June 2009

A subsidy fund designed to help phone carriers offer service in rural areas has mushroomed to an all-time high - 12.9% of interstate telecommunications revenue, up from 9.5% in the beginning of the year, the Federal Communications Commission announced Monday. That means that consumers' phone bills will increase slightly on July 1, the start of the third quarter. The FCC's announcement forecasts a change that carriers will need to make to customers' phone bills effective on that date. The subsidy fund is supported by a tax on the long-distance and regular phone-service bills paid by wireless, Internet and traditional phone customers. The amount is a separate line item dubbed "universal service," and it usually adds up to few dollars per month. AT&T estimates that the increased customer payments from the first quarter to the third quarter of 2009 amount to roughly half a billion dollars. Industry insiders say the universal-service-tax percentage is increasing because the number of traditional landline subscribers is falling dramatically as people switch to all wireless or Internet-based phone services, where contribution rates are lower. Fewer phone bills overall means a higher-percentage subsidy tax for each one. The universal-service fund pays out about $8 billion annually to phone companies that offer service in hard-to-reach areas.

Global spending on entertainment and media will reach $1.6 trillion in 2013 at a relatively sedate 2.7 percent annual average growth rate with growth in digital content offsetting declines in traditional media revenue models, PriceWaterhouseCoopers said on Tuesday. The migration to digital entertainment will accelerate as companies seek efficiencies in advertising and distribution in a downturn and consumers want greater control and higher value, according to PricewaterhouseCoopers' Global Entertainment and Media Outlook: 2009-2013, released on Tuesday. The report also showed declines in consumer and ad spending in some areas through 2011, with healthy growth returning in 2012-2013, and media companies struggling to attract revenue from fragmented and mobile audiences.

At a House Communications Subcommittee hearing on reauthorization of a satellite compulsory license bill, ranking Republican Cliff Stearns (R-FL) said that the digital television transition had gone smoothly "by most reports." Rep Ed Markey (D-MA) reminded the hearing audience that he had held the first hearing on high-definition TV as then chairman of the subcommittee 22 years earlier, and had no idea it would take that long for the DTV switch. But he said that delaying the hard date had appeared to allow three million more households to be better educated and prepared. Sens Amy Klobuchar (D-MN) and Frank Lautenberg (D-FL) also said they were pleased with the transition.

The newspaper industry in North America is forecast to shed some $13 billion in revenue by 2013, according to new research from PriceWaterhouseCoopers (PWC). The losses are expected to stem mainly from a drain in print advertising revenue. Total newspaper advertising will fall by a cumulative 32.7% during the next three years, according to the latest PriceWaterhouse Global Entertainment and Media Outlook: 2009-2013 report. Only in 2012 will advertising start to reverse, rebounding modestly. Print advertising is expected to fall the most from $36.7 billion in 2008 to $24.3 billion in 2013. Online advertising revenue is anticipated to decline over the next two years. PWC expects online ad revenue to grow to $3.7 billion in 2013 -- a 2.5% increase when compounded annually from 2008. By 2013 the US newspaper market will have lost $25 billion from its peak in 2005.