November 2010

The Coming Communications Boom? Jobs, Innovation and Countercyclical Regulatory Policy

This policy memo brings together three important strands of current policy debate: jobs, innovation, and regulatory policy.

Most distressingly, America's great strength—its innovative sector—actually lost jobs during the 2000-2007 business cycle. This sector includes everything from aerospace to pharmaceuticals to telecommunications to software. Some individual industries added employees, but collectively the innovative sector lost almost 700,000 jobs from 2000 to 2007, before the bust hit. That performance was far worse than anyone expected: In 2001, the Bureau of Labor Statistics published projections implying that the innovative sector would create 1.7 million net new jobs by 2007. In other words, the innovative sector had a shortfall of 2.4 million jobs relative to expectations, even before the bust.

There are promising signs, however, of a rebound in one part of the innovation sector: communications. Internet companies, along with firms engaged in wireless telecom and computer systems design, seem to be emerging as "job leaders" in the next economic expansion. Unfortunately, these companies are also embroiled in struggles with federal agencies - and among themselves - over whether more regulation is required to police competition in communications.

Sen Rockefeller rips news media

Senate Commerce Committee Chairman Jay Rockefeller (D-WV) blasted the media industry at a hearing on broadcast television retransmission consent.

Although the topic of the hearing was supposed to be the recent rash of fights between broadcasters and cable operators over distribution agreements that have in many cases left consumers in the lurch, Chairman Rockefeller took aim at cable news and the entertainment industry. He said that instead of a watchdog media, "we have endless barking of a 24-hour news cycle ... journalism that is always ravenous for the next rumor but insufficiently hungry for the facts that can nourish something called our democracy."

The senator also took aim at Fox News Channel and MSNBC and suggested he wouldn't mind if the Federal Communications Commission could make them both go away. "I hunger for quality news, I'm tired of the right and left," he said.

Of course, as both Fox and MSNBC are cable channels, the FCC has little regulatory power over their content.

Kagan: Cable Subs Down, Cord Cutting Minimal

Cable operators suffered their greatest three-month decline in TV subscribers in 30 years, according to one research firm. Still, there is no widespread evidence of cord-cuttng across the industry -- as both telcos and satellite operators picked up enough subscribers to mitigate an overall drop in those willing to pay for TV service.

SNL Kagan estimates that cable operators lost 741,000 basic video customers in the July-September quarter, compared to the April-June period this year, the largest drop for a quarter since Kagan began tracking the figures in 1980. And of the approximately 100 million homes that pay for service, cable's aggregated share continued to decline, falling from 62.9% in the third quarter of 2009, to 60.3% this year for the period. But as the cable slide occurred, the combination of telcos AT&T and Verizon, and DBS operators Dish Network and DirecTV, posted an increase in subscribers. So overall -- on the critical gauge on potential cord-cutting -- there was an industry-wide drop of 119,000 subscribers, according to Kagan.

A no-brainer for bipartisanship

[Commentary] Republicans, Democrats and nearly every one across the political spectrum agree that opening our radio dial to more local voices is good for the country.

That's why 86 Republicans and Democrats joined together to sponsor the Local Community Radio Act in the House, where it sailed through on a voice vote. And it's why Republican Sen. John McCain (AZ.) joined with Democratic Sen. Maria Cantwell (Wash.) to introduce the act in the Senate. Groups as different as Free Press and the Christian Coalition agree that passing the Local Community Radio Act should be a no-brainer. It would free up unused radio spectrum for hundreds and possibly thousands of new local stations. Known as Low Power FM (LPFM), these stations operate at 100 watts or less and broadcast just a few miles into local communities. They're typically run by colleges, churches, schools and nonprofits to provide local information and perspectives not available elsewhere on the dial.

The Local Community Radio Act has only an upside. Passing it would be a meaningful step toward bipartisanship at a time when our nation desperately needs to go beyond politics as usual to a place where we can all work together.

[Michele Combs is the vice president of communications for the Christian Coalition of America. Timothy Karr is the campaign director for Free Press the national media reform group.]

GOP to force vote on NPR defunding

House Republicans announced they plan to force a floor vote on defunding National Public Radio in response to the firing of analyst Juan Williams.

House Whip Eric Cantor (R-VA) and Rep Doug Lamborn (R-CO) said that cutting funds to NPR was the winner of the conference's weekly "YouCut" contest, in which the public votes online on spending items they want eliminated.

"When NPR executives made the decision to unfairly terminate Juan Williams and to then disparage him afterwards, the bias of their organization was exposed," the two said. "Make no mistake, it is not the role of government to tell news organizations how to operate. What is avoidable, however, is providing taxpayer funds to news organizations that promote a partisan point of view. Eliminating taxpayer funding for NPR is precisely the kind of commonsense cut that we have to begin making if we want to fundamentally alter the way business is conducted in Washington."

