November 2010

OECD sees dangers in NBN haste

The Organization for Economic Co-operation and Development is urging Australia's government to slow down the rollout of its $43 billion high-speed broadband network, warning that the project is installing a public monopoly that could choke off the development of better Internet technologies.

Instead, OECD is suggesting a more gradual approach would allow a better assessment of the costs and potential benefits associated with the National Broadband Network. In a new report, the OECD said the government had adopted a "picking-the-winner strategy" on the NBN that could hinder the development of "as yet unknown, superior technological alternatives". The report also found "substantial financial uncertainties" with the massive project - which is expected to have $26bn worth of equity funding from the government -- and cautioned that it may not be the most cost-effective strategy.

J:COM to add mobile TV to cable offering

Japanese multiservice operator (MSO) Jupiter Telecommunications (J:COM) is enhancing its basic cable TV packages to allow its customers to watch TV on various electronic devices, such as smartphones, at no extra cost.

Tele2 and Telenor Sweden launch LTE

Tele2 Sweden and Telenor Sweden have launched commercial Long Term Evolution (LTE) mobile broadband services via their joint network venture Net4Mobility, initially in Stockholm, Gothenburg, Malmo and Karlskrona. According to Telenor, users can expect wireless data connection speeds of 20Mbps-40Mbps in 'particularly favorable conditions', with maximum potential speeds of 80Mbps. Both cellphone companies are offering Huawei dual-mode modems which operate on both their 4G and 3G networks.

German cable operator successfully trials 1Gbps over cable TV network

German cable operator Kabel Deutschland (KDG) has successfully achieved broadband download speeds of up to 1Gbps over its cable TV network. Conducted in Hamburg in conjunction with technology partner Cisco, the trials were based on the DOCSIS 3.0 standard and were run using a standard commercial Cable Modem Termination System (CMTS) from Cisco.

Agcom confirms new unbundling rates

Italian telecoms regulator Agcom has issued its final decision on the country's new local loop unbundling (LLU) rates, raising tariffs less than previously planned. The move reflects comments received from the European Commission (EC) last month; the EC asked Agcom to further refine its model for determining cost-based prices. For 2010, the unbundling fee has been confirmed at EUR8.70 (USD11.9) per month, up from the current EUR8.49. Going forward, Agcom has cut the earlier proposed rates for 2011 and 2012 - to EUR9.02 and EUR9.28 per month respectively - instead of the EUR9.14 and EUR9.48 tariffs originally planned.

Network neutrality in neutral

After midterm elections, Julius Genachowski's already-Gordian dilemma of how to restore the Federal Communications Commission's authority over broadband has become even more difficult.

The FCC's online jurisdiction has been cloudy since a federal appellate court undercut its ability to enforce so-called net neutrality and other Internet rules in the spring. As he sought a legal fix, Genachowski has had to balance concerns and complaints of public advocates, broadband providers, online search companies, members of Congress and others.

If Genachowski presses on with his third way against House leadership, there could be repercussions. After the last midterm elections, House Democrats held oversight hearings on the stewardship of FCC Chairman Kevin Martin. Democrats prodded the FCC commissioners on a range of issues. Genachowski and his colleagues could face similar scrutiny from House Republicans.

The Obama administration came to Washington with grand plans to expand broadband networks, narrow the digital divide and create infrastructure for a new generation of online entrepreneurs. The elections have provided still another test for the administration, which must choose between commitment to principle and political expediency.

Internet Bandwidth Prices Falling -- For Wholesalers, not Consumers

The price of Internet bandwidth continues to fall -- not for consumers, but at the wholesale level. Prices for wholesale Internet bandwidth -- the kind that is sold to content providers such as Google, Yahoo, Facebook, Netflix and Internet service providers -- are declining at a steady clip. The service provided is known as IP transit. Data released by research firm Telegeography shows that prices for IP transit are declining even as international traffic volumes are growing at more than 60 percent annually.

Commerce Dept weighs privacy policy guidelines

The Commerce Department has drafted broad recommendations for Internet privacy oversight in a widely anticipated report that could set the stage for tighter regulation of Web firms.

Among its 10 policy recommendations, the report calls for strengthening the Federal Trade Commission's rule-making powers and enacting legislation requiring Internet companies to inform customers of data breaches.

