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February 2014

T-Mobile's Call Is a Wrong Number

T-Mobile's net addition of 2 million postpaid subscribers during 2013 -- most of them during the latter half -- probably didn't come cheaply. In addition to the usual handset subsidies needed to attract that desirable category of customer, T-Mobile has been paying subscribers of one-time suitor AT&T to defect while also cutting charges for lucrative services such as international roaming. Meanwhile, deep-pocketed AT&T has introduced competing subsidies aimed at T-Mobile customers. Investors will be presented with the initial bill when T-Mobile releases fourth-quarter results. Analysts predict a per-share loss of 19 cents compared with a profit of 12 cents a year earlier. The problem with T-Mobile's strategy, aside from the immediate cost, is that it leads nowhere. A soft drink with 1% market share may be able to justify a marketing spree, but a nationwide carrier with just one-tenth of the US postpaid market can't. In addition to big outlays for advanced wireless technology, T-Mobile's status as a distant fourth in postpaid subscribers will make it hard to outbid AT&T and Verizon for soon-to-be-auctioned chunks of wireless spectrum. The number of postpaid customers to be gained from aggressive discounting—perhaps a few million—pales in comparison to those two top carriers’ nearly 170 million postpaid customers today.

Coverage of Olympic Games Delivers a Win for NBC

A network buys the rights to the Olympics to beat its prime-time competition for 17 nights in a row. It doesn’t always fulfill its mission. But NBC did during the Winter Olympics in Sochi, Russia.

That, in part, means that the other networks did not put up much of a fight and that former Olympics-beaters like “American Idol” do not have their former potency. Still, if you’re the Olympic network -- as NBC is -- you take your victories and celebrate them. Mark Lazarus, chairman of NBC Sports Group, said that NBC would profit from the Sochi Games. NBC averaged 21.4 million viewers a night. That is dandy by anyone’s standard -- it is like carrying “Sunday Night Football,” which averaged 21.7 million viewers last season, every night. The Sochi figures are 6 percent better than NBC’s average of 20.2 million viewers at the 2006 Turin Winter Games, which, like Sochi, prevented NBC from carrying events live in prime time. Between the Turin Games and the Sochi Games, the Winter Games in Vancouver averaged 24.4 million viewers, largely because the competitions were primarily live in prime time.

Syria War Stirs New US Debate on Cyberattacks

Not long after the uprising in Syria turned bloody, late in the spring of 2011, the Pentagon and the National Security Agency developed a battle plan that featured a sophisticated cyberattack on the Syrian military and President Bashar al-Assad’s command structure.

The Syrian military’s ability to launch airstrikes was a particular target, along with missile production facilities. “It would essentially turn the lights out for Assad,” said one former official familiar with the planning. For President Barack Obama, who has been adamantly opposed to direct American intervention in a worsening crisis in Syria, such methods would seem to be an obvious, low-cost, low-casualty alternative. But after briefings on variants of the plans, most of which are part of traditional strikes as well, he has so far turned them down, according to officials familiar with the administration’s long-running internal debate.

Analysis

Here’s How The Government Handles A Deal Like Comcast/Time Warner Cable

There has been a wave of commentary, most of it negative, about Comcast’s proposed acquisition of Time Warner Cable. Many of the columns and op-eds call for the Federal Communications Commission (FCC) and the Department of Justice to stop the deal, but few have explained the process by which such transactions are reviewed.

Broadcasters: Aereo ‘obvious and unambiguous’ copyright violation

Major TV broadcasters want the Supreme Court to shut down the Internet video service Aereo, which they say is premised on a violation of copyright law.

“Aereo’s unauthorized retransmission of broadcast television to the public is obvious and unambiguous copyright infringement," ABC, NBC, PBS and other major broadcasters said in a brief filed with the high court. Aereo uses tiny antennas to pick up free, live broadcast television and relay it to users’ tablets, computers and other devices, for a monthly fee. The broadcasters say that’s a violation of the “transmit” clause in copyright law, which forbids transmission of a performance. They say the company needs to pay for the privilege to show their content, like satellite and company companies do.

The FCC's journalism fiasco

[Commentary] One of the messy things about a free press is that you might not always like what it's reporting. If you're a liberal, Fox News drives you crazy. If you're a conservative, you're not a big fan of MSNBC. If you're an NPR buff, you're appalled when spasms of Biebermania occur elsewhere. OK, so you get upset. Or change the channel. Or click on something else. But the fact that you aren't going to love everything you encounter goes with the territory. Which brings us to the Federal Communications Commission and its misguided plan to stick its unwelcome nose into the newsrooms of America and explore how journalists are doing their jobs.

