February 2013

Pandora to Limit Free Listening, Citing Royalty Costs

Faced with rising royalty costs, Pandora will limit the amount of free music that its users will have access to on mobile devices.

Tim Westergren, the founder and public face of Pandora, said that a limit of 40 hours a month on mobile devices would take effect this week for its free service. The change, he said, would affect less than 4 percent of its more than 65 million regular customers, since its average listener spends about 20 hours a month on the service. To continue listening, Pandora’s mobile users can upgrade to its $36-a-year paid version or switch to listening via computer. A spokeswoman for the company said the move was most likely temporary, but that it had no plans for lifting the limit. The reason Westergren gave was the rising cost of its music licenses. Its per-song royalty rates have increased 25 percent over the last three years, he said, and are to go up 16 percent over the next two years.

Caesars Looks to Cash In on Its Online-Gambling Chip

Caesars Entertainment has been crafting a complex plan to use online gambling and a few other growth assets to pull itself out of a financial tight spot—a tactic that could get a boost as New Jersey on Tuesday adopted a regulated market for Internet wagers.

Perhaps counterintuitively, the first step in Caesars's plan is to spin off its online gambling business to raise equity. The proposed gambit from Caesars's owners is controversial and complicated, particularly because the potential of online gambling in the U.S. remains hazy. But executives say it might give them the best chance of managing a balance sheet hobbled by worsening casino performances and a massive debt load.

Unsold iPhones Piling Up at Leap Wireless

For one of the country's prepaid cellphone carriers, a big bet on the iPhone is becoming a big headache. Leap Wireless International, which operates the Cricket cellphone brand, said it is on pace to sell half as many iPhones as it committed to sell during the first year of its contract with Apple Inc., which ends in June.

As a result, Leap said, it could end up with $100 million worth of unsold iPhones by the middle of this year. That spells more trouble for Leap, a company struggling to keep pace with larger competitors, and sheds light on the challenges facing Apple in cracking the huge market for smartphones being bought by lower-income consumers. Leap, which has about 5.3 million total subscribers, is also handicapped by the fact it lacks the robust nationwide networks of the country's biggest carriers, and because technological limits mean it can't sell the iPhone in all of its markets.

T-Mobile Loses More Contract Customers, Awaits iPhone, MetroPCS Deal Closure

T-Mobile continues to lose contract customers, although gains in prepaid business meant that the company’s overall ranks grew slightly last quarter.

The No. 4 U.S. carrier said it managed to add 61,000 total customers for the quarter, as an increase in prepaid customers offset the losses in the traditional business. Total revenue for the quarter was $4.9 billion, up sequentially from the prior quarter but down 5.2 percent from a year ago. Operating income before certain expenses was down 15 percent sequentially and 25 percent year-on-year. T-Mobile said it is looking forward to both the closure of its MetroPCS merger, expected in the first half of the year, as well as the ability to start selling Apple gear sometime in 2013.

Momentum Grows for Alternative Phone System Tizen

The junior league of smartphone operating systems is getting more competitive. Phones from yet another contender - Tizen - will go on sale this year with a view to eventually competing with the industry leaders, Apple's iOS and Google's Android.

For now, Tizen will compete with another newcomer, Firefox OS, as well as Microsoft's Windows Phone and a revamped BlackBerry operating system. Most of the impetus behind Tizen comes from cellphone carriers, which want a successful counterweight to the clout of Google and Apple. Tizen has a powerful backer in Samsung Electronics.

Recapping the 2013 Policy Symposium

February 26th marked the first Public Knowledge Symposium on Capitol Hill. The event was an opportunity for policy makers to hear from and exchange ideas with experts from many fields including data caps, online video, copyright and first sale. A good time was had by all.

China says U.S. routinely hacks Defense Ministry websites

Two major Chinese military websites, including that of the Defense Ministry, were subject to about 144,000 hacking attacks a month last year, almost two-thirds of which came from the United States, the ministry said.

"The Defense Ministry and China Military Online websites have faced a serious threat from hacking attacks since they were established, and the number of hacks has risen steadily in recent years," said ministry spokesman Geng Yansheng. "According to the IP addresses, the Defense Ministry and China Military Online websites were, in 2012, hacked on average from overseas 144,000 times a month, of which attacks from the U.S. accounted for 62.9 percent," he said.

Censorship’s Many Faces

[Commentary] Censorship in China conjures the image of rigid, unsmiling authority, but that disapproving scowl can give way to a different expression — and not always a consistent one.

A film, for example, might be banned for 20 years, while the novel on which it is based sells briskly throughout that same period. This might seem puzzling, but the reason is simple. China has more than 500 publishing houses, each with its own editor in chief (and de facto censor); if a book is rejected by one publisher there’s still a chance another will take it. In contrast, films are not released until officials in the state cinema bureau in Beijing are satisfied, and once a film is banned it has no hope of being screened. When it comes to censorship in China, the primary factors are often economic, not political. Publishing houses that were once government financed have operated as commercial enterprises for years now. Editors are under pressure to make the biggest profit they can. Even if a book carries some political risks, a daring editor will take the gamble if there’s a chance it will be a best seller.

Recap: Is the Broadband Stimulus Working?

The House Commerce Committee’s Communications and Technology Subcommittee held a hearing examining whether taxpayers are getting their money’s worth four years after the American Recovery and Reinvestment Act of 2009 (ARRA) allocated $7 billion for broadband grants and loans.

A background memo for the Subcommittee’s majority staff highlighted that approximately $611 million of the funding covering 42 projects has been revoked, relinquished, or suspended. Republican members of the Subcommittee claimed throughout the hearing that the program is rife with wasteful spending. "Promoting broadband is a laudable goal. But there are many laudable goals," said Subcommittee Chairman Greg Walden (R-OR). "From what we know now, the government has spent millions on equipment it did not need and on stringing fiber to areas that already had it." Rep. Joe Barton (R-TX) questioned the necessity of the broadband stimulus and suggested that the $2.5 billion in unused funds should be given back to the Treasury.

Subcommittee Democrats, however, defended the spending, which is made up of the Broadband Technology Opportunities Program (BTOP) and the Broadband Initiatives Program (BIP). They argued that while there will always be problems with large government programs, the broadband stimulus has been worthwhile. "The investments made in broadband infrastructure are having a profound impact in local communities around the country," said Rep. Anna Eshoo (D-CA), the ranking member of the subcommittee. "I don't really understand how any of my colleagues can argue that providing better, faster Internet and more digital literacy training to underserved and unserved areas of this country is something we should criticize," Rep. Mike Doyle (R-PA) said.

Larry Strickling, the head of the National Telecommunications and Information Administration (NTIA), which oversees BTOP, pushed back against the Republican criticism in several testy exchanges with lawmakers.

Activists seek to restore right to unlock cellphone

Organizers behind a petition asking President Barack Obama to rescind a federal rule that makes it illegal for consumers to unlock their cellphones say they hope to match the success of the grass-roots campaign that derailed the controversial Stop Online Piracy Act.

Unlocking a cellphone refers to the ability for a consumer to activate a handset on more than one carrier network. That can come in handy when traveling overseas, allowing you to use a local network instead of paying expensive roaming charges to AT&T or Verizon. And the ability to unlock a handset enables you to easily switch service to a competing carrier, so you aren't stuck with a paid-for handset that can never be used on another network. Activists in January 2012 blocked SOPA and a companion anti-piracy bill claiming the bills were intended to protect big media companies and would gut the Internet and stifle free speech. Derek Khanna, a former congressional aide and Yale law student, contends that the right to unlock one's cellphone is a comparable issue.

Benton

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