Daily Digest 6/27/2018 (A new "Sputnik moment")

The US is putting up relatively meager competition in a potent new global tech race that, combined with the wave of go-it-alone nationalism led by President Donald Trump, is reshaping global politics and may lead to war, according to a major new report.  In the late 1950s, the US, facing a similar momentous challenge in Sputnik, threw all its resources into a single-minded effort to dominate the future. But this time the US is failing to grasp the urgency, argues the Atlantic Council, and it could blow the race to lead the age of "geotechnology." The sciences underlying geotechnology — artificial intelligence, robotics, renewable energy, biotechnology, 5G telecommunications, 3D printing, among others — will "shape the future of human civilization" and "remake the global order," the authors write. Absent the US regaining its footing, trends suggest a China-centric future in which Beijing shapes global standards for 5G, ethics for gene editing, and norms and limits on AI. In addition, China's "digital location policies could threaten global data flows and hence digital commerce."

The author of California’s network neutrality bill, which was watered down by an Assembly committee recently, is holding his nose as it’s scheduled to be heard by another committee June 26.  As amended, SB 822 does not have the impact that CA State Sen Scott Wiener (D-San Francisco) intended. “The bill, in its current form, no longer protects net neutrality and is not worth passing,” State Sen Wiener said. “However, I am working with the Chair of the Communications Committee, Assemblyman Miguel Santiago, to restore the protections that the committee removed.” Wiener said. He said he simply wants to move the bill out of committee so he and other state legislators can keep working on it. “To be clear, if the bill ultimately remains in its current form, I will withdraw it, as I have no desire to pass a fake net neutrality bill,” he said. “But my sincere hope is that we will be able to amend it in the near future back into a strong form.”

Even as businesses in Pittsburgh (PA) compete to commercialize artificial intelligence and give machines the human quality of “learning,” just a three-hour drive away people struggle with dial-up connections — if there are internet connections at all. More than 24 million Americans — 800,000 in Pennsylvania and mostly in rural areas — lack an internet connection that meets a federal minimum standard for speed. The result is a yawning divide in commerce, education and medicine that’s splitting America into the digital haves and have-nots. It’s not only broadband access to the internet that is lacking in this part of central Pennsylvania. The towers needed to make cell phones work are also lacking for the same reason broadband hasn’t caught on: too many miles, too few subscribers. Troubling correlations have been drawn between poor health and the areas of the country where broadband is lacking. Federal Communications Commissioner Mignon Clyburn, in a February speech, called it “alarming.”  "The damage done to a 21st-century community by not being part of the 21st-century economy is astoundingly bad,” said Sascha Meinrath, a telecommunications policy specialist at Penn State University who believes the number of people without usable internet connections is higher than government estimates. “Our lack of connectivity is costing us lives.”

The Trump Federal Communications Commission has been working diligently since its first moments in office to help Sinclair expand its political messaging. By rewriting the rules governing local broadcasting, the Trump FCC is allowing Sinclair to turn supposedly “local” television operations into a coordinated national platform for the delivery of messages. Local television stations were licensed to multiple firms to promote a diversity of viewpoints. Using the public airwaves was supposed to deliver diverse editorial content and news coverage. When Sinclair “sidecar” stations, however, force their anchors to read from the same scripts as others in the market, even the pretense of independence and a diversity of voices disappears. The Trump FCC’s decision to eliminate the requirement that a local broadcaster have a local studio ultimately showed the strategy that was afoot. You can’t have local programming if you don’t have a local studio! What you get is centrally-produced, non-local content. 

The efforts of the Trump FCC to help Sinclair expand its national political propaganda machine have not even been subtle – nor have the actions of Sinclair Broadcast Group. Immediately after the election of President Trump, Sinclair announced the acquisition of Tribune Broadcasting even though the combinations would put them substantially over the ownership limits with reach into over 70 percent of American homes. Announcing a $3.9 billion transaction that was in violation of federal law per se was a strong indicator that Sinclair believed the Trump FCC would conveniently change the law to help them. There is an arrogance in engineering federal regulation to benefit a specific company – especially when the chairman of the Trump FCC has preached “regulatory humility.”

