September 2010

Sports: just the most obvious indicator

[Commentary] You can't overstate the amount of fear most people have in dealing with the giant cable networks. Programmers are terrified. In particular, Comcast remembers and holds on to grievances. Programmers may even be unwilling to speak to the Department of Justice, because there's a risk the information they give about Comcast's practices will leak over to the Federal Communications Commission and become public. Comcast does not forget.

This isn't just a squabble about tiering and channeling. It's not even, really, a tussle over contractual terms of carriage. Nor is this a story about regulating the "speech" of Comcast - although they would undoubtedly claim that it is. This is much a deeper issue. When Comcast controls a dominant pipe into the home for all communications - voice, data, entertainment, interaction, you name it - in the areas in which it operates, it will be able to decide what goes quickly, what goes slowly, and how much Comcast gets paid for everything that passes over its lines. That's enormous power. And if Comcast can keep rivals small so that they can't constrain Comcast's pricing power, there will be nothing stopping prices for its services from creeping steadily -- even if slowly -- upwards. Much of this power already exists. Comcast has 61% of the Chicago market; 63% of Philadelphia; 58% of San Francisco; 59% of Miami.

This power will be increased by the addition of NBCU content -- particularly sports content.

ACA Unveils Specific Comcast-NBCU Conditions

The American Cable Association called on the Federal Communications Commission to impose a range of conditions on the Comcast-NBC Universal transaction to prevent the unprecedented media combination from using programming and distribution dominance to undermine competition by greatly escalating the price of cable and broadcast channels that market rivals, including ACA members, must purchase to remain in business.

ACA's desired conditions target and address the competitive harms of the proposed combination and are robust and durable to ameliorate sufficiently the deal's many negative effects. ACA's conditions would close gaps in remedies used by the FCC to condition previous media combinations that while well-intentioned, proved in practice to be insufficient to protect consumers, particularly those served by smaller operators. For a period of nine years, ACA is recommending the following conditions, should the FCC decide to approve the license transfers associated with the Comcast-NBCU transaction. In the main, ACA's conditions would simplify contracts, lower arbitration costs, and contain special conditions for smaller operators that cannot afford baseball-style arbitration available to all pay-TV providers.

General Conditions Applicable To All Pay-TV Providers

Comcast-NBCU is required to sell NBC stations and regional sports networks (RSNs) on a stand-alone basis, meaning each NBC station and RSN cannot be bundled with carriage for any other video programming network.
FCC program access rules shall apply to all Comcast-NBCU TV stations as well as all satellite- and terrestrially delivered RSNs and national cable networks for distribution on any delivery platform, including online and mobile.
Dispute resolution through baseball-style commercial arbitration shall include a right to program carriage until the matter is resolved.

Special Conditions For Smaller Pay-TV Providers

Comcast-NBCU is prohibited from requiring any pay-TV provider with 125,000 video subscribers or less locally to pay a fee for an NBC station or RSN that is 5% greater than the lowest fee paid by any other local pay-TV distributor -- including Comcast itself -- for the market's NBC signal or the area's RSN.
Comcast-NBCU officials are required to certify to the FCC on an annual basis that all eligible retransmission consent and RSN contracts comply with the 5% rule.
Dispute resolution for smaller pay-TV providers through a newly designed, lower-priced commercial arbitration system, different from baseball-style, shall include a right to program carriage until the matter is resolved.
Comcast-NBCU shall negotiate in good faith with bargaining agents, including the National Cable Television Cooperative, and dispute resolution through baseball-style commercial arbitration shall be available to bargaining agents. Comcast-NBCU could not refuse to negotiate with a bargaining agent on behalf of all its principals or members.

Latinos Online 2010

The Pew Hispanic Center has found that technology use among foreign-born Latinos continues to lag significantly behind that of their U.S.-born counterparts. Their report, The Latino Digital Divide: The Native Born versus The Foreign Born, shows that the nativity differences are especially pronounced when it comes to Internet use. While 85% of native-born Latinos ages 16 and older go online, only about half (51%) of foreign-born Latinos do so. When it comes to cell phones, 80% of native-born Latinos use one, compared with 72% of the foreign born. In another recent report, How Young Latinos Communicate with Friends in the Digital Age, the Pew Hispanic Project found that, when it comes to socializing and communicating with friends, young Latinos (ages 16 to 25) make extensive use of mobile technology. Half say they text message (50%) their friends daily, and 45% say they talk daily with friends on a cell phone. Other communication platforms are less widely used for socializing. For example, fewer than one-in-five young Latinos (18%) say they talk daily with their friends on a landline or home phone, and just 10% say they email their friends daily.