The report, prepared by the Commerce's National Telecommunications and Information Administration -- which advises the White House on communications policy - also recommends voluntary codes of conduct for Web firms and advertisers, an idea that has drawn sharp criticism from privacy advocates.

The report recommends legislation that establishes a "baseline privacy framework" for the Internet and advertising industry. The draft specifically calls for baseline principles on fair data collection practices on the Web. It questions whether the FTC should have expanded authority to create rules to implement Internet privacy legislation. The report also calls on the White House to review the Electronic Communications Privacy Act (ECPA), in which companies such as Microsoft want to include privacy protections for cloud computing and location-based services.

"The Commerce Department is more interested in protecting companies collecting data than consumers," said Jeffrey Chester, executive of the Center for Digital Democracy, a public interest group.

Carey: Retransmission Modifications Could Imperil Free News, Sports, Entertainment

According to a copy of his prepared testimony, News Corp. President Chase Carey will tell a Senate Subcommittee that if the government modifies retransmission consent laws, local news on broadcast TV could be eliminated and high-value sports and entertainment content will migrate from broadcasting to cable.

He says retransmission is going through "growing pains" because broadcasters are, for the first time, seeking cash for their high-value, highly-rated content, just as cable channels have been doing all along. He says claims that broadcasters are seeking 100% increases is true: "Any increase over zero is a 100% increase." Carey plans to tell the legislators that Fox is asking a "more than fair" price for its stations given that some cable channels "command as much as $4 and $5 per sub." He points out that Fox has an average 8 million viewers per night in primetime -- "more than the top three cable channels combined." He says the comparison holds beyond price to "any comparison based on the quality and quantity of unique programming offered [or] the amount invested in programming," citing shows like Glee, House, The Simpsons and American Idol.

He says Fox is asking several times less than cable channels that have a fraction of broadcast ratings. He concedes that the two weeks when Fox was off Cablevision systems during its recent retrans impasse caused pain "primarily to viewers." But he says that had the FCC stepped in to try to force the parties hands, "Cablevision would not have come back to the bargaining table, and we likely would still not have a contract in place. But Carey suggests the dominoes would not stop falling with the impact on Fox or retrans deals. He says the real harm to consumers--the "30 million Americans who rely exclusively on over-the-air television"-- would result from government intervention and the resulting impact on the broadcast business model. "[I]f we can't sell our content for a price that allows us a fair return on our investment, we will no longer be able to invest in the high quality content that viewers enjoy," he warns.

Cable Operators Claim Current Rules Favor Broadcasters

According to testimony to be delivered Nov 17 at a Senate subcommittee hearing, cable operators will hammer the point that current federal laws advantage broadcasters in programming carriage negotiations.

Under the Cable Act, broadcasters can insist that cable operators include their programming under a "must carry" provision, or they can choose to negotiate a price for an operator's right to retransmit their signal. Historically, broadcasters elected "must carry," but in recent years, networks have increasingly opted to negotiate a price for their signal. Unstable ad revenue and ownership of premium content--such as the popular Fox shows "Glee" and "American Idol"--have made carriage-fee negotiations a more attractive option for broadcasters.

Cable firms will take issue with the local monopolies granted to broadcasters that prevent cable operators from negotiating with more than one broadcast channel in a given market. Such exclusive rights were given to broadcasters to protect local programming that may not be commercially viable in a free market.

Cablevision COO Tom Rutledge plans to tell legislators that FCC action to "fix or scrap" the retransmission consent regime is imperative, arguing that the negotiations are not free market deals but are conducted "under an umbrella of statutory provisions and FCC rules that heavily favor the broadcaster over the cable operator or multi-channel video programming distributor (MVPD)."

Rutledge counts the ways in which cable operators see the government's thumb on the scale in favor of broadcasters. For one, he says, the government has given broadcasters a local monopoly by not allowing cable operators to import "must-have programming" from affiliates outside their market. Then there are the must-carry rules, or as cable sees it, must-buy rules, since "government rules require that every one of our subscribers buy and pay for the broadcast channels as part of any cable service -- even if the subscriber doesn't want them and no matter how much money the broadcaster charges us to carry their signal."

Time Warner Cable (TWC) Chairman Glenn Britt plans to tell members of the subcommittee that, despite support for TWC's petition at the commission for retrans reforms and, in the fact of the "continued occurrence of disruption," the FCC "has failed to act."

Benton

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