December 21, 2011 (AT&T Case Shows Antitrust Mettle)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for WEDNESDAY, DECEMBER 21, 2011
AT&T AND NO T-MOBILE
AT&T Case Shows Antitrust Mettle - analysis
Failed AT&T/T-Mobile merger marks consumer victory - editorial
AT&T's lobbying turned back in T-Mobile bid
AT&T's Deep Washington Ties No Match for Uncertain Merger Process
How AT&T Miscalculated - editorial [links to web]
A Closer Look At That $4 Billion T-Mobile Break-up Fee
‘No Plan B’ for T-Mobile
Analysts predict winners from AT&T, T-Mobile failure: Consumers - analysis
Deutsche Telekom could be forced into arms of Sprint - analysis
Signal Failed: Winners And Losers From The Death Of AT&T’s T-Mobile Deal - analysis
Trouble on the Verizon for AT&T - analysis
T-Mobile on the Rebound - analysis [links to web]
Few Options for Lagging T-Mobile - analysis [links to web]
Deutsche Telekom Dividend Pressured After AT&T Deal Collapse [links to web]
MORE ON WIRLESS/SPECTRUM
Verizon Wireless Probed Over Cable Deals
Technology: The right way to gain spectrum? - analysis
How the iPhone Zapped Carriers - analysis
LightSquared Asks FCC To Confirm Spectrum Rights
APTS Confirms It Proposed $3 Billion for Spectrum-Keeper's Moving Expenses
Global Texting Rampant, Generates Billions In U.S. Revs [links to web]
OWNERSHIP
Half a billion dollars: why Apple's acquisition of Anobit matters
ITC says Motorola’s Android devices infringe on a Microsoft patent
Appeals court reaffirms DMCA defense in Veoh court victory
CONTENT
Markup of anti-piracy bill postponed
Rapper protests piracy bill with ‘SOPA Cabana’ [links to web]
USTR: Piracy, Counterfeiting Abroad Is Thriving
RIAA "report card" gives Google low marks for anti-piracy efforts
Highlights of 2011: The Year In Book Publishing, By The Numbers [links to web]
Online piracy needs a better solution - editorial
Piracy act debate getting ridiculous - editorial [links to web]
INTERNET
Lawmakers Press Commerce Over ICANN's New Domain Name Plan
China Hackers Hit U.S. Chamber
ADVERTISING/MARKETING
2012: Changed Americans Require Marketing Shifts [links to web]
3 Marketing Mega Trends For 2012 [links to web]
It's A Wonderful, Trackable Life
Anti-Drug Campaign Takes Funding Hit
TELEVISION
2011’s Strong Start Couldn’t Last the Year
Bowling Them Over: BCS Has ESPN Seeing Green [links to web]
Comcast treated Tennis Channel unfairly, FCC judge rules [links to web]
POLICYMAKERS
FCC Nominees In Waiting Stay That Way
FCC REFORM
Rep Waters Introduces FCC Reform Bill [links to web]
STORIES FROM ABROAD
Iran moves websites to guard against cyber attacks [links to web]
China Probing Blast at Apple Supplier Factory [links to web]
Global Texting Rampant, Generates Billions In U.S. Revs [links to web]
MORE ONLINE
Snapshot: Where Conservative Iowans Get Campaign News [links to web]
People more likely to lie when texting, study finds [links to web]
Congress approves $1.4 billion military health IT budget [links to web]
Ed tech unfunded in $1 trillion spending bill [links to web]
Friend Me, Follow Me or Google Me? [links to web]
Guilty Plea in Web-Poker Crackdown [links to web]
Romney-Gingrich Battle Fuels Campaign Coverage [links to web]
Turkey Arrests Journalists It Ties to Outlawed Group [links to web]
AT&T AND NO T-MOBILE
ANTITRUST METTLE
[SOURCE: Wall Street Journal, AUTHOR: Thomas Catan, Brent Kendall]
Deal makers are scrambling to determine what lessons to draw from the collapse of AT&T Inc.'s $39 billion acquisition of T-Mobile USA. Here's one: Don't underestimate the Justice Department's newfound toughness in policing mergers between rivals. As the first term of the Obama administration draws to an end, a clearer pattern of antitrust enforcement is emerging. The Obama Justice Department has been quick to challenge "horizontal" deals—in which a company buys a direct competitor—in industries that are already highly concentrated. But in deals that aren't between direct rivals—"vertical" deals—it has taken a different approach, allowing deals but imposing legally binding restrictions on the acquirer's ability to use its prize to unfairly harm competitors.
