May 2010

Wall Street Loves Cable ... Still

Despite the looming specter of regulatory pricing scrutiny, a panel of top cable analysts remain bullish on the industry, pointing to its superior infrastructure and broadband leadership, but warning that potential weak spots remain in customer service and shrinking consumer wallets.

Sanford Bernstein cable and satellite analyst Craig Moffett, who created a bit of a firestorm with his downgrading of the entire cable sector on May 10 -- which some believe helped lead to a major sell-off in the stocks -- defended his decision in a panel at The Cable Show. Moffett's actions were in response to the Federal Communications move to classify cable broadband service as a Title II telecommunications service. But what worried Moffett the most was a clause in the ruling that gave the commission the right to regulate rates. While the FCC has said it will tread lightly, and Moffett believes it will, there is still the threat that rate regulation could come. The problem is the core of Title II includes language about just and reasonable pricing," Mofett said. "This is not a, 'We have the option to opine on whether processes are just and reasonable'; this is a, 'We are compelled to opine if prices are just and reasonable.' All we have raised, notwithstanding the promise of forbearance, is the reasonable question about the long-term flexibility of pricing." But Moffett stressed that he is still bullish on the cable sector, pointing to its robust infrastructure and leadership in the broadband market.

Making Privacy Personal

How do you get people to care about privacy? People care about it in offline settings. At home, you know which window shades you prefer to draw closed at which times. At work, you might discuss Saturday night's exploits with your cubicle-mate and not with your boss. Few can tell online; I can't. I avoid networks like blippy that share purchases based on credit card data, and I turned off Google Latitude's option of automatically broadcasting my location from mobile devices, but I'm admittedly inconsistent and too laissez-faire with most other forms of social media. The latest debates over Facebook's privacy policies may not last, but there's a lot of good coming out of the dialogue. If Facebook won't clearly explain how it publicizes consumers' information, others are trying to fill the void. Most resources have the echo-chamber effect, only reaching people who care about privacy and social media to begin with. But if enough of these echoes escape and start ricocheting around the water coolers where more Facebook users hang out, then there's a chance to bring the discussion to people who wouldn't intentionally look for it. Let's look at several attempts to raise awareness about these privacy issues, and how likely they'll break through the echo chamber.

Study: Even Moderate Privacy Regulation Reduces Ad Effectiveness

A new study by two marketing professors concludes that banner ads are less effective in Europe, where online privacy laws restrict ad targeting, than in other parts of the world.

"The empirical findings of this paper suggest that even moderate privacy regulation does reduce the effectiveness of online advertising," states the paper, authored by University of Toronto's Avi Goldfarb and MIT's Catherine E. Tucker. Europe's data protection laws ban marketers from tracking users via Web bugs or cookies without notifying people and obtaining their consent. It's not clear whether that consent must be opt-out or if opt-in will suffice. But the report authors speculate that marketers responded to the ambiguity by adopting a "conservative legal interpretation" and curbing their use of targeted ads. The study draws on surveys of 3.3 million Web users who had been exposed to a total of 9,596 online ad campaigns between 2001 and 2008. Researchers asked users who had seen particular targeted ads whether they intended to purchase the products marketed and compared those answers to a control group of users who saw other ads.

Genachowski Answers Wireless Communications Services Letters

Earlier this year, Members of Congress wrote Federal Communications Commission Chairman Julius Genachowski to warn him about how mishandling an FCC proceeding on Wireless Communications Services (WCS) could cause harmful interference to nearly 35 million listeners to satellite radio.

They said that "deployment of new broadband services should not threaten other established licensees and cause disruptive interference to millions of existing consumers. The WCS spectrum is already being utilized for fixed broadband applications pursuant to FCC rules. Those original rules prohibited mobile devices from operating on these frequencies, however, specifically because oft he threat of interference with satellite radio services, which use frequencies adjacent to WCS. This initial conclusion was based upon a thorough record, and despite engineering advances since.that time, remains equally valid today."

In April, Chairman Genachowski wrote back to Congress saying that the FCC is "actively engaged in addressing interference issues that might exist between WCS and the Satellite Digital Audio Radio Service (SDARS). Commission staff released a Public Notice on April 2, 20 I0, to supplement the record with public comments on draft interference rules for the WCS and SDARS. The draft rules include provisions to minimize the risk of harmful interference to SDARS from mobile WCS operation."

FCC Waivers and Funding Could Fuel Nationwide Public Safety Network

The Federal Communications Commission took a significant step toward building a nationwide public safety network last week by clearing the way for 21 cities, counties and states to begin building their own fourth-generation wireless networks.

