December 2012

US accused of telecoms pact ‘propaganda’

Franco Bernabè, chairman of Telecom Italia and president of GSMA, the mobile operators association, has attacked what he described as “propaganda warfare” by the US that led to the collapse last week of talks over a new telecoms treaty.

Bernabè, who as president of GSMA represents almost 800 mobile operators in 220 countries, said the suggestion by the US and its allies that those in favor of the treaty were from “authoritarian regimes” was “ridiculous.” “This is propaganda warfare,” he said. “What is offensive is [the idea] that a legitimate portion of the industry has been associated with Iran and oppressive regimes. That is complete nonsense and unacceptable.” Bernabè, calling for regulators to reconsider their stance, joined other supporters of the treaty in suggesting that the US was using the principle of freedom as a cover to protect corporations such as Google and Facebook from global attempts to co-ordinate regulation. “Regulation has put European companies under dramatic competitive disadvantage . . . There could not be a European Google or a European Facebook because it would be so complex to comply with rules and the obligations of European privacy laws,” said Bernabè. Proponents of a free web, including Google, fear broad clauses set out at the ITU concerning national sovereignty and security could be used for legitimizing censorship, clandestine monitoring and the blocking of websites.

The fight to keep a state-free Internet

[Commentary] The first gathering of world governments to debate the future of the internet has ended in dramatic discord, with 55 member states of a UN body refusing to sign a global treaty on international telecommunications. The collapse of the talks marks just the first battle in what will be an enduring global contest to define the governance and control of the internet in the 21st century.

States dissenting from the new treaty cited a deep commitment to the internet’s dynamic governance model, which has emerged organically over the past two decades. Based on co-operation among civil society, global technical bodies and the private sector, the internet has flourished beyond the control of governments, fostering staggering innovation and growth through its flat, open and globally unregulated structure.

The final version of the treaty impinges on that paradigm in four critical ways.

First, at the insistence of Russia, China and several Arab states, the treaty includes a provision mandating co-ordination on cybersecurity, defined euphemistically as “network” security.
Second, encouraged by African nations and supported by countries such as Iran and Saudi Arabia, the treaty creates a requirement that member states seek to defend against internet spam, which is imprecisely defined as “unsolicited bulk electronic communications.”
Third, the treaty has a resolution calling on the ITU and its members to play an enlarged role in “international internet governance and for ensuring the stability, security and continuity of the existing internet and its future development.”
Finally, a new formulation of the treaty changes the definition of its scope and authority in ambiguous ways, creating a class of entities falling under its jurisdiction, potentially including internet service providers, private networks and even government networks.

Who rules the Internet?

[Commentary] The International Telecommunication Union, the little-known but influential United Nations agency that oversees phone, radio and satellite communications, last week stopped short of fragmenting the Internet into national fiefdoms, as some had feared it would do through a new global treaty. Instead, the draft that delegates approved barely mentions the Internet. The result wasn't exactly a victory for those who are committed to a free and open Internet, however.

Although delegates rejected many of the worst proposals, they laid the groundwork for having governments, not Internet stakeholders, regulate the technical aspects of the Web. The agency's effort to update a 24-year-old global telecommunications treaty exposed a sharp rift between the developed countries that were the earliest adopters of the Internet and the developing world, particularly Russia, China and other authoritarian regimes. The former, backed by Internet advocates worldwide, rightly argue that the Web's technical challenges are capably met by industry groups that set voluntary standards. Many countries in the latter category, however, believe that the Internet is already controlled to some degree by one government — the United States — and thus its benefits aren't properly distributed. Some want greater control over online content and users, which they see as threats to their regimes; others have legitimate problems with access, spam and other issues that they don't think are getting enough attention from Internet authorities.

Slated to take effect in 2015, the treaty itself isn't the real problem. The bigger issue is the claim the International Telecommunication Union seems to be staking to Internet governance. The agency is scheduled to meet again in 2014, when it may consider amending its constitution to assert jurisdiction formally over the technical side of the Web. Proponents of the free and open Internet have until then to convince the countries that backed the draft treaty that the current system of self-governance can and will work better for them than one under the thumb of governments around the globe.

America's First Big Digital Defeat

[Commentary] The open Internet, available to people around the world without the permission of any government, was a great liberation. It was also too good to last.

Authoritarian governments this month won the first battle to close off parts of the Internet. At the just-concluded conference of the International Telecommunications Union in Dubai, the U.S. and its allies got outmaneuvered. The ITU conference was highly technical, which may be why the media outside of tech blogs paid little attention, but the result is noteworthy: A majority of the 193 United Nations member countries approved a treaty giving governments new powers to close off access to the Internet in their countries.

The treaty document extends control over Internet companies, not just telecoms. It declares: "All governments should have an equal role and responsibility for international Internet governance." This is a complete reversal of the privately managed Internet. Authoritarian governments will invoke U.N. authority to take control over access to the Internet, making it harder for their citizens to get around national firewalls. They now have the U.N.'s blessing to censor, monitor traffic, and prosecute troublemakers.

End is near for surveillance law powers

The Senate is racing toward a last-minute showdown over a controversial counterterrorism surveillance law. While the chamber is preoccupied with the fast-approaching fiscal cliff, the clock is also running out on the so-called FISA Amendments Act — provisions of which are scheduled to sunset at the end of the year.

