June 6, 2012 (What's a Reformer to Do?)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for WEDNESDAY, JUNE 6, 2012
A busy policy day includes a House hearing on “The Future of Audio” http://benton.org/calendar/2012-06-06/
ELECTIONS AND MEDIA
What's a Reformer to Do? - op-ed
INTERNET/BROADBAND
Netflix builds its own delivery network
CYBERSECURITY
FBI Probes Leaks on Iran Cyberattack
President Obama takes part in cyberattack exercise
CONTENT
NBC’s Olympic Web Video Plan: Live, Legal and “Painful”
Facebook comments, ads don't sway most users: poll [links to web]
Google May Soon Charge For Free Services, Could Monetize TLDs
Dollars, Donuts, And Domains: The Race To Control The Web's Addresses
Analyst: Online Streaming Now Hurting Some TV Networks' Ratings [links to web]
Clear Channel and Taylor Swift’s Label Agree to Reinvent Royalty System
Pandora is lobbying Congress to establish fair royalty rates
CHILDREN AND MEDIA
Facebook and kids: a business bet - analysis
First Lady Joins the Walt Disney Company to Announce New Standards for Food Advertising to Kids - press release
Disney Takes On Obesity - editorial
TELEVISION/RADIO
Clear Channel and Taylor Swift’s Label Agree to Reinvent Royalty System
Pandora is lobbying Congress to establish fair royalty rates
Stations See Growth from New Revenue Streams
Broadcasters to FCC: Don't Let Cable Systems Drop Local Must-Carry Signals
Data Points: Social TV
Still Lots of Options for Advertisers Looking to Reach Younger Viewers
Analyst: Online Streaming Now Hurting Some TV Networks' Ratings [links to web]
OWNERSHIP
Apple Denied Ban On Samsung Tablet Computer Sales In US
Liberty Media Keeps Sirius XM in Its Sights [links to web]
WIRELESS/SPECTRUM
Using a Market to Obtain the Efficient Allocation of Interference Rights - research
Clearwire Joins RCA - press release [links to web]
Talking Less, Paying More for Voice
French Open Data Demand Spurs Network Congestion Fix [links to web]
TELECOM
Publicly Available Sources in FCC’s Special Access Proceeding - public notice
Repealing De-Regulation: How Not to Build a Roadmap Towards an All-IP World
STORIES FROM ABROAD
Companies ignore website ‘cookie law’
MORE ONLINE
FCC Commissioner Rosenworcel Pays Visit to APCO [links to web]
Using Smartphones for Last-Minute Indulgences [links to web]
ELECTIONS AND MEDIA
WHAT’S A REFORMER TO DO?
[SOURCE: Benton Foundation, AUTHOR: Michael Copps]
[Commentary] What a curious year for communications policy reformers! Those of us who consider ourselves activists in the causes of media democracy, ubiquitous broadband, an Open Internet, more competition in our communications industries, and helping minorities and women to equal opportunity in owning and managing these businesses find ourselves stymied by half steps (or, too often, no steps) and a campaign season where the choices are shaping up as four more years of the same or, alternatively, four years of something worse. What’s a reformer to do?
http://benton.org/node/125007
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INTERNET/BROADBAND
NETFLIX DELIVERY NETWORK
[SOURCE: CNNMoney, AUTHOR: David Goldman]
Netflix has created its own content delivery network called Open Connect. It's a series of servers, routers and fiber that can send Netflix video from the source to Internet Service Providers (ISPs). Previously, Netflix had been relying exclusively on third parties to deliver its content from its servers to ISPs. Level 3 had been the company's primary content delivery network since November 2010, but Netflix also relied on Akamai to handle some of its traffic. Shares of Akamai plunged on the news. About 5% of Netflix content is now being served up by Open Connect, and Netflix said in a blog post that it expects Open Connect to eventually become its primary delivery tool. It will make the shift gradually, as its multi-year agreements with the third parties come to an end. Why make the change? Netflix serves up just under 1 billion hours of streaming video per month, second only to Google's YouTube. That amounts to petabytes of data -- millions of gigabytes each month -- sent over borrowed networks. At a certain point, it makes sense to stop relying on landlords and buy the building yourself.
