March 2015

Alcohol Ads Increased 400 Percent Over 40 Years, but Americans Aren't Drinking More

A new study from the University of Texas at Austin, led by advertising professor Gary Wilcox, suggests ads have little impact on how much wine, beer or liquor people consume. The study looked at alcohol sales between 1971 and 2011 and found that during the 40-year time frame, per capita consumption remained relatively unchanged. In that time period, the study reports, alcohol advertising in the US increased more than 400 percent.

Alcohol marketers have two reasons to feel good about the findings of a new academic study on advertising impact. For one, their money seems to be well spent on generating new or loyal customers. But at the same time, their ads don't seem to be turning America into a nation of drunks. While advertising might have little impact on how much we drink, the study says it's still safe to assume that ads are effective at guiding brand preference.

ESPN Urges Advertisers to Hit All Devices

As television networks head into the annual “upfront” advertising-selling season, ESPN is trying to convince marketers that the key to effective ads is getting in front of viewers across all their devices. New research from the ESPN Lab found that combining TV commercials with digital video ads can increase awareness and, perhaps most importantly, a consumer’s intent to purchase.

The results showed that airing a combination of TV commercials, short-form videos and ads on the channel’s app WatchESPN led to a 160 percent increase in purchase intent than if the marketer only ran a TV ad. Awareness increased 36 percent and word of mouth rose 67 percent, the study found. Online and mobile ads are increasingly important for advertisers because they allow for more personalized and targeted messaging. While TV still remains a force in the advertising industry, it is facing more competition for viewers who can now catch shows on video-on-demand and web-video services that allow them to skip through commercials. Events like sports games on ESPN still attract a large live TV audience, but adding mobile and online advertising to the mix helps reach consumers who are often using their mobile device as a second screen while they’re watching TV.

ESPN will cost $36.30 per sub in a la carte world priced by 'reach', analyst says

In a video programming business that will be increasingly dominated by over-the-top distribution and skinnier bundles, "reach" -- the actual percentage of viewers that watch a channel over a set time period -- will have a much greater role in defining consumer pricing. And using some complex mathematical formulas, MoffettNathanson analyst Michael Nathanson arrived at some interesting per-subscriber price projections for major cable networks operating in a world where channels get paid based more purely on the amount of people who actually watch them.

As it is with previous speculative models for a la carte pricing, Disney's ESPN is a prime example in Nathanson's study, currently distributed in the vast majority of pay-TV homes and commanding a per-subscriber fee averaging out to around $6.10. In an a la carte scenario, Nathanson postulates that ESPN's distribution dwindles to about 16.81 percent of TV homes, matching its reach. With the smaller distribution footprint, advertising revenue also goes down. Disney would have to charge a per-sub fee of $36.30 to maintain its current margins, Nathanson postulates. TNT would cost around $8.95 a sub in this scenario. Disney Channel ($8.25), USA Network ($5.45) and Nickelodeon ($4.99) would also be pricey.

White House: No plan B if NSA deadline passes

The Obama Administration will end the National Security Agency’s bulk collection of Americans’ phone records if Congress is unable to reauthorize an expiring provision, the White House confirmed.

“If Section 215 sunsets, we will not continue the bulk telephony metadata program,” National Security Council spokesman Ned Price said. While top-ranking officials at the Office of the Director of National Intelligence had previously said that there would be no backup plan in the event of congressional inaction, the new statement is the first time the White House has made clear that the program will wholly end if lawmakers fail to move forward. The statement also clarifies that the Administration will not seek to pursue a legal loophole to continue the phone records collection. “In addition, allowing Section 215 to sunset would result in the loss, going forward, of a critical national security tool that is used in a variety of additional contexts that do not involve the collection of bulk data,” Price said. “That is why we have underscored the imperative of congressional action in the coming weeks, and we welcome the opportunity to work with lawmakers on such legislation.”

California bill requires warrant for stingray use

A California state bill that would require a warrant to access all kinds of digital data passed its first hurdle after being approved by the Senate Public Safety Committee. Among other sweeping new requirements to enhance digital privacy, the bill notably imposes a warrant requirement before police can access nearly any type of digital data produced by or contained within a device or service. In other words, that would include any use of a stingray, also known as a cell-site simulator, which can not only used to determine a phone’s location, but can also intercept calls and text messages.

During the act of locating a phone, stingrays also sweep up information about nearby phones -- not just the target phone. If the California Electronic Communications Privacy Act (CalECPA) passes the California State Senate and the State Assembly, and is signed by the governor, it would mark a notable change for law enforcement in America’s most populous state. However, passage is not a sure thing. Previous versions of the bill were vetoed by the governor twice in 2012 and again in 2013. The bill was introduced in February 2015 by State Senator Mark Leno (D-San Francisco). Texas and other states already have similar laws on the books, while revision to the federal Electronic Communications Privacy Act (ECPA) has stalled for years. California law enforcement agencies, like others nationwide, have been cagey as to how stingray use is requested and carried out.

