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August 2008

Newspapers Could Be Bargains, but Few Are Buying

Who wants to buy a newspaper? No, not just today's -- the whole company. While all publicly traded newspaper companies have seen their share prices fall in the last year -- drops of 50 to 70 percent are commonplace -- some have tumbled so far that any number of bargain hunters could snap up a controlling interest, despite the credit squeeze. But they haven't. The weak economy and tight credit market have slowed buying in all sorts of media, but the drop-off is especially pronounced in newspapers. Experts say the lack of interest reflects a sharp shift in the last year toward a more pessimistic long-term view of the industry. The loss of ads has accelerated, and few expect a rebound even when the economy recovers.

Music industry 'should embrace illegal websites'

The music industry should embrace illegal file-sharing websites, according to a study of Radiohead's last album release that found huge numbers of people downloaded it illegally even though the band allowed fans to pay little or nothing for it. "Rights-holders should be aware that these non-traditional venues are stubbornly entrenched, incredibly popular and will never go away," said Eric Garland, co-author of the study, which concluded there was strong brand loyalty to controversial "torrent" and peer-to-peer services. Radiohead's release of In Rainbows on a pay-what-you-want basis last October generated enormous traffic to the band's own website and intense speculation about how much fans had paid. He urged record companies to study the outcome and accept that file-sharing sites were here to stay. "It's time to stop swimming against the tide of what people want," he said.

21 Years Ago Today

On August 4, 1987, the Federal Communications Commission voted to abolish the Fairness Doctrine, which required radio and television stations to present balanced coverage of controversial issues. Funny, 21 years ago. What started soon after?

FCC Tables Decisions On Two Airwaves Sales

On Friday Federal Communications Commission Chairman Kevin Martin said the FCC will delay, until at least September, 1) setting the rules for a second auction of valuable radio spectrum and 2) an airwaves sale in which the winning bidders would have to offer free Internet.

Cloud Computing

A host of providers including Amazon, Salesforce.com, IBM, Oracle, and Microsoft are helping corporate clients use the Internet to tap into everything from extra server space to software that helps manage customer relationships. Assigning these computing tasks to some remote location—rather than, say, a desktop computer, handheld machine, or a company's own servers—is referred to collectively as cloud computing. In 10 years, which company will own the cloud computing space? By 2018, cloud computing will likely be evaluated based on three generic criteria: transactions, user experience, and presence. And as with any active market, it's a safe bet there will be plenty of companies that best showcase each of them.

Screen Actors Guild Is Divided Against Itself

The quest by the Screen Actors Guild for a sharply improved labor contract has a new plot line: mutiny. Infuriated by hard-line tactics used by SAG leaders in contract talks with Hollywood's largest studios — talks that broke down a month ago — a less militant collection of actors has started a campaign to take over the guild.

Today's Quote 08.03.08

"Would you be OK with the post office opening your mail, deciding they didn't want to bother delivering it, and hiding that fact by sending it back to you stamped 'address unknown - return to sender'? Or if they opened letters mailed to you, decided that because the mail truck is full sometimes, letters to you could wait, and then hid both that they read your letters and delayed them? Unfortunately, that is exactly what Comcast was doing with their subscribers' Internet traffic."
-- FCC Chairman Kevin Martin

August 3, 2008 (FCC Network Neutrality Decision)

"Would you be OK with the post office opening your mail, deciding they didn't want to bother delivering it, and hiding that fact by sending it back to you stamped 'address unknown - return to sender'? Or if they opened letters mailed to you, decided that because the mail truck is full sometimes, letters to you could wait, and then hid both that they read your letters and delayed them? Unfortunately, that is exactly what Comcast was doing with their subscribers' Internet traffic."
-- FCC Chairman Kevin Martin

BENTON'S COMMUNICATIONS-RELATED HEADLINES for SUNDAY AUGUST 3, 2008

Sorry to post on a summer weekend, but decisions at the FCC and Congress on Friday have generated a lot of news.