benton.org/node/125028 | CNNMoney
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CYBERSECURITY
LEAKS PROBE
[SOURCE: Wall Street Journal, AUTHOR: Evan Perez, Adam Entous]
Apparently, the Federal Bureau of Investigation has opened an investigation into who disclosed information about a classified U.S. cyberattack program aimed at Iran's nuclear facilities. The investigation follows publication last week of details of the cyber-sabotage program, including the use of a computer worm called Stuxnet, which Iran has acknowledged it found in its computers. The Central Intelligence Agency ran the operation in conjunction with Idaho National Laboratory, the Israeli government and other U.S. agencies, according to people familiar with the efforts. The covert effort also includes drone surveillance and cyberspying on Iranian scientists. The New York Times on Friday published an account of the U.S. cyberattack operation in an excerpt from a forthcoming book by one of its reporters, David Sanger, that he said he has been working on for a year.
Republican Sens. John McCain of Arizona and Saxby Chambliss of Georgia, in speeches on the Senate floor, called for the President to appoint a special counsel to investigate what Sen Chambliss called "a pattern of leaks." Sen McCain said the leaks raised the prospect that they are "an attempt to further the president's political ambitions for the sake of his re-election at the expense of our national security." Some Democratic lawmakers also criticized the leaks but said they didn't believe they were politically motivated.
Sen. Dianne Feinstein (D-CA), chairwoman of the Intelligence Committee, said the leak about the attack on Iran’s nuclear program could “to some extent” provide justification for copycat attacks against the United States. Several Democrats noted with alarm that the Iranian cyber leak is just the latest in a series of media reports that disclosed classified information about U.S. anti-terrorism activity.
benton.org/node/125074 | Wall Street Journal | The Hill
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CYBERATTACK EXERCISE
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
President Barack Obama and senior administration officials participated in a simulated cyberattack exercise on June 5. The simulation, which was sponsored by Federal Emergency Management Agency (FEMA), examined how the federal government would respond to an attack that caused physical damage to the nation's critical infrastructure. The President hosted a Cabinet meeting with his leadership team to practice the decision-making that would occur following a significant attack, according to the White House. The simulation is the latest in a series of exercises to help the government prepare for a catastrophic cyberattack.
benton.org/node/125072 | Hill, The
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CONTENT
OLYMPIC STREAMING
[SOURCE: Wall Street Journal, AUTHOR: Peter Kafka]
During the last summer Olympics, NBC wouldn’t show some of the most exciting events live on the Web, because it wanted to protect its ratings for its taped TV highlights. Four years later, the programmer has wised up, and will livestream every single event. This is great news, with only one catch: If you want to see all of it, you’ll need to pay for cable TV. Actually, make that two catches: You’ll also need to prove to NBC that you pay for cable TV (or telco TV, or satellite TV). That’s one of the fundamental precepts of the “TV Everywhere” plan that the cable guys are using to hold off disruption, and in practice it’s a hassle. It requires digging up your cable bill so you can find your account number, and starting up yet another online account and password. Not rocket science, but certainly not one-click easy.
The TV guys, to their credit, don’t pretend that it’s easy, either. “It’s painful, we know, but it’ll be worth it … trust us.”
benton.org/node/125047 | Wall Street Journal
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COULD GOOGLE START CHARGING?
