July 12, 2013 (Microsoft handed the NSA access to encrypted messages)
Headlines staff is on the road today, so we didn’t have time for the morning papers, but here’s the news we found on Thursday. We’ll be back on Monday, July 15.
BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, JULY 12, 2013
A look at next week’s agenda http://benton.org/calendar/2013-07-14--P1W/
GOVERNMENT & COMMUNICATIONS
Revealed: how Microsoft handed the NSA access to encrypted messages
Yahoo asks to reveal argument against NSA surveillance [links to web]
Level 3 says Global Crossing deal with U.S. did not allow for snooping
Lawmakers say Administration’s lack of candor on surveillance weakens oversight [links to web]
SPECTRUM/WIRELESS
Introducing The New Sprint - analysis
Sprint Offers Guarantee for Unlimited Wireless Service
No more excuses, Sprint. It’s time to build the mother of all networks - analysis
Most adults always have smartphone close by, 1 in 10 use it during sex [links to web]
CABLE AND THE INTERNET
Big Cable’s Sauron-Like Plan for One Infrastructure to Rule Us All - op-ed
Liberty's Malone says deals needed in U.S. cable market
Comcast Profits from the Poor with Internet Essentials Deal - analysis
Google bringing 1-gig Internet to your home, but not your office
TDS announces completion of the ARRA broadband stimulus project near Orchard Farm, Missouri - press release [links to web]
OWNERSHIP
Liberty’s John Malone Urges Ergen to Merge Dish With DirecTV
Liberty's Malone says deals needed in U.S. cable market
TELECOM
Setting the Record Straight on Fire Island and Voice Link - Verizon press release
CONTENT
3 Things We Learned About Publishers from the Apple E-Book Price Fixing Opinion - analysis
Months after settlement, retailers start cutting Penguin e-book prices [links to web]
Publishers Try a Different Kind of Pay Wall, Unlocked by Watching Web Video [links to web]
AltaVista is dead. Here’s why it’s so hard to compete with Google. [links to web]
CYBERSECURITY
Senate Commerce panel announces cybersecurity bill
JOURNALISM
Journalists Getting Less Respect, Especially Among Women - research [links to web]
EDUCATION
Union's Digital-Learning Statement Critiques Online-Only Instruction [links to web]
Tech Challenges Lead Oklahoma to Opt Out of PARCC Exams [links to web]
Building a Statewide Educational Network in the Keystone State - press release [links to web]
FCC REFORM
House Subcommittee Renews Efforts to Improve Transparency, Efficiency, and Accountability at the FCC
STORIES FROM ABROAD
EU Commission raids telecoms
Cord cutting moves north: 16 percent of Canadians ditch traditional TV [links to web]
MORE ONLINE
Welcome to the fading days of the Microsoft empire [links to web]
GOVERNMENT & COMMUNICATIONS
MICROSOFT AND NSA
[SOURCE: The Guardian, AUTHOR: Glenn Greenwald, Ewen MacAskill, Laura Poitras, Spencer Ackerman, Dominic Rushe]
Microsoft has collaborated closely with US intelligence services to allow users' communications to be intercepted, including helping the National Security Agency to circumvent the company's own encryption, according to top-secret documents. The files provided by Edward Snowden illustrate the scale of co-operation between Silicon Valley and the intelligence agencies over the last three years. They also shed new light on the workings of the top-secret Prism program, which was disclosed by the Guardian and the Washington Post last month. The documents show that:
Microsoft helped the NSA to circumvent its encryption to address concerns that the agency would be unable to intercept web chats on the new Outlook.com portal;
The agency already had pre-encryption stage access to email on Outlook.com, including Hotmail;
The company worked with the FBI this year to allow the NSA easier access via Prism to its cloud storage service SkyDrive, which now has more than 250 million users worldwide;
Microsoft also worked with the FBI's Data Intercept Unit to "understand" potential issues with a feature in Outlook.com that allows users to create email aliases;
In July last year, nine months after Microsoft bought Skype, the NSA boasted that a new capability had tripled the amount of Skype video calls being collected through Prism;
Material collected through Prism is routinely shared with the FBI and CIA, with one NSA document describing the program as a "team sport."
benton.org/node/155618 | Guardian, The
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GLOBAL CROSSING AND NSA
[SOURCE: Reuters, AUTHOR: ]
Fiber optic network provider Level 3 Communications Inc said a 2003 network security agreement signed by its unit Global Crossing did not include any provision for unauthorized surveillance by U.S. government agencies. "There is no provision in the terminated or existing network security agreement that permits the U.S. government to compel Level 3, or require Level 3 in any way, to cooperate in unauthorized surveillance on U.S. or foreign soil," the company said. It said the agreement does require it to comply with "lawful U.S. process," under applicable law.
