November 2010

BENTON'S COMMUNICATIONS-RELATED HEADLINES for TUESDAY, NOVEMBER 30, 2010

The FCC holds an open meeting today http://bit.ly/fGTrK8

INTERNET/BROADBAND
   Level 3, Comcast in a Cat Fight Over Online Video
   Zoom Complaint Against Comcast is Reason For FCC To Act
   Consumer Federation of America Open to Network Neutrality Under Title I
   Should the government encourage broadband adoption?
   Global fixed broadband connections to reach 720 million by 2015
   Australia splits its top telco in two
   The Unspoken Tension Between Public and Private Broadband

WIRELESS
   Faster cellphones to bring a wave of new services and charges

MEDIA OWNERSHIP
   Don't let Comcast Reign Over Cable Industry
   Small Cable Operators Seek 'Granite Strong' Comcast/NBCU Conditions
   Web companies close ranks to oppose merger of NBC Universal, Comcast
   EU launches formal Google probe
   Supreme Court to hear Microsoft appeal

CONTENT
   Government's Internet crackdown was timed to thwart 'Cyber Monday' crimes
   Appeal Rejected, P2P User On Hook For $28K
   Where Anonymity Breeds Contempt

LABOR
   ARRA's Impact on the Economy July-Sept 2010

GOVERNMENT & COMMUNICATIONS
   WikiLeaks founder could be charged under Espionage Act
   WikiLeaks and the Diplomats

