May 2009

The $7.2 Billion Question

The much-ballyhooed broadband stimulus program, known officially as the Broadband Technologies Opportunities Program, is, at $7.2 billion, one of the largest federal funding initiatives ever to hit the cable industry. And though the program is still in its early stages — funding isn't expected to be available until next year — a fundamental question has emerged over one of the primary tenets of the initiative: No one is sure who the money is supposed to help. So far, the broadband stimulus has been characterized as a job-creation vehicle, an educational tool, an engine for economic growth, a rural program and an urban initiative. And cable operators, who stand to get a large chunk of this funding if they so choose, are worried that the government may use the program to prop up competitors and even let them encroach on their existing, more heavily populated territories. "The question is, what is the problem they are trying to solve" with the stimulus, asked Leichtman Research principal analyst Bruce Leichtman. "Is the problem that 7% of the country does not have broadband? Or is the problem that the U.S. is 14th in the world in broadband penetration? The first step should be just figuring out what the problem is." While the government hopes that the ball can start rolling on funding in a few months, there is a question as to whether the people that would be served by this initiative want broadband at all.

Obama's Challenge in Cyberspace

[Commentary] In the next few days President Obama will decide whether he will live up to his campaign promises about dealing seriously with the challenge of cyber security by creating a White House office to direct government activity and coordinate with the private sector. None of the options being served up to him will create the stand alone White House office that is needed to provide the leadership on this issue. The reasons that this decision is important have been spread across the media this last month. Among the facts revealed are that foreign intelligence services have penetrated the control systems of the US electric power grid and have left behind "logic bombs" and "trap doors;" data about America's latest fighter aircraft, the F-35 Lightning II, has been copied off the networks of defense contractors and sent overseas; the Pentagon plans to appoint a new four star general to run a new Cyber Command based on the National Security Agency (NSA); and a National Academy of Sciences blue ribbon panel has urged caution about the US engaging in offensive cyber war. President Obama has been presented with more complex and important issues than any American leader in my lifetime. One of the difficulties any executive has in such a circumstance is spotting the crucial decisions that he must make now on what are comparatively quiet issues, decisions that will have significant future consequences. If Obama reneges on his campaign pledge to create a White House Office on Cyber Security to lead US government efforts, one day he or some future President may wish he had done otherwise, as the noise from the White House's back up electric generator fills the Oval Office and the President looks out on a city darkened by cyber attack.

The American Press on Suicide Watch

[Commentary] Three years ago, Stephen Colbert appeared at the annual White House Correspondents' Association dinner, delivering a monologue accusing his hosts of being stenographers who had, in essence, let the Bush White House get away with murder. The bad news about the news business has accelerated ever since. The causes of journalism's downfall — some self-inflicted, some beyond anyone's control (a worldwide economic meltdown) — are well known. To time-travel back to the dawn of the technological strand of the disaster, search YouTube for "1981 primitive Internet report on KRON." What you'll find is a 28-year-old local television news piece from San Francisco about a "far-fetched," pre-Web experiment by the city's two papers, The Chronicle and The Examiner, to distribute their wares to readers with home computers via primitive phone modems. Though there were at most 3,000 people in the Bay Area with PCs then, some 500 mailed in coupons for the service to The Chronicle alone. But, as the anchorwoman assures us at the end, with a two-hour download time (at $5 an hour), "the new telepaper won't be much competition for the 20-cent street edition." By all means let's mock the old mainstream media as they preen and party on in a Washington ballroom. Let's deplore the tabloid journalism that, like the cockroach, will always be with us. But if a comprehensive array of real news is to be part of the picture as well, the time will soon arrive for us to put up or shut up. Whatever shape journalism ultimately takes in America, make no mistake that in the end we will get what we pay for.

TV networks tiring of primetime Obama news conferences

Executives at the big four US broadcast television networks are seething behind the scenes that President Barack Obama has cost them about $30 million in cumulative ad revenue this year with his three prime-time news conferences. Now top network executives quietly are hoping that Fox's decision not to air Obama's April 29 news conference will serve as precedent for denying future White House requests for prime airtime. "We will continue to make our decisions on White House requests on a case-by-case basis, but the Fox decision gives us cover to reject a request if we feel that there is no urgent breaking news that is going to be discussed," said one network executive, who, like all, would not go on the record fearing repercussions from the Obama administration. Another network executive confided, "Nobody wants to take on the White House, so we'll have to tiptoe through this." Although Obama's post-election visits to "The Tonight Show With Jay Leno" and "60 Minutes" were major ratings boosts, the love affair between the networks and Obama might be cooling: There are too many demands, and too much money is at stake. Even more irksome, the White House is bailing out bankers, insurers and carmakers, but nary a nickel has gone to the media industry which has cut costs and lay off staff.

Ed-Tech Budget Cuts; NIST Tech Programs Gain

A handful of education and business groups Thursday criticized the Obama administration's proposed drastic downsizing of the Enhancing Education Through Technology (EETT) program as part of the FY10 budget proposal. Under the plan, the Education Department program would shrink from $269 million to $100 million, according to the Consortium for School Networking, International Society for Technology Education, Software & Information Industry Association and State Educational Technology Directors Association. The organizations urged Congress to invest in EETT at levels higher than last year's appropriation because the program importantly spurs innovation and provides teacher training in the use of technology to improve student achievement.

