December 2012

NEWS FROM THE INCENTIVE AUCTIONS HEARING

RECAP: KEEPING THE NEW BROADBAND SPECTRUM LAW ON TRACK
[SOURCE: House of Representatives Commerce Committee]
The House Commerce Committee’s Subcommittee on Communications and Technology held an oversight hearing on implementation of provisions of the Middle Class Tax Relief and Job Creation Act of 2012 that allow for new spectrum auctions. Subcommittee Republicans expressed that the Federal Communications Commission will fail to generate enough revenue from its planned auction of spectrum currently used by television broadcasters. Congress authorized the FCC to auction local TV stations' airwaves to cellphone carriers as part of a payroll tax cut extension bill earlier this year. The auction is intended to generate enough revenue to pay the TV broadcasters, fund a nationwide broadband network for first-responders and help pay down the federal debt.
"While I’m not about to micromanage how the FCC operates the auction, I do expect the FCC will follow the law, including maximizing the proceeds from the auction," said Subcommittee Chairman Greg Walden (R-OR). Republicans are concerned that the FCC will set aside too much unlicensed spectrum, which can be used by any company for free. Chairman Walden said he believes that some unlicensed spectrum is important to allow for innovation and to power WiFi networks, but he worried that the FCC is going too far. He estimated that the FCC's plan to reserve unlicensed spectrum blocks could cause the federal government to forgo an estimated $7 (AdWeek reports he said $19) billion in revenue.
Democrats voiced support for the FCC's unlicensed spectrum plan. Rep. Henry Waxman (D-CA), the ranking Democrat on the full Commerce Committee, said unlicensed spectrum has been an "incredible economic success story" and that additional unlicensed spectrum will allow businesses to "invent things we can't even imagine." Rep. Anna Eshoo (D-CA), the subcommittee's top Democrat, said Republicans were putting too much emphasis on maximizing government revenue at the expense of pursuing policies that would benefit the industry and consumers. Democrats also raised concerns about spectrum ownership consolidation, though no member used the names AT&T and Verizon. “The FCC must have the authority to write auction rules that aim to avoid the concentration of spectrum in the hands of just a small group of companies,” said Rep Waxman. Republican FCC Commissioner Robert McDowell testified that a cap on the spectrum that any one company can win at auction could "create harmful uncertainty and may reduce the pool of auction participants."
Preston Padden, executive director of the newly formed Expanding Opportunities for Broadcasters Coalition, confirmed that there are now more than 25 stations "in major markets" represented his group of broadcasters interested in making some spectrum available for auction.
benton.org/node/141544 | House of Representatives Commerce Committee | Chairman Genachowski | Commissioner McDowell | Commissioner Clyburn | Commissioner Rosenworcel | Commissioner Pai | The Hill | AdWeek | B&C
Recommend this Headline
back to top

MEDIA OWNERSHIP IS HOT TOPIC AT SPECTRUM HEARING
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
House Commerce Committee members came prepared with a boatload of questions for the five Federal Communications Commission commissioners. Several legislators brought up diversity and the FCC's media ownership proposal. Leading that charge were Reps Bobby Rush (D-IL) and Anna Eshoo (D-CA). Rep Rush said he was tired of a procession of platitudes from commissioners over his past 17 years on the committee, "but absolutely no performance." He thanked the FCC for putting off a vote on the item -- the chairman had wanted to vote it by the end of the year, but has effectively put that off, at least until early January. But Rep Rush said he was "tired of this continuum of excuses," and wanted to know what, other than a tax certificate policy, could be done to boost minority ownership. All the commissioners agreed that it was not acceptable that there were only 28 full-power TV stations in the country owned by minorities. FCC Chairman Julius Genachowski defended his decision to proceed to a vote on loosening cross-ownership rules, saying it was time to wrap up the 2010 quadrennial and that the FCC would continue to make diversity a core mission, including seeking funding to complete the studies that would allow it to better justify a number of associated diversity proposals, which were remanded back to the FCC by the Third Circuit Court of Appeals for better justification. Critics of that dual-track strategy continue to argue that the FCC should not take any action on its rules until their impact on diversity can be gauged via those studies.
benton.org/node/141543 | Broadcasting&Cable
Recommend this Headline
back to top

