January 2010

Jerry Levin, who sold Time Warner for AOL shares inflated by the dotcom boom, has marked the 10th anniversary of the disastrous $164 billion deal with a call for today's corporate titans to accept responsibility for the recent financial crisis.

The former Time Warner chief executive, who had avoided apologizing for the billions of dollars destroyed by the deal, on Monday made a mea culpa in an appearance on CNBC. Levin said Citigroup, AIG and General Electric had the same conglomerate problem as Time Warner. "It was not a supermarket, it was a [shopping] mall," he said. He added: "Not only the three companies I just mentioned but let's hear publicly from Lehman Brothers, Bear Stearns, Merrill Lynch, on and on." The aftermath of the financial crisis has seen apologies from bank executives including Lloyd Blankfein of Goldman Sachs . Jeffrey Immelt, GE chief, has said his generation of leaders succumbed to "meanness and greed", but GE is likely to be infuriated by being bracketed with humbled Wall Street firms.

He defended the "magnificent concept" behind the AOL deal, but said he did not treat employee fears with enough compassion. "It's a little hard to exercise compassion, connection and love when the market is very unforgiving," he said.

The expanding fallout from the Christmas Day terror plot dominated newspaper coverage last week, according to a special News Coverage Index from the Pew Research Center's Project for Excellence in Journalism. From December 28-January 3, stories connected to the attempt to blow up Northwest Airlines Flight 253 filled 23% of the front-page coverage in the 16 papers studied in PEJ's weekly index—outdistancing coverage of the economy, at 16% of the newshole. Although PEJ's weekly NCI normally includes more than 50 media outlets in five different sectors, this report focused solely on the news agenda in the nation's newspaper front pages. PEJ's index studies papers that represent a mix of geography and circulation categories to get a sense of the differing editorial priorities of different kinds of papers. As the story evolved, last week's newspaper coverage of the terrorist incident more than tripled the level from the previous week (7% from December 21-27). Some of that increase came from growing questions about why the system failed to heed warnings about the attacker. But some of the focus shifted as time passed to domestic politics and the impact on the Obama Administration. By the week's end, the coverage was pointing at a different and dangerous front in the battle against international terror—Yemen.

The current debate over spectrum access and the looming "spectrum crisis" contains numerous parallels to the ongoing debate over the national energy crisis. Everyone agrees that, under current business models, current technology, and current assumptions, our national policies cannot meet the increasing needs of commercial users, federal users, and state and local governments. Also paralleling the energy crises, most of the solutions proposed focus on traditional solutions of finding "more" spectrum rather than what could be called "spectrum conservation," using technology and changing patterns of consumption to stretch existing resources further. Nowhere is this "drill, baby, drill" mentality more prevalent than in the proposed approaches to federal, state and local spectrum access. The predominant proposals with regard to federal use revolve around clearing federal users and auctioning the cleared bands. Commercial interests generally display the same shortsighted and unsustainable attitudes toward state and municipal government. Most comments from commercial operators regard state and local governments as obstacles requiring federal preemption rather than as potential partners in developing innovative solutions. Such proposals, while attractive in the short term, are unsustainable in the long term. PK recommends that the federal government:

• Increase mixed use through opportunistic sharing and secondary markets in ways that do not interfere with existing federal use or prevent future auctions of spectrum.
• Combine the allocations of all federal agencies into a single "federal pool" managed by NTIA in consultation with the Federal Chief Technology Officer (CTO).
• Streamline the process of private applications for "mixed federal use" and approval of opportunistic sharing technologies within 1 year as provided for by law.
• Increase the frequency and quality of FCC/NTIA coordination, and improve transparency in the management of federal spectrum.

The Commerce Department has had to push back by three months its scheduled date for awarding the first round of broadband grants under the American Recovery and Reinvestment Act (ARRA) of 2009, according to a November report from the Government Accountability Office.

NTIA initially hoped to finish awarding the first round of grants by November 2009 but now expects those grants to be awarded by the end of February, due to delays brought on because of a compressed time frame to set up the program and insufficient staffing to handle the flood of applications, according to a GAO report. In order to award the broadband monies by Sept. 30, 2010, under the law, NTIA and the Agriculture Department's Rural Utilities Service must establish their respective grant programs, solicit and evaluate applications, and award the funds. In addition to a compressed time frame, the agencies are handling many more applications than they are accustomed to handling. For example, NTIA received 1,770 applications for the $4.7 billion in broadband grants, which is twice as many applications and three times as much funding as the agency has handled in other grant programs. One of the risks is to NTIA's required "maintenance-of-effort" rule under the stimulus law. Under that provision, agencies must show that stimulus grant recipients would not have proceeded with the projects "but for" or without the stimulus law funding. "Due to limited staff, NTIA may have an inability to thoroughly review applications and therefore the agency risks funding projects that might not meet the objectives of the Recovery Act's 'but-for' test," the GAO report said.