[SOURCE: MediaPost, AUTHOR: Laurie Sullivan]
Gmail, docs, and a variety of free Google services could soon cost consumers, agencies and marketers a small fee, say some search engine experts. The chatter comes after the company last week said it would charge for product listings in Google Shopping. It also acknowledged the submission of dozens of applications of top level domain names (TLD) for .google, .docs, .youtube and others to the Internet Corporation for Assigned Names and Numbers. Industry executives are concerned that the change will come. If Google gains access to the TLDs, aimClear founder Marty Weintraub believes it will allow the company to prioritize them in certain search engine results pages (SERPs). "For instance, the TLD .YouTube may well have greater weight in YouTube, or even Google's organic SERPs," he said. Weintraub said it's important to consider how .droid may play in mobile. While many believe mobile could become Google's cash cow, the company will look for other viable revenue streams. Reliable-SEO cofounder Terry Van Horne believes the company will begin changing for other free services to maintain a prior revenue growth rate. "Give people free so they become dependent, and then turn around and charge them," he said.
benton.org/node/125033 | MediaPost
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DONUTS AND DOMAINS
[SOURCE: Fast Company, AUTHOR: Kit Eaton]
A company called Donuts has amassed a fund of over $100 million to buy the rights to new, product-specific domain addresses--such as .pizza--and has applied for 307 of them in various characters to appeal to the international market. What does this mean, exactly, for you and me? Plenty, despite the fact that gTLDs (generic top-level domains) are something you probably don't often think about. Donuts doesn't expect to win all 307 of its applications, but it'll likely win a lot of them...and that instantly will turn it into a company you're going to hear more of. Because then you'll be able to buy a web address along the lines of Jims.pizza from companies acquire them from Donuts. Okay, perhaps not .pizza, necessarily, as the list Donuts has applied for is obviously closely guarded. But Donuts cofounder Daniel Schindler revealed that the list is rich with "generic everyday words." Not on the list are brand names, because the legal ramifications are too complex, Schindler says.
benton.org/node/125032 | Fast Company | CNNMoney
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CHILDREN AND MEDIA
FACEBOOK AND KIDS
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
What’s the business opportunity for getting young kids on Facebook? Experts say it’s hard to determine if parents would be more willing to let their children under 13 sign up if Facebook changed its age rules. But the numbers offer financial promise for the social networking giant. About 60 percent of 12- and 13-year-olds own a cellphone, according to the Pew Internet and & American Life Project. An older study by the Kaiser Family Foundation found 31 percent of 8- to 10-year-olds own a cellphone. This is one of the most active group of cellphone users — youth send an average of 60 text messages a day. Put that together with another data point: Facebook is one of the most addictive apps for mobile phone users, according to Sandvine, a networking analytics firm.
benton.org/node/125046 | Washington Post
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DISNEY ANNOUNCEMENT
[SOURCE: The White House]
First Lady Michelle Obama joined The Walt Disney Company Chairman and CEO Robert A. Iger to announce that Disney will become the first major media company to introduce new standards for food advertising on programming targeting kids and families. Under Disney’s new standards, all food and beverage products advertised, sponsored, or promoted on Disney Channel, Disney XD, Disney Junior, Radio Disney, and Disney-owned online destinations oriented to families with younger children will be required by 2015 to meet Disney’s nutrition guidelines. The nutrition guidelines are aligned to federal standards, promote fruit and vegetable consumption and call for limiting calories and reducing saturated fat, sodium, and sugar. American children see an estimated $1.6 billion a year worth of food and beverage marketing, and many of those ads are food that are high in calories and sugar, but low in nutrition. The First Lady has been focusing on these issues since launching her Let’s Move! initiative, and in 2010 called on the Grocery Manufacturer’s Association to retool their advertising to market healthy foods and habits to children.
benton.org/node/125035 | White House, The | First Lady Obama
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DISNEY TAKES ON OBESITY
[SOURCE: New York Times, AUTHOR: editorial staff]
[Commentary] The Walt Disney Company deserves applause for its plan to impose strict standards on food advertising aimed at young children on Disney-owned television channels, radio stations and Web sites. The standards, based on federal guidelines, should eliminate junk-food ads on children’s programs and could set an example for other companies and advertisers to follow. Disney officials say they may lose some advertising dollars in the beginning but believe that appealing to parents with healthier food is “smart business.” The company’s move could put pressure on other child-oriented networks to do the same and could push food companies and fast-food chains to reformulate products so that they can keep advertising with Disney. If that happens, the marketing game will be doing some good by giving consumers healthier choices.
