Revere Digital

In the end, I guess you could finally say Steve Case was right. Case led AOL to great power in the 1990s, and he then presided over what has become known as one of the worst mergers of all time, when he combined his high-flying Internet giant with Time Warner, back at the turn of the century. It was a truly epic move, all predicated on the very big idea that distribution and content had to marry in the digital age and that whoever did that successfully would rule the next era of media and more. It was also an epic failure, brought down by a toxic combination of timing and execution.
Which is to say that the body of Time Warner — made up of the mandarins of media whose power was waning, although they did not know it at the time — rejected the deal almost immediately and made sure it would never succeed, even as the fast-and-loose slicksters of AOL did everything possible to seem as lightweight as they still were at the time. You could write books on what went wrong — and I did — which raises the question of what Time Warner now thinks will go right in the deal it just struck with telecom giant AT&T to be taken out for $85 billion. As expected, the media has gone wild, dragged along breathlessly as they are for any holy-god deal, nearly forgetting that some of its current principals were the very same people who had been the biggest critics of the match-up of Time Warner and AOL.

When AT&T owns Time Warner, nothing will change; AT&T will treat Time Warner like a standalone company. When AT&T owns Time Warner, AT&T will offer Time Warner stuff to its customers that they can’t get anywhere else. Which version of that is true? Both versions! Just depends on who AT&T execs are trying to convince, as they look for government regulators and Wall Street to bless their $86 billion deal.

The regulator part is the really hard hurdle: Washington seems to be increasingly skeptical about mega deals like this — which is why it nixed Comcast-Time Warner Cable — and so AT&T has to convince officials that it won’t make it harder for people who don’t have AT&T to get “Game of Thrones” or the next Batman movie, or CNN. AT&T has common sense on its side when it makes this argument, since if it limits access to Khaleesi or Batman or Wolf Blitzer, or provides special access to them, all of those things become less valuable for Comcast customers or Verizon customers or anyone who doesn’t get AT&T. And even if AT&T wanted to do that, there’s zero chance regulators will let it happen. It’s a non-starter.

AT&T wants to buy Time Warner, and Wall Street, predictably, obliged, sending Time Warner shares up and AT&T stock down. Too bad the deal doesn’t make much sense. (Similarly, it doesn’t make sense for Apple to own Time Warner, either, which we’ll get to further down.) Here’s why: A company that owns pipes, whether over the air or through the ground, doesn’t actually benefit from owning the content flowing through those pipes.

Time Warner, which owns HBO, CNN, Warner Bros. and a lot of sports rights via Turner, loses its value if it can’t sell its content to every possible distributor, including AT&T’s main rivals, such as Comcast and Verizon. AT&T knows this (or should), but since the company’s been saddled with a price war (thanks to T-Mobile and Sprint), it’s been looking for new ways to increase growth. As part of that effort, it completed its $49 billion acquisition of DirecTV in 2015, a deal that actually makes sense since it allows AT&T to upsell both services to the respective customers, as well as potentially making both stickier. Even then, fewer people today are buying TV subscriptions from satellite providers (long known as the cheaper option to cable), since they can now get a lot from Netflix and Hulu and Amazon.

More than 16 years ago, AOL bought Time Warner for $160 billion, in a deal that is now commonly cited as the worst merger in history. Now AT&T wants to buy Time Warner. What the hell is it thinking? The Wall Street Journal thinks the deal could close within days, so we may hear a rationale from AT&T CEO Randall Stephenson shortly. In the meantime, here are some educated guesses about why he thinks the deal is worth doing:

• AT&T doesn’t want to be a dumb pipe — or at least, not just a dumb pipe.
• AT&T knows DirecTV is a shrinking business.
• This deal makes more sense than taking on Google and Facebook
• AT&T isn’t AOL. Neither is Time Warner.

“The internet is not controlled by one entity,” Secretary of Commerce Penny Pritzker said. “ICANN will continue to manage the domain name system, as they have for a long time. It’s been always the intention that the U.S. government would withdraw from this role.”

She argued that letting America’s direct involvement in the domain name system expire made the web less at risk of being politicized, not more, because it minimized the role of all governments. “In 2012, Russia, China and 89 countries came together and said, ‘The United States plays a role in the internet, and if a government’s going to do that, we should move the management and oversight of the internet to the UN,’” Sec Pritzker said. “That would be bad. Our position, as a country and our administration, is that we should have a free and open internet that’s managed by a multi-stakeholder community.”

[Commentary] The notion that telecommunication company carriers and other service providers have provided little more than basic connectivity has been an industry hot button for quite some time. Even now, despite a number of efforts to spice things up, most telecommunication companies and cable service providers are seen as companies that provide a very indistinct connectivity service that people only reluctantly pay for. The primary differentiators for competitive players in this space are price, price and, oh yeah, price, with maybe a bit of coverage or service quality thrown in for good measure. It’s little wonder that many consumers hold these companies in such low esteem — they just don’t see the value in the services beyond basic connectivity. It’s also not surprising that so many people are looking at cord-cutting, cord replacement and other options that attempt to cut these service providers out of the picture. But it doesn’t have to be this way.