The tougher stance shouldn't come as a surprise. President Barack Obama campaigned on reinvigorating antitrust enforcement, reversing the previous administration's more hands-off approach to mergers between rivals. Along with the Federal Trade Commission, the Justice Department last year released a new set of horizontal merger guidelines that spell out how antitrust enforcers determine whether to challenge a deal.
benton.org/node/108064 | Wall Street Journal
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CONSUMER VICTORY
[SOURCE: San Francisco Chronicle, AUTHOR: Editorial staff]
[Commentary] Foretold for months, the end of this year's biggest business merger has thankfully happened. AT&T is dumping a deal to acquire T-Mobile that aimed to reshape - and severely limit - the wireless market. It's a defeat for telecom execs and bankers who pushed the $39 billion merger and for a flock of usually successful Washington lobbyists. But it's a win for consumers, open-market competition and antitrust lawyers in the Obama administration. Cell phone networks need updating as customer needs dictate. But this task doesn't mean that shrinking the market into a few corporate hands is the best or only way. Calling off this merger was the right move.
benton.org/node/108065 | San Francisco Chronicle
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AT&T’S LOBBYING FAIL
[SOURCE: Politico, AUTHOR: Tony Romm]
AT&T's aborted T-Mobile bid proved that a company can be too big and lobby too much to succeed in Washington. Not even a nearly $16 million lobbying tab and almost $2 million in campaign contributions helped the wireless giant sell its proposed $39 billion mega-deal to federal regulators. In the end, the company’s well-oiled political machine sputtered, leaving AT&T no choice but to bail — costing the company a nearly $4 billion breakup fee in cash and spectrum. The end of the deal marks a serious defeat for AT&T’s Washington lobbying shop, which is one of the largest corporate lobbying offices in the capital. After announcing the deal in March, AT&T bulked up its presence in DC, leveraged its relationships with statehouses around the country and took its case to interest groups representing everything from milk producers to diverse communities. “Lobbying generally rolls off the back of the antitrust enforcement authorities,” said Harry First, director of the Competition, Innovation, and Information Law Program at New York University. First said the regulatory review itself seemed to be a “fairly apolitical” process, as it was the merits of the deal — and not the effectiveness of AT&T’s work stumping for it — that ultimately sunk its prospects.
benton.org/node/107650 | Politico
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AT&T’S LOBBYING NO MATCH FOR MERGER REVIEW
[SOURCE: National Journal, AUTHOR: Josh Smith]
Early in the morning on Aug. 31, AT&T CEO Randall Stephenson appeared on CNBC, promising to bring 5,000 new jobs to the United States if his company was allowed to buy rival T-Mobile. But just hours later, Justice Department officials announced their intention to sue to block the $39 billion merger, a move that would be the beginning of the end for a deal that would have created the largest wireless carrier in the U.S. AT&T said it was “surprised and disappointed.” That contrast between AT&T’s rosy optimism and federal officials’ uncompromising smackdowns came to mark the T-Mobile acquisition bid that officially ended on Dec 19. The failed attempt, which will cost AT&T $4 billion in breakup fees besides legal and other costs, left observers wondering how a company with the legal, lobbying, and political presence of AT&T could have seemingly misread the Washington situation so badly. AT&T spent $16 million on lobbying from January to September, and rolled out a long string of endorsements from lawmakers in Congress, state governors, unions, and nonprofit groups. Federal agencies like the Justice Department and the FCC don’t operate in a vacuum, and lobbying efforts can put pressure on the relatively apolitical regulatory and law enforcement processes, Brunell said. But those efforts never really came into play. Nor was it particularly close. The process never made it to wrangling over merger conditions, when political clout could be more valuable. The Justice Department acted more quickly than expected, and left little room for AT&T to maneuver. When the FCC moved to block AT&T’s application to buy T-Mobile’s spectrum licenses, it was game over.
benton.org/node/107755 | National Journal
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THE BREAK-UP FEE
[SOURCE: paidContent.org, AUTHOR: Jeff Roberts]
As the dust settles on 2011’s biggest deal-that-never-was, it’s worth taking a closer look at the exit payout. First, AT&T will pay Deutsche Telekom $3 billion. Second, $1 billion in spectrum assets that AT&T must hand over. T-Mobile USA will receive spectrum licenses in 128 U.S. markets and a seven-year roaming agreement that will expand its reach by 50 million potential subscribers.
