July 2013

Tom Rutledge, the chief executive of cable operator Charter Communications and Liberty Media chief John Malone are leading an effort to spark consolidation in the nearly $100 billion U.S. cable industry.

Persuading rivals to join forces won't be easy. In recent weeks, Rutledge met with Glenn Britt, chief executive of No. 2 cable operator Time Warner Cable to make a case for the benefits of a merger between the companies, people familiar with the matter say. But Britt showed little interest after the meeting, one of the people said. That followed a previous unsuccessful overture to Britt by Liberty Chief Executive Greg Maffei, the people say. Rutledge is a big believer that size matters. He sees plenty of scope for mergers in a U.S. cable industry with one giant—Comcast—and many smaller players, including Charter, the fourth-largest cable operator. Rutledge and Malone have in recent weeks taken their message to investors, touting the benefits of consolidation.

[Commentary] Hulu’s future seems as murky as ever after the news that the site won’t be sold after all, and it almost looks like there are losers everywhere: Hulu’s co-owners didn’t get the money they wanted for the service, Hulu’s employees and executives are still stuck with a set of co-owners that may have different ideas for its future, and Hulu’s users most certainly can expect more content to go behind the paywall. But there’s one exception: Comcast.

The pay TV operator owns one third of Hulu, but it’s not allowed to influence its business, thanks to regulatory conditions put in place when Comcast merged with NBC Universal. These conditions also prevented Comcast from having any say on the aborted sale, but I’d bet that the folks over at Comcast are pretty happy with today’s outcome. That’s because the top three contenders for Hulu included two of Comcast’s biggest rivals: AT&T and DirecTV. Cable companies like Comcast have seen many of their TV service customers flee to satellite and phone company rivals, and are now starting to feel the threat of cord cutters as well. The common narrative around AT&T’s and DirecTV’s bids for Hulu, which are said to have been around $1 billion, is that the companies were looking to use the site to power their TV Everywhere services, allowing their subscribers even easier access to complimentary catch-up programming online.

Here’s the agenda for the Federal Communications Commission’s July 19 open meeting. The FCC will consider:

1. A Fifteenth Report on the status of competition in the market for the delivery of video programming.
2. A Notice of Proposed Rulemaking to modernize the Schools and Libraries Universal Service Support mechanism (the E-rate program) to support high-speed broadband for digital learning technologies and ensure all students, teachers, and library patrons have the tools they need to succeed in the 21st century.
3. A Report and Order addressing mandatory minimum standards applicable to the Speech-to-Speech Relay program and a Further Notice of Proposed Rulemaking seeking input on ways to improve the efficiency and effectiveness of this program.

In addition, the FCC will receive two presentations:

• Margaret Spellings, former Secretary of Education, and Jim Steyer, Founder and CEO of Common Sense Media, will present on the bipartisan Leading Education by Advancing Digital (LEAD) Commission’s Five Point Blueprint recommending a national initiative to expand digital learning in K-12 education. Dr. John Word, principal of Kenmore Middle School in Arlington, VA, will present on how students and teachers at Kenmore are using digital technologies and broadband connectivity to expand learning opportunities.
• In recognition of the 23rd anniversary of the Americans with Disabilities Act, the FCC’s Consumer & Governmental Affairs Bureau, together with the Wireless Telecommunications Bureau and the Media Bureau, will provide a report on the Commission's implementation of the CVAA since its passage in 2010.

[Commentary] Homeland Security Secretary Janet Napolitano's announcement that she plans to leave the department raises interesting questions for what is next for the government's cybersecurity efforts. She, along with recently-departed Deputy Secretary Jane Hall Lute, dedicated a significant amount of resources and time to making cybersecurity a priority for DHS.

So what should the next candidate for Secretary be considering?

1. China. What role does DHS have in international efforts to combat cyberthreats from China that are affecting our domestic systems? Does this role change if the threat is mostly on the economic side (e.g. cyber espionage and IP theft) rather than national security, i.e. critical infrastructure? What about the department's role in looking at supply chain threats and foreign investment issues in U.S. cyber assets?
2. Beyond critical infrastructure protection. What role does DHS have in helping the increasing number of businesses and companies impacted by cyberattacks? We know of the debates among voluntary standards for critical infrastructure but what about everyone else?
3. Privacy and surveillance. Not just Edward Snowden, but increased information sharing. In discussions regarding government privacy, the focus has been on Justice and the intelligence agencies. Will attention now focus more on DHS?
4. The future. Mobile, cloud and emerging technologies are changing how people use technology and creating new cybersecurity challenges. Is DHS in front of these changes or focused on nuts-and-bolts critical infrastructure protection?
5. Big data. The sheer volume of information that can be gathered on individuals is staggering and growing. What is DHS doing to address new challenges in this area?