The amount of data that telco and cable service providers have access to should allow them to generate some very interesting, useful and valuable services that consumers should be happy to pay for. Admittedly, there are some serious privacy and regulatory concerns that have to be taken into consideration, but with appropriate anonymizing techniques, there are some very intriguing possibilities. The fundamental problem is that service providers act more like utilities than companies that offer services people are happy to pay for, such as Netflix. There’s little sense of personalization or differentiation from service providers, and the aforementioned router/gateway boxes they currently force into consumers’ homes are a classic example of that utility style of thinking. Honestly, if your power company was to put a box into your home, do you think it would look much different?

[Bob O’Donnell is the founder and chief analyst of Technalysis Research LLC, a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community.]

A Q&A with European Commissioner for Competition Margrethe Vestager.

Previously a minister of education and a member of Denmark’s parliament, Margrethe Vestager is viewed by some in the tech world as a new type of enforcer. Earlier in 2016, she demanded that Ireland collect nearly $15 billion in unpaid taxes from Apple, alleging that Apple was dodging what it owed by doing its booking for the whole continent from Ireland. "I think any company should compete on the quality of their products, their prices, the novelty they can produce, their services, because that would be fair competition," she said. "If you’re in a situation where your effective tax rate is so much lower than any other company, then obviously you have a much better position when it comes to compete on prices and everything else."

Vestager also discussed her three-pronged antitrust case against Google, launched last year after several years of inaction by her predecessors. She said the case asserts that Google used its dominance in search to crowd out rivals in online shopping, is unfairly restricting advertising intermediaries, and is using the mobile Android OS to preserve the dominance of its own search engine and services. "When you open the box [of an Android phone], the first experience is the Google experience," Vestager said. "Why look for something else?"

[Commentary] One of the major roadblocks to the Liberian Ebola response efforts was the lack of reliable internet access across the country, as community health centers struggled to coordinate efforts. One of the most economical and efficient ways to increase access is to prioritize a “build-once” policy in the developing world. If a United States development project supports the construction of a rural road in a developing country, or updating preexisting infrastructure, let’s invite the private sector to lay down cable before we pour the concrete.

This is a proactive, efficient approach we are calling for through the bipartisan Digital Global Access Policy Act — a.k.a. the Digital GAP Act — passed by the US House of Representatives. The Digital GAP Act would increase internet access with a relatively minor communications change. It would require U.S.-supported infrastructure projects to be made more transparent, so that the private sector can coordinate their investments in internet infrastructure. The Digital GAP Act stretches American aid further and has the potential for a long-lasting impact by narrowing the digital divide that holds so many people back.

[Commentary] In August, a ripple traversed the Internet when the White House posted an Instagram picture of our commander in chief just outside the Oval Office wearing a pair of virtual reality glasses. In the photo, President Barack Obama is trying out a virtual reality experience captured during his trip to Yosemite National Park and created by National Geographic, Felix & Paul Studios and Oculus, while an aide continues to work at her desk oblivious to the strange scene.

The striking image of the Leader of the Free World transporting himself to another corner of the country brought nearly 600,000 views of the 360-degree video tour, and captivated many more people with this amazing technology — but that virtual experience is just the tip of the iceberg for VR. Putting on a virtual reality helmet or visor unlocks new impactful ways to tell stories, play games, and educate children and adults. While the equipment is costly and clunky today, in a few years, a pair of glasses and headphones will more than suffice for a VR experience. Virtual reality has the power to transform every form of video media consumption, as long as policymakers enable high-speed broadband networks to keep pace; a sensible regulatory environment that helps investment and innovation flourish is crucial.

[Larry Irving served for almost seven years as assistant secretary of commerce for communications and information during the Clinton Administration and is president and CEO of the Irving Group. Jamal Simmons is co-chairman of the Washington, DC-based Internet Innovation Alliance (IIA).]

Silicon Valley has signed petitions against Donald Trump. It is also writing checks and telling employees that it’s important to vote. But so far the brightest minds in tech haven’t deployed much in the way of ... tech to defeat the Republican nominee. Amit Kumar says he wants to try, with a mobile app designed to rally votes against Trump where it matters: In swing states.

Kumar is CEO of Trimian, a sort-of-stealth company that is building networking apps for groups like college alumni. But in August he built #NeverTrump, an app that’s supposed to tell mobile users about people they know in battleground states, so they can reach out to them and ask them to vote. If you want, #NeverTrump will do the asking, too, with pre-programmed messages it will send up to four times before the election. It’s an explicit acknowledgement that Silicon Valley workers’ votes won’t have any impact on the electoral college, since California is already a lock for Hillary Clinton.