NEWS FROM THE FCC MEETING

HEALTHCARE CONNECT FUND
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
Acting to expand access by health care providers to robust broadband networks, the Federal Communications Commission established the Healthcare Connect Fund to reform and modernize its universal service program for health care. The new Healthcare Connect Fund will help expand access by health care providers to the high-bandwidth connections they need for modern telemedicine by:
Removing artificial limitations on technology and provider type that hampered legacy universal service health care support
Encouraging consortia between smaller rural health care providers and urban medical centers to enable remote hospitals and clinics to draw on the medical, technical and administrative resources of larger providers
Increasing fiscal responsibility by requiring participants to contribute 35% of the costs, while affording health care providers access to lower rates through group buying
Supporting broadband services purchased from diverse communications providers, while also allowing health care providers to construct new broadband networks when that is the most cost-effective option
Covering upgrades to higher speed service required for health care applications In addition, the reforms establish a new competitive Pilot Program to test expanding broadband healthcare networks to skilled nursing facilities. Because these facilities are often remote from doctors and sophisticated lab and testing facilities, frail and convalescing patients will benefit greatly from broadband services that can reduce the time, expense and stress of travelling to receive medical care. Up to $50 million over three years will be available from the Fund for these competitively-awarded Pilots. The Order implementing these reforms maintains a $400 million ceiling on the cost of universal service support for broadband health care networks. Savings achieved by group purchases through consortia and other increases in efficiency could cut the cost of robust broadband health care networks in half for both providers and the Universal Service Fund, based on the FCC’s analysis of successful Rural Health Care Pilots.
benton.org/node/141539 | Federal Communications Commission
Recommend this Headline
back to top

FCC PROPOSES ACTION TO ACCELERATE THE AVAILABILITY OF NATIONWIDE TEXT-TO-911 SERVICE
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
The Federal Communications Commission proposed rules to bring Americans the ability to send text messages to 911 more rapidly and uniformly, and to inform consumers about the availability and appropriate use of text-to-911. The FCC’s proposed action builds on prior FCC initiatives and the recent voluntary commitment by the nation’s four largest wireless carriers, with support of leading public safety organizations, to make text-to-911 available to their customers by May 15, 2014, with significant deployments expected in 2013. The FCC’s proposed action also seeks to accelerate the nation’s transition to a Next-Generation 911 system that will use cutting-edge communications technology to assist first responders in keeping our communities safe.
In the Further Notice of Proposed Rulemaking adopted, the FCC proposed to require that all wireless carriers, as well as providers of certain Internet-based (“over the top”) text messaging applications – that is, those that send text messages to phone numbers – enable their customers to send text messages to 911 in areas where local 911 call centers (known as Public Safety Answering Points, or PSAPs) are also prepared to receive the texts. Noting the voluntary commitment of the four largest wireless carriers to deploy text-to-911 capability by May 15, 2014 in areas where the 911 call center is prepared to receive the texts, the FCC sought comment on whether this timeframe is achievable for all carriers and third-party
messaging providers.
The FCC proposed to require all wireless carriers and certain “over the top” text messaging providers to send automated “bounce back” error messages to consumers attempting to text 911 in areas where the service is not yet available. The error message would indicate that the text did not reach 911 and that the consumer should instead place a voice call to 911 if possible.
benton.org/node/141537 | Federal Communications Commission
Recommend this Headline
back to top

