June 2014

Sprint CEO: Wireless merger could increase competition in suburbs

Consolidation in the wireless market could finally result in a third major wireless operator with the network footprint to finally rival AT&T and Verizon, Sprint CEO Dan Hesse said.

Networks that offer loads of capacity and fast speeds are important when it comes to competing in the wireless market. So is something as basic as network coverage. But covering rural and suburban markets is expensive.

Today, AT&T and Verizon dominate the US wireless industry with more than 73 percent of all mobile subscribers. One key reason for this dominance is the fact that these providers offer service in more markets than either of the two smaller national carriers, Sprint and T-Mobile. And because Sprint and T-Mobile have far fewer customers than either AT&T or Verizon, neither has the revenue or capital to invest in expansion.

"If you have more customers, you can afford to build a larger network," Hesse said. "Only then do you have the revenue to justify building in smaller suburbs and rural areas."

In order to truly compete against AT&T and Verizon, Sprint and T-Mobile need wider network footprints of their own. "If you live in an urban core, you will have access to AT&T and Verizon and you'll also likely have access to T-Mobile and Sprint," Hesse said. "But when you go to less populated areas, Sprint and T-Mobile might not be there."

Fox Stations Beef Up Local News In 8

Fox Television Stations said that it will expand its local news offerings in eight markets: Los Angeles; Philadelphia; Washington; Minneapolis; Phoenix; Charlotte (NC); Memphis; and Austin, Texas.

With the additions, which total 29½ hours, FTS will broadcast 885 hours of local news per week.

Judge: Warrantless Bulk Surveillance Is Legal

A federal judge has affirmed the legality of the US government's bulk collection of phone and e-mail data from foreign nationals living outside the country -- including their contact with US citizens -- in denying a man's motion to dismiss his terrorism conviction.

It was the first legal challenge to the government's bulk data-collection program of non-US citizens living overseas after revelations about massive, warrantless surveillance were made public by former National Security Agency employee Edward Snowden. The program also sweeps up information about US citizens who have contact with overseas suspects. This type of surveillance played a key role in this case.

Lawyers for Mohamed Mohamud, a US citizen who lived in Oregon, tried to show the program violated his constitutional rights and was more broadly unconstitutional. US District Judge Garr King denied that effort.

Supreme Court: Police Need Warrants to Search Cellphone Data

The Supreme Court has ruled police must almost always obtain a warrant before searching mobile devices seized when arresting someone, extending constitutional privacy protections to the increasingly vast amounts of data Americans keep on smartphones, cellphones and other hand-held digital technology.

The court, in a unanimous ruling written by Chief Justice John Roberts, said both the quantity and quality of information contained in modern hand-held devices is constitutionally protected from police intrusion without a warrant. "Modern cellphones aren't a technological convenience," Chief Justice Roberts wrote.

"With all they contain and all they may reveal, they hold for many Americans 'the privacies of life,'" he wrote.

The ruling rejected law-enforcement arguments that cellphones fell under a long-standing exception to the warrant requirement that allows police to search the contents of suspects' pockets to make sure they don't carry weapons or destroy evidence.

Chief Justice Roberts, writing for the Supreme Court in the case of Riley v California has established an important precedent about the need for law enforcement officers to secure a warrant before searching someone's cell phone. He also established a crucial cultural precedent by ruling, accurately, that iPhones and Androids and such aren't really phones at all.

“They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers,” the judge ruled.

Supreme Court Rules Against Aereo in Broadcasters’ Challenge

In a decision with far-reaching implications for the television industry, the Supreme Court ruled that Aereo, a start-up streaming service, had violated copyright laws by capturing broadcast signals on miniature antennas and delivering them to subscribers for a fee.

The 6-3 decision was a victory for the major television networks, which had argued that Aereo’s business model amounted to a theft of their programming. The judges’ ruling leaves the current broadcast model intact while imperiling Aereo’s viability as a business after just over two years in existence.

In arguments before the court in April, the broadcasters contended that Aereo and similar services threatened to cut into a vital revenue stream -- the billions of dollars they receive from cable and satellite companies in retransmission fees, the money paid to networks and local stations for the right to retransmit their programming. The networks said this revenue was so essential that they would have considered removing their signals from the airwaves had the court ruled for Aereo.

The start-up contended that the service it provided through warehouses of small antennas was merely helping its subscribers do what they could lawfully do since the era of rabbit-ears: watch free broadcast television delivered over public airwaves. Both Barry Diller, who heads Aereo owner IAC/InterActiveCorp, and Aereo CEO Chet Kanojia have expressed doubt about whether Aereo could remain in business if the Supreme Court ruled against it.

Aereo's Supreme Court Loss Leaves It in Salvage Mode

With its loss before the Supreme Court, Aereo suddenly finds itself in salvage mode. The court ruled that the company -- which uses tiny antennas to beam broadcast TV signals to subscribers’ devices -- had violated broadcasters’ copyrights.

The ruling killed Aereo's business model in the midst of what had been a speedy rollout of the technology across the United States. It was a victory for traditional TV, and a setback for companies that hope to circumvent traditional TV sets by bringing TV to the masses without paying broadcasters to do so.

Now Barry Diller and other investors must find some way to recoup their money. Aereo CEO and founder Chet Kanojia raised one way Aereo could recoup some of its expenses: he said the company's technology was “immensely valuable” and he is “sure somebody will want it.”

