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  2. August 2009

August 2009

Why AT&T Killed Google Voice

[Commentary] AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the US economy. Wireless data service is AT&T's only bright spot. How so? As any parent of teenagers knows, text messages are 20 cents each, or $5,000 per megabyte. After the first month and a $320 bill, we all pony up $10 a month for unlimited texting plans. Same for Internet access. With iPhone, you pay $30 a month for unlimited data service (actually, one gigabyte per month). Is it worth that? The à la carte price for other not-so-smart phones is $5 per megabyte (one-thousandth of a gigabyte) per month. So we buy monthly plans. Margins in AT&T's Wireless segment are an embarrassingly high 25%. The trick in any communications and media business is to own a pipe between you and your customers so you can charge what you like. Cellphone companies don't have wired pipes, but by owning spectrum they do have a pipe and pricing power. Aren't there phone competitors to knock down the price? Hardly. Verizon Wireless, T-Mobile and others all joined AT&T in bidding huge amounts for wireless spectrum in FCC auctions, some $70-plus billion since the mid-1990s. That all gets passed along to you and me in the form of higher fees and friendly oligopolies that don't much compete on price. Google Voice is the new competition. We need a national data policy, and here are four suggestions:

1) End phone exclusivity.

2) Transition away from "owning" airwaves.

3) End municipal exclusivity deals for cable companies.

4) Encourage faster and faster data connections to our homes and phones.

Lawyer and Author Adds His Objections to Settling the Google Book Lawsuit

A growing chorus of authors, academics and other book industry figures is objecting to the settlement of a class-action suit that would allow Google to profit from digital versions of millions of books it has scanned from libraries. Those questioning the agreement, which is subject to a court review, have raised concerns about whether it is fair to authors, whether it protects the privacy of people whose reading habits might be tracked and whether Google is being improperly given what amounts to exclusive rights to commercialize millions of out-of-print books. The Justice Department has begun an antitrust investigation. In the latest objection, Scott E. Gant, an author and partner at Boies Schiller & Flexner, a prominent Washington law firm, plans to file a sweeping opposition to the settlement on Wednesday urging the court to reject it. Unlike most previous objections to the project, which focused on policy issues and recommended modifications to the settlement, Mr. Gant argues that the agreement, which gives Google commercial rights to millions of books without having to negotiate for them individually, amounts to an abuse of the class-action process. He also contends that it does not sufficiently compensate authors and does not adequately notify and represent all the authors affected.

Conservatives Take a Page From Left's Online Playbook

A group of Republicans, looking to recoup the party's clout, is borrowing a page from liberal Democrats by beefing up Internet efforts to energize the grass roots. The conservative Americans for Prosperity has further embraced Internet activism to energize its 700,000 members and point them to dozens of town-hall meetings with lawmakers over the past weeks, leaving Democrats on the defensive on a signature issue: overhauling health care. Americans for Prosperity held their conference Right Online here last weekend. It centered on ramping up the use of Facebook, Twitter and other online megaphones to rally conservative opposition to what they consider ultra-liberal policies -- strategies popularized by organizations such as MoveOn.org and President Barack Obama's 2008 campaign. That's a shift, these activists say, from recent years of GOP strategy, where the shaping of the party's message has been largely top-down, with the message coming from party leaders. Now, the message is bubbling up more from groups of online activists.

Lines are blurring in strange new world of journalism

[Commentary] The struggle to find a way to pay for good journalism is taking some troubling turns. Journalism creates influence for those who produce it, and that influence can be monetized. The traditional way of turning influence into money is through advertising, but that source is failing as the Internet finds more efficient ways to bring buyers and sellers together. Marketing the influence without corrupting the news product has always been a concern. The safeguard, especially for newspapers, has been to keep a wall between the news and advertising departments. In my own newspaper career, I saw it violated just often enough to remind me that the wall was needed. The new forms of journalism will require new kinds of safeguards. Without clear standards, journalism can't be trusted. If it can't be trusted, it won't be influential. If there is no influence, there is nothing to monetize.

[Philip Meyer, professor emeritus in the journalism school at the University of North Carolina-Chapel Hill, is the author of The Vanishing Newspaper]

From Wires to People: FCC to devote day to broadband adoption and use

On August 19, the Federal Communications Commission devotes a full day to people. After talking about deployment and technology and even small business, Wednesday's discussion shifts to why and how people use broadband. The FCC is in the middle of a series of discussions on creating a National Broadband Plan. So far, the talk has mainly been about wires (and wireless) and homes passes. Today the FCC looks at: A) the current state of data on broadband adoption and utilization, as well as the associated measurement and other challenges, B) the ways in which broadband services can benefit consumers, particularly those in groups that historically have been less likely to adopt or utilize broadband, and C) existing adoption programs that aim to increase adoption and utilization of broadband. The focus of the FCC's adoption and utilization workshops is no accident.

