January 3, 2013 (The 113th Congress)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for THURSDAY, JANUARY 3, 2013
AFTER THE CLIFF
Tech groups laud R&D tax credit extension in 'fiscal cliff' deal
Hollywood keeps its tax break in 'fiscal cliff' deal
Media Stocks Start Year Higher on Fiscal Agreement
No Good News for Government IT in Sequestration Delay
OWNERSHIP
FTC Chairman Pushing for a Google Antitrust Decision This Week
Microsoft: Google Is Still Blocking Us From Building YouTube for Windows Phone
Amazon Wins Dismissal of Apple’s False Advertising Claim
Al Jazeera Acquires Current TV
WIRELESS
US telecoms – softly ticking - analysis
Life After The iPhone: How AT&T's Bet On Apple Mobilized The Company - analysis
UK companies not ready for mobile Internet [links to web]
CONTENT
The superhighway of information has a toll - editorial
Report links Google, Yahoo to Internet piracy sites
POLICYMAKERS
Portrait of the 113th Congress
Commissioner Clyburn Pledges to Keep Consumers Her Priority
AFTER THE CLIFF
FISCAL CLIFF AND R&D
[SOURCE: The Hill, AUTHOR: Jennifer Martinez]
Technology trade groups that represent Google, Microsoft and Cisco lauded the research and development (R&D) tax credit extension included in the final "fiscal cliff" deal. The Information Technology Industry Council (ITI) and the Telecommunications Industry Association (TIA) said the R&D tax credit is key to maintaining the United States' position as a leader in the global tech industry. The credit was retroactively extended until the end of 2013 in the approved "fiscal cliff" legislation. It expired at the end of 2011. “The R&D credit has been, and will remain, a cost-effective policy for increasing research activity and producing a dollar-for-dollar increase in research spending," TIA President Grant Seiffert said. Tech companies have long supported efforts to make the tax credit permanent.
benton.org/node/142342 | Hill, The
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HOLLYWOOD AND R&D
[SOURCE: Los Angeles Times, AUTHOR: Richard Verrier]
Middle-class taxpayers aren't the only ones who stand to benefit from the last-ditch deal to avert the so-called fiscal cliff. The agreement in Congress also includes something for Hollywood -- the extension of a tax break for movies and TV shows that shoot mainly in the US. The provision, Section 181 of the federal tax code, allows qualifying productions to write down the first $15 million of expenses from their corporate tax bill. The program will cost an estimated $430 million in deductions in the next year, according to estimates by the Joint Committee on Taxation. Congress implemented the federal tax incentive in 2004 to encourage productions to stay home rather than flee to Canada, Britain and other foreign countries. It's not clear how effective the incentive has been. Film and television production continues to migrate to foreign cities, including Vancouver, Canada, and London, because of the stronger film tax breaks available there. And while production in the U.S. has increased dramatically in the last decade, most of that has been attributed to various state tax incentive programs.
benton.org/node/142341 | Los Angeles Times
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MEDIA STOCKS UP ON AGREEMENT
[SOURCE: Broadcasting&Cable, AUTHOR: Jon Lafayette]
Media companies were among the beneficiaries as the stock market rallied on news that the White House and Congress forged a deal to avoid sending the economy over the dreaded fiscal cliff. The Dow Jones Industrial Average jumped 308.41 points, or 2.35%, to close at 13.412. Many programmers registered even bigger gains because there had been concerns that falling over the fiscal cliff could lead to decreases in purchases by consumers and lower spending by companies, particularly on advertising. TV networks are starting to gear up for another upfront season, and not having to revise already fairly pessimistic outlooks for ad spending created a more positive atmosphere. Among media stocks, Viacom was the biggest gainer on a percentage basis. Other big gainers were Time Warner and Crown Media, Comcast, CBS, News Corp, AMC, Discovery Communications and Scripps Networks.