AT&T will give T-Mobile blocks of AWS (Advanced Wireless Services) spectrum in 128 Cellular Market Areas, including 12 of the 20 largest in the U.S., Deutsche Telekom said. The carrier will gain spectrum in San Francisco, Boston, Atlanta, Washington, Los Angeles, Dallas, Seattle, and other metropolitan areas, which should help it to serve more subscribers with higher speeds. In addition, T-Mobile will enter into a seven-year roaming agreement with AT&T, which Deutsche Telekom said would allow T-Mobile to reach areas where it has not had a high-speed network or a roaming arrangement until now. With the roaming deal, T-Mobile will reach 280 million U.S. residents, up from the current 230 million.
benton.org/node/107686 | paidContent.org | IDG News Service | GigaOm
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NO PLAN B
[SOURCE: New York Times, AUTHOR: Mark Scott]
Deutsche Telekom of Germany still faces long-term problems with its American subsidiary, T-Mobile USA, after the proposed $39 billion takeover by AT&T was scrapped. Deutsche Telekom’s chief executive, René Obermann, said that T-Mobile, the fourth-largest mobile phone carrier in the United States, needed additional investment. But the failure of the deal with AT&T gives the company some breathing room in the short term. Under the terms of the deal announced in March, AT&T will pay a break-up fee to Deutsche Telekom that includes $3 billion in cash and wireless spectrum. “With the spectrum we’re getting, we have a better chance of expanding the network in many markets,” Obermann said. “That is not a final solution. In the long term, we need more spectrum and network capacity. We are working on that.” Obermann declined to give specifics on the next steps for its American business. T-Mobile needs to make large investments in its mobile phone infrastructure to keep up with consumers’ growing use of data packages on their smartphones.
benton.org/node/107573 | New York Times
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CONSUMERS WINNER IN AT&T/T-MOBILE DECISION
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
Whom does Wall Street think is the winner coming out of AT&T’s failed attempt to buy T-Mobile? Consumers. Well, they don’t necessarily put it that way. From their perspective, it’s not good for investors if the industry retains four major wireless players duking it out for new customers. That may hurt corporate margins — the money they make above the costs of running their business — but the implications could be positive for users. “Without the combination, we think the wireless industry will be further weakened by continued hypercompetitive activity, particularly regarding subscriber acquisition costs,” said Nomura Securities analyst Mike McCormack. That means customers can still get lower rates as the industry competes for their dollars.
benton.org/node/107572 | Washington Post
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T-MOBILE/SPRINT?
[SOURCE: Reuters, AUTHOR: Maria Sheahan]
Deutsche Telekom may be forced into a tie-up of its T-Mobile unit with Sprint Nextel after a $39 billion deal with AT&T collapsed. While Deutsche Telekom is now walking away with a $6 billion breakup package, its chief executive Rene Obermann has lost a lot of time and will now have to invest in the U.S. market or find a new way to exit the country, an option analysts regard as unlikely. T-Mobile USA "is just crying out for a merger with Sprint. That's the only long-term solution for Deutsche Telekom," Will Draper, head of telecoms research at Espirito Santo, said. T-Mobile USA, a growth engine in its early days but now a run-down asset, is badly lacking in the spectrum it needs to build a network capable of handling the vast data volumes that U.S. consumers and businesses use on smartphones. Bleeding money and losing customers, it ranks fourth among U.S. carriers behind AT&T, Verizon and Sprint.