Analysis

From Wires to People

On August 19, the Federal Communications Commission devotes a full day to people.

After talking about deployment and technology and even small business, Wednesday's discussion shifts to why and how people use broadband. The FCC is in the middle of a series of discussions on creating a National Broadband Plan. So far, the talk has mainly been about wires (and wireless) and homes passes.

US Broadband Growth Slowest in Eight Years

According to a new report by broadband, media and entertainment analyst firm Leichtman Research Group (LRG), the U.S. added a net 634,000 broadband subscribers during the second quarter of 2009. That's the worst quarterly performance in the eight years that LRG has been tracking this statistic. The biggest wins came at Verizon and AT&T, which added 186,000 and 112,00 subscribers respectively. Time Warner managed to add 94,000 subscribers while its larger rival Comcast eked out only 64,000. Together, the 19 companies represented in LRG's report accounted for 93 percent of the U.S. broadband market. And LRG does not predict that broadband stimulus funding will help. "The broadband stimulus will potentially bring landline services to the approximately 3 to 5 percent of US households that currently don't have a landline offering," Bruce Leichtman said. "While this will benefit this portion of households (who otherwise would not receive a landline offering), the building of the networks will take time, and the impact on the overall market will be negligible in the near term." He added that the effect of the stimulus will be "difficult to distinguish even when the networks are up and running, because this is represents a comparatively small portion of the US."

US broadband program -- too much like old times?

[Commentary] The Federal Communications Commission just issued a request for opinion as to "whether broadband is being deployed to all Americans in a reasonable and timely fashion" as required by section 706 of the Telecommunications Act of 1996. The request notes that in each of the previous five Section 706 reports to Congress the FCC concluded that broadband was being deployed "in a reasonable and timely fashion." Very few other than some carriers and the FCC itself agreed with that assessment. The new request notes that "these conclusions, however, rested on data increasingly criticized as lacking sufficient detail to support robust analyses." The request notes that Congress got fed up with the FCC's relying on crappy data and told it to do better. The FCC did ask better questions this time, but has yet to finish analyzing the data so we do not know if it will continue to play the role of Pollyanna.

With broadband funding, whose needs are we meeting?

[Commentary] Assembling a group of technologists, industry think tanks and, consultant types into the first rounds of discussions on the National broadband Plan does the needs analysis process a disservice. You're not going to fix the problems that the lack of broadband creates, nor deliver the opportunities that broadband promises unless early on you have these discussions with the clients. Communities are the clients. They have the economic development needs, the telemedicine needs, the lack of educational opportunities. They have the population demographics and the terrain challenges that impacts the ability to use "x" versus "y" technology. What's more, they are paying directly and indirectly for the solution they get. Furthermore, these discussions have to be more than just dog and pony shows to appease the masses while the agencies go back to their offices to craft rules more favorable to sellers than to buyers. Or they split the difference with some rules that appease communities and many that appease incumbents, which usually means ultimately that those benefiting the most are the biggest private sector companies. The Feds have to realize that there are private sector companies that will lose out on some deals. The world will not end.

[Craig Settles, President of Successful.com, is an industry expert who helps organizations pursue stimulus grants.]

For Better Mobile Broadband, the U.S. Needs More Spectrum

A 2009 report from the Organization for Economic Co-operation and Development (OECD) notes that the spectrum currently assigned for commercial use in the U.S. is 409.5 MHz, more than what's allocated for such use in any of the other top 10 OECD countries. However, the U.S. ranks second when it comes to the number of people served by each MHz, at just 660,073. Mexico is the most efficient user of spectrum, providing service to 661,666 people per MHz, while Germany ranks third, at 350,819 people. The International Telecommunications Union estimates that the U.S. needs to have 800 MHz available for mobile voice and data by 2010. Guttman-McCabe, vice president of regulatory affairs at CTIA (a trade group that represents the wireless industry), notes that it took about 10 years to get the 700 MHz spectrum auctioned off from the time it was identified. That spectrum is the basis for the upcoming fourth-generation long term evolution wireless networks from Verizon and AT&T. He says that we currently have just 50 Mhz in the pipeline for future use. So while there's debate among folks about what spectrum should be licensed and what should be unlicensed, and questions over whether new spectrum should go to the incumbents, there's notable agreement over the need to get more highway lanes built for mobile broadband.

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