June 2010

Bankruptcy for Tribune Gets Hung Up by Squabbles

Eighteen months into bankruptcy, the Tribune Company remains stymied in squabbling over just how the company landed in bankruptcy in the first place.

The ailing media company was taken private in 2007 with an $8.2 billion deal by real-estate investor Sam Zell. Today, the transaction continues to haunt the company, its management and creditors. A group of creditors holding Tribune's bank debt is threatening to upend the newspaper-and-television station owner's plans to exit from bankruptcy later this summer. Separate lender groups are deposing Zell and James B. Lee, a top banker at J.P. Morgan Chase & Co., which backed the buyout. And a court-appointed examiner probing Zell's buyout for possible fraud could give ammunition to creditors of all stripes to battle Tribune's restructuring plans.

The dissident lenders, led by Oaktree Capital Management, are grousing that holders of bank debt are unfairly paying more than $400 million to bondholders, while Mr. Zell and the buyout's original backers contribute nothing. They complain that the settlement at the same time insulates Mr. Zell and his backers from litigation related to the buyout. The dissident lenders have emerged as the most significant hurdle to Tribune's efforts to exit from bankruptcy and start anew. Further litigation by Oaktree and its allies could prolong Tribune's stay in bankruptcy court, depending on their ability to forge a coalition that could vote against the company's restructuring plan.

Facebook targets China and Russia

Facebook is looking to China, Russia and Japan for its next phase of expansion as its overall growth has begun to taper.

Mark Zuckerberg, founder and chief executive of the world's largest social network, said that with almost 500m members, Facebook was finding it impossible to maintain its breakneck growth. He told an audience of marketers at the Cannes Lions advertising festival on Wednesday that after relying largely on organic growth, Facebook would soon begin to make its first strategic local moves. "We are down to four countries that we are not the leading social network in," he said, naming Japan, Russia, China and South Korea. "Now for the first time we are focused on doing some specific things in specific countries."

Medvedev's Silicon Valley Visit Yields Deal With Cisco

Russian President Dmitry Medvedev came to learn about Silicon Valley and notched at least one deal in the process.

During his June 23 visit to the headquarters of Cisco Systems, the company pledged to invest $1 billion over ten years in technology projects in Russia. The networking giant, which already has a major presence in the country, said it will undertake a series of initiatives that include a $100 million increase in venture-capital investments in Russia, up from a previous commitment of $30 million.

Medvedev visited microblogging service Twitter and his schedule included a trip to Apple Inc., where he met with Chief Executive Steve Jobs; Mr. Medvedev is known as an avid iPhone user, and made use of an iPad during a speech at Stanford University later in the day. He also visited the Silicon Valley office of Yandex, a Russian Internet company, and met with Russian émigrés at a local cafe to exchange ideas for spurring innovation.

Who is attending these "secret" FCC net neutrality meetings?

Anger and confusion remains high over these private "back door" meetings that the Federal Communications Commission has been holding with various "stakeholders" regarding its proposed open Internet rules. Reform groups are still up in arms over the June 22 gatherings, which appear to have focused on a legislative solution to the problem.

Congress, it should be noted, is exploring rewriting the Communications Act in response to the current FCC logjam on the issue. The Washington Post reports that these conferences haven't made much progress; nonetheless, the reform group Free Press has published an ad in that newspaper protesting the sessions.

FCC Chief of Staff Edward Lazarus, who we are told summoned various key players to these conferences, has published a list of the attendants. They included Verizon Vice President Thomas Tauke, AT&T Vice President James Cicconi, President of the National Cable & Telecommunications Association Kyle McSlarrow, Google's Alan Davidson, and Skype's Christopher Libertelli. All are key corporate lobbyists. These gents met with Lazarus and two other FCC policy people: Paul de Sa and Zachary Katz. The disclosure of these participants comes via a "Notice of Stakeholder Meetings" letter sent to the agency by Markham Erickson, head of the pro-net neutrality Open Internet Coalition (we're presuming he also attended). "We discussed details relating to prospective legislation relating to open Internet principles," Erickson's letter concludes.

Blair Levin gives insight to National Broadband Plan

Blair Levin, former executive director of the Omnibus Broadband Initiative at the Federal Communications Commission, spoke about some of the issues that were included and not included in the writing of the National Broadband Plan. He picked out three key initiatives in the National Broadband Plan: spectrum appropriation, the unbundling of cable systems, and universal service.

Levin predicted that there will be a spectrum crunch in the United States by the middle of this decade. The allocation of spectrum can take years to implement, and the current idea of "you keep what you own" makes it difficult to free up spectrum. Additionally, technologies like the iPad, smartphones, and other mobile broadband applications are increasing the amount of spectrum users. He proposed that the FCC should regulate spectrum and provide incentives to spectrum holders who are not using their spectrum at maximized efficiency and capacity. He said that the under-utilization of spectrum is restricting spectrum for other uses, and encourages an incentive auction of spectrum, because "Under current law, nobody wins. The American people lose out."

Models for Community Broadband Adoption

At the Roadmap to Adoption Conference a panel discussion was held focusing on models for community broadband adoption, and attempting to answer question such as where to implement such models, who should be targeted and how to manage the programs involved.