FCC PROPOSES TO ENABLE INNOVATIVE SMALL CELL USE OF SPECTRUM IN THE 3.5 GHZ BAND
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
The Federal Communications Commission (FCC) proposed to make available 100 megahertz of shared spectrum in the 3.5 GHz Band (3550-3650 MHz) using small cell and database technologies. The Notice of Proposed Rulemaking (NPRM) broadly reflects the innovative thinking of the President’s Council of Advisors on Science and Technology (PCAST), which issued a report this summer recommending spectrum sharing and small cell use in the 3.5 GHz Band. It also builds upon the FCC’s previous work to free up spectrum by promoting spectrum sharing and enabling innovative licensing techniques.
The proposal lays the groundwork for the widespread deployment of small cell technologies across 100 megahertz of spectrum, and would spur significant innovation in wireless technologies and applications throughout the economy, while protecting incumbent users in the band. The proposal envisions three tiers of users, each with different levels of rights and protections in
the 3.5 GHz Band:
The first tier, Incumbent Access, would include authorized federal users and grandfathered fixed satellite service licensees. These incumbents would be afforded protection from all other users in the 3.5 GHz Band.
The second tier, Protected Access, would include critical use facilities, such as hospitals, utilities, government facilities, and public safety entities that would be afforded quality-assured access to a portion of the 3.5 GHz Band in certain designated locations.
The third tier, General Authorized Access, would include all other users – including the general public – that would have the ability to operate in the 3.5 GHz Band subject to protections for Incumbent Access and Protected Access users. A spectrum access system, incorporating a geo-location enabled dynamic database, would govern access to the 3.5 GHz Band.
benton.org/node/141536 | Federal Communications Commission | read the proposed rules
Recommend this Headline
back to top

FCC PROPOSES SPECTRUM SHARING
[SOURCE: The White House, AUTHOR: Tom Power]
The Federal Communications Commission (FCC) proposed new rules governing how wireless broadband providers can share the airwaves with government users, adopting an innovative model first proposed earlier this year by the President’s Council of Advisors on Science and Technology (PCAST) in its landmark report, Realizing the Full Potential of Government-Held Spectrum to Spur Economic Growth. The FCC action comes amidst an array of Administration initiatives aimed at freeing up more spectrum for wireless broadband in order to drive productivity, jobs, and innovation, while also protecting the essential government systems – including public safety, law enforcement, border protection, and military defense -- that also rely on spectrum and are relied upon by the American taxpayer. It is this type of public-private commitment and collaboration that is crucial to maintaining America’s leadership in the development and use of advanced wireless technologies. Reflecting PCAST’s recommendation to apply creative approaches to spectrum sharing, the FCC’s proposal would allow sharing of certain parts of the spectrum under a three-tiered prioritization scheme, allowing two new categories of commercial use into a radio band that until now has been reserved for exclusive use by the government. The proposed rules would ensure absolute protection of the vital government systems operating at those frequencies; a more limited degree of access for commercial users who, within limits, could use those frequencies outside of government protected zones; and a third class of “general authorized access” that would be engineered so as to avoid interference with the first two categories. All users would be required to register in a database, so market participants could make informed decisions about when and where to deploy their systems. While these proposed rules would, if adopted, govern only one slice of the radiofrequency spectrum, they offer a window into how sharing of government spectrum can become an important component of the more efficient approach to spectrum management called for by President Barack Obama.
benton.org/node/141533 | White House, The
Recommend this Headline
back to top

LABOR

OUTRACE THE ROBOTS
[SOURCE: New York Times, AUTHOR: Quentin Hardy]
We have to learn how to “outrace the robots.” “Given the trends of globalization, automation and demographics, there will definitely be a small number of people who will be very prosperous,” said Google’s Eric Schmidt. The challenge is to let as many people into that class as possible, and, even more important, get masses of people educated to a level where they can qualify for work in the new businesses these people create. Robots may hollow out the factories in China, which count on cheap human labor, and bring manufacturing back to the United States. Those machines will need people to service them, and those people will need to be reasonably skilled. But who says those robot operators have to be United States-based, just because the machines are? “The way to combat it is education, which has to work for everyone, regardless of race or gender. You’ll have global competition for all kinds of jobs,” said Schmidt. Understanding this, he said, should be America’s “Sputnik moment,” which like that 1957 Russian satellite launch gives the nation a new urgency about education in math and science. “The president could say that in five years he wants the level of analytic education in this country – STEM education in science, technology, engineering and math, or economics and statistics – has to be at a level of the best Asian countries.” Asian nations, Mr. Schmidt said, are probably going to proceed with their own increases in analytic education. “Employment is going to be a global problem, not a U.S. one,” he said.
benton.org/node/141531 | New York Times
Recommend this Headline
back to top

