November 2011

Big Brands Like Facebook, But They Don't Like to Pay

Everybody wants to be liked. The question for Facebook Inc. is how much advertisers are willing to pay for the opportunity.

Facebook's estimated market value, now in the neighborhood of $70 billion, is founded on the belief that companies will spend big to advertise on the site. Facebook's revenues, which come largely from ads, were $1.6 billion in the first half of this year, up $800 million from a year earlier. But most of its ads were for small advertisers, such as local businesses and small-scale websites, according to comScore Inc. Facebook is under pressure to grow its advertising on a grand scale, and to snag the sort of big brand names who now drive billions of dollars to TV, radio and print campaigns. U.S. consumers spent 15% of their online time at Facebook in September, according to comScore. But Facebook is expected to capture just 6.4% of total online ad spending this year, according to estimates by research firm eMarketer Inc.

Apple in His Own Image

Tim Cook promised that Apple wouldn't change when he took over the company's helm from Steve Jobs in August. But the low-key Cook has already put his operational mark on Apple in ways that suggest the company won't be entirely the same as under its intense and tempestuous co-founder.

Cook has tended to administrative matters that never interested Jobs, such as promotions and corporate reporting structures. The new chief executive, 50 years old, has also been more communicative with employees than his predecessor, sending a variety of company-wide emails that address Apple employees as "Team." Cook has also displayed some different corporate philosophies from Jobs. The new CEO recently announced a charitable program promising Apple would match employee donations to non-profits of up to $10,000 a year, starting in the U.S. In contrast, Jobs said at a company off-site meeting last year that he was opposed to giving money away. Much about the technology giant hasn't changed and isn't expected to. Cook, an Apple veteran who became chief operating officer in 2005 and who ran the company during Jobs's multiple medical leaves, isn't a fan of reorganizations, said a person familiar with the matter. He is also a fierce believer in Apple's culture, which prizes product development and design and preaches intense secrecy. But the moves Cook has made since he officially took over the CEO title on Aug. 24 provide signs of how he will seek to run Apple in the years ahead, imposing more discipline on a place that for years was guided by Jobs's gut.

Tribune hopes bankruptcy exit plan can be altered to win approval

Tribune Company and its allies in bankruptcy court were optimistic that their plan for reorganizing the company would eventually win a Delaware judge's approval. But even as lawyers hunkered down to analyze a long-awaited decision in the case, several sources acknowledged that significant challenges remain to resolve the nearly 3-year-old bankruptcy.

Particularly problematic could be the judge's concern over how the senior creditors' plan treated a group of investors who hold junior bonds known as the PHONES. The PHONES have more than $1 billion in claims but get nothing in the company-sponsored plan. U.S. Bankruptcy Judge Kevin J. Carey took issue with how the Tribune-sponsored plan deals with the PHONES subordination agreement. Sources said it was likely that the decision would energize the PHONES trustee, Wilmington Trust Co., to press for a slice of the settlement proceeds, potentially adding another level of complexity to the case. Tribune employees, meanwhile, reacted with alarm to the judge's rejection of plan provisions shielding them from litigation stemming from the company's 2007 leveraged buyout. Tribune had sought releases for employees who sold Tribune stock into the deal.

Stop Online Piracy Act would stop online innovation

[Commentary] A bipartisan bill introduced last week in the House of Representatives would mark a fundamental change in Internet law, shifting liability for copyright piracy from the infringer to the host website.

It would chip away at critical safeguards that have shaped the Internet as we know it today, and many worry it would make it far more difficult for the next YouTube, Facebook or Craigslist to emerge and succeed. The Stop Online Piracy Act (SOPA) is the counterpart to the Senate's pending PROTECT IP Act, which already had rights groups, academics and many online businesses up in arms. But the House bill goes much further. The goal of both bills is to give copyright holders stronger legal tools to go after sites that host unauthorized or counterfeit music, movies, software or goods, in particular "rogue" overseas sites that largely lie beyond the reach of U.S. law. It's a worthy goal, but not one worth sacrificing a critical enabler of online innovation, job creation and expression. "The limitation, censorship or stunting of such tools - because they may not support the guidelines of SOPA - would inevitably be bad for content creators and democracy more broadly," said Aaron Levie, chief executive officer of Box.net, a Palo Alto online storage and collaboration service. It's impossible to understand what the bill could do without first understanding the enormous influence of the Digital Millennium Copyright Act.

ONC seeks opinions on mobile devices as health info tools

Department of Health and Human Services Office of the National Coordinator for Health Information Technology wants to gauge consumer attitudes about using mobile devices to communicate personal health information.

The ONC is planning an educational campaign to convey to consumers the need for private and secure health information exchange, and data collected throughout the course of the 24-month campaign will inform the ONC's creation of pertinent public messages and websites. With the notice's publication, the ONC is looking for public comment on a proposal to expand the campaign's data collection to include asking consumers for their opinions on using mobile devices to communicate personal health information. The educational campaign itself was mandated by the Health Information Technology for Economic and Clinical Health Act provisions of the American Recovery and Reinvestment Act of 2009, but consumers' ever-increasing reliance on mobile technology means the original proposed data collection needs tweaking, according to the ONC.

UK rural areas asked to aid mobile Internet trial

Vodafone is to test innovative technology in an effort to improve mobile internet coverage in rural areas.