The FCC gave conditional approval on May 12 to waiver requests from New Jersey, Los Angeles County, Boston and 18 others to start creating 4G networks known as Long Term Evolution (LTE) networks. These networks could begin to form a nationwide interoperable wireless network that has been sought by public safety officials since Sept. 11, 2001, terrorist attacks. The LTE networks approved last week will use 10 MHz of spectrum that public safety was granted in 1997. But the FCC required that the new networks be compatible with the proposed national D Block 700 MHz network. "I think it is going to have a very profound effect upon our ability to get a nationwide network because if we can get some of these early build-out cities or regions or states done, we'll get some early lessons and learn what works and what doesn't," said Harlin McEwen, chairman of the Public Safety Spectrum Trust (PSST), a Washington, D.C.-based nonprofit designated by the FCC to guide construction of the national wireless network for first responders.

FCC Seeks Comment on Public Safety Broadband Networks

On May 13, 2010, the Federal Communications Commission released an order granting conditional waivers to twenty one public safety entities (Petitioners) for early deployment of public safety broadband networks in the 700 MHz public safety broadband spectrum (PSBB Block). The Waiver Order establishes technical, operational and governance conditions for early deployment and requires each Petitioner to submit to the Bureau, within a specified time window, a detailed plan for achieving interoperability with other public safety broadband networks. The release of this order is a major step towards development of a nationwide public safety broadband network. However, there remain open several key technical issues focused on network deployment. In this Public Notice, the Public Safety and Homeland Security Bureau seeks further comment on interoperability, out-of-band emissions, and equipment certification surrounding public safety broadband network interoperability which will serve the basis for final rules for the public safety broadband network.

Genachowski, Kohl and Hatch Exchange Letters on Broadband Competition, Spectrum

In December 2009, Sen Herb Kohl (D-WI) and Orrin Hatch (R-UT) wrote Federal Communications Commission Chairman Julius Genachowski will some suggestions about how FCC broadband competition policy could be improved. They said the FCC should readily use its ample authority -- including allocation of spectrum -- to promote new entry and increased competition in the broadband market.

In late April, Chairman Genachowski replied, "Mobile broadband is central to our mission at the Commission. No sector of the communications industry holds greater potential to enhance America's economic competitiveness, spur job creation, and improve the quality of our lives. To achieve this potential, however, we must address one of the biggest challenges to the development of competitive broadband services, the limitation on available spectrum. The National Broadband Plan, which was delivered to Congress on March 16, 2010, presents multiple recommendations for allocating spectrum to meet consumers' needs for wireless broadband services."

Louisiana politician lawsuit against Internet commenters

Jefferson Parish President Steve Theriot dropped a parish lawsuit Monday that sought the identities behind 11 anonymous user names on the Times-Picayune website who made critical comments online about his administration and former parish officials. The reversal comes after a group of residents criticized Theriot and the Parish Council for the suit at last week's council meeting. Theriot said Wednesday he sued to learn more details about the commenters' specific complaints, but the lawsuit's language stated that Theriot had "suffered embarrassment" and that the comments contained "maliciously false and defamatory statements concerning plaintiffs with the purpose of defaming the plaintiffs." The suit, filed in the 24th Judicial District Court, also listed Jefferson Parish as a plaintiff and Theriot had said the parish would pay for any litigation. Council Chairman John Young said the law firm that filed the suit, Phelps-Dunbar, had been initially hired by the council to handle the investigation of Anne Marie Vandenweghe, an assistant parish attorney who Theriot suspended in February on suspicion of improperly using her parish computer. She was reinstated just weeks later.

Professional social networking booming

Professional social networking companies are recovering well from the recession, boosted by a surge in members, and growth in fees from advertisers and recruiters. Membership of professional social networks like LinkedIn and Viadeo has bloomed since late 2008 as tens of millions of consumers from around the world have sought to widen their "safety networks" fearing worsening economies.

Facebook, mobile carriers offer free access to site

Facebook has teamed up with 50 wireless operators to offer cellphone users a stripped-down version of the social networking site that can be accessed without incurring data charges.

The new site, dubbed 0.facebook.com, is a text-only version of Facebook's flagship Internet site and is specially designed for mobile phones with limited bandwidth Internet connections. The new site will be available beginning on Tuesday in 40 different countries, including Brazil, India, Indonesia and Turkey from a variety of carriers. The new site comes as the world's largest Internet social network continues to grow its base and looks for ways to increase the amount of time Web surfers spend using its service.

Benton

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