Stimulating Competitive Disadvantages in Broadband

[Commentary] Federal officials failed to determine whether targeted communities for broadband stimulus funding actually lack Internet service options. In a number of cases, in fact, the government subsidies will put existing private service providers at a competitive disadvantage. Some $2.2 billion has already been allocated by the Departments of Commerce and Agriculture to enhance broadband services in "unserved" and "underserved" areas. (The balance of $7.2 billion is scheduled to be awarded by September 30.) But according to a newly released report by the Government Accountability Office, program officials "lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved." This disregard for the private sector is all too reminiscent of the municipal broadband craze that swept the country earlier this decade. Dozens of local governments hatched plans to build and operate broadband networks or develop broadband infrastructure for wholesale lease to commercial service providers. But as they lacked the expertise and flexibility of the private sector, the results weren't pretty. Many of the projects were never completed, while others saddled taxpayers with unwelcome debt. Proponents contend that the broadband subsidies will stimulate economic growth, create jobs, and alleviate computer illiteracy. But that won't happen if, in the process, the subsidized services undermine private sector investment. If public officials are so intent on promoting broadband, the far better alternative is to reduce the tax and regulatory barriers that inhibit universal deployment.

Genachowski Criticized for Slow Movement on National Broadband Plan

Critics say that Federal Communications Commission Chairman Julius Genachowski is not moving fast enough on implementing recommendations included in the National Broadband Plan. The massive plan calls for action on a host of items before October, including a TV white spaces opinion and order, a public safety broadband order and rulemaking notices about broadcast spectrum, dynamic spectrum access, special access, and Lifeline flexibility. Much of the FCC's attention since release of the report has been on network neutrality and reclassify broadband transmission as a common carrier service under Title II of the Communications Act.

"The commission is moving apace on a few issues like spectrum policy, where it has clear authority," said Michael Calabrese, vice president at the New America Foundation. "However, the uncertainty surrounding the FCC's authority to regulate Internet access providers has created an enormous bottleneck that threatens progress on the National Broadband Plan overall. The chairman needs to remember he leads an independent regulatory agency and stop looking over his shoulder to Congress and the White House for permission to regulate."

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Media issues are among those behind schedule. The quadrennial media ownership review mandated by Congress for 2010 is set to wrap up early next year, when the review of Comcast's planned purchase of control of NBC Universal may be finished, and action on program carriage, station license renewals and other items is taking longer than hoped, commission and industry officials said. "We can't deal with these issues one-by-one until we have finished our Future of Media initiative," said Chairman Charles Benton of the Benton Foundation. "You can't shut down all the other media while things are being sorted out in broadband." Analyst Kevin Taglang of the foundation and Benton said the FCC has done a good job on preparing items for Universal Service Fund reform.

India to Monitor Google and Skype

India on September 1 expanded its drive to monitor Internet and telecommunication networks for security threats. The government said all communication-services providers operating in India, including Google Inc. and Skype Technologies SA, will need to open up their data within two months to be scrutinized regularly to ensure national security. "They have to install servers in the country," said federal Home Secretary G.K. Pillai, referring to the communications companies. Servers in India will enable local agencies to monitor the services. The latest move comes two days after Research In Motion Ltd. of Canada averted a ban in India by offering technical solutions to monitor its heavily encrypted BlackBerry services.

FCC Asks for more Input on Network Neutrality

The Federal Communications Commission has released a Public Notice seeking further input in its Network Neutrality/Open Internet proceeding.

The Notice focuses on two issues. The first is the relationship between open Internet protections and services that are provided over the same last-mile facilities as broadband Internet access service (commonly called "managed" or "specialized" services).

The second is the application of open Internet rules to mobile wireless Internet access services, which have unique characteristics related to technology, associated application and device markets, and consumer usage. The FCC's original Notice of Proposed Rulemaking raised both of these issues but addressed them in less detail than many other issues, and the FCC's analysis, it now says, would benefit from further development of these issues in the record.

The FCC will soon public the Public Notice in the Federal Register and comments will be due 30 days thereafter. That will be followed by a 55 day period in which interested parties can review the docket and offer reply comments. With 62 days between Sept 1 and the November 2 election, the FCC has delayed a decision in the proceeding launched last October until we know the make-up of the next Congress.

FCC Chairman Genachowski said, "Recent events have highlighted questions on how open Internet rules should apply to 'specialized' services and to mobile broadband -- what framework will guarantee Internet freedom and openness, and maximize private investment and innovation. As we've seen, the issues are complex, and the details matter. Even a proposal for enforceable rules can be flawed in its specifics and risk undermining the fundamental goal of preserving the open Internet."

Reaction to FCC's Network Neutrality Notice

Network Neutrality proponents quickly responded to the Federal Communications Commission's has release of a Public Notice seeking further input in its Network Neutrality/Open Internet proceeding.