The cut came as a major shock since the economic stimulus package signaled that the White House was prepared to invest significantly in educational technology, they said. Although Obama has requested a $170 million cut to EETT funding next year, the program did receive an additional $650 million for the 2009 and 2010 fiscal years in the economic stimulus package. According to a program description on the Department of Education (ED) web site, the proposed EETT cut "reflects the significant amount of funds available [for educational technology] under the Recovery Act." Overall, the president's budget request, unveiled May 7, allocates $46.7 billion for ED—an increase of $1.3 billion from 2009.

A pair of technology programs at the National Institute of Standards and Technology that were routinely zeroed out by the Bush administration but rescued annually by appropriators would get a new lease on life under President Obama's budget request. It included $124.7 million for the Manufacturing Extension Partnership, a public-private initiative that provides technical assistance to small manufacturers, and $69.9 million for the Technology Innovation Program, which provides financing to small high-tech entrepreneurs to support cutting-edge technologies. Former President George W. Bush cut both programs in his FY09 budget, but Congress provided MEP with $110 million and TIP $65 million in its FY09 omnibus.

Health IT Funding Remains Flat Under Obama's Proposed Budget

Under President Obama's proposed fiscal year 2010 budget, the Office of the National Coordinator for Health IT and the health IT initiatives at the Agency for Healthcare Research and Quality would continue to receive funding at current levels. For the third consecutive year, the federal budget proposes allocating $61 million for ONC and $45 million for AHRQ's health IT initiatives. However, the budget proposal does not include "jump start" funds for ONC included in the economic stimulus law. The office is set to receive an estimated $432 million this year and $809 million in 2010 in jump start funding. The Federal Health Architecture program, which aims to improve the effectiveness and efficiency of government health IT programs, is slated to receive $8 million under Obama's budget, the same level as in FY 2009.

FTC Chair OK with Paying For Higher-Speed Broadband

Federal Trade Commission Chairman Jon Leibowitz said Friday he has no problem with charging more for higher Internet speeds or heavy Internet usage, so long as the bill does not come as a surprise. He also confirmed that Google is being investigated for violating the prohibition on interlocking board members, but says that he does not think its dominance of search automatically equates to anticompetitive practice and doesn't think it is abusing its power. Chairman Leibowitz indicated that the FTC may weigh in on the Federal Communications Commission's inquiry on crafting a national broadband plan. He said broadband was a deregulated industry, which was a good thing, but that you needed law enforcement to make sure that people were doing the right thing. He also said he was hoping that both sides of the network neutrality debate were ratcheting down the rhetoric.

Lawmakers Mull Changes To Wireless Phone, Internet Regs

The cell phone and mobile Internet industry could face a new regulatory framework over the next several years as lawmakers consider how to spur competition and streamline the patchwork of state laws in the wireless sector. Several senior members of a House telecommunications panel said Thursday state regulations governing consumers' contracts with wireless companies should be preempted in favor of national standards. At a hearing, House Energy and Commerce Telecommunications Subcommittee Chairman Rick Boucher (D-VA) said states should continue their role in resolving disputes that arise between cell phone carriers and their subscribers. Chairman Boucher wants to continue negotiating a draft state preemption bill that was crafted last year by Rep. Edward Markey (D-MA), who previously chaired the telecom subcommittee. State preemption is a priority for the wireless industry. Lobbyists argue that cell phones and mobile Internet services by their nature cross state lines and should be governed by a single federal standard. Lawmakers also are asking questions about exclusive arrangements between cellular providers and handset manufacturers. AT&T's deal with Apple to be the sole wireless provider for the popular iPhone has raised eyebrows on Capitol Hill. Some lawmakers think such arrangements put smaller wireless companies at a disadvantage because they don't have access to the newest gadgets.

AT&T Buys Some Assets From Verizon Wireless

AT&T, the country's second-biggest wireless phone company, agreed Friday to pay $2.35 billion in cash to buy assets put up for auction by Verizon Wireless. The network assets and mobile licenses are for 79 service regions in 18 states, mostly rural areas. AT&T will be 1.5 million customers closer to closing the service gap with Verizon. Verizon surpassed AT&T to become the largest wireless carrier after it acquired the Alltel Corporation in January. Verizon's dominance in more than 20 markets led the Federal Communications Commission to demand the asset sale. AT&T will buy mostly Alltel assets but will include some assets from Verizon Wireless and the former Rural Cellular Corp.

AT&T Plans for a Proliferation of Wireless Gadgets

On Thursday, AT&T announced a partnership with Jasper Wireless which plans to provide technical infrastructure to AT&T to support a new generation of wireless devices, like e-readers, netbooks and navigation systems. But as it races to create a new generation of wireless devices, the industry isn't exactly sure where it is headed. The kinds of devices people want, as well as the business models that will support them, are still in their infancy.

Benton

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