MEDIA & ELECTIONS
   Justices to Assess Arizona Campaign Financing

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INTERNET/BROADBAND

3RD STRIKE FOR COMCAST?
[SOURCE: GigaOm, AUTHOR: Stacey Higginbotham]
According to middle-mile Internet provider Level 3, on November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider. On November 22, after being informed by Comcast that its demand for payment was ‘take it or leave it,’ Level 3 agreed to the terms, under protest, in order to ensure customers did not experience any disruptions. Comcast’s Joe Waz, Senior Vice President for External Affairs and Public Policy Counsel emailed a statement characterizing this as a peering issue and noted that Level 3 has even dealt with these imbalances in traffic in the same manner as Comcast is­ by charging a provider that sends the greater amount traffic across the network more money to compensate for the fact that it’s using more of the resources than it is providing. The timing of the fee request is suspicious given that in the middle of November, Level 3 announced that it would provide content from Netflix the online video rental and streaming service, whose streaming traffic generates a lot of online traffic. Netflix declined to comment on the issue today, but Chief Product Officer Neil Hunt recently said Netflix ships “over half a billion” DVDs a month. CEO Reed Hastings previously said Netflix will stream more content online than it will ship on DVD in the fourth quarter, so one can assume Netflix is currently streaming more than 40 million DVDs’ worth of video each month.
benton.org/node/45503 | GigaOm | Level 3 | Public Knowledge
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ZOOM COMPLAINT
[SOURCE: Public Knowledge, AUTHOR: Press release]
Modem manufacturer Zoom Telephonics filed a complaint at the Federal Communications Commission (FCC) against Comcast, setting out a string of facts which show that the media giant is restricting consumer access to innovative devices by controlling the approval process for cable modems. According to the complaint, the requirements are “unreasonable, irrelevant, time-consuming and costly.” The requirements ranged from paying tens of thousands of dollars for duplicative testing and related expenses (including business class air fare and expensive hotels), to requiring the company to meet standards far in excess of normal consumer electronics needs which have no bearing on whether the cable network would be harmed (including weight, labeling, packaging, waxes to be applied) to “arbitrarily refusing” to test one of Zoom’s modems for distribution. With Comcast controlling about 40 percent of the national cable market, Zoom said, Comcast’s approval is necessary in order to sell their products. Comcast is the only cable operator of which Zoom is aware that charges manufacturers for independent testing. Zoom told the FCC that by its practices, Comcast was violating both the Communications Act and the FCC’s open Internet principles. Public Knowledge, Free Press and MAP said that the complaint shows that Comcast is continuing its pattern of anti-competitive behavior that it showed in throttling the BitTorrent protocol, and that the proceedings show the need for binding open Internet policies that guarantee the right of consumers to attach devices which don't harm the network.
benton.org/node/45499 | Public Knowledge
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CFA OK WITH TITLE I
[SOURCE: National Journal, AUTHOR: Eliza Krigman]
Mark Cooper, director of research at the Consumer Federation of America, is open to supporting a Federal Communications Commission network neutrality order that doesn't reclassify broadband as a public utility. "I'm not religious about Title I or Title II as long as it's effective to get the job done," Cooper said. "When I say effective, it means not having a [Congressional] resolution of disapproval stop it and not having the court stay the order." Whether the FCC needs to regulate broadband as a common carrier (Title II of the Communications Act) in order to protect the openness of the Internet is the central issue in the ongoing net neutrality debate. Cooper's comment comes as the FCC is rumored to be preparing a network neutrality order to vote on during its December meeting.
benton.org/node/45502 | National Journal
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GOV ROLE IN BROADBAND ADOPTION?
[SOURCE: Fierce, AUTHOR: A Mitchael Noll]
[Commentary] Is it the role of government to encourage Americans to have broadband access to the Internet? I think not. The broadband adoption rate in the US is about 65 percent, although about 92 percent could have access if they wanted it. This level of adoption disturbs the National Telecommunications and Information Administration (NTIA). The NTIA believes that a lack of broadband Internet access cuts off Americans "from many educational and employment opportunities" and prevents them from competing "in the 21st century economy." It might be appropriate for government to ensure that Americans have the opportunity for broadband Internet access--but it is not, in my opinion, the role of government to encourage or promote such access on Americans. This is just another example of good old-fashioned technology push, which has been seen before.
benton.org/node/45494 | Fierce
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BROADBAND SUBSCRIBERSHIP TO GROW
[SOURCE: Analysys Mason, AUTHOR: Press release]
The total number of fixed broadband connections worldwide will pass 500 million by the end of 2010 and will continue to grow to 720 million by the end of 2015, according to Analysys Mason. Fixed broadband will account for just 62% of the 1.16 billion broadband connections available worldwide by the end of 2015. Developed regions (Central and Eastern Europe, developed Asia­Pacific, North America and Western Europe) offer limited growth opportunities in terms of new business. The report forecasts fixed broadband net line additions will grow at a CAGR of 3.9% during 2009­2015 in these regions. By contrast, fixed broadband net line additions will grow at a CAGR of 13.7% in emerging regions (Central and Latin America, emerging Asia­Pacific, the Middle East and North Africa, and sub­­Saharan Africa). Central and Latin America will have the highest CAGR of all regions in terms of fixed broadband connections, at 15.4% between 2009 and 2015. However, emerging Asia­Pacific will account for most of the net line additions, growing from 117 million lines at the end of 2009 to more than 250 million by the end of 2015. The Middle East and North Africa’s fixed broadband market will achieve reasonable growth during the forecast period. As a result, it will account for an increasing ­ albeit small ­ proportion of worldwide fixed broadband revenue to 2015. Its share of worldwide access retail revenue will grow from 2.3% in 2009 to 3.4% in 2015. In sub-Saharan Africa, mobile services are, and will continue to be, crucial to the development of the region’s broadband market. The number of mobile broadband connections in the region exceeded that of fixed broadband connections in 2009. By 2015, we expect that fixed broadband will account for only 9% of broadband connections in the region.
benton.org/node/45493 | Analysys Mason
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AUSTRALIA BROADBAND VOTE
[SOURCE: ars technica, AUTHOR: Matthew Lasar]
Fulfilling another promise of its ambitious national broadband program, Australia's Senate has passed a bill that will split the country's biggest telco into separate retail and wholesale operations. Telstra will also sunset a big chunk of its copper wire operation, making way for Australia's massive nation-wide fiber project. "Ever since Telstra was privatized Australians have suffered," Communications Minister Stephen Conroy declared shortly after the vote. "They have suffered with high prices, less competition and less innovative services. Today is about celebrating a significant win for Australian consumers." The government let go of Telstra in the late 1990s. But, over the coming eight years, Australia's taxpayers will fork over AUS$43 billion (US$38 billion) to build a "world-class broadband infrastructure." The project will deliver fiber-to-the-home to 93 percent of all households. We're talking open access and wholesale only. Every ISP will be able to tap into the system. As for Telstra -- or as a government report put it, Australia's "highly profitable vertically integrated and horizontally integrated incumbent with a monopoly position in most fixed-line access in many backhaul routes" -- the bill is intended to keep the company from favoring its own retail offerings over those of other ISPs that buy access to its network.
benton.org/node/45489 | Ars Technica
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PUBLIC-PRIVATE TENSION
[SOURCE: App-Rising.com, AUTHOR: Geoff Daily]
[Commentary] One of the most fundamental arguments given in support of public broadband projects is the potential they have for delivering higher speeds for lower prices than broadband delivered via private, market-driven, profit-maximizing means. But that cost savings comes directly from the bottom lines of private broadband providers. So when government agencies tout the savings they're helping America's anchor institutions realize, what they're also saying is that the private providers in those areas were charging too much for not enough bandwidth.
benton.org/node/45490 | App-Rising.com
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WIRELESS