benton.org/node/155617 | Reuters
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SPECTRUM/WIRELESS
INTRODUCING THE NEW SPRINT
[SOURCE: Benton Foundation, AUTHOR: Kevin Taglang]
[Commentary] You may hate the story that gives you the ending first, but here it is: Tokyo-based SoftBank Corp now owns a controlling stake in Sprint, America’s No. 3 wireless carrier. SoftBank also deposited $1.9 billion into Sprint’s checkbook on July 10 as part of the deal. SoftBank previously injected $3.1 billion to strengthen Sprint's finances. In return, SoftBank now owns 78 percent of Sprint. Sprint also now owns all of Clearwire, which has been Sprint’s wireless network partner. On July 9, Sprint completed the $3.9 billion purchase of the half of Clearwire it didn’t already own. The completed deal creates the world’s third-largest mobile phone operator by revenues. Softbank group now has 96 million users. SoftBank plans to invest $16 billion in capital improvements at Sprint in the next two years.
http://benton.org/node/155583
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SPRINT UNLIMITED GUARANTEE
[SOURCE: Bloomberg, AUTHOR: ]
Sprint, fresh from a takeover by Japan’s SoftBank, introduced new unlimited service plans, an effort to tout the mobile-phone carrier as a lower-cost alternative to Verizon Wireless and AT&T. The new Sprint Unlimited Guarantee assures customers that they will have unlimited calls, texting and data use for as long as they have their phone lines. The idea is to stand out from the carrier’s larger U.S. rivals, which are switching to tiered plans -- where customers pay more when they use more data. The new program provides an early glimpse at Sprint’s strategy under the control of SoftBank. The new pledge is also aimed at competing with rivals offering data share plans that allow families and multiple devices to ride on one account, said Roger Entner, an analyst at Recon Analytics in Dedham, Massachusetts. The new Unlimited package starts at $80 a month. Within it, there are two plans called My Way and My All-In. With the My Way program, customers get unlimited data and can add an extra smartphone for $30 a month or an extra regular phone for $10 a month. With the All-In plan, subscribers get unlimited talk, text and data, as well as 5 gigabytes of mobile hot-spot use for $110.
benton.org/node/155621 | Bloomberg | Press release
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SPRINT’S NETWORK
[SOURCE: GigaOm, AUTHOR: Kevin Fitchard]
[Commentary] With SoftBank’s $21.6 billion investment in Sprint -- Sprint, it’s time to build that network you’ve been promising. Ever since Sprint began bandying about the term 4G back in 2006, it’s been talking a big game about networks. It’s boasted about its significant spectrum holdings, its willingness to take the lead in new technologies, and its desire to overturn the established business models of mobile telecom. But in those seven years, that promised game-changing network has failed to materialize. Sprint now has the resources to create one of the most powerful, if not the most powerful, LTE network in the country — one that would certainly put its current LTE efforts to shame. A small portion of its 2.5 GHz spectrum is currently being used in the old Clearwire WiMAX network, and some of that spectrum is in weird configurations, making it less useful for mobile broadband. But the companies still have a lot of airwaves to play with. With more capacity Sprint can support more mobile broadband connections and deliver that service at a much lower cost to the consumer.
benton.org/node/155620 | GigaOm
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CABLE AND THE INTERNET
ONE INFRASTRUCTURE TO RULE US ALL
[SOURCE: Wired, AUTHOR: Susan Crawford]
[Commentary] When Liberty Media chairman John Malone talks, it’s a good idea to pay attention. And this month, the craggy, whip-smart, billionaire cable mogul has set his sights on having the entire cable distribution industry charging for buckets of bits. Which means the Internet in America — as well as in the U.K., Belgium, Holland, Germany, and Switzerland — is in big trouble. The issue is “cableization” of the entire Internet Protocol enterprise. After all, the cable distribution pipe is just a giant set of channels that will be dynamically reallocated between “Internet” access and other IP-based cable-provided services. Malone’s bet (his word) is that we’ll all be buying channels from our local cable guy in the form of IP packets, and the cable industry will pull off the unrestrained monetization of its long-ago sunk cost in installing local monopoly distribution networks. Malone calls this “creating value off the scale of a cooperative industry.” But creating this value for them is bad news for the rest of us.
benton.org/node/155613 | Wired
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CABLE CONSOLIDATION
[SOURCE: Reuters, AUTHOR: Liana Baker]
Liberty Media chairman and cable pioneer John Malone, whose offer to buy Time Warner Cable was rejected by its management, sees Time Warner Cable as a buyer of other cable operators in an industry that needs to be consolidated. The U.S. cable TV market faces rising programming costs as well as technology threats from upstarts such as Netflix, which offers movies and TV shows to subscribers online. "Whether A merges with B, B buys A or A, B and C get together to do a joint ventures to do things that have to be done in larger scale, that's really the message I'm trying to deliver," Malone said, without specifying which companies those letters represent. Companies have to get bigger to thrive, he said. "Comcast is large enough to do OK," Malone said. "The rest of the industry needs consolidation, in our view, in order to get scale economics." In terms of the kind of deals Malone likes, he said that "buying the guy (geographically) next door makes the most sense," referring to a decade-long push by larger companies to swap local cable systems with one another to create larger clusters.