benton.org/node/107570 | Reuters
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WINNERS AND LOSERS
[SOURCE: paidContent.org, AUTHOR: Tom Krazit]
AT&T had little chance but to call off its $39 billion acquisition of T-Mobile, but where does that leave all the involved parties come 2012? A quick rundown:
AT&T: Ma Bell remains the second-largest wireless carrier in the U.S., and is nipping at rival Verizon’s heels thanks to a strong lineup of Android phones and its iPhone legacy. It had 100.7 million subscribers at the end of the third quarter to Verizon’s 107.7 million subscribers, which accounts for an awful lot of the 313 million people who live in the US. But there is a longer-term problem for AT&T when it comes to growth, which is exactly why it coveted T-Mobile. Yet AT&T’s own spectrum situation is not nearly as dire as it would have regulators believe; instead, it was driven more by the need to grow its subscriber base in light of its infamous reputation in the iPhone community for network performance and customer service. Now it will actually have to compete on the merits of its products and services. That might be a problem.
T-Mobile: What a waste of a year. T-Mobile is definitely vulnerable after throwing all of its eggs in AT&T’s basket, shedding subscribers by the quarter and having endured a year in which AT&T basically forbid it from appearing on the public stage in order to maintain appearances that this was one big happy merger of “equals.” T-Mobile does not have an easy route to LTE. It might have to cut deals with third-party LTE providers like Clearwire (NSDQ: CLWR) or LightSquared, but those come with their own distinct perils. Perhaps a more likely outcome is that T-Mobile joins forces with a smaller player, like U.S. Cellular, MetroPCS, Leap Wireless, or C Spire in order to pool their assets toward network expansion.
benton.org/node/107569 | paidContent.org
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TROUBLE ON THE VERIZON
[SOURCE: Wall Street Journal, AUTHOR: Rolfe Winkler]
The cost to AT&T of its busted deal for T-Mobile is much more than the huge breakup fee. There is also the time it has lost to rival Verizon. The deal looked risky from the start, yet AT&T had the Wall Street community focused on potential cost-cutting opportunities as well as the competitive benefits of taking out a rival. Up to the day the deal was challenged by the Justice Department, AT&T was confident it wouldn't face antitrust issues. The outcome for AT&T's investors is bad on several fronts. First there's that breakup fee. Already the largest ever paid, according to Dealogic, it may actually be slightly higher than the $4 billion cited by the company. The $1 billion "book value" of spectrum that AT&T is handing over to T-Mobile as part of the fee may have a fair market value closer to $1.3 billion based on how much Verizon paid in a recent spectrum acquisition. The bigger issue is that AT&T has fallen farther behind Verizon in terms of investing in its own network. AT&T had hoped T-Mobile's cell-phone towers and spectrum assets would be a shortcut to solving its congestion problems. Verizon, besides its better network, is at least a year ahead rolling out its next generation LTE network.
benton.org/node/108060 | Wall Street Journal
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MORE ON WIRLESS/SPECTRUM
VERIZON WIRELESS PROBE
[SOURCE: Bloomberg, AUTHOR: Sara Forden]
Verizon Wireless’ deals for spectrum with cable companies are under investigation by the Justice Department for their potential to hurt competition in the wireless and cable industries. Gina Talamona, a Justice Department spokeswoman, said the antitrust division is examining the transactions, declining to comment further. The Justice Department probe will focus on whether that transaction and a subsequent one with Cox Communications, concentrate too much control of airwaves in one company’s hands and whether the marketing agreements between Verizon and the cable companies violate antitrust laws, said a person familiar with the investigation. “This agreement is diminishing competition in every way,” said Mark Cooper, director of research at Consumer Federation of America, which opposes the deal. “It means the cable companies are no longer trying to do their own thing in wireless, it concentrates ownership of spectrum and it turns rivals such as Verizon and Comcast into partners.”
