February 2012

On Behalf of the 1%, the Best Bargain Since Manhattan

[Commentary] The Middle Class Tax Relief and Job Creation Act of 2012 has been publically promoted as a bill to extend payroll-tax cuts, thereby providing about $100 billion in tax relief to the bottom 99% of Americans by income. Unmentioned is that the bill, by bipartisan agreement, sets in motion a much larger transfer of public assets to the top 1%. For bundled into the bill's fine print and camouflaged in the Orwellian doublespeak of "Incentive auctions" is a giveaway of public spectrum assets (popularly known as "public airwaves") worth over $200 billion, which would make it the largest corporate welfare program in history.

Usually, when it comes to "minor" modifications of spectrum licenses that enhance the value of incumbents' licenses by a mere millions of dollars, Congress lets the FCC discreetly do the dirty work. But in this case the giveaway was orders of magnitude larger and thus blatantly conflicted with the Communications Act, which specifies that the FCC cannot allocate spectrum in such a way as to cause "unjust enrichment." Congress and the Administration thus came up with the idea of calling the giveaway an "incentive auction," promising it would bring the U.S. Treasury billions of dollars to offset the cost of extending the payroll-tax cuts. This promise provided a rationale for adding the special interest spectrum provisions to a bill supposedly about middle class tax relief. But this is an auction of public assets unlike any other you've heard about. The terms of the auction are cleverly designed so that the bulk of the proceeds will go to broadcast licensees. Moreover, the licensees still get their windfall even if they don't participate in the auction.

Mobile Use, Apps Soar, Table Gain Traction

In its annual “Mobile Future In Focus” report, comScore highlights the mainstreaming of smartphones, the emergence of tablets as a viable fourth screen and the growing integration of mobile into consumer lifestyles.

The Web research firm reported that mobile media use -- defined as browsing the mobile Web, accessing applications, or downloading content -- has surpassed the 50% level in many markets. The growth of app use outpaced mobile browsers last year, but both ended up with the same level of adoption: about 47.5% of mobile owners used both formats. Health ranked as the fastest-growing mobile media category in the U.S., followed by retail and other commerce-related categories, such as electronic payments and auction sites. The most popular apps for the iPhone included YouTube, Google Maps, Facebook, Yahoo Weather and Pandora. Google apps were featured more heavily among Android users’ favorites, including Google Search, Gmail, Google Maps, Facebook and Google News and Weather. When it comes to mobile shopping, comScore found that more than half of U.S. smartphone owners used their phone to research products while inside a store last year. (Mobile retail data released by Nielsen Wednesday estimated that 38% are doing in-store research.) By year’s end, nearly 1 in 5 smartphone users scanned product barcodes and almost 1 in 8 compared prices.

Foxconn Is Good At Making Itself Look Good Enough

Somehow Foxconn has convinced the world that its treatment of workers isn't that bad. Sure, we've heard the stories from those on the inside, seen workers in their natural habitats, and we know all about the suicide nets. And yet, Foxconn has managed to turn its image around, allowing us to rationalize it, Apple, and our own obsession with iThings.

Consumer Data Privacy in the Networked World

At the center of this framework is a Consumer Privacy Bill of Rights, which embraces privacy principles recognized throughout the world and adapts them to the dynamic environment of the commercial Internet.

The Administration has called for Congress to pass legislation that applies the Consumer Privacy Bill of Rights to commercial sectors that are not subject to existing Federal data privacy laws. The Federal Government will play a role in convening discussions among stakeholders—companies, privacy and consumer advocates, international partners, State Attorneys General, Federal criminal and civil law enforcement representatives, and academics—who will then develop codes of conduct that implement the Consumer Privacy Bill of Rights. Such practices, when publicly and affirmatively adopted by companies subject to Federal Trade Commission jurisdiction, will be legally enforceable by the FTC. The United States will engage with our international partners to create greater interoperability among our respective privacy frameworks. This will provide more consistent protections for consumers and lower compliance burdens for companies.

The Smartphone Revolution Is Over (For Now)

Ahead of the Mobile World Congress event next week dozens of new smartphones are being revealed or teased to stir up the tech press, get potential customers excited, and, of course, drum up sales. Among the varied designs, operating systems, and technical specifications coming from a long list of manufacturers, one thing is clear--there's really not an enormous amount of innovation going on. The smartphone, it seems, has hit an evolutionary dead end.

NPRM for Stage 2 of Meaningful Use

The Department of Health and Human Services has sent to the Federal Register two notices of proposed rulemaking for Stage 2 of the electronic health records meaningful use program. The rules will be available on Feb. 23 on the Federal Register Public Inspection Desk, and within days officially published. The proposed rules have a 60-day public comment period following publication. Federal officials hope to publish final rules in mid-summer.