NEW CELL PHONE PLANS
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
Within weeks, some of the biggest wireless companies will offer super-fast Internet connections for cellphones that rival the speeds delivered to desktop computers. As competitors follow suit with their own juiced-up networks geared for the Web, consumers can expect a cornucopia of new services - along with new charges. For now, consumers can buy flat-rate monthly data plans from most carriers. But Verizon Wireless and T-Mobile are moving toward tiered pricing packages based on how much data a customer uses. All-you-can-eat plans are no longer available to AT&T's new customers, who must choose from a menu of data services. The Federal Communications Commission is trying to keep up, launching an effort to prevent mystery fees and confusing increases from appearing on cellphone bills. The FCC is considering rules that require carriers to text or call users when they approach their voice and data limits. The regulation is aimed at avoiding "bill shock." But the wave of changes is only beginning. Cisco, which provides routers for wireless networks, is working with corporate clients such as Verizon to create even more options for consumers. Users could opt for "turbo charging" streaming video feeds to their smartphone for an extra fee. Just pay a little more for "gold service" compared with "bronze service" for data packages and speeds. Consumer advocates say confusion is to the advantage of carriers. "You have a population without true knowledge of how much they are consuming compared to carriers who have true knowledge of demand on their networks, and that assymetry leads to things like bill shock," said Sascha Meinrath, a director of the open technology initiative at the New America Foundation.
benton.org/node/45507 | Washington Post
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MEDIA OWNERSHIP