benton.org/node/107660 | Bloomberg
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THE RIGHT WAY TO GAIN SPECTRUM
[SOURCE: Los Angeles Times, AUTHOR: Jon Healey]
At least one public interest group is complaining that Verizon's spectrum deals with cable companies are more damaging to consumers than AT&T's long-shot takeover of T-Mobile, but there's a critical difference: While AT&T sought to buy an actual competitor, Verizon is trying to take out a potential one. Regulators haven't been especially aggressive in blocking the former, but they've been even more reluctant to block the latter. At issue is the spectrum that cable operators leased in 2006, when the Federal Communications Commission auctioned off licenses for "advanced wireless services." These airwaves flank the frequency band used for 3G mobile data traffic and they can also support 4G services. Large swaths of the AWS band were leased by the five largest mobile-phone carriers. But the country's biggest cable TV operators, which banded together to bid for spectrum, were able to lease enough licenses to stitch together a national network. The cable operators said at the time that they weren't planning to launch a mobile-phone company to compete with the likes of Verizon and AT&T. Instead, they said the purchase gave them "flexibility and strategic options." The airwaves grew in value over the following five years, but the licenses remained unused. This month, Verizon announced a pair of deals to buy the licenses held by various members of the cable operators' consortium -- first with Comcast, Time Warner Cable and Bright House Networks, then with Cox, which had launched a mobile-phone service only to start phasing it out earlier this year. (The deals netted cable operators more than $1 billion in profit, a nice "strategic option.") It also announced a swap with Leap Wireless to exchange some of Verizon's turf in the 700 Mhz band for some of Leap's AWS licenses. The cable companies plan to market Verizon's wireless service, and Verizon has agreed to market their video services. The joint marketing arrangement strongly suggests that Verizon won't be expanding its own pay-TV offering, FiOS TV, any time soon. This prospect worries Andrew Jay Schwartzman, policy director for the Media Access Project public interest group.
benton.org/node/107575 | Los Angeles Times
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IPHONE ZAPPED CARRIERS
[SOURCE: Wall Street Journal, AUTHOR: Anton Troianovski]
Americans are glued to their mobile devices, obsessively calling, texting, emailing and downloading applications. So why is the U.S. wireless industry in such straits, as shown by AT&T Inc.'s crucial but failed plan to buy T-Mobile USA? A big reason is that carriers are losing power to the device and software makers riding the smartphone boom.
They're saddled with rising capital costs while much of the profit growth continues to accrue to Apple, manufacturers using Google's Android software, and companies making popular wireless apps. And carries haven't figured out the most profitable way to charge consumers for their greater use of data. In short: Device makers and app developers are having the fun, while the carriers are doing the grunt work.
benton.org/node/108062 | Wall Street Journal
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LIGHTSQUARED WANTS SPECTRUM RIGHTS
[SOURCE: National Journal, AUTHOR: Juliana Gruenwald]
The embattled wireless startup LightSquared formally asked the Federal Communications Commission to rule that global positioning system manufacturers should be responsible for making sure their devices don't experience interference. Repeated tests have shown that LightSquared's planned nationwide wholesale wireless network would interfere with GPS devices. The FCC has blocked the company from moving forward with its plans until the interference issues are resolved. But LightSquared argues that GPS devices are not entitled to use LightSquared's spectrum because they don't own the licenses. It filed a petition asking the FCC for a declaratory ruling to confirm the company's spectrum rights. "Commercial GPS receivers are not licensed, do not operate under any service rules, and thus are not entitled to any interference protection whatsoever,'' the petition said.
benton.org/node/107753 | National Journal | B&C
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THANK APTS FOR THAT $3 BILLION
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The Association of Public Television Stations proposed the $3 billion figure that made its way into the Republican version of the spectrum incentive auction bill and had Democrats complaining about the size of that proposed broadcaster pay-out. The Republicans had proposed setting aside "up to" $3 billion to compensate the broadcasters who did not give up spectrum for the expense of being moved or repacked to free up contiguous blocks of spectrum for auction to wireless broadband. The money would also go to cable and satellite operators for any technical adjustments to receive and retransmit the new signals. "Our engineers calculated that $3 billion was the number we needed -- $2 million to $3 million per station [commercial and noncommercial] -- and we asked for $3 billion accordingly. We're very grateful to Chairman [Greg Walden (R-Ore.)] and his House colleagues for supporting this request," said an APTS spokesperson.
benton.org/node/107692 | Broadcasting&Cable
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OWNERSHIP
APPLE-ANOBIT
[SOURCE: ars technica, AUTHOR: Chris Foresman]
Apple reportedly acquired the Israeli flash memory design firm Anobit in a deal that cost the company $500 million dollars. Anobit management told its staff of the acquisition this week, according to Israeli newspaper Calcalist, after Apple's head of R&D visited the company's headquarters last week. Additionally, Apple is supposedly planning to build a research center in Israel as well, conveniently located in a hotbed of silicon design. The acquisition is one of the most expensive for Apple since it acquired NeXT in 1996—15 years ago to the day, in fact—and should cement the company's strategic shift to solid-state flash storage for its products.
