December 2011

Web is media game changer, says music chief

Pop legend Boy George once derisively called record-company executives “bank managers who wear jeans,” a view Hartwig Masuch, the be-jeaned chief executive of music-rights group BMG, seems to share.

“Artists don’t necessarily want ‘creative’ intermediaries anymore,” says the man whose clients include Will.i.am of the Black Eyed Peas and Quincy Jones. Cheap digital technology and the internet have put production and distribution so firmly into the hands of singers and writers that, he says, they no longer need big labels such as Universal or Sony, which once controlled access to expensive recording studios. BMG, owned by media group Bertelsmann and KKR private equity, is betting the content-producing record giant of the vinyl era has to become the content-brokering music company of the web age – and that this will apply to all media sectors. “The position of content providers is growing stronger. The middle men have to redefine how they add value,” Masuch said. Bertelsmann, which also owns RTL TV, Random House books and G&J magazines, is closely eyeing the Berlin-based venture as the media group casts around for ways to master the technology-driven changes in the media industry. Like musicians, authors are beginning to experiment with self-publishing on the web and TV-program makers are dabbling with the internet as a broadcaster.

Take the time to curate Facebook Timeline

[Commentary] I've often joked that if something's not on Facebook, it didn't happen. Facebook's new Timeline feature makes that adage even more apparent.

Timeline is Facebook's new way of presenting you to the world. It replaces your traditional profile page — the one with your headshot and a smorgasbord of personal musings, photos and other items to share with friends. Instead of just a snapshot of you today, Timeline is supposed to be a scrapbook of your whole life. But these highlights are culled from what Facebook sees as important — the stuff you and your friends have chosen to write or post photos about over the years. So it's crucial to spend time curating it, so your life doesn't come across as vain. If you're not careful, you also might reveal skeletons from your past to more recent friends. Once you're ready for Timeline, you have a week to airbrush your life before it replaces your current profile. That's not a lot of time when you have (cough, cough) years of your life to go through. I suggest focusing on the years since you joined Facebook. You can always add photos from childhood later.

It's Always Sunny in Silicon Valley

In Silicon Valley, all the Sturm und Drang of 2011 seemed as relevant as the Cricket World Cup. High unemployment? Crippling debt? Not in Silicon Valley, where the fog burns off by noon and it’s an article of faith that talented, hard-working techies can change the world and reap unimaginable wealth in the process.

“We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” says Google Chairman Eric Schmidt. “And what a world it is: Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in daily discussion, because their issues are not our daily reality.”

It was never clearer than in 2011 that Silicon Valley exists in an alternate reality—a bubble of prosperity. Restaurants are booked, freeways are packed, and companies are flush with cash. The prosperity bubble isn’t just a state of mind: Times are as good as they’ve been in recent memory. The region gets 40 percent of the country’s venture capital haul, up from 31 percent a decade ago, according to the National Venture Capital Assn. And the U.S. Bureau of Labor Statistics recently reported that growth of the area’s job market led the nation, jumping 3.2 percent, triple the national rate. Even real estate, a cesspool of despair in the rest of the country, is humming along. It’s next to impossible to get a table on a weekend night at the Rosewood in Menlo Park, a watering hole for Sand Hill Road’s technology financiers where the olive-oil-poached steelhead goes for $36. The closest we got to “Occupy: Cupertino” was the line outside Apple stores in October for the iPhone 4S.

FCC OKs AT&T’s Acquisition of Qualcomm Spectrum

The Federal Communications Commission has concluded its review of AT&T’s acquisition of all 11 of Qualcomm’s D and E Block licenses in the Lower 700 MHz band for $1.925 billion. AT&T is acquiring six megahertz of unpaired 700 MHz spectrum nationwide and an additional six megahertz of unpaired 700 MHz spectrum in five major metropolitan markets (New York, Boston, Philadelphia, Los Angeles, and San Francisco) with population totaling 70 million. The Applicants asserted that this transaction is in the public interest because it will enable AT&T to repurpose Qualcomm’s underutilized Lower 700 MHz D and E Block spectrum for the deployment of mobile broadband services by using supplemental downlink technology to couple it with paired spectrum that AT&T already holds.

The FCC’s analysis suggests that AT&T’s proposed acquisition of Qualcomm’s Lower 700 MHz D and E Block licenses has the potential to cause some competitive and other public interest harms. The FCC concludes, however, that these potential harms from AT&T’s acquisition of this unpaired spectrum can be mitigated with certain targeted conditions to prevent or limit any potential anticompetitive behavior. In particular, we conclude that our competitive concerns can be mitigated by ensuring that AT&T’s use of the newly acquired spectrum does not impede actual and potential competitors’ operation on neighboring spectrum in the provision of broadband services, and that AT&T cannot use the Qualcomm spectrum in a way that deprives other providers of the benefits of the Commission’s roaming rules.

