April 2010

Keep expectations low and you won't be disappointed. That maxim holds true for phone firms reporting earnings this week. With their somewhat defensive businesses unlikely to attract much attention as economic recovery takes hold, phone stocks are missing from most investor "buy" lists.

While the S&P 500 is up 45% over the past 12 months, AT&T is up 5% and Verizon Communications down 3.8%. First-quarter earnings from AT&T on Wednesday and Verizon on Thursday are unlikely to change that dynamic. It is understandable investors are so downbeat. The wireless business, whose growth has offset erosion in the traditional land-line phone sector in recent years, is facing strong headwinds. With the cellphone market nearing saturation, price cutting has intensified. Cheaper so-called "prepaid" cellphone services that don't require contracts are increasingly in favor, at the expense of the "postpaid" sector dominated by AT&T and Verizon. Indeed, analysts expect AT&T to report postpaid net additions in the 500,000-to-600,000 range, well down from 897,000 a year earlier. And while AT&T has made a major push to sell wireless services for devices like the Kindle, that business offers low per-subscriber revenue. UBS predicts AT&T's wireless average revenue per user fell 2% in the first quarter.

Investors also will be expecting an update on AT&T's efforts to upgrade its cell network in New York and San Francisco.

A handful of top tech and telecommunications companies lobbied Washington lawmakers aggressively in the first three months of 2010, newly filed disclosure reports show.

Some of the firms widely regarded as industry bellwethers -- including Google, Verizon and AT&T -- greatly expanded their lobbying efforts in the first quarter of this year, as tech issues like net neutrality and cybersecurity returned to the political foreground. Other companies, meanwhile, seemed to keep pace with the slow uptick in overall federal lobbying over the past year, made possible by changing economic trade winds. Still more attributed their recent increases to changes in lobbying disclosure laws.

However, the figures perhaps confirm some analysts' early predictions that tech spending in Washington would blossom in 2010. Prior to this year, computer and Internet companies collectively ranked fourth of 120 industries in the Center for Responsive Politics' annual lobbying tabulations. Combined, these firms spent roughly $1 billion over the course of 2009 -- a far cry from the $38 million they spent just over a decade earlier, the Center noted.

In an effort to combat the rising tide of online censorship, Google Inc. released a new tool Tuesday to show users where it gets the most pressure to remove content from its services and turn over personal information about its users as a part of criminal investigations.

The move marked the first time that Google has provided detailed information on such requests. The new tool breaks down by country and service the number of government demands in the second half of 2009 in the 100 or so countries where it operates. Google did not say how often it complies with demands. Companies like Google receive a torrent of such requests. The vast majority of such requests are legitimate, such as removing child pornography, Google's top lawyer, David Drummond, said in a blog post. But Google is betting that making the data about the requests more broadly available will lead to less censorship that is not legitimate. Brazil tops the number of takedown requests at 291, while the United States came in fourth at 123. U.S. data requests numbered 3580.

Top Federal Communications Commission broadband plan advisor Blair Levin suggested Tuesday that it was foreseeable back in the mid-1990's -- when he was at the FCC under then Chairman Reed Hundt -- that the Internet was going to supplant broadcasting and traditional cable video service.

"In 1994, you could envision as inevitable the Internet replacing existing platforms for communications and entertainment," he said in a speech to the American Cable Association policy summit in Washington. "And based on numerous metrics, that transformation is well underway," he said. What he said was not as clear was who was going to provide that access -- it turned out to be cable in this country. And he at least had some encouraging words for that medium. "[G]iven that the cost of upgrading the performance of the cable platform from DOCSIS 2.0 to DOCSIS 3.0 is significantly lower than the telcos' cost to upgrade, it is likely -- though not inevitable-that cable will increase its lead," he said. But that means the cable industry needs to focus on those so-called "over the top" video offerings online. He basically gave cable credit for investing in providing online service. He also said cable should be in the best position in most cases to provide the massive bandwidth needed to deliver over-the-top video.