January 2012

During the ascent of the internet, Silicon Valley geeks tapped away at keyboards in northern California while Washington policy wonks debated welfare and taxes. Both groups happily ignored each other. The isolation served the Valley well at first as it spawned many tech powerhouses without government interference. But its absence from the political arena had consequences and, in the battle over proposed anti-piracy legislation, the techies are playing catch-up to their politically entrenched opponents in the entertainment industry.

“It is the first time the tech community as a whole, including all the tech folks beyond Silicon Valley, have really come to realize how things work in DC,” said Alexis Ohanian, cofounder of web-linking site Reddit. “We spend our money innovating, not lobbying.” Media and entertainment companies are outspending tech companies at a ratio of four to one in the lobbying contest over the Stop Online Piracy Act – the 32 politicians backing the bill have received almost $2 million in campaign contributions from the film, music and TV industries, compared with little more than $500,000 that -politicians opposing the proposals have received from the computer and internet industries, according to MapLight, a campaign finance research company. Overall, financial contributions to politicians who support the bill outnumber contributions to politicians opposed to it by 13 to one, with $92.2 million spent in favor, compared with $7.2 million opposed, between January 1 2009 and June 30 2011, the latest data show.

Consumer groups and wireless competitors have told the Federal Communications Commission that it needs to look beyond Verizon's planned purchase of spectrum from cable operators to a series of related deals and relationships among them.

In a letter to the FCC on Verizon's application to assume the wireless spectrum licenses of SpectrumCo. and Cox, Public Knowledge, Sprint, T-Mobile, and others said that deal is part of a larger transaction between "actual and potential competitors." "Without the ability to review the larger transaction in its entirety, it is impossible to assess whether there will be public interest harms associated with the proposed transfer," they said. The groups pointed to the applications' assertions that SpectrumCo owners -- Comcast, Time Warner Cable and Bright House -- have entered into "several agreements, providing for the sale of various products and services," including the ability to sell Verizon Wireless service on a wholesale basis, which would mean branding it as part of a cable quadruple-play bundle. They also point to Verizon and the cable companies' creation of a joint venture to develop technology to integrate wireless and wireline service.

McGraw-Hill normally sells high school textbooks for $75 a pop. Now it says it will sell electronic versions of the same books, via Apple, for $15 apiece. How can the publisher make that work? “Volume,” says McGraw-Hill CEO Terry McGraw, which is the usual answer for this kind of digital question. But there’s an important asterisk here, too. Normally, McGraw-Hill would sell its books directly to public schools, which would keep the texts for an average of five years. Under Apple’s new textbooks plan, though, McGraw-Hill will try something different: It will sell its books directly to each student (the student could either pay out of pocket, or the school could fund the purchase via a voucher/code), who will use the book for a year, then move on. They’ll be able to keep the digital text, but won’t be able to resell it or pass it along to another student, and McGraw-Hill anticipates that another set of students will buy new books the following year. So Terry McGraw figures that over five years he’ll generate the same total sales selling $15 e-books as he would selling $75 books. It’s not a total push, because in this model, Apple will take an undisclosed cut of sales — McGraw-Hill execs wouldn’t go into details, so let’s assume for now that it’s Apple’s standard 30 percent — but presumably McGraw-Hill can make some of that up by forgoing the costs of print and distribution.

Advances in wireless technology have created "cascades of innovation," and additional investment in new networks has the potential to help get the broader American economy back on track, according to a study released by the progressive think-tank NDN and the New Policy Institute. Researchers Robert Shapiro and Kevin Hassett concluded that transitions from early wireless networks to more advanced 3G and Internet technology led to some 1,585,000 new jobs from April 2007 to June 2011.

"Based on previous advances, the current transition to 4G technologies is likely to spur significant new job creation and growth which could help the American economy restore gains in incomes and business investment," the study predicted. For every 10 percent increase in the adoption of 3G and 4G technologies, the study estimated that the U.S. economy could gain 231,000 jobs in "less than a year."