July 2015

Moffett: Customers to drop cable TV subscriptions at even faster rate in Q2

MoffettNathanson analyst Craig Moffett predicted that the pay-TV industry will continue to lose subscribers during the second quarter, led by 120,000 net losses of video subscribers at industry leader Comcast. Overall, Moffett predicted video subscriber growth of -0.5 percent in the second quarter, essentially flat from the first quarter but down significantly from the same quarter in 2014.

"Seasonality won't help," Moffett added in a report released July 13. "The second quarter is always the weakest of the year. We estimate that the pay TV sector shed 321,000 subscribers in Q2 [in 2014]. [In 2015], we expect that number to be markedly worse." Further, Moffett noted that recently launched streaming alternatives such as Sling TV, Sony PlayStation Vue and HBO Now could have a significant impact to the industry in the second quarter, even though many have only been available for just a few months.

Consumers prefer Wi-Fi calling, survey finds

Spotty indoor cell coverage is becoming less of a problem for consumers. And it's not because of improved mobile networks. Phone users are lapping-up Wi-Fi calling, a survey says. That's where phone calls are routed over Wi-Fi by the mobile network, as distinct from consumer-installed VoIP-style apps and other tools. Among other things, the users polled said Wi-Fi calling was more conducive to longer calls than their previous cell-only mobile network experience. S

ixty-one percent of Wi-Fi calling users say they are making longer and more frequent voice calls, according to the study by telecommunication equipment maker Ericsson. And people particularly like being able to make calls and send texts in places that they were not previously able to, such as inside tricky structures, like their homes; in Wi-Fi-sprouting subways; and on airplanes, the research says.

AOL's Latest Goodie For Advertisers Is Weather-Based Analytics

AOL’s ad-tech division, AOL Platforms, is testing out a new strategy: using weather reports for individual zip codes to track how climate impacts advertising results. The new initiative by AOL's Convertro division aims to show marketers how changes in weather can impact purchasing decisions on tablets, smartphones, and desktop computers.

For the past two years, advertisers have used weather data -- particularly free data sets like the National Oceanic and Atmospheric Administration’s (NOAA) massive open-access cache -- to target digital ads to customers. But this is one of the first attempts by a major advertiser to create weather-based analytics: According to AOL, the new project mashes up anonymous user-level geographic data with time attributes, as well as daily and historical weather data from the NOAA. Convertro general manager Amy Mitchell said that the company’s product is more granular than what other advertising analytics services offer. She also noted that weather-based tracking was especially helpful for companies that provide delivery services or support outdoor events -- offerings that are strongly impacted by the weather. The data that AOL collects can generate models that help those companies decide whether or not to send ads to a specific user, at a specific time, on a specific device.

Facebook Instant Articles Just Don’t Add Up for Publishers

[Commentary] In effect, digital content is being divided between a lucrative high-end entertainment world, where licensors receive a negotiated fee for allowing the distribution of their property, and a low-end publishing world where content is expected to be “free,” supporting itself on often elusive advertising sales and ad splits. In this particular deal, publishers can sell ads on their articles and keep all of the revenue, or have Facebook sell ads in exchange for 30 percent. An important and grievous question is how this anomalous division in the media business came to pass. The more immediate question is about whether Facebook’s “instant articles” and other republishing initiatives are digging a deeper hole for publishers or helping them get out of the one they are already in. Publishers of course believe the latter is true, or why else would they be doing such deals? On the other hand, publishers have largely found themselves in this dismal situation because of their past bad decisions -- accepting the general free ethos, bowing to a vast catchall of casual and formal sharing and reposting agreements, and failing to challenge an ever-expanding interpretation of fair use.

It seems only logical to doubt the business acumen of people who have been singularly inept when it comes to protecting their interests in the world of digital distribution. There are of course differences between entertainment content and news and other editorial matter, and perhaps that accounts for why the old rules and basic business models that worked so well for so long should not apply in a digital context. Or perhaps publishers are just shamefully bad businessmen.

[Michael Wolff is the author of "Television is the New Television: The Unexpected Triumph of Old Media in the Digital Age"]

'Competify' Campaign Seeks FCC Action on Broadband

"Competify," a campaign by a coalition of competitive telecommunications, information processing and public advocacy groups and companies seeking to sway the Federal Communications Commission and other policy makers on key broadband issues, debuted on July 13. The initial group includes the Ad Hoc Telecommunications Users Committee, Broadband Coalition, BT (the company formerly known as British Telecom), Competitive Carriers Association (CCA), COMPTEL, Computer & Communications Industry Association (CCIA), Engine, Level 3, Public Knowledge, Sprint and XO. While cable TV and the huge telephone companies are not mentioned by name on the new website or in an ad in The New York Times unveiling the campaign, it is clear that these major system providers are the target of the new group's wrath.

The announcement characterized the current market condition as "a chronic disease" affecting the entire information economy. It urged the FCC to move forward aggressively "on its critical work to address the scourge of high broadband prices and anticompetitive behavior by advancing meaningful broadband competition." "The broadband economy pays at least $10 billion dollars each year in overcharges to a few huge companies that control access to America’s critical broadband infrastructure," according to the coalition's announcement. "These profits of over 100 percent come at the expense of the rest of the economy: driving up prices, stifling innovation, and dragging down speeds and deployment of both wireless and wireline broadband." Although its initial focus is on FCC actions, Competify is also expected to take its message to Capitol Hill and to other policy makers.