DON'T LET COMCAST REIGN
[SOURCE: Sacramento Bee, AUTHOR: Susan Crawford]
[Commentary] It's clearly in Comcast's interest to make this titanic, unprecedented merger between content and distribution seem inevitable. The company has done a smoothly professional job of hiring former government employees ­ almost 80 of them at last count ­ to help it ensure that the merger doesn't run up against any political obstacles. Approval of the Comcast-NBC Universal merger would bless the creation of a vertically and horizontally integrated communications giant that would have crushing market power. With the addition of NBC programming ­ most importantly, NBC's category-killing cable channels USA and CNBC and NBC's rights to broadcast the Super Bowl and the Olympics ­ Comcast will be able to ensure that no other provider of broadband services will be able to compete with it effectively. There will be no real constraint on Comcast's ability to raise its cable subscription prices. And Comcast will be setting the "market prices" for programming content distributed by competing cable and satellite systems ­ as the owner of NBC's content, it will make this calculation based on how much it is willing to shift from one of its pockets to another. One pipe to rule them all: Comcast's version of Mordor. It is this last piece of the puzzle, the looming cable monopoly, which makes the seemingly inevitable approval of the Comcast-NBC merger surprising. What's really going on here is a fight over the future of the Internet. The cable industry has a strong interest ­ as do the oligopolistic programmers ­ in avoiding the destruction of their business model by the advent of a decentralized, non-prioritized, commoditized fast connection to the Internet. That's why they're steadfastly maintaining that cord-cutting isn't happening. They need to make a high-priced, densely bundled, sole-source subscription model for all the information and entertainment we watch seem inevitable. That's why Comcast wants this merger, and that's why it shouldn't happen, absent conditions that ensure Comcast cannot discriminate in favor of its own programming or raise the costs of doing business of its distribution rivals.
benton.org/node/45495 | Sacramento Bee
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SMALL CABLE OPS OPPOSE COMCAST-NBC
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
A group of 40 self-described "smaller" cable companies, all members of the American Cable Association (ACA), filed a letter with the Federal Communications Commission arguing that the Comcast/NBCU deal would mean they would pay higher prices for so-called must-have content even though they do not compete head-to-head against Comcast in their markets. They say that is because they do carry either a Comcast regional sports network (RSN) and NBCU cable networks, as well as an NBC station on some of the systems. "When multiple blocks of this 'must-have' programming are combined under single ownership, what little bargaining leverage we have to resist unjustified increases in carriage fees will be reduced materially. This is because Comcast-NBCU can then threaten to withdraw all of these blocks of 'must-have' programming simultaneously," they argued. "Even though none of these providers competes head-to-head with Comcast, they'll still need to negotiate with a single entity for both a Comcast RSN and NBCU's suite of national cable networks," said ACA President Matt Polka. "For ACA members, the default position in any dispute with Comcast-NBCU will be to pay more for all Comcast-NBCU programming."
benton.org/node/45498 | Broadcasting&Cable
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WEB COMPANIES OPPOSE COMCAST-NBC
[SOURCE: The Hill, AUTHOR: Gautham Nagesh]
A group of leading Internet companies including Google, Yahoo!, Amazon.com and Wikipedia urged the government to reject Comcast's proposed acquisition of NBC Universal on the grounds that it will limit competition. The firms are part of NetCoalition, an advocacy group that is also funded by Bloomberg, CNET Networks and IAC/Interactive Corp. Many of the firms have previously stated their opposition to the merger through the Coalition for Competition in Media. “The Internet remains one of the most dynamic forces in our economy, one that provides choice and access to millions of users worldwide. This merger puts too much of that resource in too few hands," said Markham Erickson, executive director of NetCoalition. Specifically, the group cites concerns with the merger's potential impact on diversity and competition in the media, as well as the lack of access for independent content creators and distributors. The group also warned of potential cost increases for consumers and reduced access to local sports broadcasts.
benton.org/node/45496 | Hill, The | National Journal
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EU GOOGLE PROBE
[SOURCE: Financial Times, AUTHOR: Nikki Tait]
European antitrust authorities have opened a full investigation into Google after allegations from smaller online search service providers that the US company had abused its dominant market position. It follows eight months of more informal inquiries by competition officials at the European Commission into the issue, during which Google has answered questions and provided information to the authorities. The commission’s probe will investigate allegations that Google lowered the ranking of unpaid search results from competing services and gave preferential placement to the results of its own vertical search services to shut out competitors. It will also look at charges that Google lowered the “quality score” for sponsored links of competing vertical search services. This is one factor that determines the price advertisers pay to Google. A further element of the investigation centers on the claim that Google imposed exclusivity obligations on its advertising partners, and prevented them from placing competing advertising on their websites. Finally, the competition officials will look at suspected restrictions on the extent to which online advertising data can be moved to competing advertising platforms.
benton.org/node/45506 | Financial Times | www.bloomberg.com
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MICROSOFT CASE
[SOURCE: Bloomberg, AUTHOR: ]
The Supreme Court agreed to hear Microsoft's appeal in a patent case that forced changes in the company's Word software and could cost it $300 million. Microsoft, fighting a verdict won by closely held I4i, says the federal appeals court that handles patent cases is making it too hard for those accused of infringement to argue that a patent never should have been issued and is invalid. The software giant has support in its appeal from more than a dozen publicly traded companies, including Apple and Google. Apple told the justices that the patent system "is tilting out of balance," giving disproportionate power to people who secure patents of questionable legitimacy. The case concerns a method developed by I4i for editing documents using XML, which tells the computer how text should appear. In its 2007 lawsuit, I4i accused Microsoft of incorporating the invention into Word.
benton.org/node/45505 | Bloomberg
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CONTENT