benton.org/node/155614 | Reuters
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COMCAST’S INTERNET ESSENTIALS
[SOURCE: Roosevelt Institute, AUTHOR: John Randall]
[Commentary] Regulatory failures and telecommunications market consolidation have left most Americans with few options when it comes to a high-speed Internet access connection at home. There is a lack of market pressure to keep prices low or encourage the investment needed to expand networks, or to upgrade them for higher speeds or better service. This has exacerbated our digital divide. And while Comcast’s highly publicized Internet Essentials program is supposed to address this problem, a deeper look shows that it is more effective as a customer acquisition program for Comcast than anything else. While the program may sound like a noble effort to combat the digital divide, it is deeply flawed in practice. Its so-called high-speed connections are painfully slow: 3Mbps downstream and 768Kbps upstream. This is equivalent to Comcast’s bottom-tier service, normally billed at $39.95, and is slower than 89 percent of cable connections in the U.S. These connections may not even be fast enough for modern web applications, especially if multiple users in the house are sharing the same connection at the same time. (The Internet Essentials program originally offered only 1.5Mbps, but Comcast raised the speed cap in the second year in response to criticism and a protest outside of Comcast’s headquarters.) The program is also ineffective because it is not serving enough low-income households.
benton.org/node/155612 | Roosevelt Institute
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GOOGLE FIBER IN PROVO
[SOURCE: Daily Herald, AUTHOR: Genelle Pugmire]
Google promised free Internet to every home. It never said anything about businesses. As residents attend town meetings and ask questions of Google employees and city officials, more information is coming out about what being a Google Fiber city means for Provo. Residents will get Internet for seven years for a sign-up fee of $30, or gigabit service for a yet-to-be-determined monthly fee. Small businesses may have access to the network, as will a few larger organizations, but most businesses won't be on the network. They'll have to get Internet service through other providers. Other companies on the network, including Veracity, will be invited to get off once things start rolling. Residents still will be paying a fee with their utility bills to pay off the iProvo bond; Google is not taking that payment over, although they are buying the network -- for $1.
benton.org/node/155615 | Daily Herald | Forbes
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OWNERSHIP
DISH-DIRECTV?
[SOURCE: Bloomberg, AUTHOR: Alex Sherman, Jonathan Erlichman]
Liberty Media Chairman John Malone urged fellow billionaire Charlie Ergen to combine Dish Network with DirecTV to get the advantages of bigger bulk in the pay-TV business. “It would be good if DirecTV could combine with Echo or Dish or whatever Charlie calls it now just because scale economics in the media business drives down costs and makes it possible for larger investment,” Malone said in an interview at the Allen & Co. conference in Sun Valley, Idaho. “You need larger -- I’m not saying monopoly players -- but you need larger players.” Malone is the largest individual -- as opposed to institutional funds -- shareholder in DirecTV with 27.7 million shares, or 5 percent, according to data compiled by Bloomberg. He was DirecTV’s chairman from 2008 to 2010 after acquiring 38.5 percent of the El Segundo, California-based company in a 2007 asset trade for Liberty’s stake in News Corp. A DirecTV-Dish combination would have 34 million U.S. video customers, making it the world’s largest pay-TV company, ahead of Comcast Corp. and Malone’s European cable asset holding company Liberty Global Plc. Merging would give the new company leverage in negotiations with programmers, such as Walt Disney Co. and Time Warner Inc., to limit content price increases. DirecTV said earlier this year programming costs would rise more than 10 percent in 2013.
benton.org/node/155593 | Bloomberg
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TELECOM
FIRE ISLAND VOICE LINK
[SOURCE: Verizon, AUTHOR: Tom Maguire]
There continues to be a lot of swirl around Verizon New York’s work to restore voice service on Fire Island. In recent days, there have been inaccurate media reports and criticism of Verizon’s efforts to restore communications services to a small number of customers on Fire Island and the barrier islands in New Jersey. It’s important that the record be corrected. Verizon takes seriously its responsibility to its customers and the communities it serves. Since Hurricane Sandy, Verizon has engaged with state and federal policymakers, the broader public policy community, and most importantly our customers, about Verizon’s ongoing efforts to restore services. Verizon employees have spent countless hours with municipal leaders and individual customers on Fire Island in order to explain our restoration plan and to address their concerns. We have visited them at home and at their businesses, attended town meetings, and provided hands-on support and resources on the island. Verizon carefully evaluated the state of our facilities and the unique attributes of the affected area. We studied the usage patterns on the island before moving forward. In light of all this, we made the decision to offer the customers Voice Link, at the same or better price they were previously paying for wired voice.
