July 2012

How Big Cable killed the open set-top box—and what to do about it

A final nail in the open set-top box coffin could come soon.

The Federal Communications Commission currently prohibits cable providers from encrypting basic cable channels in order to preserve compatibility with third-party devices. But these third-party devices have become increasingly rare, so the FCC is considering dropping the encryption ban altogether. The cable industry opposes the ban, and it got a boost last month when set-top box manufacturer Boxee announced it had reached an agreement with Comcast that would provide Boxee products with access to encrypted Comcast content. The announcement was significant because Boxee had been a vocal supporter of the encryption ban.

Millions of Americans now fall within government's digital dragnet

[Commentary] It’s now clear that government surveillance is so widespread that the chances of the average, innocent person being swept up in an electronic dragnet are much higher than previously appreciated. The revelation should lead to long overdue legal reforms. Up to now, persistent lobbying from the Justice Department and a lack of outcry from the public have left Congress with little incentive to act. But the revelation that millions of Americans are falling within a digital dragnet may be the spark needed to make this an issue that resonates with the middle class.

Libertarians make the case: network neutrality is unconstitutional

A group of well-known libertarian organizations has filed an amicus brief to the US Court of Appeals for the District of Columbia Circuit in support of the plaintiff in the Verizon v. Federal Communications Commission case. Verizon filed its own brief earlier this month.

In the brief, TechFreedom, The Competitive Enterprise Institute, The Free State Foundation, and the Cato Institute argue that the last year’s FCC network neutrality order, which took effect in November 2011, violates the First and Fifth Amendments, and that the FCC lacks jurisdictional authority to implement such a rule. Specifically, the groups say that compelling private companies to “speak,” by requiring them to carry all traffic across their networks, instead of allowing them to discriminate as they see fit, violates the principle of freedom of speech. “When you allow the government to say that a private operator has to treat all speech equally and cannot refuse to carry some speech—our view is the First Amendment jurisprudence [stipulates] that the government can’t compel a speaker,” said Free state’s Randolph May. Further, the groups argue, citing case law, the government must show immediate, real harm, rather than theoretical or possible harm.

Comcast Doubles Speeds of Two Xfinity Internet Speed Tiers at No Additional Cost to Customers

Comcast announced plans to bring connected consumers the best and fastest online experience in their homes with new options for high-speed Internet service. Comcast is doubling the speeds of two of its existing Internet speed tiers in certain Comcast markets (Boston, Hartford, Philadelphia, Pittsburgh, Harrisburg, Wilmington, Baltimore, Washington, D.C., Richmond, and New Jersey) at no additional cost.

Specifically, Xfinity Blast! customers will now get download speeds of up to 50 Mbps (formerly 25 Mbps), and Extreme 50 customers will now receive speeds of up to 105 Mbps (formerly 50 Mbps). This is the seventh time since 2002 that Comcast has increased speeds for its customers. In addition to doubling the speeds of two existing Internet speed tiers, Comcast also announced plans that it will begin to launch Xfinity Platinum Internet, a new ultra-fast speed tier, throughout markets in its Northeast division. Xfinity Platinum Internet offers the most-advanced digital homes download speeds of up to 305 Mbps and upload speeds of up to 65 Mbps. These customers will also receive at no additional charge: Xfinity Signature Support (a $9.95/month value), providing customers 24/7 tech support from experienced and knowledgeable specialists; a wireless gateway to create a fast, efficient and secure home network; a dedicated Personal Communications Consultant to support their high-speed Internet needs; and the Constant Guard Security Suite, the most comprehensive online protection services available from any major ISP.

Independent Show: Small Ops in Programming Squeeze Play

Is the TV business still a good business for cable operators? As improbable as the question sounds, that issue kicked off the annual Independent Show here for the nation's small and mid-sized cable operators. Of all the differences between the giants in the cable industry and its smallest members, few issues unify -- or divide -- the two groups more than the rising cost of programming. Cable operators now pay more; small cable operators pay disproportionately more. "Why invest in the video business now?" asked Rich Fickle, president and CEO of the National Cable Television Cooperative on the July 23 opening panel..

The PCAST Report And The Inconvenient Truth About Federal Spectrum.

[Commentary] We have all kinds of reality-challenged folks in Washington including “the folks who think we can keep finding federal spectrum to auction forever.”

Case in point, the reaction by some to last week’s report on the future Federal spectrum management by the President’s Council of Advisors on Science and Technology (PCAST). The PCAST Report found that we won’t clear big chunks of spectrum for auction anytime soon. We therefore ought to consider other ways that will make spectrum available for commercial use and simultaneously make federal spectrum users more efficient. This means moving from a world that treats exclusive federal allocations (occasionally cleared for exclusive commercial applications) as the norm to a world that treats sharing federal spectrum with commercial users as the norm. Hardcore spectrum warriors unwilling to adapt cannot change reality. Unfortunately, in Washington DC, well-funded deniers of reality have an amazing capacity to block good policy that contradicts their worldview. Happily, the demand for new wireless capacity continues to produce an ever growing number of industry participants – such as the cable operators making a heavy investment in Wi-Fi and carriers such as Sprint using shared spectrum to supplement their licensed spectrum -- who don’t have time for ideological battles. While I am not so naïve that I believe that being right is enough, it helps especially when there is money to be made by doing the right thing.

