December 2012

Sprint Isn't Yet in the Clearwire

Sprint Nextel hopes to add to its airwaves. But the spectrum it aims to buy may keep it grounded.

The No. 3 U.S. wireless carrier offered $2.1 billion to acquire the 49% of Clearwire it doesn't already own. While it may end up having to pay more, its status as the only natural Clearwire buyer gives it negotiating leverage. And Sprint does need additional spectrum. More concerning, though, may be added investment needed to put that spectrum to use. Clearwire's spectrum has higher capacity than other swaths but requires greater cell-tower density to provide high-quality coverage. That isn't a problem in urban areas. But Sprint will likely need to invest in more towers outside major cities at a time when capital expenditures on its next-generation network are already running high. The added expense required to put Clearwire's spectrum to use in less densely populated areas could significantly cut into operating cash flow, according to Sanford C. Bernstein.

Softbank caps Sprint's Clearwire bid; investors want more

Sprint Nextel's $2.1 billion offer to buy out Clearwire appeared to be running into trouble, as some shareholders said they wanted more money while Softbank set a cap on how much Sprint could pay.

Any deal would need approval by Softbank, which has agreed to buy 70 percent of Sprint for about $20 billion. Clearwire shareholders, who together hold about 7.6 percent of the company, criticized the Sprint offer, with some saying that the No. 3 U.S. wireless carrier should raise its bid to at least $5 per share. Holders of at least 24.8 percent of Clearwire's outstanding stock, other than Sprint, need to approve the deal. But Softbank has told Sprint that it would not consent to any Clearwire bid higher than $2.97 per share, two sources close to the matter said. The threshold is the same price that Sprint recently paid to buy a small stake from Clearwire founder Craig McCaw's Eagle River Holdings LLC.

FCC Begins Search for Health Care Director and Launches New Health Website

The Federal Communications Commission posted the official vacancy announcement for a Director of Health Care Initiatives.

In September, FCC Chairman Julius Genachowski announced that the FCC would soon undertake a search for a new position to coordinate the agency’s numerous health care technology related initiatives, in response to a recommendation by the mHealth Task Force. Filling this position is an important step in the FCC’s ongoing mission to expand access to health care applications through wired and wireless broadband. The Director of Health Care Initiatives will lead the agency’s efforts in facilitating and promoting communications technologies and services that improve the quality of health care for all citizens and help reduce health care costs; facilitating the availability of medical devices that use spectrum; and ensuring hospitals and other health care facilities have required connectivity.

Fulfilling an additional Task Force recommendation, the FCC is launching a new website fcc.gov/health to serve as a central repository for all the FCC’s health care-related work. For the first time in one place, you will be able to find links and information to each of the FCC’s health programs, as well as instructions on how to submit comment and get involved with the FCC. We hope this will be a valuable resource for industry, policymakers, and anyone who wants to learn more about our programs.

Chairman Takes Aim At FCBA Dinner

Federal Communications Commission Chairman Julius Genachowski ended the suspense over his future. At the Federal Communications Bar Association's annual chairman's dinner in Washington, the chairman acknowledged that, since the election, there had been speculation about him -- there is much chatter he will be exiting the post sometime next year. "This will be my last chairman's dinner," he said, to a "No!" from one audience member. But they needn't have worried. "I'm not making any announcement," he added, "I just believe in the Mayan prophesy that the world is ending Dec. 21.

Chairman Genachowski was just getting started as he good-naturedly poked fun, sometimes with a slightly sharpened stick, at lobbyists, staffers and even journalists. Chairman Genachowski said everyone was happy that the election was over, except perhaps broadcasters. "TV stations made more than a billion dollars in ad revenue this cycle," he said. "That may explain why [NAB President] Gordon Smith has a Citizen's United tattoo." It is traditional for the chairman to provide a video send-up featuring staffers and the chairman did not disappoint. One was set to Carly Rae Jepsen's "Call Me Maybe" and featured lip synching and dancing by a host of good sports including all the commissioners, what appeared to be most of the FCC staff, as well as a boogying National Cable & Telecommunications Association President Michael Powell, former Chairman Reed Hundt, former Commissioner Michael Copps on drums, Andy Schwartzman in a blond wig, lobbyists, former FCC officials and others too numerous to mention. It drew wild applause, and deservedly so as a bipartisan bit of fun that struck the right chord in a politically divided town.

Educational apps alone won't teach your kid to read

[Commentary] As partners with the Campaign for Grade-Level Reading, a national coalition examining reading problems, scanned the technology and literacy landscape examining new products and programs. What we found was a digital Wild West, especially in the teeming app marketplace.

Tens of thousands of apps are labeled educational and marketed to parents who receive little to no information about whether and how they work. Most of the top-selling reading apps appear to teach only the most basic of literacy skills. They lean toward easy-to-teach tasks, such as identifying the ABCs, but don't address higher-level competencies that young children also need to become strong readers, such as developing vocabulary and understanding words in a narrative. A snapshot of the iTunes App Store's most popular paid literacy apps showed that 45 percent targeted letters and sounds and half focused on phonics. Only 5 percent covered vocabulary, and none addressed comprehension or the ability to tell stories. Many “reading” apps are essentially flashy flashcards: Click on a set of letters and the audio kicks on, uttering the letter's sounds. Move to the next set and repeat. This imbalance comes as research shows that knowing the ABCs and other basic literacy skills, while important, are not enough to help children become strong readers. Children need background knowledge and vocabulary, too. With the advent of new technologies, we are at an opportune moment for harnessing digital media to support parents, educators, and children in building the next generation's reading skills. But technology's potential to be a game changer will not be reached unless technology is tapped to provide vital new supports for parents and educa­tors. At its best, the technology complements the work of trained teachers and parents. It doesn't replace it.