The panel was led by Karen Archer Perry, of the Federal Communications Commission National Broadband Taskforce, and included Emily Tseng, Broadband Technology Opportunities Program Officer with the National Telecommunications and Information Administration (NTIA), and Elizabeth Stock, President of Computers for Youth (CFY). Perry began her speech by explaining the goals underlying the FCC's National Broadband Plan with a special focus on the 1002 goal. "The 1002, our aspirational goal, is that by the year 2020, 100 households have a 20Mbps download speed and a 50Mbps upload speed," Perry said. "The key barriers are cost, literacy and relevance." While Perry agreed with a former speaker that choosing to adopt Broadband was primarily an individual choice, she stressed that that choice took place "in a social context." "That social context is very important. There's a neighborhood effect associated with adoption in that if people in my neighborhood adopt broadband, it's more likely that I will as well," Perry said.

Big Cable Lobby: USF for Broadband Must Be "Tailored"

The Senate Commerce Committee will hear from National Cable & Telecommunications Association President Kyle McSlarrow and three of the five members of the Federal Communications Commission June 24 as the committee ponders migrating the Universal Service Fund to broadband.

According to a copy of his testimony, McSlarrow plans to tell the committee that cable operators support considering changes to the program to achieve universal access, but that given the history of "staggering growth" in the fund--almost everybody agrees some reform is needed--"the role of USF in promoting broadband must be carefully tailored to unserved areas and populations." McSlarrow argues that USF subsidies for broadband should only go to areas that don't have broadband facilities. He points out that cable broadband is in 92% of the country. As with the broadband stimulus funds being handed out by the Commerce Department, NCTA is concerned that the USF money not go to overbuild its members. "It would be a poor use of scarce government resources to subsidize a broadband competitor in communities--including many small, rural communities -where cable operators have invested risk capital to deploy broadband services," McSlarrow says.

Commissioner Baker at FCC's Low-Income Pilot Program Roundtable

Speaking to a FCC discussion among interested parties about how to design broadband pilot programs for low-income consumers, FCC Commissioner Meredith Baker said, "Broadband affordability is ... not limited to a monthly DSL bill. We will have to take into account the substantial consumer electronic costs of broadband." She noted that a consumer can get a telephone from amazon.com for $9.84. But the cheapest netbook is $259 and a full function laptop is at least hundred dollars more. 10 percent of non-adopters cite computer costs such as these as their key affordability hurdle, while only 15 percent cite the monthly bill itself.

"With respect to broadband, we must also recognize that digital literacy and relevancy play equally important roles in the decision of whether or not to subscribe. All of these complexities demonstrate that a pilot program approach - looking before we leap - is particularly appropriate here. There is no magic formula for the type or level of subsidy, and I look forward to learning from this workshop and future efforts how best to structure a low-income support mechanism for broadband," she said

NTIA Invites Comment on BroadbandMatch Web Site Tool

The National Telecommunications and Information Administration decided to create a tool that would allow larger anchor institutions, smaller satellite organizations, Internet service providers and technical experts to find one another and create mutually beneficial partnerships.

The tool, BroadbandMatch (available at http://match.broadbandusa.gov), allows potential applicants to find partners for broadband projects, helping them to combine expertise and create stronger proposals. Now, in support of the Recovery Act's goals to create jobs, promote economic growth, and encourage participation of socially and economically disadvantaged small business concerns, BroadbandMatch includes small disadvantaged businesses desiring to provide goods and services for broadband projects around the country. It is a helpful resource for firms seeking contracting opportunities with BTOP grantees, among other participants, and for purchasers intending to diversify their suppliers.

Current participants will be solicited to continue their participation in the program by opting in; potentially, new participants will be encouraged through publicizing of BroadbandMatch using the press, conferences, and conversations between applicants/grantees and Federal program officers.

The Department of Commerce invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before August 23, 2010.

Genachowski Taps Gottheimer as Senior Counselor

Federal Communications Commission Chairman Julius Genachowski announced the appointment of Josh Gottheimer as Senior Counselor to the Chairman. In this capacity, Mr. Gottheimer will serve as the Chairman's strategic advisor on a wide range of policy and legal matters. He will have oversight over the legislative, communications, intergovernmental affairs, and public liaison functions of the agency. Gottheimer will also focus on America's innovation agenda and the steps the FCC can take -- including considering the recommendations in the National Broadband Plan -- to help facilitate American global competitiveness, economic growth, and job creation and to improve the use of 21st century communications networks to improve health care, education, energy efficiency, and public safety.

Gottheimer currently serves as the Executive Vice President, Worldwide at Burson-Marsteller, a global communications firm; before that, he was the Director of Strategic Communications at Ford Motor Company, where he oversaw corporate advertising.

Between 1998 to 2001, Mr. Gottheimer served as Special Assistant to the President and Presidential Speechwriter to President Bill Clinton. Among others, he helped draft the State of the Union addresses in 1999 and 2000, several comedy speeches, and the 2000 Democratic Convention speech. After leaving the White House, Mr. Gottheimer was a Senior Advisor to the United States Commission on Civil Rights. In the 2004 presidential race, Mr. Gottheimer served as Deputy Director of Speechwriting and Senior Policy Advisor to the John Kerry for President Campaign.

Benton

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