The law has its skeptics, many of whom fear that Americans are getting swept up in what is supposed to be a surveillance statute aimed at foreign targets. Its leading critic, Sen. Ron Wyden (D-OR), has tried to block Senate consideration of the measure as he seeks more information on how many U.S. citizens have been affected. But the chamber now faces a daunting task in addressing Wyden’s objections while processing a slew of proposed amendments to the extension, which the House approved without change earlier this year.

Sprint to Acquire 100 Percent Ownership of Clearwire

Sprint announced that it has entered into a definitive agreement to acquire the approximately 50 percent stake in Clearwire it does not currently own for $2.97 per share, equating to a total payment to Clearwire shareholders, other than Sprint, of $2.2 billion.

This transaction results in a total Clearwire enterprise value of approximately $10 billion, including net debt and spectrum lease obligations of $5.5 billion. The transaction consideration represents a 128 percent premium to Clearwire's closing share price the day before the Sprint-SoftBank discussions were first confirmed in the marketplace on October 11, with Clearwire speculated to be a part of that transaction; and, a 40 percent premium to the closing price the day before receipt of Sprint’s initial $2.60 per share non-binding indication of interest on November 21. Clearwire’s spectrum, when combined with Sprint’s, will provide Sprint with an enhanced spectrum portfolio. In connection with the transaction, Clearwire and Sprint have entered into agreements that provide up to $800 million of additional financing for Clearwire in the form of exchangeable notes. The transaction is subject to customary closing conditions, including regulatory approvals and the approval of Clearwire’s stockholders, including the approval of a majority of Clearwire stockholders not affiliated with Sprint or SoftBank.

The closing of the transaction is also contingent on the consummation of Sprint’s previously announced transaction with SoftBank. The Clearwire and SoftBank transactions are expected to close mid-2013.

Onetime Allies in Antitrust Part Ways Over Google

In the digital economy, 14 years is an eternity. Fast-shifting technology means that companies, once feared and seemingly invincible, fade, while new powers rise to dominance, raising fresh sets of concerns. Exhibit A: In the spring of 1998, the federal government and 20 states filed a landmark antitrust suit against Microsoft. A few months later, Google was founded. Now Google is the subject of major antitrust investigations in the United States and Europe.

In the United States, regulators are expected to announce a decision within days to sue or settle, and under what terms. The European decision will come soon as well. Much has changed over the years, but two lawyers who helped build the case against Microsoft are playing important roles once again. But this time, Gary L. Reback and Susan A. Creighton are on opposite sides. The two lawyers, and the positions they have taken, point to some striking similarities yet also significant differences between the two high-stakes investigations — and why the pursuit of Google has proved challenging for antitrust officials.

Does Fox Dream of an ESPN?

Anyone wondering why News Corp's Fox has been negotiating so many sports deals in recent weeks, including a stake in the YES Network and a likely deal to renew TV rights to the Los Angeles Dodgers, has only to look at one number for a possible explanation: $42 billion. That's the value put on Walt Disney's sports juggernaut ESPN by Wall Street research firm Sanford C. Bernstein.

It is more than the market capitalization of several big entertainment companies, including Viacom and CBS Corp., and nearly as much as that of Time Warner Inc. It reflects in part ESPN's outsized share of subscription fees split with cable- and satellite-TV operators. ESPN's flagship channel alone generates four times as much revenue from such fees as the next biggest cable channel, according to market researcher SNL Kagan. Enter Fox, which early next year is expected to announce plans for a national sports cable channel through the rebranding of its motor-sports network Speed, according to people familiar with the plans. The new venture, to be called Fox Sports 1, is expected to launch later in 2013, say these people. With the network, Fox will be in a position to capture a bigger share of TV viewers and advertisers' seemingly insatiable appetite for sports, not to mention the subscription fees shared by pay-TV operators. Even next to ESPN, insiders say, there's still room for Fox to carve out its own chunk of the market.

GOP has lost another key bloc: Silicon Valley techies

Since President Barack Obama was re-elected last month, Republican strategists have publicly fretted about whether the GOP has lost Latinos, Asian-Americans, women and other key voting blocs of America's future. Add another bloc to the list: young Silicon Valley professionals whose technological skills as campaign volunteers can provide a vital edge in elections.

Silicon Valley helped turn Obama's "Yes We Can" into "Yes We Code" this year. And as the campaigns' veils of secrecy have slowly lifted since the election, it has become clear Republican contender Mitt Romney's campaign was technologically outclassed, culminating in the spectacular Election Day meltdown of its get-out-the-vote program. One huge problem for the Republicans: Not only is Silicon Valley overwhelmingly Democratic, but the values, beliefs and culture of the valley often seem incompatible with some of the current stances of the GOP.

Price tag of £1bn on military airwaves in the UK

The UK Treasury stands to raise as much as £1 billion by selling Ministry of Defence airwaves currently reserved for military purposes, according to industry analysts.

The MoD will reveal plans to sell part of its spectrum holdings in 2014, as part of a longer-term government strategy to auction unused public sector airwaves to support next generation 4G mobile networks. The MoD controls about three quarters of all publicly-held spectrum and one third of all spectrum below 15GHz, which it uses for secure communications, navigation as well as functions such as radar.

Benton

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