NEWS FROM THE FCC
   FCC Orders Comcast to End Discriminatory Network Management Practices
   FCC Tries to Avert Threatened Satellite Cutoff
   FCC Approves Verizon Wireless Acquisition of Rural Cellular Corporation's Spectrum Licenses
   FCC Examines Fees Used to Fund Commission Budget
   First responders to FCC: give up national D Block pipe dream
   Verizon Opposes FCC Making Tru2way Standard

NEWS FROM CONGRESS
   Lawmakers query Internet firms on ad targeting
   What the telecom industry will do about DPI
   Congress Takes IP Enforcement to School

MEDIA & CAMPAIGNS
   The Digital Divide Between McCain And Obama

BROADCASTING
   Networks Go After Red Lion, Pacifica
   Victories in DC Are Too Rare for Rehr

MEDIA OWNERSHIP
   Post-merger, Sirius XM faces tricky landscape

QUICKLY -- One Fifth Of Marketers Buy Advertising For News Coverage; Nominations for Commerce Spectrum Management Advisory Committee Due Sept 2; Verizon labor talks continue, beyond deadline

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NEWS FROM THE FCC

FCC ORDERS COMCAST TO END DISCRIMINATORY NETWORK MANAGEMENT PRACTISES
[SOURCE: Benton Foundation, AUTHOR: Kevin Taglang]
Comcast's management of its broadband Internet networks contravenes federal policies that protect the vibrant and open nature of the Internet, the Federal Communications Commission found on August 1. Ruling on a complaint by Free Press and Public Knowledge as well as a petition for declaratory ruling, the FCC concluded that Comcast has unduly interfered with Internet users' right to access the lawful Internet content and to use the applications of their choice. Specifically, the FCC found that Comcast: 1) had deployed equipment throughout its network to monitor the content of its customers' Internet connections and selectively block specific types of connections known as peer-to-peer connection; 2) network management practices discriminate among applications rather than treating all equally and are inconsistent with the concept of an open and accessible Internet; 3) practices are not minimally intrusive, as the company claims, but rather are invasive and have significant effects; 4) monitors its customers' connections using deep packet inspection and then determines how it will route some connections based not on their destinations but on their contents; 5) conduct affected Internet users on a widespread basis -- Comcast may have interfered with up to three-quarters of all peer-to-peer connections in certain communities. The Commission concluded that the end result of Comcast's conduct was the blocking of Internet traffic, which had the effect of substantially impeding consumers' ability to access the content and to use the applications of their choice. The Commission noted that the record contained substantial evidence that customers, among other things, were unable to share music, watch video, or download software due to Comcast's misconduct. The Commission also concluded that the anticompetitive harms caused by Comcast's conduct have been compounded by the company's unacceptable failure to disclose its practices to consumers. The FCC did not fine Comcast, but, within 30 days, the company must: A) Disclose the details of its discriminatory network management practices to the Commission; B) Submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year; and C) Disclose to customers and the Commission the network management practices that will replace current practices. [Lots more coverage at the URL below]
http://benton.org/node/15785
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FCC TRIES TO AVERT THREATENED SATELLITE CUTOFF
[SOURCE: Washington Post, AUTHOR: Holly Watt]
Federal Communications Commission Kevin Martin issued a last-minute appeal to a satellite telecommunications company Friday, urging it to continue providing Internet and other satellite-based services to a subscriber despite a contract dispute. SES Americom had threatened to shut off satellite service to OnSat Network Communications, saying it is owed more than $4 million. Their dispute involves the delivery of Internet services to the Navajo Nation in Arizona, New Mexico and Utah. But Chairman Martin noted in a letter to SES Americom's chief operating officer, Jim Ducay, that such an action would also cut off "significant public safety services to first responders across the country," affecting "at least 25 public safety entities in 13 states." He warned of the serious risks of such a disruption, writing, "These agencies can ill afford to be confronted with a precipitous loss of service when dealing with potentially life or death situations."
http://benton.org/node/15784
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FCC APPROVES VERIZON WIRELESS ACQUISITION OF RURAL CELLULAR CORPORATION'S SPECTRUM LICENSES
[SOURCE: Federal Communications Commission]
On Friday, the Federal Communications Commission today approved with conditions, the transfer of control of licenses held by Rural Cellular Corporation (RCC) and its subsidiaries to Cellco Partnership doing business as Verizon Wireless. In analyzing Verizon Wireless's proposed acquisition of RCC and its subsidiaries, the FCC examined the market for mobile telephony services and concluded that the companies had demonstrated that the merger will be in the public interest. However, based on a case-by-case analysis which determined that there was a potential for competitive harm in the six markets, the FCC is requiring that one of the two companies divest the licenses and related operational and network assets in those markets. Commissioner Michael Copps said, "[T]hese divestitures will improve competition in the affected areas."
http://benton.org/node/15780
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FCC EXAMINES FEES USED TO FUND COMMISSION BUDGET
[SOURCE: Federal Communications Commission]
Each fiscal year, the Federal Communications Commission is required to collect enough fees to raise the amount appropriated by Congress. For Fiscal Year 2008, the FCC received an annual appropriation from Congress for $313 million, with all but $1,000,000 collected through regulatory fees. On Friday, the FCC adopted a Report and Order and Further Notice of Proposed Rulemaking to collect regulatory fees for Fiscal Year 2008. The Report and Order retains the same formula, policies, and procedures for collecting regulatory fees that the Commission adopted in Fiscal Years 2007 and 2006, as well as in prior years. In addition, the Commission adopted a Further Notice of Proposed Rulemaking that asks how to more fairly distribute regulatory fees among communications industry segments. The further notice also examines methods to more closely align the regulatory fee regime with the Commission's costs.
http://benton.org/node/15774
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FIRST RESPONDERS TO FCC: GIVE UP NATIONAL D BLOCK PIPE DREAM
[SOURCE: ars technica, AUTHOR: Matthew Lasar]
Here's the message from the public safety community to the Federal Communications Commission: Drop the vain attempt to auction off the so-called 700MHz "D Block" to one national licensee and allow public safety agencies to access the spectrum and build their systems on a regional basis instead. "There is nothing wrong, per se, with the goal of nationwide interoperability," argued James Farmer, former counsel to the 9/11 Commission as well as former New Jersey Attorney General. "The way that emergencies actually happen, however, suggests that the best way to achieve interoperability nationwide is by first building it locally and regionally, and then interconnecting the regional interoperable networks." The head of New York City's Communications Division put it more plainly. "The Commission should not re-auction the 'D' Block spectrum," Charles Dowd said, "and should appeal to Congress to permit the allocation of this spectrum immediately to public safety."
http://benton.org/node/15771
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VERIZON OPPOSES FCC MAKING TRU2WAY STANDARD
[SOURCE: Multichannel News, AUTHOR: ]
Verizon Communications has asked the Federal Communications Commission to encourage the development of interactive video standards based on a low-cost, universally implementable interface - such as Ethernet - so that a "cable-centric approach" like tru2way doesn't put other providers at a disadvantage. The cable industry has pushed tru2way, formerly called the OpenCable Application Platform, as its preferred mechanism for complying with federal regulations that require operators to make interactive services like video-on-demand accessible through third-party consumer-electronics devices.
http://benton.org/node/15770
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NEWS FROM CONGRESS