benton.org/node/107758 | Ars Technica
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MICROSOFT-MOTOROLA DECISION
[SOURCE: GigaOm, AUTHOR: Ryan Kim]
One day after the International Trade Commission approved a formal ban on certain HTC products that infringe on an Apple patent, an ITC administrative law judge has issued an initial determination finding that Motorola has infringed on four claims of a Microsoft patent with its Android products. The initial ruling, however, whittles away most of the other patent claims of Microsoft against Motorola. The judge found that Motorola did not infringe on six Microsoft patents. The trade commission will now review the finding and issue a final ruling in the coming months. Both Microsoft and Motorola claimed victory.
benton.org/node/107752 | GigaOm
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COURT AFFIRMS DCMA DEFENSE
[SOURCE: GigaOm, AUTHOR: Janko Roettgers]
The 9th Circuit Court of Appeals reaffirmed that video hosting site Veoh was indeed legal, dismissing Universal’s claims that the site facilitated copyright infringement. The court decision, which comes four years after Universal sued Veoh and two years after the site’s first court victory, comes too late for Veoh — the company went into bankruptcy in early 2010 and subsequently sold its domain and other assets to Israel-based video startup Qlipso. However, the decision is still notable as a strong win for companies operating under the DMCA’s safe harbor provisions.
benton.org/node/107750 | GigaOm | ars technica
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CONTENT
SOPA MARK-UP POSTPONED
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
The House Judiciary Committee has canceled its scheduled markup of the controversial Stop Online Piracy Act (SOPA). A Judiciary aide said that because the House will not be in session Dec 21, the committee will take up the measure when Congress returns. House Majority Leader Eric Cantor (R-VA) said the House would be in session “as necessary” over the holiday season for work on the payroll-tax bill.
benton.org/node/107663 | Hill, The
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PIRACY ABROAD
[SOURCE: National Journal, AUTHOR: Juliana Gruenwald]
The Office of the U.S. Trade Representative provided copyright and trademark holders with fresh evidence to demonstrate the scope of online infringement they face from pirates and counterfeiters based offshore. USTR released a new report outlining the most notorious infringers based outside the United States. "Globally copyright piracy on a commercial scale and trademark counterfeiting continue to thrive, in part because of the presence of marketplaces that deal in goods and services that infringe intellectual property rights," according to the USTR report. The report includes a list of sites offering pirated music, links to pirated content, sites that provide illegal streaming of live events such as professional sports, cyber lockers where pirated content can be stored and accessed, and social networking sites such as Russia's vKontakte, where users can provide access to infringing materials.
benton.org/node/107690 | National Journal | USTR
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RIAA GOOGLE REPORT CARD
[SOURCE: ars technica, AUTHOR: Timothy Lee]
A year ago, Google announced a new initiative to combat illicit file-sharing on its various websites. The Recording Industry Association of America has marked the one-year anniversary of that announcement with a new "report card" faulting Google for what the RIAA considers the search giant's slow progress. In its December 2010 blog post, Google pledged to take four specific anti-piracy steps: respond to takedowns more quickly, remove piracy-related terms from autocomplete, make it harder for infringing sites to participate in AdSense, and make legitimate content easier to find in search results.
The RIAA grades Google's efforts to date as "incomplete," faulting the search giant's progress in all four areas. The industry group complains that phrases such as "lady gaga mp3 download" are still suggested by the autocomplete feature of Google search. It faults Google for refusing to explicitly "prioritize sites with authorized content over unauthorized sites"—though the report doesn't have much detail about how Google should distinguish the two. And it says Google "needs to be more proactive" about blocking infringing sites from using Google's AdSense advertising program.
But the RIAA pays the most attention to Google's promise to respond more quickly to takedown requests. Last year, Google said the first services to get faster takedowns would be Blogger and search. The RIAA tacitly admits that Google has kept its promise with respect to these two services. But the RIAA criticizes Google's management of the Android Marketplace, noting that Google "doesn't adequately screen apps" before accepting them in its app store. It also complains that apps removed from the Marketplace aren't automatically blacklisted from AdSense and Google Wallet.
