August 2008

Lawmakers query Internet firms on ad targeting

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).

What the telecom industry will do about DPI

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. Well-documented problems with how DPI is used have many, including the American Civil Liberties Union, questioning whether this technology, which allows ISPs to look at each packet they transport and know where it comes from, where it is going, and which subscribers and applications are involved, isn't too dangerous to be widely deployed and used. "If DPI is built everywhere, will we see the govt. try to force ISPs or search companies to turn over data or create a back door for the government - targeted warrants and requests?" said Timothy Sparapani, ACLU senior legislative counsel. "I don't think people expect there to be a gatekeeper or recording monitoring their Internet activity." That's why the ACLU and others have argued in Congressional hearings for limits on what telecom service providers can do with DPI. 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.

The Digital Divide Between McCain And Obama

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 despite the Republican presidential candidate's reluctance to use technology on a personal basis, he "understands technology very well" from his time as chairman of the Senate Commerce Committee on Commerce. Powell 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. That person also would be charged with making sure government is more transparent and that there is outreach to the public to get the "best ideas on how we can govern the country." "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," he says.

FCC Approves Verizon Wireless Acquisition of Rural Cellular Corporation's Spectrum Licenses

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."

Merger Likely to Usher In a One-Radio Future

What does the merger of XM and Sirius satellite radio me for car owners? What should a buyer say to a salesperson who asks, "Which kind of radio do you want in your car, AM or FM?" It sounds like a ridiculous question, but that is just the sort of frustrating choice buyers have been facing in recent years. Would it be smarter to get a radio that tunes in the XM satellite service or one that works with Sirius? What about a unit that receives HD Radio broadcasts? Since satellite radio began, the competing services have used different digital formats, essentially locking in listeners to one service or the other. Those days of frustration could soon be over. Digital radio, which includes the satellite companies as well as HD Radio broadcasts, often referred to as hybrid digital radio, offers the allure of clean high-fidelity sound, free of the static that can interrupt today's analog radio broadcasts. However, to receive the digital programming each service requires its own tuner to decode the signals, which is why listeners have had to decide on one service or the other. Before long, though, new car audio systems may all be factory-equipped with the ability to accept the three forms of digital programming, just as radios have long tuned in both AM and FM stations. The most recent step toward compatibility was the approval last month by the Federal Communications Commission of a merger of the satellite services.

Post-merger, Sirius XM faces tricky landscape

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.

Networks Go After Red Lion, Pacifica

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. That was one of the justifications the Supreme Court used for upholding the Pacifica decision finding George Carlin's "Filthy Words" monologue indecent. 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. "Whatever its validity when Red Lion affirmed it in 1969 or in 1987 when the commission rejected it without reservation, today the scarcity rationale is totally, surely and finally defunct," the networks said. 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 and adopt the approach advocated by former FCC Chairman Mark Fowler, to apply a public-interest standard based on minimally regulated marketplace forces rather than content regulation. Fowler once said that whether you call the public-trusteeship model of regulating broadcasters "paternalism" or "nannyism," it is Big Brother, and it must cease. The Center for Creative Voices in Media filed a brief in the Supreme Court Friday in the Federal Communications Commission's challenge to a lower-court decision throwing out decision to find profanity on Fox's air indecent. Creative Voices says TV creators are literally at a loss for words to know when they might run afoul of FCC rules. In its brief, the Center said it is not challenging the broader constitutionality of the indecency-enforcement regime, and on that score at least, it is in agreement with the FCC. But that is about the only thing they agree on.

Congress Takes IP Enforcement to School

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.

Victories in DC Are Too Rare for Rehr

[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. Radio broadcasters are deathly afraid of satellite radio and the combination of XM and Sirius multiples the threat many times. Sirius XM will be a better service and is more likely to survive its current financial woes than the two companies on their own. Rehr went toe to toe with Sirius CEO Mel Karmazin and lost — first at the Justice Department and then at the FCC. There is no other way you can spin it. Rehr will ultimately be judged by his performance on Capitol Hill and at the FCC and that's too bad because the fate of radio and TV stations really doesn't reside in Washington. It lies in how successful the stations are in reinventing themselves over the next five years. And in that regard, Rehr has been a help. He has championed efforts to expand broadcasting's reach in the real world, embracing and supporting TV's mobile broadcasting initiative and radio's campaign to install AM and FM tuners in cell phones and in every other kind of portable device known to 16-year-olds. But, as I said, Rehr will ultimately be judged by his impact on the rules and regulations. And there the record is not so good. He badly needs to post some Ws. Quality starts don't count in this league.

FCC Examines Fees Used to Fund Commission Budget

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. The docket will remain open as the Commission continues to evaluate the appropriate regulatory fee method assessed on providers of International Bearer Circuits, including submarine cable operators. In the order, the Commission commits to addressing this issue within 60 days. 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 under Section 9 of the Communications Act of 1934 (as amended) with the Commission's costs.