[Lisa Guernsey is director of the Early Education Initiative at the New America Foundation. Michael H. Levine is executive director of the Joan Ganz Cooney Center at Sesame Workshop.]

Are Digital Foxes Guarding the Web's Privacy Hen House?

If you want to see how industry self-regulation can fall short, take a look at the online advertising business and the fight over a do-not-track protocol to protect consumer privacy.

It would seem to be in business's interest to keep customers happy—to give those who want it the guarantee that they aren't being tracked on the Internet. That's the idea behind a one-click, do-not-track button that would permanently block marketing firms that currently follow your activity from website to website. And yet negotiations between advertising, marketing and privacy groups are stuck in a continuous loop. Email exchanged between members of the W3C Tracking Protection Working Group shows they still disagree over basic questions, such as what "do not track" should mean and how to assure compliance. The problem is, self-regulation in the case of the Internet is often a contradiction in terms. Jon Leibowitz, the head of the Federal Trade Commission, says he's still optimistic that companies will find a solution. But it's unclear how potent that threat really is. Sen. Rockefeller's bill didn't get traction after he introduced it. That may explain industry's strategy in the negotiations. Delay and rope-a-dope have worked so far. Maybe they will win the fight.

No data-mining on kids

[Commentary] Blink and you're left behind in the online-marketing world. That's the dilemma facing the Federal Trade Commission, which is considering catch-up fixes to a 1998 law designed to protect children's privacy on the Internet.

The big firms - Facebook, Apple, Google, Microsoft and Twitter - are opposed to tighter laws. User habits and tastes are the real gold mine in the social-media world, where viewers freely trade personal information as they correspond, search and amuse themselves. If the laws are changed to protect children, then it won't be long before consumer advocates want the same guarantees for everyone, these firms worry. For starters, the federal agency should investigate the extent the problem, a task that likely will show how extensive data mining has become. Then the harder task of devising better rules should begin. Is there an effective way that balances privacy with the cost of running websites that draw young viewers? Apps and online outlets remain free only as long as advertisers believe they're worthwhile, business advocates say. If too many privacy regulations are added, this industry will be damaged. California is pushing ahead on a parallel course. Attorney General Kamala Harris has sent out notices to app developers and websites to better display privacy agreements for all users. In the case of children, Washington's intentions should be clear: A vulnerable and less sophisticated audience needs nearly ironclad privacy protections. It's time to strengthen rules that protect children in the online world.

China party chief stresses reform, censors relax grasp on Internet

China must deepen reforms to perfect its market economy and strengthen rule of law, Communist Party chief Xi Jinping said in southern Guangdong, echoing groundbreaking comments by reformist senior leader Deng Xiaoping in the same province 20 years ago. Xi's call for reform was reported on Monday, coinciding with an apparent easing of Internet search restrictions that the party has energetically used to suppress information that could threaten one-party rule. China's largest microblog service unblocked searches for the names of many top political leaders in a possible sign of looser controls a month after new senior officials were named to head the ruling party.

In Europe, Publishers Dealt a Setback Over e-Book Pricing

The European Commission settled its antitrust case against Apple and four book publishing groups over e-book price fixing, in what was described as a victory for the leading online seller, Amazon, and a setback for publishers fighting for the ability to set prices for electronic literature in the digital marketplace.

The European Union’s competition commissioner, Joaquín Almunia, said he was ending his office’s investigation after Apple and the publishers — Simon & Schuster, HarperCollins, Hachette, and Holtzbrinck, the owner of Macmillan — agreed to end their attempt to set prices for e-books through a series of preferred selling agreements. Under those agreements, made in 2010, publishers could set their own prices on e-books, with the retailer acting as an agent taking a commission. Apple championed this agency model. For print books, by contrast, publishers act as wholesalers, charging retailers about half the cover price for a book and then allowing retailers to set their own price to consumers. Amazon built a huge business by offering consumers discounts under this wholesale model. Publishers fear that under the wholesale model, Amazon can sell e-books for less than it pays, taking a loss in the short term to drive smaller competitors out of business, thus gaining a monopoly, to the detriment of the publishers. European Union officials, however, see things differently: that collusion by publishers would lead to higher prices for consumers.

Statement from Dr Hamadoun I. Touré, Secretary General of the ITU

We have concluded the drafting of the text for the newly revised International Telecommunication Regulations treaty.

This treaty contains many gains and achievements including increased transparency in international mobile roaming charges and competition, an extremely important win for consumers. The treaty contains a newly updated Article which will promote greater connectivity for people with disabilities as well as a new Resolution covering Land-Locked Developing Nations and Small Island Developing States. This Resolution will set the framework for increased investment and roll out of broadband and mobile broadband, bringing vital services to populations that are currently disconnected. Information and communication technologies can now play a greater role in driving sustainable development, in particular with new Articles that provide recommendations for dealing with the growing scourge of e-waste and promoting greater energy efficiency.

The conference did NOT include provisions on the Internet in the treaty text. Annexed to the treaty is a non-binding Resolution which aims at fostering the development and growth of the internet – a task that ITU has contributed significantly to since the beginning of the Internet era, and a task that is central to the ITU’s mandate to connect the world, a world that today still has two thirds of its population without Internet access. The new ITR treaty does NOT cover content issues and explicitly states in the first article that content-related issues are not covered by the treaty. Likewise, in the preamble of the new text signatory Member States undertake to renew their commitment and obligation to existing human rights treaties.

History will show that this conference has achieved something extremely important. It has succeeded in bringing unprecedented public attention to the different and important perspectives that govern global communications. There is not one single world view but several, and these views need to be accommodated and engaged.