LAWMAKERS QUERY INTERNET FIRMS ON AD TARGETING
[SOURCE: Reuters, AUTHOR: Peter Kaplan]
Senior members of the House Commerce Committee wrote to broadband Internet providers and other online companies on Friday, asking whether they have "tailored, or facilitated the tailoring of, Internet advertising based on consumers Internet search, surfing, or other use." The request comes amid rising scrutiny of the practice, known as deep-packet inspection, or DPI, by lawmakers and consumer advocates. The letters were sent to more than 30 online companies, including large broadband providers such as Comcast Corp, AT&T Inc and Verizon Communications Inc, as well as search giant Google Inc and Microsoft. The letter asks where any ad-targeting practices have been used, how many consumers have been subjected to it and whether those people were ever notified about it, among other things. "We are interested in the nature and extent to which you engage in such practices, and the impact it could have on consumer privacy," said the letter from Commerce Committee Chairman John Dingell (D-MI) and ranking committee Republican Joe Barton (TX).
http://benton.org/node/15783
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WHAT THE TELECOM INDUSTRY WILL DO ABOUT DPI
[SOURCE: TelephonyOnline, AUTHOR: Carol Wilson]
Based on public perception, deep packet inspection (DPI) would seem to be a technology either headed for the scrap heap or doomed to very limited applications. Telecom industry officials, particularly those who have developed products which use DPI or something similar to enable new applications and services believe that is throwing the baby out with the bath water.
http://benton.org/node/15782
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CONGRESS TAKES IP ENFORCEMENT TO SCHOOL
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The House and senate have passed a compromise version of the Higher Education Opportunity Act that requires colleges and universities to spell out how they will combat unauthorized peer-to-peer file sharing of copyrighted material. The bill calls for an annual disclosure by schools that "explicitly" informs students that unauthorized distribution of copyrighted materials, including P2P file sharing, may mean civil or criminal penalties. It also requires schools to summarize those penalties and to describe its policies regarding unauthorized P2P file sharing.
http://benton.org/node/15776
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MEDIA & CAMPAIGNS