[Former FCC Chairman Tom Wheeler]

21st Century Fox determined that a deal with Comcast has more antitrust risk than its pact with Disney, even after a judge chose not to block AT&T’s takeover of Time Warner. Fox’s management and lawyers — while reviewing Disney’s revised offer in June — concluded that antitrust concerns could scuttle a transaction with Comcast. "While a potential Disney transaction was likely to receive required regulatory approvals and ultimately be consummated, a strategic transaction with Comcast continued to carry higher regulatory risk," it said in a registration statement filed with the Securities and Exchange Commission. That could lead "to the possibility of significant delay in the receipt of merger consideration as well as the risk of an inability to consummate the transactions." It noted that Comcast had issues when it tried to acquire Time Warner Cable, the upcoming expiration of the consent decree it agreed to when it bought NBC Universal in 2011, the changes in network neutrality rules, and the possibility of Comcast getting control of Hulu and Comcast’s ownership of regional sports networks that compete with Fox’s. The Fox board agreed the week of June 18 to an improved, $71.3-billion deal to sell its entertainment assets to Disney, shunning Comcast for the second time in six months. 

It started with a cold call from the Ad Council to the Children’s Defense Fund (CDF). In 1996, the Ad Council, with more than $2 billion a year in donated media for public service advertising (PSA), decided to make a ten-year commitment to campaigns on behalf of children as the centerpiece of its work. To launch the initiative, the Ad Council was looking for a partner who could deliver a grassroots network and reinvent fulfillment for PSA campaigns in the digital age (replacing 800 phone numbers and brochures with multimedia websites to provide information and resources for action). CDF said, “That’s not what we do, but you should talk to the Coalition for America’s Children and Larry Kirkman at the Benton Foundation.” Benton’s partnership with the Ad Council would garner more than $300 million in donated media and establish Benton as a pioneer in internet-based public service communications.

When people think about the challenge that Facebook and Twitter pose to our democracy, they don't often think about James Madison and the Federalist Papers. But perhaps they should, argues constitutional scholar Jeff Rosen. Rosen pointed to Madison's writings in No. 55 of the Federalist Papers in arguing against direct democracy. "In all very numerous assemblies, of whatever character composed, passion never fails to wrest the sceptre from reason. Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob," Madison wrote. One of the ways that social media challenges the founders' vision, Rosen says, is by enabling politicians to harden their positions before they even have a chance to hear the other side. Rosen says that the filter bubbles of social media are exacerbating the fact that Americans are already pretty divided along geographic lines.

In a new letter to Federal Communications Commission Chairman Ajit Pai, Sen Ron Wyden (D-OR) submitted a slew of new questions concerning how the controversial stingray devices interact with the 911 emergency system. His inquiries come on the heels of efforts in May to scrutinize what the Department of Justice knows about the secretive use of these devices. In addition, Sen Wyden got a new amendment into an appropriations bill that was approved by the Senate on June 25. The amendment requires the Department of Defense to notify the Armed Services Committee about all stingrays detected near military bases during the previous three years and to describe what actions the Department has taken to protect service members and their families against hostile stingrays. Recently, as part of Sen Wyden's ongoing efforts to shed more light on the shadowy technology, the Department of Homeland Security told him that there were foreign-controlled fake cell-tower surveillance devices in Washington (DC). DHS said that, not only did it not know how to find them, the agency could not determine whether stingrays interfere with 911 calls. Now, Sen Wyden wants to know what the FCC knows about this type of disruption. Amongst his slew of new questions—which he has said the agency must answer by July 13—he wants to know about what level of testing it has done, and if it hasn’t, why not.

 The analysts at Oppenheimer raised their capital expenditure estimates for both AT&T and Verizon for 2018, noting that both carriers are spending slightly more on their network efforts than the analysts had initially expected. The analysts also lowered their capex estimate for Sprint for the current quarter to just $1 billion, down from $1.5 billion, but the firm didn’t change its estimates for Sprint’s total 2018 capex spending. The firm’s analysts in a note to investors explained that they aren’t changing their full-year estimates for Sprint because “as management stated at a recent industry conference capex will be back-end loaded due to timing on its tri-band upgrades and macro footprint expansion.” Nonetheless, it’s noteworthy that the Oppenheimer analysts raised their capex forecasts for Verizon and AT&T for the full year 2018 because both carriers are edging toward their promised 5G service launches later this year. The increases are not necessarily a surprise. Both Verizon and AT&T spent more on their networks in the first quarter of this year than some Wall Street analysts had expected.