October 2014

European telecommunications companies that operate in countries with four or more competitors have generally had poor profitability. That does not concern regulators, although the resulting low rate of investment should. But regulators are slowly changing their tune on consolidation, for example allowing Telefonica’s purchase of E-Plus in Germany in July. That is good news for a sector whose shares have underperformed the market over the past decade. Both incumbents and challengers have struggled with the current structure. In particular the mobile operators have taken a hit. In the US, the decline has been less dramatic. And while US telecom investment has boomed since 2008, in the EU it has hardly changed. More consolidation could change that. Yet, even if the EU softens its stance further, the process will take time.

To Facebook -- the 1.35-billion-user behemoth where we increasingly record our daily choices -- no person, comment or casual thumbs-up is isolated: Everything is part of a larger pattern.

Facebook is inferring millions correlations, based on billions of disparate data points, predicting any number of user behaviors. In many cases, it’s also selling those data points back to advertisers, political campaigns and other people who are interested in manipulating all the tiny daily choices you make. In an update made to Facebook’s ad platform in May, the site released a trove of new, anonymized data to advertisers, showing them -- among other things -- the demographics and “liked” pages of potential customers, the better to help companies learn their “interests and behaviors.”

New research from Harvard Institute of Politics on the political attitudes of young Americans paints a picture of a population that is digitally connected to the outside world but wary of putting their political beliefs into action through traditional offline actions, such as attending a protest or volunteering for a candidate.

According to the study of more than 2,000 18-to-29 year olds, young people in the United States are nearly universally connected, often in multiple ways. Some 94 percent report having an Internet connection at home, and 88 percent say they have a mobile phone. Eighty percent have a Facebook account, though social-network participation drops off sharply from there: Google+ stands at 45 percent, Instagram 39 percent, Twitter 38 percent, Pinterest 30 percent, Snapchat 28 percent, and Tumblr 13 percent. But the Harvard poll finds that young Americans are unlikely to get involved in conventional channels of offline politics, even with time or interest to spare.

In a note to investors, BernsteinResearch says it still expects the Comcast/Time Warner Cable merger to be approved by the Federal Communications Commission -- with conditions -- and close by the end of first quarter 2015 or the beginning of the second quarter.

While it notes that sentiment has become more negative on the deal following the FCC's stopping of the shot clock on the transaction, it suggests that and other concerns of investors are overstated. The BernsteinResearch team, led by senior analyst Paul de Sa, points out that procedural disputes like those that stopped the clock -- access to contracts, incomplete filings -- are typical in large and controversial mergers. They point out that the clock was stopped once for the Comcast/NBCU merger and twice for the Verizon/SpectrumCo deal (both of which were approved). They also downplay the concerns that the FCC may establish a speed threshold for the Internet access marketplace, arguing that the competitive marketplace is local, not national, and offered speeds are not relevant. They say proving market power in interconnection would be tough.