Map: The state of broadband in the states

Broadband speeds are expanding nationwide and the conditions seem good for even more growth. All but seven states saw average peak connection speeds grow between the third and fourth quarters of 2014, an indication that Internet connection capacity is growing across the country, according to a new State of the Internet report from Akamai Technologies, which hosts content online.

Delaware held onto its top ranking among the states, with average peak speeds of 75.4 megabits per second. Virginia jumped four spots to claim second place at 73.5 Mbps. DC was third at 65.9 Mbps, followed by Massachusetts and Rhode Island. Kentucky unseated Arkansas as the state with the slowest average peak speeds, clocking in at 34 Mbps. Akamai argues that the average peak connection speed is most representative of Internet connection capacity. Speeds have gained over the past few quarters and that trend is expected to continue, Akamai reports. US average peak broadband speed was 49.4 Mbps. The US average connection speed was 11.1 Mbps. The average peak connection speed was up 16 percent over the fourth quarter in 2013, and the average connection speed was up 15 percent over the same period.

98 Percent of Americans Are Connected to High-Speed Wireless Internet

President Barack Obama announced that we've reached our major broadband connectivity goal -- 98 percent of Americans nationwide are now connected to high-speed wireless Internet, surpassing any point in history.

"Four years ago, I set a national goal to provide 98 percent of Americans with high-speed wireless Internet so that any young scientist or entrepreneur could access the world’s information," the President said. "Today, I can announce that we have achieved that goal, and we did it ahead of schedule." The President also announced that he’s creating a new team called the Broadband Opportunity Council, which will be co-chaired by the Secretary of Commerce and Secretary of Agriculture and made up of leaders across government who will work with businesses and communities to invest in next-generation Internet nationwide. This includes a special focus on rural and underserved Americans. More than $7 billion of Recovery Act funding went to increasing broadband connectivity to underserved areas, and we have installed or upgraded more than 174,000 miles of high-speed broadband infrastructure. Finally, the White House will carry forward this momentum by hosting the Community Broadband Summit this June. The summit will help connect community leaders so they can learn from one another and hear about our progress on other broadband initiatives.

Some network neutrality advocates are worried about this small loophole in the FCC’s rules

Even as federal officials prepare to defend their network neutrality regulation in court, attention is shifting to a part of the new Federal Communications Commission rules that could give Internet providers a loophole, according to some analysts. There is concern that Internet providers could mislabel some types of Internet content in order to avoid the strongest parts of the rules. The issue in question deals with what are known as "specialized services" -- a loosely defined category of Web applications that covers things like VoIP phone service, smart thermostats and real-time health monitoring.

These services have been traditionally less regulated, and that won't change under the new net neutrality rules. But some advocates fear that because the specialized services label comes with few restrictions it gives Internet providers the ability to bypass the FCC's rules that prevent Internet throttling, blocking and so-called fast lanes. Ultimately, it is up to the FCC to call foul on broadband companies that try to circumvent the rules. But it isn't clear how the agency would do that in the case of specialized services. Although the FCC insists it will keep a close eye on the companies to be sure they're not abusing the loophole, senior officials have not laid out what, specifically, might trigger an investigation. And that has some net neutrality advocates worried.

Setting the record straight on a network neutrality fact check

In January, the Washington Post’s Fact Checker was critical of claims by opponents of a then-pending Federal Communications Commission rule change on Internet regulation. The Fact Checker awarded Three Pinocchios to widely-cited claims that the FCC reclassification would cost $15 billion a year in new taxes and fees. Since the fact check published, some network neutrality proponents misquoted it on social media, either attributing the Pinocchios to the study by the Progressive Policy Institute or to the $11 billion figure. Most recently, FCC Chairman Tom Wheeler misused the fact check during a House Appropriations Committee budget hearing on March 24, 2015.

On Feb. 26, 2015, the FCC voted to reclassify Internet service. The cost impact remains to be seen. Some state and local government leaders may decide to levy fees, and the FCC may decide to extend federal fees. A recent calculation placed additional annual costs at $6.25 billion. We will continue to monitor the issue. For now, however, we caution everyone commenting on net neutrality to check the facts, and beware of the myriad unknowns. The Fact Checker certainly does not appreciate being misquoted.

Title II and the future of LTE broadcast

[Commentary] As the wireless industry analyzes the changed legal landscape following the Federal Communication Commission’s reclassification decision, the always-insightful Phil Goldstein at FierceWireless asks an interesting question: what does Title II mean for LTE broadcast? The answer is not as clear as one may think -- but it may provide hope for those worried about how future innovation will fare under the FCC’s new framework. LTE broadcast may not replace traditional unicasting for most online content, but it can be a useful tool to help manage network congestion -- and it appears the Open Internet order is flexible enough to allow carriers to use it.

[Lyons is an associate professor at Boston College Law School]

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