Finally, the RIAA complains that, "the [takedown] tools Google has built have limits on the number of submissions rights holders can submit each day and they do not scale to the scope of piracy online." If the RIAA is describing the situation accurately (unfortunately, Google refused to speak to us about it) then this does seem like a legitimate complaint. On the other hand, the recent Megaupload and Hotfile takedown debacles illustrate the risks of abuse when copyright holders are given unlimited power to delete content from third-party services.
The RIAA completes its report card with a wish list of additional steps for Google to take: proactively block "pirate sites" from using its advertising networks, proactively screen Android apps for infringing content, proactively list sites with authorized content ahead of infringing sites in search results, and proactively remove from YouTube videos that advocate infringing activities.
benton.org/node/107580 | Ars Technica
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PIRACY NEEDS BETTER SOLUTION
[SOURCE: San Jose Mercury News, AUTHOR: Editorial staff]
[Commentary] The only thing worse than members of Congress deciding how to regulate the Internet would be passing the buck to the courts. That is precisely the problem with the Stop Online Privacy Act.
Some members of Congress barely know how to call up a browser on their laptops, much less what IP addresses are and how they work. Never mind. The entertainment industry needs a solution to the very real problem of online piracy, so, ready or not, the House Judiciary Committee will resume the debate early in the new year.
The tech industry has legitimate concerns about the legislation as proposed, but getting Congress to pay attention to the industry has been an uphill battle. The entertainment industry reportedly has given about $1.5 million in campaign funding -- four times as much as tech companies -- to members of the House Judiciary Committee. But some of the valley's biggest Internet companies, including Google, Yahoo, Facebook, Twitter and eBay, are working with the Bay Area's congressional delegation to convince Congress that there are alternatives. Finally, they seem to be making progress. The Stop Online Privacy Act would give the Justice Department additional powers to go after websites that engage in pirated movies, designer ripoffs and counterfeit goods. Attorneys would be able to ask judges for authorization to force Internet companies to shut down offending websites. This could mean it would be up to judges throughout the country to decide what constitutes an inappropriate website. And companies surely would look for judges most likely to favor their cause.
benton.org/node/108053 | San Jose Mercury News
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INTERNET
MORE ICANN PRESSURE
[SOURCE: National Journal, AUTHOR: Juliana Gruenwald]
Two senior lawmakers on the House Judiciary Committee are urging the Commerce Department to try to delay the rollout of a program that could dramatically expand the number of Internet addresses. The Internet Corporation for Assigned Names and Numbers, the California nonprofit picked by the Commerce Department in 1998 to manage the Internet's domain name system, is set to begin accepting applications for the new domain name program Jan. 12 despite a growing chorus of protests against the proposal. The latest criticism comes from Judiciary Intellectual Property, Competition and the Internet Subcommittee Chairman Bob Goodlatte (R-VA) and Rep. Howard Berman (D-CA), a senior Judiciary member and the ranking member on the Foreign Affairs Committee. They joined other lawmakers in recent weeks who have raised concerns about the domain name plan and have called for a delay in its launch. Trademark holders, including many of the nation's biggest corporations, say the new program could cost them millions of dollars to register their brands in the new names -- or launch new domain names themselves. "We urge the department to take steps necessary to delay the roll out of these new [domain names] until a more thorough analysis and evaluation of the potential costs and benefits of all these factors is concluded and until the department can assure Congress and the American public with absolute confidence that the benefits of the proposed rollout exceed the costs and risks to consumers, businesses and the Internet," Reps Goodlatte and Berman wrote in a letter. They called on the department to answer several questions about the program's development and rollout by Jan. 5.
benton.org/node/107659 | National Journal
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HACKERS HIT CHAMBER
[SOURCE: Wall Street Journal, AUTHOR: Siobhan Gorman]
A group of hackers in China breached the computer defenses of America's top business-lobbying group and gained access to everything stored on its systems, including information about its three million members, according to several people familiar with the matter. The break-in at the U.S. Chamber of Commerce is one of the boldest known infiltrations in what has become a regular confrontation between U.S. companies and Chinese hackers. The complex operation, which involved at least 300 Internet addresses, was discovered and quietly shut down in May 2010. It isn't clear how much of the compromised data was viewed by the hackers. Chamber officials say internal investigators found evidence that hackers had focused on four Chamber employees who worked on Asia policy, and that six weeks of their email had been stolen. It is possible the hackers had access to the network for more than a year before the breach was uncovered, according to two people familiar with the Chamber's internal investigation. One of these people said the group behind the break-in is one that U.S. officials suspect of having ties to the Chinese government. The Chamber learned of the break-in when the Federal Bureau of Investigation told the group that servers in China were stealing its information, this person said.