benton.org/node/125082 | New York Times
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TELEVISION/RADIO
NEW ROYALITY SYSTEM
[SOURCE: New York Times, AUTHOR: Ben Sisario]
Clear Channel Communications has agreed to share revenues from standard radio broadcasts with the record label behind Taylor Swift, a move that deviates from the traditional economics of the radio industry. The deal is a departure from the way broadcast companies have traditionally done business with record labels; performers and labels currently do not collect royalty payments when their songs are played on standard over-the-air radio. According to federal law, broadcasters must pay only the composers and publishers of the song. The deal would give Big Machine, which also represents country stars like Tim McGraw and Rascal Flatts, an undisclosed portion of Clear Channel’s revenue, an amount based on how many times a broadcaster plays songs by the label’s acts. If the agreement takes hold throughout the industry, it would give performers and record companies access to an income stream they have long coveted. In return, broadcasters like Clear Channel, which streams music on 850 radio stations as well as through its iHeartRadio app, could save money in the growing and unpredictable realm of Internet radio.
benton.org/node/125078 | New York Times | WSJ
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PANDORA LOBBYING ON ROYALTY FEES
[SOURCE: Los Angeles Times, AUTHOR: Salvador Rodriguez]
Pandora has reportedly spent more than $50,000 this year lobbying Congress to establish a more equal system for how much different forms of radio pay in royalties. The online radio company has been focusing on Congress in preparation for upcoming meetings by the Copyright Royalty Board that will determine how much will be paid in royalties from 2016 to 2020. As a result, Tim Westergren, Pandora's co-founder, is in Washington this week and will be testifying at a House subcommittee hearing hoping to sway Congress to establish a system that will charge each form of radio a similar rate in royalties. The way the system works now, newer forms of radio, such as online radio, pay more than older forms, like broadcast radio, which pays nothing. "Now I am fully supportive of fair compensation for artists," Westergren said in his written testimony prepared for the hearing. "But this lack of a level playing field is fundamentally unfair and indefensible."
benton.org/node/125079 | Los Angeles Times
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NEW REVENUE STREAMS FOR TV
[SOURCE: TVNewsCheck, AUTHOR: Jack Messmer]
Sure, the television spot business is recovering from what many people have branded “The Great Recession,” but TV executives at the SNL Kagan TV and Radio Finance Summit in New York see new revenue streams adding to that positive momentum. So even with a slow national economic recovery, the TV business is looking attractive for the next several years. The core business, of course, is still local and national spot. “That for us, we think over the next five years, is sort of a low- to mid-single digit growth rate,” said Peter Markham, chairman-CEO of Granite Broadcasting. Other panelists seemed to agree with that assessment, but retransmission consent revenues are growing at a must faster clip and digital revenues, while still small, are becoming more significant. Markham noted that digital revenues doubled for his company over the past two years, with growth continuing. “We’ve got five revenue streams now, where 10 years ago we had one,” noted Robert Prather, president-COO of Gray Television. “We’ve got our regular channel, we’ve got multicast, we’ve got retrans, we’ve got digital and we’ve got mobile. So I think the revenue streams are great going forward.” But he also noted that broadcasters now have more competition than ever before.
benton.org/node/125067 | TVNewsCheck | MediaPost – CBS revenue
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VIEWABILITY RULE
[SOURCE: The Wrap, AUTHOR: Doug Halonen]
Broadcast industry executives are turning up the heat in their campaign to retain a Federal Communications Commission rule that requires cable television operators to ensure that all of their customers have access to local must-carry signals. Unless it takes action, the FCC's so-called three-year-old “viewability rule” is set to automatically expire on June 12. The rule ensures that all 58 million cable TV subscribers have access to local must-carry signals -- not just the 46 million who subscribe to digital cable. Eliminating the viewability rule would severely undermine the viewership of independent, religious and foreign-language stations that rely on the regulation to reach all cable viewers, broadcasters say.