So, in light of the FCC’s targeted conditions to address the potential for competitive harm and the likely public interest benefits flowing from the use of the spectrum at issue, the FCC approved the proposed transaction, subject to the conditions.

FCC Commissioner Michael Copps voted against the Order saying, “I could be persuaded, with the right set of pro-consumer conditions, to concur in the transaction. While much of the competitive analysis in today’s order is strong, the conditions the Commission does attach strike me as falling short of advancing the public interest demand.”

Commissioner Clyburn said, “I would have preferred that the Order found that the lack of interoperability is a merger specific issue that should be remedied by an interoperability condition similar to the one that the A Block licensees and other parties requested. But today, the policy priority for me is the most efficient path possible for interoperability in the lower 700 MHz band. In order to accomplish this, compromise among all stakeholders will be necessary.”

FCC Proposes Changes to Media Ownership Rules

The Federal Communications Commission is seeking comment on economic studies analyzing the relationship between local media market structure and the policy goals -- competition, localism, and diversity -- that underlie the FCC’s media ownership rules. In particular, the FCC reaffirms that a major goal of the rules is to encourage the provision of local news, and the invites suggestions about how that goal can be further achieved.

In addition, the FCC seeks comment on the aspects of the FCC’s 2008 Diversity Order that the Third Circuit remanded in Prometheus Radio Project v. FCC (Prometheus II). In Prometheus II, the Court of Appeals for the Third Circuit considered appeals of the FCC’s review of the media ownership rules in the 2006 Quadrennial Review Order. The court:

affirmed the FCC’s decision to retain the local television and radio rules to protect competition in local media markets,
affirmed the FCC’s decision to retain the dual network rule based on potential harm to competition that would result from mergers of the top four networks,
affirmed the FCC’s conclusion to retain the radio/television cross-ownership rule as well as, in part, to retain the local radio rule based on the benefits to the FCC’s diversity goal,
vacated and remanded the newspaper/broadcast cross-ownership rule as modified by the FCC in the 2006 Quadrennial Review Order, concluding that the FCC failed to comply with the notice and comment provisions of the Administrative Procedures Act, and
vacated and remanded a number of measures adopted in the FCC’s 2008 Diversity Order, which the FCC now addresses.

Now the FCC proposes to:

retain the current local television ownership rule with minor modifications,
retain the current local radio ownership rule,
retain the Dual Network rule without modification,
loosen the Newspaper/Broadcast Cross-Ownership Rule mainly as proposed in the 2006 rule, and
eliminate the radio/television cross-ownership rule in favor of reliance on the local radio rule and local television rule.

The FCC also invites views on how its ownership rules and policies can promote greater minority and women ownership of broadcast stations. The FCC will explore a broad range of potential actions it might take to that end.

FCC Aims to Ease Media Ownership Rule

The Federal Communications Commission agreed to move ahead with a proposal to modestly change media ownership rules, loosening the ban on owning a TV station and a newspaper in any of the top 20 markets.

In 2007, the FCC had tried to lift a 35-year-old ban on companies owning both TV stations and a local newspaper in the country's top 20 markets, saying it was no longer needed. Public-interest groups challenged that rule change and in July, a federal appeals court tossed it out, after concluding the agency didn't give the public enough time to comment. The FCC's action on Dec 22—voting to move ahead with a new proposed rule change—essentially responds to the appeals court and will give the public 45 days to comment on the lifting of the cross-ownership ban. The agency isn't expected to vote on final rules until April at the earliest. The FCC's new rules would leave in place limits on how many TV or radio stations a company can own in one market, as well as other media ownership caps. If enacted, the rules could broaden the pool of potential newspaper owners, a significant shift at a time when many newspapers are struggling and the list of buyers is short. For instance, Orange County Register owner Freedom Communications Inc., which came out of bankruptcy last year, shelved recent talks to sell its newspapers because of inhospitable credit markets.

FCC Commissioners’ Statements on Media Ownership Proposals

FCC Commissioner Michael Copps, casting one of his last votes as a commissioner, warned that the FCC is heading “down a similar road that the two previous Commissions travelled regarding newspaper-broadcast cross-ownership. In the vast majority of cases, I do not believe that newspaper-broadcast cross-ownership advances the public interest. It means fewer voices in the community, less localism in the industry, and steep transactional costs that all too often lead to down-sized or shuttered newsrooms and fired journalists. Our media, and our public policy, need to head in a different direction. A media that more effectively nourishes genuine civic dialogue is necessary to successful self-government.”

“Today’s notice recognizes that the current media landscape has more delivery platforms than just broadcasting and newspapers;” said FCC Commissioner Robert McDowell, “however, this vibrant competition is not reflected in the tentative conclusions. Instead, the Commission appears to be prepared to accept a regulatory status quo by entrenching itself into an overly-cautious, wait-and-see approach regarding the further development of new media platforms even though they have already revolutionized the market.”