CRACKDOWN ON COPYRIGHT SITES
[SOURCE: The Hill, AUTHOR: Sara Jerome]
Attorney General Eric Holder said Nov 29 the government crackdown on websites facilitating copyright infringement was timed to coincide with the holiday shopping season. The government has shut down 82 websites in the past few days as part of "Operation In Our Sites II," an effort by the Justice and Homeland Security Departments and nine attorneys general offices to debilitate fraudulent Web domains. "As of today -- what is known as 'Cyber Monday' and billed as the busiest online shopping day of the year -- anyone attempting to access one of these websites using its domain name will no longer be able to make a purchase," Holder said Monday at a press conference. AG Holder said seizure orders for the domain names were obtained from U.S. magistrate judges.
benton.org/node/45491 | Hill, The
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SUPREME COURT REJECTS CASE
[SOURCE: MediaPost, AUTHOR: Wendy Davis]
The Supreme Court has decided not to hear the appeal of Whitney Harper, leaving her facing a $27,750 bill for having downloaded 37 tracks from Kazaa when she was 16. In 2008, a trial judge ruled in San Antonio, Texas that Harper was a so-called "innocent infringer" and ordered her to pay $200 per track -- the minimum for innocent infringers. The statutory floor for those who aren't innocent infringers is $750. That ruling was reversed by the 5th Circuit Court of Appeals, which ruled that Harper wasn't an innocent infringer because the copyright statute says that only people without access to published phonorecords -- in this case compact discs -- can be considered "innocent." That court also deemed Harper's age and lack of legal knowledge irrelevant to her liability. Harper then asked the Supreme Court to take up the case, arguing that the copyright statute's wording about notices on phonorecords should not apply in her case because she didn't infringe by copying a CD. The Supreme Court didn't give a reason for turning down Harper's appeal, but the order issued today shows that the decision wasn't unanimous. Judge Samuel Alito Jr. wrote a three-page dissent explaining why he wanted the court to consider Harper's appeal. He said there was "a strong argument" why the part of the statute dealing with notices on records doesn't apply in cases involving digital downloads, noting that the provision dates to 1988, "well before digital music files became available on the Internet."
benton.org/node/45501 | MediaPost
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ANONYMITY AND CONTEMPT
[SOURCE: New York Times, AUTHOR: Julie Zhuo]
[Commentary] Trolling, defined as the act of posting inflammatory, derogatory or provocative messages in public forums, is a problem as old as the Internet itself, although its roots go much farther back. Many victims are turning to legislation. All 50 states now have stalking, bullying or harassment laws that explicitly include electronic forms of communication. But the law by itself cannot do enough to disarm the Internet’s trolls. Content providers, social networking platforms and community sites must also do their part by rethinking the systems they have in place for user commentary so as to discourage — or disallow — anonymity. Instead of waiting around for human nature to change, let’s start to rein in bad behavior by promoting accountability. Content providers, stop allowing anonymous comments. Moderate your comments and forums. Look into using comment services to improve the quality of engagement on your site. Ask your users to report trolls and call them out for polluting the conversation. In slowly lifting the veil of anonymity, perhaps we can see the troll not as the frightening monster of lore, but as what we all really are: human. [Zhuo is a product design manager at Facebook.]
benton.org/node/45508 | New York Times
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LABOR