FCC's Robocall Rules Could Affect Media Marketing, Customer Support

The Federal Communications Commission has finally issued its lengthy text plus commissioners' scathing comments from June's contentious decision regarding the Telephone Consumer Protection Act (TCPA) Omnibus Declaratory Ruling and Order. Predictably, the final details, published on Friday, July 10, triggered even more critiques along with speculation about how the restrictions will affect marketing, promotions and other outreach initiatives from media companies. It also quickly triggered a court challenge. ACA International, an association of credit and collection professionals, on July 11 filed a suit in the United States Court of Appeals for the DC Circuit seeking judicial review of the FCC's June 18 TCPA ruling. Other organizations are expected to seek an overturn of the FCC's ruling, according to legal observers who follow the case.

Although much of the concern about automated calling -- including text and voice calls to mobile devices -- has involved the financial and health services industries, many observers voiced concern about the extent of the FCC's ruling. Online service providers, entertainment companies, sports franchises and social media networks have already been hit with lawsuits by consumers who claim they improperly received robocalls or other prohibited contacts. In its ruling, which sprawls over nearly 200 pages, the FCC noted, "We have not viewed 'legitimate' businesses as somehow exempt from the statute." The agency insisted that its goal is to "Strengthen the core protections of the TCPA." Among the robocall factors it confirmed are that "Internet-to-phone text messages require consumer consent" and "Text messages are 'calls' subject to the TCPA."

New proposal would strike at web’s anonymity

Privacy advocates, public interest groups and even some celebrities are raising alarms about a proposal that could limit the ability of some website owners to disguise themselves. The issue has caught fire over the past few months as an obscure organization that manages the Internet's domain name system was inundated with comments about a proposal that could bar commercial websites from using proxies to register their web addresses. Advocates argue anonymity is a key feature of free speech online, and removing that protection from people who create a website for commercial purposes could open vulnerable populations up to abuse.

“Whatever the interest in unmasking an anonymous speaker, free speech interests demand the preservation of opportunities for anonymous speech,” Public Knowledge, the Open Technology Institute and the Center for Democracy and Technology argued in joint public comments. Individuals and businesses are currently allowed to hide their identity, physical location and other personal contact information behind proxies in the public “WHOIS” directory that stores information online about the owners of every registered website domain name. Proxies can be used by anyone registering a domain, from a lawmaker gearing up for a presidential run who does not want to tip off the press, to a blogger posting unpopular views online. The proxy service comes standard with many of the major domain registrars like GoDaddy. The organization that coordinates the entire back end of the Internet, the Internet Corporation for Assigned Names and Numbers (ICANN), just finished seeking comment to see if it should cut off that proxy service for websites that conduct “financial transactions for commercial purpose.”

SCOTUS move fuels uncertainty for tech, groups say

The Supreme Court’s decision to not weigh in on a copyright fight between Google and Oracle could have severe implications for future software development, say public interest groups. The court late in June declined to hear Google’s appeal of a ruling favorable to Oracle. A district court found for Google, but that ruling was overturned by the US Court of Appeals for the Federal Circuit. Google appealed to the Supreme Court -- which declined to hear the case. The court asked the White House to weigh in on the case because it involved copyrights, which could involve the Administration. The White House, in its filing, told the justices not to hear the case and instead send it back to the lower courts.

“It’s difficult for copyright lawyers to understand sort of the boundaries of what is copyrightable,” said Evan Engstrom, the policy director at startup advocacy group Engine, which filed a brief supporting Google. He said it is even harder “for programmers to understand what you’re allow to repurpose and use,” and that the Supreme Court has added to the uncertainty. Others argue that the effects are overstated, in part because Federal Circuit court rulings lack significant power as precedents. Software developers, they say, also appreciate being able to build on other people’s work and would be unlikely to enforce copyright protection en masse against their peers. Still, it is possible that the decision to let the Federal Circuit’s ruling stand could trigger new copyright infringement lawsuits related to APIs. Charles Duan, the Director of Public Knowledge’s Patent Reform Project, said he worried that uncertainty in the courts -- where there are some older rulings that conflict with the Federal Circuit’s decision -- might lead to a fractured software landscape.

Do weaker copyrights really increase economic growth?

[Commentary] The Lisbon Council, a Brussels-based “think tank for the 21st century,” recently released a report titled “The 2015 intellectual property and economic growth index: Measuring the impact of exceptions and limitations in copyright on growth, jobs and prosperity” (hereafter the “IP Index Report”). It claims that analyses of eight developed countries reveal positive, statistically significant correlations between a country’s overall rate of economic growth and the “flexibility” of its copyright laws. The SFEER-Index method of assessing national copyright “flexibility” is legally flawed. It concluded that the US has, by far, the most “flexible” national copyright laws of the eight countries studied. That is wrong.

But, taken as a whole, US copyright laws are almost uniquely “inflexible” because they increase both the risk of error and its potential financial consequences. Were this not true, then rational, sophisticated copyright owners and lawyers who could challenge Internet-based infringements in either the US or, say, France, should be rushing to sue in France.

[Tom Sydnor is the former Director of the Center for the Study of Digital Property at the Progress & Freedom Foundation]

Here’s how much Comcast is charging for its answer to Google Fiber

Comcast has finally set a price on its super-fast (2 Gbps) answer to Google Fiber. The company's new Gigabit Pro service, which aims to deliver download speeds roughly 200 times faster than what the average US household gets today, will cost $300 a month. That's $100 less than the price Comcast currently offers for its top Internet speeds -- and nearly four times as fast. Compared to Google Fiber, it's twice as fast and $170 more per month. Comcast says it's offering a promotional price of $159 a month for a three-year contract.