THE DIGITAL DIVIDE BETWEEN MCCAIN AND OBAMA
[SOURCE: National Public Radio, AUTHOR: David Kestenbaum]
On Friday, All Things Considered offered a three-part comparison of presidential candidates Barack Obama (D-IL) and John McCain (R-AZ), noting they have different digital resumes. Their habits were shaped, in part, by what they were doing when the digital age arrived. Sen Obama has more experience using the Internet and mobile digital tools like the Blackberry. Sen McCain has referred to himself as computer illiterate, but is quick to pull out his cell phone to consult directly with experts. Former Federal Communications Commission Chairman Michael Powell, a technology adviser to McCain's campaign, says Sen McCain hopes to create momentum in all branches of government to foster "a range of e-government initiatives." That would include making more government services available online and hiring people with substantial tech experience to "populate throughout the government." Former FCC Chairman William Kennard says Sen Obama would create a cabinet level "chief technology officer" who would make sure the federal government imports the best technology tools from the private sector. "Obama understands that the future of our economy depends to a large extent on how we can ensure that Americans have access to technology and we empower Americans to use it," Kennard says.
http://benton.org/node/15781
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BROADCASTING
   Networks Go After Red Lion, Pacifica
NETWORKS GO AFTER RED LION, PACIFICA
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The Federal Communications Commission's current indecency-enforcement regime is unconstitutional, Fox told the Supreme Court Friday. Saying it now exists side-by-side with hundreds of cable channels not subject to FCC rules, Fox told the court broadcasting was no longer uniquely pervasive. It also said that because kids can access indecent material through the Internet or via cable or satellite "just as easily" as they can get it via broadcasting, it is no longer uniquely accessible to children, which would also undercut Pacifica. That argument came in a brief asking it to uphold a lower-court's ruling that the FCC's crackdown on cussing was an arbitrary and capricious change in policy that broadcasters were not sufficiently warned about. The other broadcast networks took dead aim at that regime and the underpinning of broader content regulation in their brief to the Supreme Court in support of Fox Friday, calling the FCC's effort to avoid a challenge to the constitutionality of its indecency-enforcement regime the commission's "latest bait and switch." In their filing, NBC, CBS and ABC called the FCC's indecency-enforcement regime unfathomable and indefensible. The networks also took aim at the Red Lion decision, in which the High Court upheld content regulations -- in this case the jettisoned "Fairness Doctrine" -- using the spectrum-scarcity rationale. Erwin Krasnow, former general counsel for the National Association of Broadcasters, concludes in a commentary in Broadcasting and cable: The FCC should bury the scarcity rationale.
http://benton.org/node/15777
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VICTORIES IN DC ARE TOO RARE FOR REHR
[SOURCE: tvnewsday, AUTHOR: Harry Jessell]
[Commentary] National Association of Broadcasters President David Rehr has been having a hard time getting its way in Washington, especially at the Federal Communications Commission where most of the action has been. And it's been forced to play defense by an FCC bent on making life for broadcasters as unpleasant as possible. The NAB's difficulties culminated (and became apparent to all) when the FCC approved the merger of the two satellite radio players, XM and Sirius, despite NAB's all-out, multimillion-dollar campaign to block it.
http://benton.org/node/15775
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MEDIA OWNERSHIP

