July 2012

Connect America Fund Kicks Off in Rural California and Nevada with Frontier Communications

The Federal Communications Commission kicked off the first announcement of Connect America fund deployment in the nation with events in rural California and Nevada. At ribbon-cutting events, I was joined by Frontier Communications CEO Maggie Wilderotter and met local residents, tribal, and business leaders that will benefit from the opportunities high-speed Internet will deliver to these areas. In these areas, broadband build-out will happen thanks to Frontier Communications, the first carrier to accept Connect America funding.

AT&T, Verizon Reject FCC Funds To Close Digital Divide

To help close the digital divide, the Federal Communications Commission is offering phone companies millions of dollars to expand high-speed Internet service to rural Americans. But the nation’s two largest phone companies -- AT&T and Verizon -- have told the FCC to keep the money.

One expert said AT&T and Verizon likely declined the funds for this reason: They did not think it was enough. Phone companies have avoided delivering broadband to rural areas because their profit margins are higher in cities. It would likely take a much larger government subsidy to change their minds, said Benjamin Lennett, a policy director at the New America Foundation, a nonprofit, nonpartisan public policy institute. "It underscores how flawed it is to rely on private companies to serve these rural areas where their margins are not going to be that high," Lennett said.

Universal Service Fund Not Designed to Help Consumers: New report shows it is not always clear who benefits from funding

While the Universal Service Fund (USF) was originally developed to provide all Americans with ubiquitous access to telephone services at reasonable prices, there have been questions about the extent to which this funding actually helps consumers. According to a new report authored by Steve Pociask, the president of the American Consumer Institute Center for Citizen Research, , the old USF mechanism should not be used as a model for future broadband funding. “This federal program totals $4 billion and is financed by consumers through a fee on their telephone bills. But the funding is not distributed in proportion to consumer needs; it is dispersed to help telephone companies,” writes Pociask.

Key report findings include:

The biggest recipients of USF are small telephone companies, who (collectively) are the most profitable in the industry.
If the USF high-cost fund were entirely eliminated, small rural telephone companies would (collectively) still be more profitable than their larger counterparts.
Contrary to common beliefs, small telephone companies are not most affected by high capital costs; they are most burdened by administrative expenses.
USF subsidizes smallness, and works to discourage lower cost production and attainment of optimal scale.

Verizon Wireless To Pay $1.25 Million To Settle Investigation Into Blocking of Consumers' Access To Certain Mobile Broadband Applications

The Federal Communications Commission’s Enforcement Bureau released a $1.25 million consent decree with Verizon Wireless that resolves an investigation into whether the company had fully complied with the FCC’s “C Block rules,” requiring licensees of C Block spectrum to allow customers to freely use the devices and applications of their choosing.

Verizon Wireless offers customers its 4G LTE service on C Block spectrum. Verizon Wireless bid at auction to acquire that spectrum, understanding that it was accompanied by open device and application obligations. Specifically, licensees offering service on C Block spectrum “shall not deny, limit, or restrict the ability of their customers to use the devices and applications of their choice on the licensee’s C Block network,” subject to narrow exceptions. Under the terms of today’s settlement, Verizon Wireless will make a voluntary payment to the Treasury in the amount of $1.25 million, and has committed to notifying the application store operator that it no longer objects to the availability of the tethering applications to C-Block network customers in the operator’s online market.

Verizon Wireless has also agreed to implement a compliance plan, requiring that:

employees will receive training on compliance with the C Block rules;
future communications with application store operators regarding the availability of applications to Verizon Wireless customers will be reviewed in advance by legal counsel; and
Verizon will report any instances of noncompliance with the rule at issue that might occur during the two-year term of the plan.

PokerStars settles for $731 million, buys Full Tilt, pays players

The world's largest Internet poker company, PokerStars, is settling with the government to the tune of $731 million more than a year after a crackdown on online gambling.