The FCC decided in its infinite wisdom that it would be a good idea to launch something called a Multi-Market Study of Critical Information Needs. Fortunately, the FCC, under heavy fire -- particularly in the conservative media and on Capitol Hill -- for this boneheaded, intrusive initiative, is now in full retreat mode. FCC spokeswoman Shannon Gilson ran up the white flag. She said FCC Chairman Tom Wheeler "agreed that survey questions in the study directed toward media outlet managers, news directors and reporters overstepped the bounds of what is required." Now he noticed. But that's hardly reassuring. Such an enterprise shouldn't have gotten off the ground. And who knows what would have happened if an FCC commissioner who opposed the study, Ajit Pai, hadn't gone public with a Wall Street Journal op-ed. That's what galvanized the flurry of attention that doomed the ill-advised initiative.

Is the FCC still trying to stifle political speech?

[Commentary] As a result of tremendous public outrage, the Federal Communications Commission was forced to walk back its “Critical Information Needs” or “CIN” Study. Unfortunately, I regret to say that the CIN Study is not an isolated incident.

In the midst of the CIN Study debacle, the FCC released a document compiled at FCC Chairman Tom Wheeler’s instructions entitled Staff Working Group Report on Process Reform. Buried deep inside this Report is Recommendation 5.44, which proposes to require everyone filing comments at the FCC -- from advocacy groups to academic institutions -- to disclose any direct and indirect financial support they may receive “from industry.” According to this recommendation, such a rule is necessary because: “In most cases, a filer’s motives are apparent, but sometimes they are hidden. For instance, an organization purporting to represent consumer interests may actually represent industry, or may be influenced by industry contributions.” Thus, reasons the report, the implementation of such a rule will permit the agency to “evaluate the credibility of factual and policy arguments by knowing who is making them.” (Emphasis supplied.) This statement is a naked admission by the FCC that it does not intend to evaluate the merits of the arguments before it, but that the agency will assess the “credibility of … arguments” based on “who is making them” and, thus, the filer’s presumed “motives.”

[Spiwak is the president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies]

AT&T speaking to Netflix about deal for faster speeds

AT&T is talks with Netflix about a possible agreement to improve performance for broadband customers who use the streaming video service. AT&T spokesman Mark Siegel said that "we're in discussions with Netflix to establish a more direct connection between our networks, similar to agreements we have with others, so that AT&T broadband customers who use Netflix can enjoy an even better video experience."

NOAA Moves to Unleash “Big Data” and Calls Upon American Companies to Help

Secretary of Commerce Penny Pritzker called on private industry to partner with the Department of Commerce to help meet a Big Data challenge.

How can the National Oceanic and Atmospheric Administration (NOAA), part of the Department of Commerce, unleash the power and potential of our oceanic and atmospheric data in a quick and sustainable way? What kind of economic benefits would more environmental data provide to companies? What new products and services could arise as a result? These are the questions that the Secretary is calling upon American companies to help answer. That’s why we have released a Request for Information (RFI) to help us explore the feasibility of this concept and the range of possibilities to accomplish our goal. At no cost to taxpayers, this RFI calls upon the talents of America’s best minds to help us find the data and IT delivery solutions they need and should have. When we look at the number of businesses that rely on NOAA and the Department's data today, and the economic vitality they represent, we see tremendous potential to spur even more economic growth, create new industries, and promote job creation. The RFI is one step toward unlocking the power of NOAA’s number one asset – our data.

[Sullivan is Acting Undersecretary of Commerce for Oceans and Atmosphere and Acting NOAA Administrator]

Supreme Court Opts Not to Review Tennis Channel's Appeal Of Pro-Comcast Ruling

The US Supreme Court has nixed Tennis Channel’s appeal that sought equal distribution footing as two sports networks owned by Comcast, but the dedicated racquet service said it still has some strokes to play.

Without issuing comment, the justices left intact a federal appeals court ruling in May that determined that Comcast made a legitimate business decision to offer the Tennis Channel on a sports tier. In its long-running court battle with Comcast, Tennis has charged that the cable giant engaged in a discriminatory practice that violated provisions of the 1992 Cable Act. The Federal Communications Commission and an administrative law judge sided with Tennis Channel, ruling that Comcast should give the channel the same placement as Golf Channel and Versus -- now known as the national cable sports service NBCSN -- both of which are part of NBC Sports Group’s portfolio.

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