POST-MERGER, SIRIUS XM FACES TRICKY LANDSCAPE
[SOURCE: Reuters, AUTHOR: Antony Bruno, Ken Tucker]
Sirius XM Radio will face a host of challenges in navigating the new digital landscape. Over the long haul, the prospect of widespread broadband availability threatens to consign satellite carriers to technological redundancy, as it becomes easier for cell phones and other hand-held devices to stream music over the Internet. And in the near term, new rivals continue to emerge, the most recent being Apple's iPhone and its App Store, which offers a slew of free downloadable music applications, including one from streaming music site Pandora that's already a big hit. For the moment, Sirius XM can expect to retain a strong position in the all-important automotive market. But here, too, challenges await.
http://benton.org/node/15778
Merger Likely to Usher In a One-Radio Future (New York Times)
http://benton.org/node/15779
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QUICKLY

ONE FIFTH OF MARKETERS BUY ADVERTISING FOR NEWS COVERAGE
[SOURCE: WebProNews, AUTHOR: Jason Lee Miller]
One in five senior American marketers polled said they had bought advertising in return for a news story about their company or product, according to a survey sponsored by PRWeek and Manning Selvage & Lee. implicit/nonverbal agreement with a reporter or editor for favorable coverage of their company or product in return for buying advertising. One in 12 provided valuable gifts in exchange for coverage.
http://benton.org/node/15772
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NOMINATIONS FOR COMMERCE SPECTRUM MANAGEMENT ADVISORY COMMITTEE DUE SEPT 2
[SOURCE: National Telecommunications and Information Administration]
The National Telecommunications and Information Administration (NTIA) is seeking applications from persons interested in serving on the Commerce Spectrum Management Advisory Committee (CSMAC) for new two year terms to commence in December 2008. The CSMAC provides advice to the Assistant Secretary for Communications and Information and NTIA Administrator on spectrum management matters. Nominations must be postmarked or electronically transmitted on or before September 2, 2008.
http://benton.org/node/15773
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VERIZON LABOR TALKS CONTINUE, BEYOND DEADLINE
[SOURCE: Reuters, AUTHOR: ]
Verizon Communications and two big unions kept talking after a labor contract covering 65,000 workers expired on Saturday and the unions said they made progress toward a deal, averting a strike threat. The majority of the Communications Workers of America's 50,000 members and the 15,000 members of the International Brotherhood of Electrical Workers covered by the contract have voted in favor of a strike authorization. Areas in dispute in the talks included job security, outsourcing, employee and retiree health care.
http://benton.org/node/15769
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FCC Orders Comcast to End Discriminatory Network Management Practices

Comcast's management of its broadband Internet networks contravenes federal policies that protect the vibrant and open nature of the Internet, the Federal Communications Commission found on August 1. Ruling on a complaint by Free Press and Public Knowledge as well as a petition for declaratory ruling, the FCC concluded that Comcast has unduly interfered with Internet users' right to access the lawful Internet content and to use the applications of their choice.

Specifically, the FCC found that Comcast: 1) had deployed equipment throughout its network to monitor the content of its customers' Internet connections and selectively block specific types of connections known as peer-to-peer connection; 2) network management practices discriminate among applications rather than treating all equally and are inconsistent with the concept of an open and accessible Internet; 3) practices are not minimally intrusive, as the company claims, but rather are invasive and have significant effects; 4) monitors its customers' connections using deep packet inspection and then determines how it will route some connections based not on their destinations but on their contents; 5) conduct affected Internet users on a widespread basis -- Comcast may have interfered with up to three-quarters of all peer-to-peer connections in certain communities.

The Commission concluded that the end result of Comcast's conduct was the blocking of Internet traffic, which had the effect of substantially impeding consumers' ability to access the content and to use the applications of their choice. The Commission noted that the record contained substantial evidence that customers, among other things, were unable to share music, watch video, or download software due to Comcast's misconduct. The Commission also concluded that the anticompetitive harms caused by Comcast's conduct have been compounded by the company's unacceptable failure to disclose its practices to consumers.

The FCC did not fine Comcast, but, within 30 days, the company must: A) Disclose the details of its discriminatory network management practices to the Commission; B) Submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year; and C) Disclose to customers and the Commission the network management practices that will replace current practices.