benton.org/node/125065 | Wrap, The
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SOCIAL TV
[SOURCE: AdWeek, AUTHOR: Lucia Moses]
Watching television isn’t what it used to be. With smartphones, computers and tablets, people have more ways to watch shows, and even people watching TV are often simultaneously engaged with their phones and tablets. Optimedia’s fifth annual Content Power Ratings attempts to measure all of this, from cross-platform delivery across platforms to a show's social engagement and buzz. For the fifth year in a row, American Idol was the top-ranked in Content Power Ratings as well as Nielsen. But as the high rankings of other shows like Glee and Family Guy demonstrate, high social activity doesn’t always translate into big television viewing audiences.
benton.org/node/125063 | AdWeek
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OPTIONS FOR ADVERTISERS
[SOURCE: Broadcasting&Cable, AUTHOR: John Consoli]
For media buyers negotiating with broadcast networks on behalf of their clients this week for 2012-13 primetime ad commitments, it's got to feel a bit like a supermarket out there. But what among the crop looks freshest, and what looks like it's got a fast-approaching expiration date on it? What do you pick up for the younger set, and heck, what do you want (you know who you are...and how old you are)? Nielsen viewer data from the past season indicates that there is, in fact, a cart's worth of choice among returning shows. Advertisers looking for younger audiences can take a couple of routes. The broadcast TV series reaching the youngest median ages are on Fox's Sunday animation block, and they hit a majority of harder-to-reach males. The two youngest-skewing shows on broadcast TV are Fox's animated Family Guy and American Dad, each with a median age of 30, followed closely by Bob's Burgers and The Cleveland Show with viewer median ages of 31, and The Simpsons with a median age of 32. The youngest-skewing live-action scripted show on broadcast TV is The CW's Gossip Girl, with a median age of 32. All of The CW's other returning shows except for Nikita have median age audiences under 40, including 90210 (33), The Vampire Diaries (34), The Secret Circle (37), America's Next Top Model (38) and Hart of Dixie and Supernatural (both 39).
benton.org/node/125045 | Broadcasting&Cable
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OWNERSHIP
APPLE DENIED SAMSUNG BAN
[SOURCE: Bloomberg, AUTHOR: Edvard Pettersson, Joel Rosenblatt]
Apple was denied its renewed request for a ban on US sales of Samsung Electronics’s Galaxy Tab 10.1 tablet computer while the case is still before a federal court of appeals. US District Judge Lucy Koh in San Jose, California, said that she doesn’t have jurisdiction to issue a preliminary injunction because the US Court of Appeals for the Federal Circuit in Washington hasn’t issued a mandate yet. The judge said Apple can renew its request once the court in Washington issues its ruling.
benton.org/node/125042 | Bloomberg
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WIRELESS/SPECTRUM
FCC RELEASES WORKING PAPER ON ALLOCATING INTERFERENCE RIGHTS
[SOURCE: Federal Communications Commission, AUTHOR: Mark Bykowsky, William Sharkey]
The Federal Communications Commission (FCC) released the fourth of its new FCC Staff Working Papers. The paper examines possible alternatives to the current administrative process for identifying the efficient allocation of signal interference rights. The paper shows how the efficient allocation of such rights can arise from a multi-player game embedded into an auction where participants place bids reflecting the benefit or harm they would expect to incur due to signal interference. It also considers how to identify the efficient set of interference rights, as well as the efficient licensee, for yet-to-be auctioned spectrum (e.g., Advanced Wireless Services-3). In both cases, the authors demonstrate that an efficient outcome requires market participants to select a particular Nash equilibrium from a possibly large set of equilibria, a process that also may require them to solve a “collective action” problem.