Amid government concern over mobile “not spots” outside main population centers, the company will unveil plans to trial devices that can be installed in local facilities such as community centers and pubs. These will provide high-quality data-carrying signals using existing phone lines. They can be used to project a 3G network across areas otherwise without coverage, and could also be used for the next-generation 4G coverage. Their range is likely to be limited to a few hundred metres, so a remote village or town would need several sites to provide comprehensive coverage. Vodafone will seek 12 communities across the UK to take part in the trial, which will start early next year. It has so far used the technology in the Berkshire village of East Garston near its Newbury headquarters. The government has identified improving mobile coverage in rural areas as a priority, committing an additional £150m to boost services. High-speed internet connections are seen as key to boosting local economies. Ed Vaizey, the communications minister, said: “Bringing mobile coverage to communities can make a huge difference to people’s lives. It is good to see Vodafone looking for innovative ways to bring mobile coverage to rural areas. I urge areas without mobile coverage to get involved and see if this trial is suitable for them.”

Ofcom says big areas still lack all 3G signals

Nearly 90 per cent of the UK’s land mass and a quarter of buildings are unable to receive all five 3G phone networks a decade after the introduction of the mobile licenses, according to the telecoms regulator.

In its first report on the UK’s communications infrastructure, Ofcom said that almost 7.7m homes and workplaces did not have a choice of all five 3G networks, which allow fast internet access. The regulator is working with the government on the best way to invest the £150m set aside to improve coverage, in particular in so-called “mobile not-spots” in rural and remote areas left behind as operators prioritize investment in larger cities. Ofcom said signals from all five networks – Vodafone, Orange, T-Mobile, O2 and Three – were available outside 73 per cent of buildings. However, all five were available in just 13 per cent of the country’s land mass, with lower coverage focused in less densely populated areas. Coverage is worst in the Scottish highlands and mid-Wales. Overall, 30 per cent of the UK cannot receive any 3G signal, although this represents only 1.2 per cent of premises. Ofcom said its findings might not reflect consumers’ actual experience of mobile services, with complaints about coverage from users even in large cities. Consumer groups criticized the findings, with Bob Warner, chairman of the Communications Consumer Panel, saying the UK’s mobile phone coverage was unsatisfactory.

Why government should not touch the internet

[Commentary] The London Cyberspace conference is an elegant metaphor for why government involvement in the internet should be limited as much as possible.

Even its name is already out of date, as quaint as calling it the “information super-highway” these days. A roomful of young people, convened as a “Youth Forum” on the fringes of the conference, were asked if anyone used the word “cyber” any more. No one raised their hands. Registering as a journalist was a laborious process, involving uploading letters of accreditation, passport details and a photo. The Queen Elizabeth II conference center in Westminster was surrounded by police, including many carrying sub-machine guns. Yet, inside, the airport-style x-ray machine was broken and harassed security staff were reduced to giving cursory glances to bags. Hmm. Is there a parallel somewhere in there about elaborate firewalls while ministry staff leave unencrypted laptops in the back of taxis? No wonder then, that almost every presentation from an internet company was a thinly veiled plea to “please leave us alone.” The best line of the day was from Jimmy Wales, the founder of Wikipedia, saying that “the greatest threat to the internet was misguided and over-reaching government policy.”

AT&T defends job-creation claims, says ‘spillover’ from merger will help economy

AT&T defended its claim that its proposed merger with T-Mobile will create "thousands" of jobs in a filing with the Federal Communications Commission.

AT&T committed to not cut any U.S. call center jobs if the merger is approved and pledged to bring 5,000 call center jobs back to the U.S. from other countries. AT&T promised to extend a job offer to all "non-management" T-Mobile employees. "T-Mobile non-management employees whose job functions are no longer required because of the merger will be offered another position in the combined company," AT&T wrote. The most significant job creation will come from the economic "spillover effects" that will result from AT&T's investment in its high-speed wireless network, the company said. The company also argued that T-Mobile is a struggling company that might need to purge jobs soon if it is not allowed to merge with AT&T. Public Knowledge, a consumer advocacy group that opposes the deal, slammed AT&T for not providing enough details about the merger's impact on jobs. "The company is spending millions of dollars on TV ads claiming that its takeover of T-Mobile will create 96,000 jobs, but it can’t be bothered to tell the public how those jobs will be created," Gigi Sohn, president of Public Knowledge, said. “Instead, it continues to file more information under confidentiality restrictions that do nothing to answer the question how AT&T will reverse its trend of cutting 10,000 jobs per year if the takeover goes through.” AT&T says it only redacted confidential company data.

Critics of AT&T, T-Mobile merger see hope in court blocking of tax merger

Opponents of AT&T’s $39 billion bid for T-Mobile are finding hope in a court decision blocking another merger — between H&R Block and a tax software company. Some antitrust watchers point to similarities in the cases. The market concentration created by the combination of identical businesses wouldn’t uphold competition laws, the judge decided. Judge Beryl A. Howell of the U.S. District Court for the District of Columbia sided with the Justice Department, which sued to block the tax companies’ merger. Beryl’s findings haven’t been publicly released but some antitrust experts and public interest groups say the decision bodes poorly for the wireless megamerger.

“This case proves that antitrust law is alive, well and relevant to AT&T’s proposed takeover of T-Mobile,” said Harold Feld, legal director for public interest group Public Knowledge. The judge in the H&R Block case ruled that one of the largest companies in a competitive industry could not buy out a competitor, particularly when that competitor is seen as a maverick within that industry. The judge agreed with the Justice Department that a market dominated by the two biggest companies is not sufficiently competitive. We agree. Whether the market is tax-filing software or the wireless industry, the principles are the same. The fact that the opinion has not been released because of the large amount of confidential data presented in court filings means that those who on the surface think the Justice Department has a weak case in the AT&T matter would do well to remember we don’t know all that has been filed.”

Benton

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