[Maguire is Verizon’s Senior Vice President - National Operations Support]
benton.org/node/155611 | Verizon
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CONTENT
3 THINGS WE LEARNED ABOUT PUBLISHERS
[SOURCE: Public Knowledge, AUTHOR: Michael Weinberg]
The Apple e-book decision is full of interesting information about antitrust law and emerging markets. But in addition to that, the opinion – drawing on internal emails and in-court testimony – offers a compelling description of how publishers see their world. At least three things jump out:
1. Everyone at the Top Understands That There is a Relationship Between Availability and Piracy
2. Publishers Have Not Come to Terms with Pricing Digital Goods
3. Publishers Are Very Concerned About Protecting Their Existing Physical Market
benton.org/node/155591 | Public Knowledge
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CYBERSECURITY
CYBERSECURITY BILL
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
The Senate Commerce Committee announced a draft bill aimed at improving the nation's defenses against hackers. The draft, which is backed by Committee Chairman Jay Rockefeller (D-WV) and ranking member John Thune (R-SD), is an attempt to forge a compromise on cybersecurity after repeated attempts to pass legislation through the Senate failed last term. Chairman Rockefeller expects to mark up the legislation later this month, according to a committee aide. The draft bill would task the National Institute of Standards and Technology (NIST), a Commerce Department agency, with developing voluntary cybersecurity standards and best practices for critical infrastructure, such as banks and power plants. The legislation also aims to improve cybersecurity research, education and public awareness.
benton.org/node/155595 | Hill, The
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FCC REFORM
HEARING RECAP: FCC PROCESS
[SOURCE: House of Representatives Commerce Committee]
The Subcommittee on Communications and Technology, chaired by Rep. Greg Walden (R-OR), examined legislative proposals to improve transparency, efficiency, and accountability at the Federal Communications Commission (FCC). Members reviewed discussion drafts of the FCC Process Reform Act and the FCC Consolidated Reporting Act, both similar to the legislation approved with bipartisan support last Congress. The draft bills are part of the ongoing effort to streamline obligations of the FCC and improve decision making while reducing regulatory burdens facing job creators. Democrats didn’t like the bills last year when they passed the GOP-controlled House, and they don’t like the newly minted ones now. Figuring the bills will take the same trajectory as they did last year and go nowhere in the Senate, Dems saw the whole hearing as a waste of time. Only two Dems even bothered to show up for the hearing, ranking subcommittee member Rep. Anna Eshoo (D-CA) and ranking commerce committee member Rep. Henry Waxman (D-CA). As a result, the back and forth between the GOP and Dems was often reduced to bipartisan fireworks. Rep Eshoo called the bills “a backdoor way of gutting the FCC’s authority.” Rep Waxman argued the bills would tie the agency up in knots. “The red tape created by this legislation is astounding,” said Waxman, adding that the agency would have to hire more people and spend more money. At one point, Rep Eshoo cut through the partisan back-and-forth to point out that it was the section that would limit the FCC’s ability to impose merger conditions unrelated to the specific transaction that was causing the most division. She seemed to suggest that if Chairman Walden would remove that section of the bills, perhaps the Dems could work with the GOP. “There are smaller reforms we can do on a bipartisan and bicameral basis, but this is the area that causes the most heartbreak both pro and con,” said Rep Eshoo. But Chairman Walden is unlikely to budge on a point that he often cites as the biggest reason for the bill in the first place. Bottom line is the bills are likely to sail through the commerce committee and pass again in the House. The big question is whether Sen. Dean Heller (R-NV) can overcome Senate Dems and get the bills a hearing in the commerce committee and on to the Senate floor. Lobbyists were cautiously supportive of Republican efforts to reform FCC processes.
benton.org/node/155619 | House of Representatives Commerce Committee | AdWeek | B&C | B&C – industry lobbying groups | The Wrap | FCC Commissioner Pai
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STORIES FROM ABROAD
EU TELECOM INVESTIGATION
[SOURCE: CNNMoney, AUTHOR: Alanna Petroff]
The European Commission has raided the offices of various telecom companies over concerns that the firms are violating antitrust rules. The commission says it is looking into whether certain large telecoms offering Internet services have been abusing their dominant market position. A spokesman says Commission officials are searching through paper documents and e-mails in the offices. The Commission outlined how it was investigating potential issues with the way telecom companies worked with websites and content providers, potentially creating problems with how they connect to the Internet and offer various products and services to consumers.
benton.org/node/155586 | CNNMoney
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