benton.org/node/142340 | Broadcasting&Cable
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NO GOOD NEWS FOR GOVERNMENT IT IN SEQUESTRATION DELAY
[SOURCE: nextgov, AUTHOR: Joseph Marks]
A just-past-deadline deal to put off a decision about drastic federal spending cuts until February will provide little solace for government technology chiefs and may be more damaging than if the draconian cuts had gone into effect, observers said. With no final decision on how or even whether to avert the slate of automatic cuts known as sequestration, agency leaders must spend two more months planning and budgeting for the most austere outcome or risk violating budgeting laws by overspending, said Alan Balutis, a former chief information officer at the Commerce Department and now a director at Cisco’s Internet Business Solutions Group. The major change resulting from the last minute deal is that if and when a sequestration-averting plan comes through, agencies will have only seven months to rejigger their spending to conform with final budget allowances before the government fiscal year ends in September 2013, Balutis said, rather than nine months if a deal had been reached by January 1, the initial deadline.
benton.org/node/142343 | nextgov
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OWNERSHIP
GOOGLE DECISION THIS WEEK?
[SOURCE: Wall Street Journal, AUTHOR: Liz Gannes]
It’s likely that the Federal Trade Commission will rule on its antitrust investigation of Google this week, with a similar settlement to the one discussed before the December holidays, according to multiple sources familiar with the matter. The FTC had seemed ready to agree to a non-binding settlement with Google in late December, but it pushed back a decision after it seemed that the European Commission was still in the fight for a stricter deal. Now, FTC Chairman Jon Leibowitz is behind a charge for the FTC’s five commissioners to vote on the same issue this week. What’s changed? Well, the Senate confirmed George Mason law professor Joshua Wright late Jan 1 to replace Commissioner Thomas Rosch. Rosch’s last day is Jan 4. Due to a previous relationship with Google, Wright will recuse himself from the case. The other thing that’s evolved in the past month is that after descriptions of the Google-FTC settlement leaked, it was perceived as weak compared to what Europe was still negotiating. The proposed U.S. settlement includes a resolution about scraping content for use in Google’s search “snippets,” a requirement for AdWords data to be portable onto other platforms and restrictions about when injunctions can be sought over standards-essential patents. These so-called “voluntary commitments” seemed markedly weaker than the “binding” and later to be “market-tested” agreement that EC competition commissioner Joaquin Almunia said in a public statement he was still hoping to get from Google before the end of January. Not wanting to hurt its leverage in future cases, the FTC took a step back to think about how this was being perceived, sources said.
benton.org/node/142332 | Wall Street Journal
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MICROSOFT, GOOGLE AND THE WINDOWS PHONE
[SOURCE: Wall Street Journal, AUTHOR: Liz Gannes]
Microsoft said that Google executives have blocked a full-featured YouTube app for Windows Phone, via a blog post from one of its chief lawyers. The company is trying to put a little public antitrust pressure on Google, given the context of impending American and European decisions about Google’s behavior in search and advertising. But the YouTube issue is not a new one; Microsoft has complained about it to regulators multiple times since 2010. YouTube clients for Android and iPhone have fuller search, favorites and ratings capabilities, while YouTube for Windows Phone is basically a wrapper for the mobile Web version of the site, because it doesn’t have access to full APIs. What’s new is that Microsoft is now claiming that people at YouTube are in favor of helping provide a good Windows Phone experience, but senior Google executives recently told them not to do so.
benton.org/node/142331 | Wall Street Journal
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COURT DISMISSES APPLE CLAIM
[SOURCE: Bloomberg, AUTHOR: Karen Gullo]
Amazon won dismissal of Apple’s claim that the online retailer’s use of the term “app store” for Android device software is false advertising. U.S. District Judge Phyllis Hamilton in Oakland (CA) granted Amazon’s request to throw out one claim in Apple’s lawsuit alleging trademark infringement and unfair competition over the Amazon Appstore for Android, a service begun in March that sells applications for the Kindle Fire and devices running Google’s Android software. “The court finds no support for the proposition that Amazon has expressly or impliedly communicated that its Appstore for Android possesses the characteristics and qualities that the public has come to expect from the Apple APP Store and/or Apple products,” Judge Hamilton said.