In the end, we will have more spectrum sharing because we don’t have a reality-based alternative. But if we want to save ourselves a lot of endless delay, we will need to force the spectrum old guard to accept some inconvenient truths.

Apple, Samsung drop some patent claims as trial approaches

Apple and Samsung have agreed to drop some of the patent infringement claims they have filed against each other, they said. The move will help simplify the litigation between the two companies when it goes in front of a California jury next week.

Apple said it would dismiss all claims it had previously made against Samsung's Acclaim, Nexus S, and Sidekick cellphones, while Samsung is dropping all claims against Apple relating to U.S. Patent 6,928,604. The decision was disclosed in a filing to the U.S. District Court for the Northern District of California. Apple will seek billions of dollars in damages from Samsung. "Samsung has reaped billions of dollars in profits and caused Apple to lose hundreds of millions of dollars through its violation of Apple's intellectual property," Apple's trial brief claims. Combining Samsung's revenue from sales of all phones and tablet PCs that allegedly infringe on Apple's patents, $500 million in profits Apple assumes lost because of the Samsung handsets, and $25 million in royalty damages, Apple's lawyers will ask the jury to award "a combined total of $2.525 billion," the filing said. In its own trial brief, filed shortly after Apple submitted its documents to the court, Samsung called the Apple request "a natural extension of its attempt to monopolize the marketplace."

AT&T and Verizon shine as iPhone sales sink

A curious trend has developed in recent quarters: When iPhone sales fall, business improves for AT&T and Verizon. What gives?

Carriers pay heavy up-front subsidies to bring the cost of most smartphones down to $200 for their customers. Apple commands the highest subsidies for the iPhone. Since many potential iPhone customers are now in a holding pattern, waiting for the next iPhone to debut, iPhone sales have steadily declined since last fall. As iPhone sales slump, the amount of money AT&T and Verizon pay Apple up front has fallen, improving their margins. But telecom analysts think that trend is about to reverse course. With a highly anticipated 4G-LTE iPhone expected to launch in October, wireless margins will probably plummet in the fourth quarter.

Aurelius, others appeal judge's confirmation of Tribune bankruptcy plan

Junior bondholders in the Tribune Company's bankruptcy appealed the confirmation decision in the case and asked the judge to stay consummation of a restructuring plan that would hand ownership of the Chicago-based media company to its senior creditors.

In one appeal, Aurelius Capital Management, the largest junior creditor in the Tribune bankruptcy, challenged as unreasonable the settlement at the heart of the restructuring plan confirmed by U.S. Bankruptcy Judge Kevin Carey. In a separate appeal, two indenture trustees for the junior bonds said Carey's decision unfairly discriminated against the bondholders by allowing a group of retirees and other creditors share in that settlement despite a technical subordination issue. Both appeals were accompanied by requests that Judge Carey stay the proceedings for as long as it takes a federal district court to hear the appeals. Before the restructuring plan can go into effect, Tribune must win approval from the Federal Communications Commission to transfer its television and radio broadcast licenses to the new owners. The company also has to arrange $1.1 billion in new debt financing and a credit line.

Miracles in space

[Commentary] Fifty years ago, we took a giant step in communications history with the first transatlantic live television broadcast connecting Europe and America.

For the first time, Europeans saw the Statue of Liberty, the Chicago Cubs playing the Philadelphia Phillies at Wrigley Field, President John Kennedy's news conference, buffalo roaming the Great Plains and a boy admiring a Sioux chief in North Dakota in real time. Americans saw the Eiffel Tower, Big Ben and reindeer in the Arctic Circle. Today, communications satellites every day perform miracles we never thought or dreamed of 50 years ago. They connect cable systems and broadcast networks, carry telephone calls and data all over the United States and the world. With the development of computers, digital technology and their marriage with satellites, the world has become much smaller. Satellite communications enlarge television choices for viewers, enable people around the globe to watch the Olympics at the same time, see the Sept. 11, 2001, disaster unfold and make it possible for a woman in Ghana to speak to her son in Chicago. And this is only the beginning.

At age 86, I will not be here for the 100th anniversary of communications satellites on July 23, 2062. But I have suggested to my grandchildren that they write that date down and remember that great advances happen when the imagination of science is combined with the bipartisan spirit of cooperation by industry, labor and government — and that ideas last longer than men and women.

[Minow served as chairman of the Federal Communications Commission under President John Kennedy]

Benton

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