E-rate reform: A sustainable path forward for school and library connectivity

[Commentary] A year ago, President Barack Obama unveiled the ConnectED initiative, declaring that his goal was to connect virtually every school in the United States to high-speed Internet by the end of the decade.

A key piece of the Administration's plan is reforming the Federal Communications Commission's E-rate program, which subsidizes communications services for schools and libraries across the country.

Earlier in June, a diverse coalition of over 100 organizations from the education sector, technology, and business communities (including the New America Foundation's Open Technology Institute and Education Policy Program) sent a letter to the FCC urging the agency to modernize and expand the E-rate program. The letter outlines a series of joint recommendations which include upgrading E-rate to provide schools and libraries not just with Internet connectivity but also sufficient capacity to use new digital learning tools; prioritizing funding to support both high-speed broadband to the premises and ubiquitous Wi-Fi connectivity over other, outdated technologies; incentivizing schools and libraries to purchase connectivity more efficiently; and simplifying the program to streamline the application process.

The letter also urges the FCC to set clear targets for connectivity moving forward, to improve data collection practices and program transparency, and to commit to reviewing E-rate's goals every four years. The proposed reforms would address some of these concerns but not all. Focusing on infrastructure investments is the key to E-rate's ability to meet the goal of providing a gigabit of capacity per 1,000 students by the end of the decade.

While Wi-Fi upgrades are needed so that students, teachers and library patrons can access the Internet on their individual devices, these improvements must be made in conjunction with significant investments in broadband infrastructure that increase overall capacity at their institutions.

[Kehl is a policy analyst; Morris is a senior policy counsel, for the Open Technology Institute at the New America Foundation]

Apple buying Disney? A consultant explains why he thinks a deal is ‘frighteningly obvious.’

Apple’s success has started to become a problem. The company’s revenue and profits have grown so fast that it’s difficult for it to find new markets that will be large enough to ensure its revenues continue growing.

Apple has introduced a stock dividend and bought back shares to appease investors who question whether the world’s largest technology company by market capitulation is still a growth company. Apple is expected to release a smartwatch this fall, which should provide a boost. But Francis McIlerney, a consultant at North River Ventures, has another idea for how Apple can keep growing. Why not buy Disney?

McIlerney imagines the two combined as a “Netflix on steroids,” in which Apple would benefit from finding ways to monetize Disney’s content offerings, and Disney would have a safe and profitable place in the emerging, unbundled world of TV and video to peddle its wares. Having Disney under the Apple umbrella would also be an asset if Apple ever launches a television set, which has been suggested for years but may not become a reality.

Remarks of FCC Commissioner Ajit Pai On “Reforming Communications Policy In The Digital Age: A View From The FCC”

The Internet has levelled the playing field so that consumers can access the best products for the cheapest price, and anyone who wants to compete for their business can do so quickly and easily. To borrow from Adam Thierer, broadband has made it easier for entrepreneurs to innovate without first asking the government’s permission.

What makes all this digital innovation possible? Broadband infrastructure -- and a lot of it. Since the Telecommunications Act of 1996, telephone companies, cable operators, and wireless providers have invested more than $1.2 trillion to deploy broadband to the American public, with more than $68 billion invested in 2012 alone. For those keeping score, that’s one trillion dollars more than the Universal Service Fund has ever distributed, and about $60 billion more than it distributed in 2013.

Aside from the mechanics of implementing Title II, we need to ask a more basic question. Where would Title II regulation lead? One good indication is to compare the results produced by the American regulatory model to those of a more intrusive regulatory model: Europe’s. Rather than taking a light-touch regulatory approach to broadband, the European model treats broadband as a public utility, imposes telephone-style regulation, and purports to focus on promoting service-based (rather than facilities-based) competition.

Why would we ever want to abandon our regulatory model for Europe’s? Those of us who support light-touch regulation of the Internet should engage in this debate and take our case to the American people. Should a carrier like T-Mobile be able to respond to consumer demand by offering free music to its customers? We say yes, but those who support Title II regulation say no. Is it good for competition when a carrier like T-Mobile is able to differentiate itself from its competitors and offer innovative service plans? Again, we say yes, but those who support Title II regulation say no.

Why Are We Still Calling the Things in Our Pockets ‘Cell Phones’?

[Commentary] When Amazon CEO Jeff Bezos took to a Seattle stage to announce a new smartphone called the Amazon Fire, he spent an hour and a half describing feature after feature: unlimited photo storage, 24/7 video support, 13-megapixel camera, a 3-D-like "dynamic perspective" display, a visual-recognition shopping button called Firefly, and dozens more bells and whistles. But there was one question Bezos left unanswered about his new device's feature set. Namely: Could it, you know, make phone calls?

“I haven’t made a phone call on my phone in a long time,” Bezos said. “But I know people still make phone calls.”

Not so much. In fact, the use of voice calls -- which has been dropping since 2007, the year Apple introduced the original iPhone -- has fallen off a cliff lately. As of 2013, cell providers in the US are now making more money per user from data use than voice calling. (The US is only the seventh nation to reach the data-voice tipping point -- it happened in countries like Japan as early as 2011.)

A recent survey of 7,000 US high-school seniors found that only 34 percent made phone calls every day -- far fewer than the number who texted or used apps like Snapchat, Facebook, and Instagram. And companies like AT&T and Verizon, which saw the data boom coming years ago, have been spending more and more on new, bigger LTE data networks, while essentially giving away their voice plans for free.

Benton

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