July 2009

Zell: Tribune Could Exit Bankruptcy This Year

A day after Tribune Co. asked a bankruptcy court for more time to complete its reorganization plan, Chairman and CEO Sam Zell said Tuesday the Chicago media giant could exit Chapter 11 as early as the end of the year. "No plan has been put forward yet, though everybody's working on one, and I suspect that some time between now and maybe as early as the end of the year, it will exit from bankruptcy," Sam Zell said. Zell sounded a somewhat positive note about the economy in general. He said he believes the residential real estate market has reached an equilibrium where prices will stop falling, which should stabilize other parts of the economy. Newspapers in particular have been hammered by the collapse of real estate advertising.

Who's On Which Social Nets

An Anderson Analytics study suggests that 1) Twitter has become more popular than LinkedIn, 2) more than half of the US consumers who use social networks belong to more than one, and 3) the people who belong to a social net are four times more vocal about products and services than people who don't belong. Twitter users are likely to be bloggers, too, and many trumpet social causes. The average user logs into their social network four times a day, five days a week, and spends about one hour per day on the network. Nearly 32% are business users, 26% fun seekers, 22% social media mavens, and 10% leisure followers.

Outsourcing: Telecoms Give Their Networks the Boot

Telecom operators worldwide are increasingly considering outsourcing the management of their networks to companies like Nokia, Alcatel-Lucent and Ericsson in order to lower costs, increase capabilities and/or focus on other strategic imperatives. In fact, network services contracts accounted for half of all the megadeals (contracts with values of $1 billion-plus) signed in the first half of this year. Network services outsourcing has taken off among wireless providers in Europe and Asia, where all providers operate using common GSM technology.

Weaknesses Threaten Electronic Records Archive Program

The National Archives and Records Administration must provide more detailed information on its progress creating a system to store the federal government's electronic records, and develop a better contingency plan in case the system fails, according to a new report from the Government Accountability Office. Auditors found NARA's 2009 spending strategy did not specify the outcomes or capabilities the agency expected to achieve with funding for the Electronic Records Archive, which will house the federal government's massive volumes of electronic records independent of their original hardware or software. "Cost, schedule and performance data in the expenditure plan do not provide a clear picture of ERA system progress," the report stated. NARA also has made very little progress on adding records from the Bush administration into a piece of ERA called the Executive Office of the President system. Less than 3 percent of electronic records from the Bush presidency had been entered into the EOP system at the time of the review, and NARA officials did not expect the rest to be added until October.

US Municipal Fiber Networks a "Model for failure"?

In Australia critics have seized on the failure of a municipally owned wholesale fiber to the premise network in the US as a warning that the proposed Australian NBN model could be commercially unviable. The municipal fibre network in Provo, Utah - passing some 36,000 homes - was sold to a greenfields FTTP provider, heralding the end of its life as a wholesale-only proposition. New owners Broadweave Networks intended to scrap the wholesale model to make it economic. Tim Nulty, former GM of a retail municipal fibre network in Burlington, Vermont, dismissed the wholesale fibre model "a recipe for financial failure" - noting that wholesalers often ended up having to beg service providers to participate in order to meet the debts racked up by building the networks in the first place.

The US Newspaper Industry in Transition

The US newspaper industry is suffering through what could be its worst financial crisis since the Great Depression. Congress has begun debating whether the financial problems in the newspaper industry pose a public policy issue that warrants federal action. Whether a congressional response to the current turmoil is justified may depend on the current causes of the crisis. If the causes are related to significant technological shifts (the Internet, smart phones and electronic readers) or societal changes that are disruptive to established business models and means of news dissemination, the policy options may be quite limited, especially if new models of reporting (and, equally important, advertising) are beginning to emerge. Governmental policy actions to bolster existing businesses could stall or retard such a shift. In this case, policymakers might stand back and allow the market to realign news gathering and delivery, as it has many times in the past. If, on the other hand, the current crisis is related to the struggle of some major newspapers to survive the current recession, possible policy options to ensure the continuing availability of in-depth local and national news coverage by newspapers might include providing tax breaks, relaxing antitrust policy, tightening copyright law, providing general support for the practice of journalism by increasing funding for the Corporation for Public Broadcasting (CPB) or similar public programs, or helping newspapers reorganize as nonprofit organizations.

Stimulus Package Steps Up Health Data Privacy, Security

Health care providers are gearing up to meet the privacy and security provisions of the American recovery and Reinvestment Act. Under the health IT provisions of the federal stimulus package, all entities that handle protected health information must comply with HIPAA privacy regulations. In addition, the stimulus law calls for health care providers to: Notify all affected patients within 60 days of a security breach; Report security breaches to the HHS secretary and prominent media outlets if the incident affects more than 500 individuals; Track all personal health information disclosures; and Upon patient request, provide an account of every disclosure for the previous three years. Experts say health care facilities could face serious penalties if they fail to comply with the new security provisions of the federal stimulus package.

Grilled Genachowski

A Q&A with Federal Communications Commission Chairman Julius Genachowski. He says broadband is our generation's major infrastructure challenge -- it is to us what railroads and electricity and highways were to previous generations: connecting all Americans for commerce, a platform for commercial activity and for entrepreneurs to start and grow. It also is a platform to promote a whole series of public benefits that we have always regarded as important: connectivity for news and information, making sure that everyone has access to health care, education. He identifies government's two roles: universality -- making sure that everyone has access to high-speed broadband -- and openness. He also addresses indecency regulation.

CDT Releases Report on Privacy Concerns Surrounding Government Cybersecurity System

The Center for Democracy & Technology released a report outlining a series of privacy and legal questions that surround the government computer monitoring system known as "Einstein." The report calls on the Administration to release information about the legal authority for Einstein, the role of the nation's top spy agency, the National Security Agency, in its development and operation, and the impact of Einstein on the privacy.

Sprint Buys Virgin Mobile USA for $483 Million

Sprint Nextel said Tuesday it will buy out Virgin Mobile USA in a deal that values the small wireless carrier at $483 million and pushes Sprint deeper into the low-end prepaid mobile market. Sprint, which already owns 13.1% of Virgin Mobile, will pay a mix of shares and cash to buy the rest of the company from Richard Branson's Virgin Group, South Korea's SK Telecom and public shareholders. The No. 3 U.S. mobile service also plans to retire all of Virgin Mobile USA's debt, estimated to be no more than $205 million by Sept. 30. Besides consolidating management, some analysts feel the deal will only distract Sprint from where it needs the most help - in postpaid. "We view the acquisition as part of a strategy by Sprint Nextel to continue to diversify itself away from the post-pay business, in which it continues to struggle mightily against Verizon Wireless and AT&T Mobility," Stifel analyst Christopher King wrote in a research note. "However, the prepaid market is becoming increasingly competitive from a price standpoint in the US, and we wonder whether Sprint's recent branding and marketing efforts surrounding the 'fastest 3G network' and its nascent 4G-Clearwire product offering will have much of an impact with its now larger-prepaid subscriber base. The lingering question of what Sprint "wants to be when it grows up" resonates more than ever with us following this transaction announcement."