And, in possibly the best part of the deal, the company is also buying former competitor Full Tilt Poker and paying back its customers, who were left locked out of their accounts after the site’s U.S. operations were shut down last April. In the agreement with the Manhattan branch of the Department of Justice, PokerStars will forfeit $547 million to the government over three years. The payment will settle civil charges that the company engaged in fraud to sidestep U.S. regulations on online gambling. Part of that pot will go toward repaying Full Tilt’s American players. PokerStars will also fill a separate bank account with $184 million within 90 days to pay back the balances owed to foreign Full Tilt customers. Unlike Full Tilt, PokerStars’ international site has been steadily operational and the company has already reimbursed customers left in the lurch after its American operations were shut down last year. As part of the government deal, PokerStars did not admit to wrongdoing and will be allowed to apply to once again offer online poker for real money if and when the U.S. makes it legal. The company will also pay the government $225 million for Full Tilt’s assets. PokerStars said it plans to relaunch Full Tilt in most markets as a separate brand operated out of Dublin, Ireland.

NBC: Twitter alerted us to Guy Adams' tweets

Twitter has been thrown under the bus by NBC, which said Twitter first alerted the network to the tweets of a journalist, who was then suspended from Twitter.
Guy Adams, the Los Angeles correspondent for the British publication The Independent, had been criticizing NBC since Friday through both Twitter and articles.

He was suspended Sunday after tweeting out the corporate email address of NBC Olympics President Gary Zenkel. Initially, NBC said it reported Adams' tweet to Twitter, which began the process that ended in Adams' suspension. Posting a user's private information is a violation of Twitter's terms of service, and Twitter requires that the user who was the target of the violation, or someone on behalf of the user, be the one to report the violation. But The Telegraph is now reporting that NBC says it was Twitter that first noticed Adams' tweets.

Twitter at a crossroads: Economic value vs information value

As Twitter tries to evolve from being a real-time information network into a multibillion-dollar commercial media entity, it is having to face the inherent conflict between those two goals, and many critics see the suspension of journalist Gary Adams’ account as a symptom of that conflict.

Twitter takes the Olympic gold for speed

In the 2012 London Olympics, Twitter is taking center stage. It's the first Olympics where many of the competition results are hitting the Web through social networks before they're aired on television. Twitter revealed there have been more than 10 million Olympic tweets sent during the games so far. Twitter says the tweet volume is about 100 times what it saw during the Beijing Olympics in 2008.

Chairman Mark Lazarus defends NBC Sports’ decision for tape delay

NBC Sports Chairman Mark Lazarus defended his network’s decision to show some marquee Olympic sports, like swimming and gymnastics, on tape delay in NBC’s prime-time window.

Addressing the topic for the first time since the London Games started, the NBC Sports chief told SportsBusiness Journal that the early TV ratings show that most Americans are comfortable with the way NBC develops stories around the Games. “I think what we’ve proven is that the American viewing public likes the way we tell the story and wants to gather in front of the television with their friends and family — even if they have the ability to watch it live either on television or digitally,” Lazarus said. “I inherently trust that decision is the right one and that people want to see these events.” Lazarus said that he has heard the complaints from Twitter, where tweeters protesting NBC’s decision to tape delay certain events added “#NBCFail” to their tweets. But Lazarus said he trusts NBC executives and their years of Olympic experience with making programming decisions that are based on years of research.

London 2012 Lives Up To 'Social Games' Title, In Unwelcome Ways

The London 2012 Games have been touted as the first Olympics to live fully in the age of social media. After all, the organization's Twitter feed has nearly 1.4 million followers, as it lists on its special portal for Facebook and other social sites. But a rash of scandals and news related to Twitter has put a new mark on the face of these games. And, as they say, it ain't pretty.

First came news that athletes were being sent home for posting racist tweets. Now NBC, Twitter, and British newspaper The Independent are in a row over a journalist's Twitter feed, which was disabled after he posted remarks criticizing NBC and its leadership. In London, Twitter has emerged as a platform for Olympians who see deep economic inequities in the current system. The group, which includes many Americans, are also frustrated that current policies forbid them from promoting the sponsors that helped them train for the Summer Games.

Benton

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