benton.org/node/142330 | Bloomberg
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AL JAZEERA ACQUIRES CURRENT
[SOURCE: New York Times, AUTHOR: Brian Stelter]
Al Jazeera completed a deal to take over Current TV, the low-rated cable channel that was founded by Al Gore and his business partners seven years ago. Current will provide the pan-Arab news giant with something it has sought for years: a pathway into American living rooms. Current is available in about 60 million of the 100 million homes in the United States with cable or satellite service. Rather than simply use Current to distribute its English-language channel, called Al Jazeera English and based in Doha, Qatar, Al Jazeera will create a new channel, called Al Jazeera America, based in New York. Roughly 60 percent of the programming will be produced in the United States, while the remaining 40 percent will come from Al Jazeera English. Al Jazeera may absorb some Current TV staff members, according to people with knowledge of the deal who insisted on anonymity because they were not authorized to speak publicly. But Current’s schedule of shows will most likely be dissolved in the spring.
benton.org/node/142344 | New York Times
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WIRELESS
US TELECOMS – SOFTLY TICKING
[SOURCE: Financial Times, AUTHOR:]
Shares for AT&T and Verizon have underperformed the market by 9 percent and 5 percent respectively since October but have performed in line with the market for 2012 and have outperformed over two years. The shares trade at a slight premium to the market. Yet these pseudo-duopolists, which sit atop the US wireless telecoms market, are facing a radically different competitive environment than they did a year ago. SoftBank’s purchase of Sprint and the latter’s subsequent acquisition of Clearwire create a better-funded number three with the spectrum to launch low-priced wireless data products. Nor is Sprint the only problem: the T-Mobile/MetroPCS merger (if it is not interrupted by a counterbid) creates a fourth player just strong enough to grasp for market share, adding to the price pressure Sprint is all but certain to create. Meanwhile, Dish Network has a nice chunk of wireless spectrum it could add to one of the smaller competitors’ war chests. The next few years are going to be fun to watch – from a distance.
benton.org/node/142349 | Financial Times
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AT&T AND APPLE
[SOURCE: Forbes, AUTHOR: Connie Guglielmo]
Trust was a big part of the story behind AT&T’s deal with Apple. The country’s biggest phone company was a sclerotic mess of assets. Its shrinking landline business produced the majority of revenue. Its play on the future was a glitchy, hodgepodge cellular network cobbled from deals past. It couldn’t pass up, as Verizon reportedly did, the chance to usher in the smartphone era with the man who had reinvented the computer and the music industry. “I told people you weren’t betting on a device. You were betting on Steve Jobs,” says AT&T CEO Randall Stephenson, talking candidly about the effect of the iPhone deal from his 37th-floor aerie atop Whitacre Tower in Dallas. That one little phone transformed the whole company. AT&T still lags Verizon on many fronts, but since the iPhone deal Ma Bell moves faster, embraces new technologies and partnerships big and small, and has decided to spend big–really, really big–to stay atop the data deluge. Since 2007 traffic on its network has doubled each year, and AT&T has spent more than $115 billion acquiring spectrum and building its network. It claims to have made a greater capital injection into the U.S. economy than any other public company in that time span.
benton.org/node/142348 | Forbes
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CONTENT
INFORMATION TOLLS
[SOURCE: Financial Times, AUTHOR: John Gapper]
[Commentary] Newspapers and other news publishers are increasingly targeting smaller, more affluent audiences, impelled not by governments, but by their own economics. For years, digital news conformed to one section of the 1984 prophecy of the technology guru Stewart Brand – that “information wants to be free because the cost of getting it out is getting lower.” Now, it is relying on his other, lesser-known maxim – that “information wants to be expensive because it’s so valuable. The right information in the right place just changes your life.”
