arrangements. The commitment to address the issue of shared services in the 2010 quadrennial review, while welcome, is likely to come too late to prevent the significant loss of diversity and competition from these shared service agreements.

Benton

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