BROADBAND/INTERNET

NOD TO GREATER INTERNET OVERSIGHT
[SOURCE: Associated Press, AUTHOR: Brian Murphy]
The United Nations conference weighing possible Internet rules shifted into high-stakes showdowns on Dec 13 after advancing a proposal for greater government oversight. The proposal was a blow to U.S.-led efforts to keep new regulations from touching the Net. The move frames the ideological divide at the 193-nation gathering in Dubai. A Western bloc led by a powerhouse U.S. delegation seeks to block any U.N. rules on cyberspace, fearing they could squeeze Web commerce and open the door for more restrictions and monitoring by authoritarian regimes. A rival group — including China, Russia, Gulf Arab states and others — favors U.N. backing for stronger sway by governments over all levels of Internet affairs. They appeared to win a critical preliminary battle early Thursday when the meeting's chairman declared consensus on a proposal for a more "active" government role in Internet dealings. There was no formal vote, but Mohammed Nasser al-Ghanim said he based his decision on "the temperature of the room" following marathon negotiations. That brought an immediate backlash from the U.S. and its backers, which questioned the procedure and vowed to keep any new Internet rules from the final treaty by the U.N.'s International Telecommunications Union, or ITU.
benton.org/node/141569 | Associated Press | Bloomberg
Recommend this Headline
back to top

UN TELECOM TALKS DEADLOCKED
[SOURCE: Bloomberg, AUTHOR: Amy Thomson, Marie Mawad]
Negotiations to update a quarter- century old telecommunications rulebook reached a deadlock as the U.S. and Europe failed to resolve disagreements with China and the Middle East on measures that would increase government control over the Internet. At the World Conference on International Telecommunications in Dubai, discussions on whether the Internet and Web spam should be included in the new rules gave way to elaborate debate on phrasing because of concern that governments might overstep boundaries in Internet control. “The Internet does well with a multi-stakeholder governance model where you have dedicated organizations that have technical expertise,” Terry Kramer, the leader of the U.S. delegation, said in an interview today. “They include industry, they include governments, they include civil society, to address issues affecting the Internet.” The Saudi-Arabian delegation said in a statement during the plenary that the regulations wouldn’t affect the Internet and were meant to regulate new networks. “It’s unacceptable that one party to the conference gets everything they want and everybody else must make concessions,” the delegation said. To address these concerns, which have caused delays in the finalization of the new rules, WCIT President Mohammed Nasser Al-Ghanim proposed wording that explicitly prevents the interpretation of any of the amendments to be used to regulate content.
benton.org/node/141567 | Bloomberg
Recommend this Headline
back to top

GLOBAL INTERNET DIPLOMACY
[SOURCE: New York Times, AUTHOR: Editorial staff]
[Commentary] Organizers of the World Conference on International Telecommunications, which ends on Dec 14, have already said that no proposals or a final treaty will be put to a vote. Instead, they say an agreement will be reached through consensus. The envoy representing Washington, Terry Kramer, has made it clear that the United States will not accept any language on Internet controls, which he says does not belong in a treaty that should properly focus on telecommunications. Subjecting the Internet to more overlapping and unneeded regulations would only serve to weaken it. The Internet provisions are ill-considered diversions from what should be the core purpose of the conference: finding ways to expand access to communications technology, including reducing international cellphone roaming charges and lowering the cost of wireless and broadband services by encouraging competition.
benton.org/node/141566 | New York Times
Recommend this Headline
back to top

FIGHT FOR INTERNET CONTROL
[SOURCE: San Francisco Chronicle, AUTHOR: Editorial staff]
[Commentary] No one should be surprised at what's happening at a United Nations conference weighing Internet regulation. Countries such as China, Russia and Saudi Arabia that don't like wide-open cyberspace want it bottled up and under their thumbs. The Internet is so new, decentralized and untamable that there aren't international norms to handle it. A U.N. agency - the International Telecommunication Union - has assigned itself the job of roping in the connective force for the first time. It's not going well. On one level, it's a fool's errand. The Internet isn't in the same league as phone lines, TV signals or the mail, which require standards and agreements. It doesn't need a treaty or official seal of approval to run itself. The standoff should remind all sides of the Internet's vigorous and uncontrollable nature. It's a force that eludes political limits and constraints. It shouldn't be subject to a misguided treaty.
benton.org/node/141564 | San Francisco Chronicle
Recommend this Headline
back to top