Gigi B. Sohn, president and co-founder of Public Knowledge, said: "Nothing in this public notice prevents the FCC from taking prompt action on its 'Third Way' proceeding, which would make certain all Americans have affordable access to broadband, and to make sure it can deal with public safety and other crucial issues that are broader than the narrow issues on which the Commission seeks comment. We expect the Commission will move quickly to set the legal framework for the FCC to oversee broadband Internet access services, with specific rules to protect the open Internet to follow soon after. We note that both of the issues on which the FCC seeks public comment, dealing with specialized services and the status of wireless services in an open Internet, were extensively explored in not one, but two proceedings pending at the Commission in which comments were submitted. The most recent comments were filed three weeks ago, following public disclosure of the policy agreement between Verizon and Google."

Matt Wood, Associate Director of Media Access Project, said: "Recent events prove that giant companies left to regulate themselves will craft rules full of loopholes and exceptions that benefit their own interest, not the public interest. The Commission asks the same questions time and time again about wireless broadband services and specialized services, instead of providing basic answers on the basis of the robust record it already has compiled. MAP, other public interest groups, companies, trade associations, and other commenters on all sides of the issue have provided great detail on these topics, both in the Open Internet and Broadband Framework dockets. The record demonstrates already that the same framework and openness principles should apply to all broadband access services, even if the rules differ on the basis of legitimate technological differences. The record also shows that the Commission must retain authority over specialized services."

Free Press Research Director S. Derek Turner said, "The FCC continues to kick the can down the road and prolong this process, but the longer the FCC ponders the politics of Net Neutrality, the longer consumers are left unprotected. It is time for the FCC to stop writing notices and start making clear rules of the road. The phone and cable companies have shown us what the Internet will look like if they are allowed to write their own rules and build a two-tiered Internet with fast and slow lanes and zero protections on mobile broadband. We don't need more questions from the FCC, we need more answers. Today's announcement does nothing to change what the FCC must do next. The crucial first step for the agency is to reassert its authority and reclassify broadband access services under Title II of the Communications Act. This must happen before any Net Neutrality rules can be finalized. This is the only way the Commission can fully protect the open Internet and free speech online."

M2Z: FCC Closes Door On Free Broadband Proposal

M2Z Networks, which has been proposing a free, nationwide wireless broadband service, says the Federal Communications Commission has informed it that it has terminated its AWS-3 "public interest" rulemaking, thus putting the kibosh on M2Z's petition to create the service.

Former FCC Chairman Kevin Martin had proposed that an auction of the advanced wireless services (AWS) spectrum include a condition that some of it be used for a free lifeline broadband service. But there was pushback, including from the Bush administration, that such a condition would discourage bidders. In its national broadband plan, the FCC proposed going ahead with the AWS-3 spectrum auction as part of an effort to free up 500 Mhz of spectrum for commercial wireless broadband.

"We gave careful and thorough consideration to the proposal, but ultimately determined that this was not the best policy outcome," said Wireless Bureau Chief Ruth Milkman. "We remain vigilant in our efforts to facilitate the universal deployment and adoption of broadband, especially through the much-needed reform to the Universal Service Fund."

"A new nationwide broadband entrant that provided a free broadband service would have created tens of thousands of direct and indirect jobs throughout the country while giving all Americans an equal opportunity to participate in the digital economy," said M2Z CEO John Muleta in response to the FCC move.

Paying for Video Description

Legislation moving through Congress would require the Big Four broadcast networks and their affiliates in the top 25 markets to provide four hours per week of primetime and children's programming with video descriptions which aids viewing for the visually impaired.

The numbers rise over time, to seven hours after four years and the top 60 markets after six years. After 10 years, the FCC would be authorized to extend video description duties to up to 10 additional markets each year until all 210 markets are covered. (The tougher House bill would require all stations to offer descriptions after six years.) The legislation also require local TV broadcasters to make emergency crawls audible to the blind in the top 60 DMAs, but would otherwise exempt live or near-live programming. The nation's top five cable TV networks would also have to provide the service. Video descriptions enhance programming for the nation's 25 million blind and visually impaired by describing characters and action between the dialog in programming. Just like foreign-language soundtracks, descriptions constitute their own audio channel. Advocates for the blind have been fighting for descriptions for years and they thought they had won the battle in 2000 when the FCC adopted rules similar to the pending legislation. But the parties that would have had borne the cost of the service -- broadcasters and program producers -- challenged the FCC's authority to mandate it. A federal appeals court agreed and threw out the rules in 2002. With the exception of CBS, commercial broadcasters have mostly failed to provide descriptions on a voluntary basis.

Benton

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