As paywalls go up, and advertising yields continue to fall, publishers have pinned their hopes on subscriptions. I don’t see why publishers have an ethical duty not to charge for the content they originate. Free news is a recent phenomenon. Newspaper publishers always charged readers, albeit a small amount compared with the cost of newsgathering. Furthermore, nothing will change the fact that people have access to far more information than before the internet. News cannot be patented – once information is uncovered, it spreads rapidly across Twitter and Facebook, and is repeated by rivals and aggregators. Should we be worried? The risk is that news will become slanted in the interests of corporations and the wealthy. So far, there isn’t much sign of that. The news organizations best placed to prosper from the shift – Bloomberg, Reuters, the FT, the Wall Street Journal, The Economist – have high standards. Indeed, the shift towards subscriptions could raise editorial standards, rather than lowering them. Free sites that need to boost page views to gain advertising have an incentive to go downmarket with more gossip and celebrity news; the ones that rely more on subscriptions have the reverse incentive. But the fading era of advertising-subsidized newspapers and free-to-air television was at least democratic. At relatively low cost, everyone could be well informed. In the future, the information superhighway will have both fast and slow lanes.
benton.org/node/142346 | Financial Times
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GOOGLE, YAHOO AND PIRACY
[SOURCE: Los Angeles Times, AUTHOR: Dawn Chmielewski]
Google and Yahoo, two Internet companies that have long cultivated relationships in Hollywood, are nevertheless placing ads on sites that feature pirated movies, TV shows and music, a new report says. USC's Annenberg Innovation Lab ranked Google and Yahoo among the top 10 advertising networks that support major piracy sites around the world, based on the lab's analysis of online ads that receive the most copyright infringement notices. Google took issue with the report's findings, calling its conclusion "mistaken." Yahoo did not respond to requests seeking comment. The report is the first installment of a monthly update that Innovation Lab Director Jonathan Taplin hopes major brands will use to inform their decisions about online ad spending and steer dollars away from sites that exploit film, television and music.
benton.org/node/142345 | Los Angeles Times
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POLICYMAKERS
THE 113TH CONGRESS
[SOURCE: The Hill, AUTHOR: Emily Goodin]
There will be over 90 new members of Congress sworn into office on Jan 3 — a diverse group of men, women, straight, gay, married, single, well-known and unknown. The freshman class of 2013 includes an animal vet (Ted Yoho (R-FL)), a reindeer farmer (Kerry Bentivolio (R-MI)), a scion of a legendary family (Joseph Kennedy (D-MA)), a famous twin (Joaquin Castro (D-TX), whose brother gave the keynote address at the Democratic National Convention). Joining the 12 newly-elected members of the upper chamber — three Republicans, eight Democrats and one independent — will be Tim Scott (R-SC), the House member who was appointed to fill the seat of Sen. Jim DeMint (R-SC), who resigned this month. The lower chamber will gain 82 new lawmakers: 35 Republicans and 47 Democrats. The lower chamber also is losing some of its most well-known members: Reps. Barney Frank (D-MA), Ron Paul (R-TX), and Dennis Kucinich (D-OH) are leaving. But there will be some familiar faces returning to Capitol Hill — seven incoming House members have served in the lower chamber before: Republican Matt Salmon of Arizona, Democrat Alan Grayson of Florida, Democrat Bill Foster of Illinois, Democrat Rick Nolan of Minnesota, Democrat Carol Shea Porter of New Hampshire, Democrat Dina Titus of Nevada, and Texas Republican Steve Stockman.
benton.org/node/142350 | Hill, The
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COMMISSIONER CLYBURN’S STATEMENT
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Newly-reconfirmed Federal Communications Commission member Mignon Clyburn is committed to working with the Congress to "keep the needs of American consumers paramount." “It is an extraordinary honor to have the opportunity to serve on the Federal Communications Commission for another term. I am grateful to the President for his faith in renominating me, and am humbled by the Senate’s support in approving my nomination.”
benton.org/node/142339 | Broadcasting&Cable | Commissioner Clyburn
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