GOOGLE’S COOLEST PROJECT
[SOURCE: New York Times, AUTHOR: Quentin Hardy]
According to Eric Schmidt, Google‘s executive chairman, the most interesting project going on at the search giant is its high-speed broadband trials in Kansas City. (Missouri and Kansas versions) “All of the distinctions, like HD, DVD, that we grew up with, go away,” he said. “You really imagine that your computer is really in a data center.” Google is considering introducing the service to other select cities, Schmidt said, but would not specify which towns would get the fiber. Google is likely not interested in being a service provider, like Verizon, but rather in fostering a competitive climate in which ultrafast broadband becomes the norm. “Teleconferences will become holographic,” he predicted. “People take advantage of this kind of increase.” The more people are on the Internet, Google has found, the more they search for things, which is good for Google’s core ad business. In addition, Google can tailor other services to people, like its videoconferencing Hangouts service, which it sells to corporations. Watching consumers use more Google products also makes Google’s ads more profitable, because the company can personalize the pitches better.
benton.org/node/141529 | New York Times
Recommend this Headline
back to top

ELECTIONS AND MEDIA

ROMNEY SPENT MORE, GOT LESS
[SOURCE: Washington Post, AUTHOR: Tom Hamburger]
Senior Republican campaign operatives who gathered over beer in Alexandria for a post-election briefing were taken aback by what they were told. A nonpartisan research firm presented data showing that President Barack Obama had far outperformed Mitt Romney in managing the largest single expenditure of the campaign: television advertising. Romney’s spending decisions on advertising look like “campaign malpractice,” said one person who had reviewed the newly circulated data. President Obama and his allies spent less on advertising than Romney and his allies but got far more — in the number of ads broadcast, in visibility in key markets and in targeting critical demographic groups, such as the working class and younger voters in swing states. As the presidential race entered its final, furious phase, for example, millions of college football fans tuning in to televised games saw repeated ads for Obama but relatively few from the Romney campaign. All told, from June through Election Day, the Obama campaign and its allies aired about 50,000 more ads than Romney and his allies, according to the research firm’s data.
benton.org/node/141528 | Washington Post
Recommend this Headline
back to top

OWNERSHIP

GOOGLE MORALITY TALE
[SOURCE: Washington Post, AUTHOR: Dominic Basulto]
Google is one of the leading players in a modern-day Silicon Valley morality tale, particularly now, since it is among the American multinationals using sophisticated international tax shelters to avoid paying billions of dollars in taxes. According to Bloomberg, nearly $10 billion in revenue and $2 billion in taxes due disappeared into a Bermuda Triangle of shell corporations, offshore subsidiaries and clever accounting maneuvers such as the “Double Irish With a Dutch Sandwich”. Even for Google’s biggest fans, it’s now a fair question: Whatever happened to the unofficial company motto "Don't be evil"? To be fair, nothing Google did was illegal — the company simply executed well-known tax loopholes to perfection in the interest of maximizing returns to shareholders. Moreover, Google is hardly the only tech company caught with their Bermuda shorts pulled down around their ankles. Across Europe, there has been an outcry against tax-avoiding multinationals, with an emphasis on cracking down on the offshore tax activities of the tech world’s biggest players, including Amazon, Apple and Microsoft. In the UK earlier this month, British lawmakers took turns publicly admonishing the leaders of some of America's biggest companies, claiming that they aren’t paying their “fair share” of taxes. These are not just harangues from our cash-strapped European friends, they are evidence of a fundamental change to the way we view Silicon Valley’s most successful tech companies.
benton.org/node/141497 | Washington Post
Recommend this Headline
back to top