ARRA IMPACT REPORT
[SOURCE: Congressional Budget Office, AUTHOR: Ben Page]
Under the American Recovery and Reinvestment Act of 2009 (ARRA), also known as the economic stimulus package, certain recipients of funds appropriated in ARRA (most grant and loan recipients, contractors, and subcontractors) are required to report the number of jobs funded through the law after the end of each calendar quarter. ARRA also requires CBO to comment on those reported numbers. In its latest report, issued today, CBO provides estimates of ARRA’s overall impact on employment and economic output in the third quarter of calendar year 2010. When ARRA was being considered, CBO and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009­2019 period will amount to $814 billion. By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and about 70 percent of ARRA’s budgetary impact was realized by the close of that fiscal year. ARRA policies the third quarter of calendar year 2010:
Raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
Increased the number of people employed by between 1.4 million and 3.6 million, and
Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers).
benton.org/node/45500 | Congressional Budget Office
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GOVERNMENT & COMMUNICATIONS

WIKILEAKS FACES PROBE
[SOURCE: Washington Post, AUTHOR: Ellen Nakashima, Jerry Markon]
Federal authorities are investigating whether WikiLeaks founder Julian Assange violated criminal laws in the group's release of government documents, including possible charges under the Espionage Act. Attorney General Eric H. Holder Jr. said the Justice Department and Pentagon are conducting "an active, ongoing criminal investigation.'' People familiar with the probe said the FBI is examining everyone who came into possession of the documents, including those who gave the materials to WikiLeaks and also the organization itself. No charges are imminent, the sources said, and it is unclear whether any will be brought. The U.S. attorney's office in Alexandria - which in 2005 brought Espionage Act charges, now dropped, against two former pro-Israel lobbyists - is involved in the effort, the sources said. The Pentagon is leading the investigation and it remains unclear whether any additional charges would be brought in the military or civilian justice systems. Pfc. Bradley Manning, an Army intelligence analyst suspected of being the source of the WikiLeaks documents, was arrested by the military this year.
benton.org/node/45510 | Washington Post
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WIKILEAKS AND DIPLOMATS
[SOURCE: New York Times, AUTHOR: Editorial staff]
[Commentary] There are legitimate reasons for keeping many diplomatic conversations secret. The latest WikiLeaks revelations will cause awkward moments not least because they contain blunt assessments of world leaders. The claim by Secretary of State Hillary Rodham Clinton that the leaks threaten national security seems exaggerated. The documents are valuable because they illuminate American policy in a way that Americans and others deserve to see.
benton.org/node/45509 | New York Times | David Brooks | Washington Post
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MEDIA & ELECTIONS

AZ CAMPAIGN FINANCE LAW
[SOURCE: New York Times, AUTHOR: Adam Liptak]
The Supreme Court agreed to hear a First Amendment challenge to an Arizona law that provides matching funds to candidates who accept public financing. The law, enacted in 1998, gives an initial sum to candidates for state office who accept public financing. Then it provides additional matching funds based on the amounts spent by privately financed opponents and by independent groups. There is reason to think the Supreme Court will find that second part of the law problematic. In June, the court issued an order barring its enforcement while appeals were prepared. And recent decisions from the court, including Citizens United in January and one striking down a federal measure known as the “millionaire’s amendment” in 2008, suggest that a majority of the justices are skeptical of government efforts to level the playing field in the area of political speech.
benton.org/node/45504 | New York Times | WashPost | USAToday
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