One rule sets the policies and criteria for achieving Stage 2 meaningful use; the other rule would adopt standards, implementation specifications and certification criteria to ensure EHRs support Stage 2 objectives. National HIT Coordinator Farzad Mostashari, M.D., says the main message in Stage 2 proposed rules is “stay the course.” Much of the meaningful use objectives in Stage 2 are familiar, as the Office of the National Coordinator adopted recommendations of the HIT Policy and Standards advisory committees “in very very large part,” he notes. But there are significant changes and new flexibility in the proposed rules, compared with the Stage 1 meaningful use program. Stage 2 includes specific emphasis on data exchange, Mostashari says. “We can’t wait five years to get standards-based exchange.” That goal, he adds, will be reached when the next phase of meaningful use starts in October 2013 for hospitals and January 2014 for eligible professionals. The proposed rules require use of the Direct Project protocols for secure e-mail, although optional certification of the SOAP approach is permitted. There are specific standards--no longer a menu of options--for lab results and vocabulary.

Sen. Warner calls for tougher standards for electronic medical records

Congress’s gambit to create a national system of electronic health records is “at risk of failure or mediocrity” if federal regulators continue to water down the standards that doctors and hospitals must meet, Sen. Mark Warner (D-VA) wrote in a letter to federal health officials.

Lawmakers have set aside $27 billion in Medicare and Medicaid incentives for medical providers to switch to paperless records, and 780 products have already been certified under the first stage of the program created by the 2009 stimulus bill. Sen Warner said the process so far has been “too limited.” For example, regulators don’t publish performance data for certified vendors, and failing to deliver medical data to a public health agency is still acceptable.

For the next stage of the program, Sen Warner wrote, regulators should:

Require providers to submit data electronically and allow the Medicare agency to conduct “aggressive oversight of the program”;
Mandate “clear and robust” requirements that certified Health Information Technology be able to communicate and exchange data with different types of healthcare providers and systems, including health information exchanges; and
Support electronic access by consumers, including the ability to download data in a useful format.

Tech media misconceptions

[Commentary] All journalists who break news are in the business of giving and receiving favors.

I know that sounds more like Godfather than Columbia J-School, but it's the truth. When we talk about "developing sources," all it means is forming a business relationship to further improve our product. And just like in any business relationship, both sides expect to get something out of it. Sometimes, a source simply wants someone to listen to them. Sometimes they want to leak information that damages a rival, or benefits a friend. Sometimes a source simply likes to trade gossip. You tell me something, I'll tell you something. Yes, there are situations in which a new source magically appears with valuable information with the purest of intentions. But it's the rare exception. In any case, it is a journalist's job to weigh a source's motives against the information's value to readers (after first confirming the information's authenticity). Ultimately, it all comes down to reader trust, which journalists and media outlets gain over time by regularly publishing accurate, insightful and/or entertaining information. Anyone can publish unfounded rumors or gushy pabulum about their own supporters. But those outlets won't stand the test of time (and, consequently, won't produce a good return on investment for their VC backers).

Readers have limited time, don't suffer fools lightly and have plenty of options. The work is what matters. The rest will come out in the wash.

Pros and Cons of the Verizon Wireless – SpectrumCo/Cox Deal

Parties filed comments and petitions to deny the proposed Verizon Wireless purchase of cable spectrum assets held by SpectrumCo (Comcast, Time Warner and Bright House Networks) and Cox on February 21, 2012. Although the FCC was not inundated with thousands of furious consumer comments a la AT&T/T-Mobile (yet anyway), this $3.6b deal is certainly not skating by unopposed.

Some strong opposition comes from seemingly unlikely sources, including AT&T/T-Mobile champion union Communications Workers of America and AT&T target T-Mobile. Expected opposition from the Rural Telecommunications Group (RTG), Sprint, Public Knowledge and Free Press outlines why the deal is anticompetitive and not in the public interest. As RTG expressed, this deal “trumpets the dawn of a new era in America – the oligopolistic cartel of Big Cable + the Twin Bells.” Fear of excessive market power is a clearly a theme carried over from the AT&T/T-Mobile deal. The Verizon/SpectrumCo deal has the potential to create “an unprecedented level of market power” in the quad-play arena, and “could hinder video and broadband competition, resulting in higher cable rates, less network investment and fewer jobs,” according to the Communications Workers of America and International Brotherhood of Electrical Workers (CWA/IBEW). Despite many familiar and predictable negative sentiments about mega-deals, the comments reveal some interesting positions both for and against these uncharted waters in cross-platform consolidation. Comments generally focused on the pros and cons of 1) the spectrum transfer and 2) the applicants’ Commercial Agreement.

The FBI and the DOJ want you to report suspicious people and monitor social networks. Goodbye liberty

[Commentary] Some of the worst consequences of terrorism come not from the real dangers that terrorism poses but in our efforts to defend ourselves from something that is incredibly hard to define and predict.

Terrorism is not like dealing with an invading army or an attack by aircraft or missiles; it is a diffuse, random assault that can, theoretically, happen anywhere. The next person to get blown up could be some state official or it could be you, which is how terrorism works; the fear it generates is more powerful and culture-changing than the actual attacks themselves. While our government quite rightly sees one of its many tasks as protecting us from such threats, the reality of efforts to do so is that we wind up ignoring pragmatic issues such as the cost and effectiveness of counter-terrorism measures, as well as the dangers of overreach that accompany those efforts.

As an example of overreach I offer you the latest in governmental insanity: The FBI and the Department of Justice produced a series of 25 fliers to encourage -- and I am not kidding -- the reporting of suspicious activities by local businesses in a variety of industries.

Benton

Search