FCC Chairman Kevin Martin said, "Would you be OK with the post office opening your mail, deciding they didn't want to bother delivering it, and hiding that fact by sending it back to you stamped "address unknown - return to sender"? Or if they opened letters mailed to you, decided that because the mail truck is full sometimes, letters to you could wait, and then hid both that they read your letters and delayed them? Unfortunately, that is exactly what Comcast was doing with their subscribers' Internet traffic."

Fellow Commissioner Michael Copps called the action a landmark decision but cautioned, "We do recognize that unreasonably impeding the performance of an Internet application (like peer-to-peer file sharing)-and not just outright blocking a particular website or program-violates the FCC's Internet policies. We do require that Internet providers inform their customers when they make important technical decisions that change how the Internet works. And we do give consumers who feel their Internet experience is being unreasonably interfered with a right to seek help at the Commission. We do not, however, prohibit carriers from reasonably managing their networks. And we do not prevent engineers-either now or in the future-from coming up with new and better ways to serve their customers."

Commissioner Adelstein said, "This decision is seminal because, for the first time, we interpret the specific provisions of the Internet Policy Statement and follow through on our repeated promises to act on allegations of misconduct. At the same time, it is also a narrow decision, grounded firmly in the facts of the case before us."

Commissioner Deborah Taylor Tate voted against the order saying, "Rather than assuming the role of 'world wide web enforcer,' perhaps the best way for the FCC to fulfill our duties under Internet Policy Statement would be to assume the role of mediator or arbitrator, helping to facilitate agreements among the various sectors of the broadband Internet industry to create an experience that benefits all users, rather than issuing broad mandates to protect the few."

Commissioner Robert McDowell also voted against the decision. For most consumers, the FCC decision may have little short-term impact, because only a small percentage of people actually use file-sharing services to exchange big files. But it sends a signal that regulators won't allow phone and cable companies to prevent consumers from using the Internet as they please. "For the first time, today our government is choosing regulation over collaboration when it comes to Internet governance," Commission McDowell said. "The (FCC) majority has thrust politicians and bureaucrats into engineering decisions." In a lengthy dissent, he addressed his procedural and legal concerns about the action.

"We expect companies like Cox to stop blocking and degrading [traffic] immediately. If they don't, we will file a complaint," said Josh Silver, executive director of Free Press.

Members of Congress, presidential nominee Sen. Barack Obama (D-IL), have pushed for network neutrality legislation without success. Obama's likely Republican challenger, Sen. John McCain (R-AZ), opposes enacting net neutrality rules.

Verizon Communications, AT&T and the US Telecom Association all released statements Friday saying the FCC action proved there was no need for federal network neutrality legislation.

Charles Cooper of C|Net writes, "Let me see if I've got this right. Federal regulators determined on Friday that Comcast broke the law by slowing Internet traffic for subscribers using BitTorrent to swap large files with other people. But then the FCC decided it was enough to issue a press release declaring the victory of the rule of law and now it's time to move on. Not a penny in fines was assessed and not the slightest penalty suggested. OK. Post-Enron, post-Bear Stearns, post the subprime debacle, I'm long past being surprised by big corporations trying to cover their posteriors for posterity. But what's really amusing here is that Comcast thinks even this rap on the knuckles is undeserved."

FCC Tries to Avert Threatened Satellite Cutoff

Federal Communications Commission Kevin Martin issued a last-minute appeal to a satellite telecommunications company Friday, urging it to continue providing Internet and other satellite-based services to a subscriber despite a contract dispute. SES Americom had threatened to shut off satellite service to OnSat Network Communications, saying it is owed more than $4 million. Their dispute involves the delivery of Internet services to the Navajo Nation in Arizona, New Mexico and Utah. But Chairman Martin noted in a letter to SES Americom's chief operating officer, Jim Ducay, that such an action would also cut off "significant public safety services to first responders across the country," affecting "at least 25 public safety entities in 13 states." He warned of the serious risks of such a disruption, writing, "These agencies can ill afford to be confronted with a precipitous loss of service when dealing with potentially life or death situations."

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