“This Commission has a duty to get a firm and informed handle on what is actually happening in our big cities and in our small towns. We need to know how our policies are actually affecting ALL Americans. The FCC needs to know who owns the media. We have an obligation to more fully understand what impact that ownership has on journalism and the critical information needs of all our communities. The answers to these questions are crucial, and we owe it to the public to implement policies that are informed and forward-looking. This Commission’s responsibility to the public interest is one I take very seriously, and this falls squarely into that mission. Our research on the media landscape cannot be done quickly enough, and with the funds approved for Fiscal Year 2012, one less barrier stands in the way of us meeting that basic mission,” said FCC Commissioner Mignon Clyburn.

Activist Groups Pan FCC Media Ownership Plan

Reaction was swift to the Federal Communications Commission's announcement it had proposed new media ownership rules:

"It appears that the FCC is proposing to adopt the same loophole-ridden scheme that the Bush Administration FCC had tried to push through," said Andrew Schwartzman of Media Access Project, the public interest law firm that has repeatedly challenged FCC deregulatory moves. "The public understands that excessive concentration of media ownership is bad for democracy, so we expect to convince the FCC to take a stronger position in the end," he said.

Craig Aaron, president of Free Press, on loosening the newspaper-broadcast cross-ownership rules in manner similar to that proposed by then FCC Chairman Kevin Martin in 2007 -- "Those failed policies were resoundingly rejected by the public, Congress, and the courts. The FCC should be working to remedy the mistakes of past administrations - not repeating them," said Aaron. "This action not only flies in the face of promises made by the President on the campaign trail, but it will make it much harder for local and diverse owners to secure a piece of the public airwaves."

National Association of Broadcasters CEO Gordon Smith said, “NAB supports elimination of the broadcast/newspaper cross-ownership rules, because we believe journalism jobs could be saved under that scenario. We also support relief from TV duopoly rules to help sustain news and public affairs programming at struggling TV stations. Given the explosion of media outlets, we believe nearly 40-year-old ownership rules that restrict free and local broadcasting ought to be reformed to reflect today's hyper-competitive marketplace.”

Group says Comcast's Internet program for the poor needs work

Action United, an activist group of low- and moderate-income residents, says Comcast's discounted Internet program for poor children needs to be improved and more heavily advertised.

Comcast launched the $9.95-a-month Internet service this school year to help close the gap in Internet access between low-income and wealthier families. The nation's largest provider of residential Internet service agreed to the program during negotiations with the Federal Communications Commission over its purchase of NBC Universal. Based on an informal survey of 107 families, Action United said 62 percent of respondents had not heard of Comcast's $9.95-a-month service, while almost three-quarters of the respondents said they would have considered applying for it if they had been aware of it. Action United also says that people seem to have a hard time qualifying for the service. A family can participate if its children are enrolled in the federal school-lunch program. Action United said that of the 107 families who qualified for the school-lunch program, only eight had applied for Internet Essentials. Two of the families were approved and Comcast was sending them paperwork, said Elly Porter-Webb, Action United parent organizer. Comcast told the other families they were not eligible because of past unpaid cable bills or because they had an existing Internet service, even though the families had children in the federal school-lunch program. "There are too many obstacles," Porter-Webb said.

Eleventh Quarterly Status Report to Congress Regarding BTOP

The National Telecommunications and Information Administration (NTIA) provided its Quarterly Report on the status of the Broadband Technology Opportunities Program (BTOP) to Congress, focusing on the Program’s activities from July 1 to September 30, 2011, as well as overall accomplishments from Fiscal Year 2011.

One year after NTIA met the congressionally mandated deadline to award all BTOP funds by September 30, 2010, grant recipients collectively exceeded goals set for FY11, delivering significant progress this quarter in areas, such as new fiber-optic infrastructure construction, the opening of new public computer centers, and thousands of new broadband adopters now experiencing the benefits of the high-speed Internet.

Through September 2011, 31 BTOP recipients reported that their training and adoption projects led 229,178 households and 1,577 businesses to subscribe to broadband services. The Program exceeded its goal of 100,000 new households or business subscribers for FY11. New subscribers for this quarter totaled almost 115,400, an increase of nearly 100 percent from the previous quarter. BTOP recipients reported spending more than $281 million of outlayed Federal grant funds this quarter, matched by recipient funds of more than $150 million. Cumulatively, Federal outlays for the Program total $765 million, while total recipient matching contributions exceeded $391 million. Federal outlays increased more than 58 percent from last quarter, and matching funds contributed increased by more than 62 percent. NTIA anticipates that outlays will occur faster in FY 2012 as the BTOP program works toward the completion of all projects by the end of FY 2013.

Benton

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