benton.org/node/108044 | Wall Street Journal
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ADVERTISING/MARKETING
A TRACKABLE LIFE
[SOURCE: MediaPost, AUTHOR: Geoff Gieron]
[Commentary] What would the Internet be like if there was no tracking at all? Much like the “It’s a Wonderful Life”’s hypothetical town that would have existed if Jimmy Stewart’s character had never been born, Pottersville – crass, sleazy and utterly unappealing. Not a pretty picture for anyone involved: publishers, advertisers or consumers. To begin with, the Web would be cluttered with many more ads. Why? Because without the ability to target ads to specific audiences, brands will have to compensate by running more ads in the hopes of reaching customers, effectively substituting quantity for quality. On the flip side, consumers will experience a wild decline in relevance. The ads they see will have nothing to do with who they are, what they are interested in or what matters to them. The next impact to consider is that removing tracking capabilities will mean significantly reducing a publisher’s revenue. Without the ability to assure advertisers that they can reach the specific audiences they want, the value of inventory will drastically decrease. And while the cost of advertising inventory units may go down – potentially a boon for advertisers – the ROI on these units will plummet even faster if advertisers can’t be confident that they are reaching their target consumers. With less advertising revenue coming in, publishers will need to find new sources of revenue which would likely mean more and taller pay walls, subscription models, etc. – more paid content. Consumers have come to expect a wealth of free content, but without the support of advertising revenues, publishers simply won’t be able to sustain the current model.
[Gieron is he Business Development Strategist at AdTruth]
benton.org/node/107579 | MediaPost
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FUNDING HIT FOR ANTI-DRUG CAMPAIGN
[SOURCE: AdWeek, AUTHOR: Andrew McMains]
How do you support an advertising campaign designed to steer adolescents away from drugs without additional media dollars? Such is the daunting challenge facing the Office of National Drug Control Policy, whose media budget for the “Above the Influence” effort has been eliminated. Accordingly, the campaign, which was developed by lead creative agency Draftfcb, now will require donated media time and private funding. ONDCP didn’t spend all of the $35 million that the federal government allotted last year. It’s only a few million dollars, however, and that will only last until the spring.
benton.org/node/108048 | AdWeek
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TELEVISION
2011 YEAR-IN-REVIEW FOR TV INDUSTRY
[SOURCE: TVNewsCheck, AUTHOR: Harry Jessell]
[Commentary] The year is ending on an up note for television broadcasters. Last week's news that CBS, Fox and NBC had extended their TV rights contracts with the NFL through 2022 shouts that TV broadcasting is still the No. 1 TV medium and will be for a good long while. And many local TV broadcasters might have been in need of a little boost since before that football news, the year has been a little bit of a disappointment. Not that anybody was expecting big doings from the year, with political advertising in its biennial hibernation. But many thought the economy would really pick up some speed this year, and carry the industry into 2012 without any more bumps and bruises. But it wasn't to be the case. The economy never really did get going, and a lot of auto advertising dollars disappeared after Japan and its auto industry were devastated by the earthquake and tsunami on March 11.
benton.org/node/107583 | TVNewsCheck
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POLICYMAKERS
FCC NOMINEES WAIT
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Nominees for the Federal Communications Commission -- Ajit Pai and Jessica Rosenworcel – and the Federal Trade Commission -- Jon Leibowitz and Maureen Ohlhausen – remain in limbo as the Senate has left town. All the nominees have been approved by the Senate Commerce Committee and await a Senate floor vote. Given that anything can happen, there is still some outside chance of a Christmas miracle, with the Senate having to come back to vote on some payroll tax extension and taking the opportunity to vote on nominations, but that is not likely.
benton.org/node/107587 | Broadcasting&Cable
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