New Jersey Public Broadcaster Laying Off 130

Employees at New Jersey Network received 45-day layoff notices as the public television and radio network prepares to move off the government payroll.

Whether the station (which broadcasts over the air in Camden, Trenton, New Brunswick and Montclair) moves off the air on Jan. 1, when it stops receiving state funding and the layoffs take effect, remains to be seen.

The notices went out to 130 employees; 17 additional employees who are paid through a private foundation are also expected to receive layoff notices, said Janice Selinger, the acting executive director of NJN public television. If the governor's office and Legislature don't act before Jan. 1, the station would go dark. However, both branches have "expressed the sentiment that they want us to thrive and continue," Selinger said, adding that the station just started a new series and continues to fundraise, although that has become more difficult, she said.

Free Press Disses Personal Privacy Exemption For Corporations

Free Press has filed a friend of the court brief in a case that could determine how much information large companies, including media companies, have to make public.

The group said it had filed the brief with the Supreme Court in support of the Federal Communications Commission's contention that AT&T should have to make public documents on equipment and services provided through the FCC's E-rate program, which supplies broadband to schools and libraries. The High Court is hearing a challenge to a Third Circuit ruling that there was a corporate privacy right that shielded the documents from a Freedom of Information Act request by AT&T's competitors. The documents related to AT&T's discovery, and the FCC's ensuing investigation, of possible AT&T overcharges to the government program in New London, Conn.

The FCC asked AT&T to produce the records as part of the investigation, which it did. CompTel, the association industry association representing competitive communications providers and suppliers, filed a FOIA to get access to the information and AT&T objected. the FCC rejected that objection, and AT&T took its case to federal court.

Groups Pushing For Action Thursday On Internet Piracy Bill

Several groups are pushing the Senate Judiciary Committee to act Nov 18 on legislation that would crack down on online piracy and counterfeiting.

The legislation, sponsored by Judiciary Chairman Patrick Leahy (D-VT) is on the committee's agenda for its Nov 18 markup along with several nominations and other bills. Only one of the nominations is viewed as controversial at this point. Several sources say they expect the committee to get to the online piracy bill if it can muster the necessary number of members needed to report legislation out of committee. Leahy said earlier this week that "he'd love" to move the bill at Thursday's markup. The committee released a lengthy list of supporters. They included letters of support sent Wednesday from the Newspaper Association of America and a group of trade unions.

"We appreciate the leadership you have shown with your efforts to move this legislation through the Senate and urge you to continue to push for its enactment during the time remaining in the 111th Congress," according to the letter from such labor groups including the American Federation of Musicians, Communications Workers of America, International Brotherhood of Electrical Engineers and the Teamsters. "The industries most directly impacted by these rogue websites are among the most vibrant and important in the country; the entertainment and manufacturing sectors provide excellent wages and benefits to American working families and in these very difficult economic times are precisely the types of jobs we cannot afford to lose."

DPI will be a balancing act of protecting networks and customer privacy

Continuous Computing has published three policy management white papers commissioned from industry analyst Disruptive Analysis. The white papers take a good look at Deep Packet Inspection (DPI) in mobile broadband networks -- always an interesting topic because it pits operator necessity for traffic management and targeted services against consumer desire for privacy assurances.

But simultaneous to that desire is the consumer desire for more compelling, personalized content, for which they are willing to sacrifice -- at least it seems -- some level of privacy. Though DPI is one of those technologies that quickly raises a lot of eyebrows because of its potential for abuse, its use will no doubt increase for traffic management, targeted marketing of products to consumers, and tailored advertising campaigns -- all necessary if operators are to grow revenues from the explosion of smartphones, tablets and other devices. The pressure to enforce policies, and do real-time charging and traffic management will mean operators will have to become more subscriber and device-aware to better understand the usage patterns of users and the impacts on network elements.

Auction for Cellphone Bandwidth Was Rigged, India Says

An auction to provide cellphone services in India's booming market was rigged to favor a few companies, the government asserted Nov 16.

The comptroller and auditor general of India say in a 96-page report that the agency in charge of cellular licenses, the Ministry of Communications and Information Technology, arbitrarily moved up deadlines in a 2008 auction of new bandwidth for phone operators. The Communications Ministry also rejected calls from the prime minister and the Ministry of Law for greater scrutiny and awarded licenses to operators in a way that "lacked transparency and fairness," the report says. The questionable practices cost the Indian government 1.76 trillion rupees ($39 billion) in revenue, auditors say. The report, issued after a nine-month investigation by the auditor and the Central Bureau of Intelligence, seems to focus on the Communications Ministry and a handful of operators, including Reliance Communications.

Benton

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