benton.org/node/125040 | Federal Communications Commission | read the paper
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PAYING MORE FOR VOICE
[SOURCE: Wall Street Journal, AUTHOR: Greg Bensinger]
The largest US wireless carriers are working on ways to keep their customers paying up for something they do less and less -- making phone calls. In a sea change for consumer behavior, the amount of time spent making old-fashioned voice calls has fallen every year since Apple introduced the iPhone in 2007. The rub for carriers is that voice billings still account for about two-thirds of what they charge cellphone customers every month. To make sure monthly billings don't follow usage downhill, carriers expect to get rid of plans that let contract subscribers buy only the number of minutes they need and replace them with a flat rate covering unlimited calls. Carriers say a move to unlimited-only calling plans would simplify what can be a confusing array of options. But it also would keep a cash cow healthy by depriving customers of the option to trade down to cheaper plans -- even as their phone use drops as they spend more time texting and using Internet-based calling services such as Skype.
benton.org/node/125075 | Wall Street Journal
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TELECOM
PUBLICLY AVAILABLE SOURCES IN THE FCC’S SPECIAL ACCESS NPRM PROCEEDING
[SOURCE: Federal Communications Commission, AUTHOR: ]
In January 2005, the Federal Communications Commission initiated a broad inquiry into the regulatory framework applicable to price cap local exchange carriers’ (LECs) interstate special access services. The FCC subsequently sought to refresh the record in the Special Access NPRM proceeding, and invited interested parties to propose an analytical framework that the FCC could apply to assess competitive conditions for special access. Most recently, the FCC issued two voluntary data requests, which sought to obtain data from special access providers and customers about special access facilities, pricing, and competition. Consistent with the questions the FCC has asked thus far, and to ensure a high level of transparency in the rulemaking process, the attached appendix provides a list of publicly available documents that the Commission may consider as part of this proceeding.
benton.org/node/125039 | Federal Communications Commission
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SPECIAL ACCESS ORDER
[SOURCE: AT&T, AUTHOR: Bob Quinn]
[Commentary] The Federal Communications Commission has circulated an order that would undo more than 12 years of Clinton-era, deregulatory pricing policy on legacy non-packet services. The services in question are called “special access” services – 95% of which are slow 1.5 megabits per second (Mbps) TDM (think POTS) services. That is not a misprint. We are not talking about 100 Mbps connections – services we should actually be figuring out how to get to more people in more places. We are not even talking about fiber. We are talking about legacy, copper-based services that are so slow the services would not qualify for a single dollar of Universal Service Fund (USF) support if they were deployed to homes throughout rural America under the FCC’s recent USF order. We are concerned about the impact the proposed action is going to have for the overall transition to IP technology that the FCC had begun in that USF order. The transition to IP cannot happen fast enough. The industry needs to move to a more cost-effective, all-IP infrastructure if we are going to remain a globally competitive economic force. In regulatory time, that transition must occur with incredible speed. Once subsidies are removed from TDM/POTS infrastructure, carriers will need to nimbly move to retire that infrastructure to make way for an all-IP world. In the USF order, the FCC took a great step in that direction by declaring the obsolescence of TDM/POTS. To make those investments work, however, there must also be a path away from the costs of the legacy infrastructure.
benton.org/node/125037 | AT&T
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STORIES FROM ABROAD
Companies ignore website ‘cookie law’
UK COMPANIES IGNORE COOKIE LAW
[SOURCE: Financial Times, AUTHOR: Tim Bradshaw]
More than three in four British businesses are ignoring online privacy regulations that came into force last month amid confusion about the so-called “cookie law”, research by KPMG has found. In an analysis of 55 representative UK websites, and drawing on its own work for clients, the professional services firm found that only 20 percent were complying with the EU privacy directive, which came into force on May 26. That marks just a small improvement in compliance since a KPMG survey conducted before last month’s deadline, which found 95 percent of the same sample had failed to change their sites to obtain visitors’ consent for the use of cookies and other online tracking technologies. The Information Commissioner’s Office, which enforces the law in the UK, can fine site owners up to £500,000 for non-compliance. The ICO last week said it had received dozens of complaints from members of the public about sites using cookies without permission.
benton.org/node/125062 | Financial Times
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