POLICYMAKERS

WHAT’S SO FUNNY ABOUT FCC FAILURES?
[SOURCE: The Huffington Post, AUTHOR: Craig Aaron]
[Commentary] Federal Communications Commission Chairman Julius Genachowski may pride himself on playing the "compromiser in chief," but his tenure has been a series of major disappointments for those expecting real change. His strategy at the FCC has been to fold, fold, fold anytime industry comes calling. The one time he went all-in against a major player was when the agency blocked the AT&T/T-Mobile merger. But he was holding aces then in the form of the antitrust lawsuit the Justice Department had already filed against AT&T. When Politico asked Genachowski to name his crowning achievement, the chairman simply said "broadband" -- as if we'd all be communicating through tin cans and string without his leadership. Yet his National Broadband Plan was the first sign we were dealing with a serial capitulator. The document failed to confront the biggest obstacle to providing world-class broadband in America: the lack of meaningful competition. Worst of all, Genachowski missed the opportunity to reverse failed Bush administration policies and "reclassify" broadband under the Telecommunications Act. Doing so would have ensured the FCC's authority to protect consumers from corporate malfeasance. But once again, Genachowski bowed to industry pressure-- and did nothing. Is Genachowski the worst FCC chairman ever? Well, there was once a guy who saw no difference between televisions and toasters, so the bar is pretty low. But it's hard to think of someone else who squandered as many opportunities at a more critical moment for the future of the media, the Internet and the agency itself.
benton.org/node/141571 | Huffington Post, The
Recommend this Headline
back to top

STORIES FROM ABROAD

UK LEADS WORLD IN MOBILE INTERNET USE
[SOURCE: Financial Times, AUTHOR: Daniel Thomas]
The UK’s mobile users are consuming more data on their phones and tablets than any other leading nation for the first time, according to a report published by Ofcom. The communications regulator found that activities such as web browsing, video streaming and the use of social networking sites in Britain now exceed those in Japan, which has long been the trend setter. Shopping is a key driver of the surge in overall data consumption, with the UK now spending more online than any other country in the world. Shoppers spent more than £1,000 a year via the internet for the first time in 2011, up 14 per cent from 2010, and pushing the UK higher than second-ranked Australia where consumers spent £842. The rapid rise in internet usage is in partly due to the widespread use of “smart” devices, from phones and tablets to internet-enabled televisions, in the UK.
benton.org/node/141554 | Financial Times
Recommend this Headline
back to top

HUTCHISON-ORANGE OK
[SOURCE: Financial Times, AUTHOR: James Fontanella-Khan]
Europe’s top competition authority approved the acquisition of France Telecom’s Orange Austria operation by Hong Kong’s Hutchison, but set a series of tough conditions that could still derail the deal. A key condition that will have to be met to approve the takeover is the sale of the budget mobile brand Yesss from Orange to Telekom Austria, which could still be blocked by the domestic competition regulator BWB. The decision by Brussels to greenlight the €1.3bn deal – which was seen by the telecom industry as a test case for whether consolidation would be allowed within national telecoms markets – will be welcomed by mobile operators. European chief executives of large telecom groups have been putting mounting pressure on the European Commission, the EU’s executive arm, to ease rules to facilitate consolidation in the troubled sector. Joaquín Almunia, the bloc’s antitrust enforcer, said that the acquisition would be completed upon Hutchison’s successful sell-off of its radio spectrum and on the condition that it grants access to its wholesale network to smaller competitors.
benton.org/node/141553 | Financial Times
Recommend this Headline
back to top

Benton

Search

Benton

Daily Digest

Analysis

December 2012

Owners of Southern California dailies eye Tribune papers

The Man Looking to Turn Samsung into a Silicon Valley Trendsetter

Did Google pay Belgian newspapers a $6 Million Copyright fee? Sure looks like it

The world’s best paid content market? China

Canadian Supreme Court: CRTC Lacks Authority to Impose Retransmission

EU report urges action against Chinese telecom firms

December 13, 2012 (What's So Funny About the FCC's Failures?)

What's So Funny About the FCC's Failures?

UN group gives nod for greater Internet oversight

UN Telecom Talks Deadlocked as U.S., Europe Fight Control