February 2011

Apple risks sowing the seeds of its own downfall

[Commentary] Last week, Apple said it would enable subscriptions to magazines, news apps, and streaming media services for iPads, iPhones and iPods, seemingly addressing one of content owners’ few qualms. Yet at the same time it said it would take 30 per cent of subscriptions it processed. For good measure it dispelled media companies’ hopes that it might share meaningful data on apps customers’ identities and behavior. The prospect has alarmed content owners. Big conglomerates, with fragile but still profitable old business models, may decide they can live with this fee if Apple’s devices expand their markets rather than cannibalizing them. But start-ups currently making little or no profit could be crushed by such a toll. Apple needs to tread carefully. If it uses the data it withholds from content owners to favour its iAds advertising platform, for example, media companies would – and should – seize on the chance to have regulators rein it in. Competition authorities move slowly, though, especially in such fast-changing markets. Apple may also yet win the argument that 30 per cent is a fair toll given the phenomenal success its risk-taking has created and the fact that this is already the standard rate in music, books and games (although Google’s announcement of a subscription service for its Android store which would take a 10 per cent cut has set up a tough debate on that point). The bigger risk is that Apple forces media owners into rivals’ hands, filling their devices with more attractive content.

Michael Robertson Bucks the Music Industry Again

Michael Robertson's DAR.fm -- short for digital audio recorder -- will be a centralized Web-based TiVo (TIVO) for radio.

Users can go to DAR.fm to search through the programming schedules of about 600 music and talk-radio stations around the country and schedule the site to record up to four hours of any broadcast. The recordings, complete with ads and DJ chatter that users can fast-forward through, are then deposited into a user's password-protected account that can be accessed from any PC, smartphone, or Internet-connected radio. "Radio is dying because it's inconvenient and limiting," says Robertson. "The content is not interactive, and it's available on only a limited number of devices." The free service -- Robertson says he'll eventually try to sell ads -- works by recording audio right off a radio station's own website. About half the 10,000 stations in the U.S. stream their live broadcasts on their home pages. (DAR.fm will only record feeds that do not use encrypted media-streaming formats such as Microsoft's (MSFT) Silverlight.) When instructed by a user, DAR.fm can, for example, visit the site of KOH in Reno to record Sean Hannity's daily talk show, navigate to an ESPN Radio affiliate such as KTIK in Boise to get Jim Rome's three-hour drive-time sports rants, or grab several hours of alternative rock from WPBZ in West Palm Beach, Fla., or KITS in San Francisco. The feature that may be most appealing to consumers and irksome to music executives: DAR.fm identifies individual songs in a broadcast and allows users to download them to mobile phones or iTunes music libraries. (The audio quality is much lower than music bought on iTunes.)

Official Says Most Broadcasters Unlikely To Give Up Spectrum

Phil Weiser, the National Economic Council's senior adviser for technology and innovation, said that not many broadcasters have to participate in a proposal that would give them a share of the proceeds from the auction of spectrum they voluntarily give up for the initiative to be a success.

During a forum sponsored by the Wireless Innovation Alliance on ways to expand the availability of spectrum, Weiser said broadcasters' top concern with the incentive auction proposal is not how much money they would get from the proposal but the process that will be used for relocating broadcasters who choose to give up some spectrum. "Most are not going to participate," Weiser said. "Most don't need to participate for it to be a win." Broadcasters have said they are open to incentive auctions as long as they are truly voluntary. When asked what share of the proceeds broadcasters will want in order to give up spectrum, Weiser said he did not believe it would be much given that they will still have "the same business model but it is done ... more efficiently." He said lawmakers, when crafting legislation authorizing the Federal Communications Commission to conduct incentive auctions, will have to decide what share of the auction proceeds broadcasters should receive in exchange for giving up some spectrum.

Old Media Is Being Unbundled, Just Like Telecom Was

[Commentary] The 1996 Telecom Act was the start of the liberalization of an industry that had been vertical with very little competition. What followed was an amazing transformation of the staid calling industry — not necessarily for the better. One of the basic tenets of the 1996 Telecom Act was unbundled access to the telecom facilities of the local phone companies, which meant competing phone companies could access the so-called “last-mile” that led to people’s homes over the incumbent carrier’s network. The change in law created an insane amount of competition, and turned the economics of the business on its head. It led to kamikaze-style pricing of phone minutes. Voice had been the primary source of revenue for phone companies for nearly a century. The increased competition was coupled with the arrival of Internet and Internet-based telephony. That allowed rivals such as cable companies to further take away voice customers. Skype, Vonage and others only added to the phone companies’ misery. Today, phone companies are happy to give away voice-minutes as long as you buy data from them. Why do I bring that ancient history up? Mostly because as I sit in the crowded Virgin America red-eye flight to New York, I'm thinking about the media business and the parallels I see between it and the media industry. In the media industry, we’re seeing an unbundling of a highly vertical business, with the most lucrative parts being siphoned off by Internet-based low-cost rivals.

Distance Learning and Telemedicine Grants from RUS

The Rural Utilities Service (RUS), an agency of the United States Department of Agriculture (USDA), announces its Distance Learning and Telemedicine (DLT) grant program application window for Fiscal Year (FY) 2011 subject to the availability of funding. This notice is being issued prior to passage of a final appropriations act to allow potential applicants time to submit proposals and give the Agency time to process applications within the current fiscal year. RUS will publish a subsequent notice identifying the amount received in the final appropriations act, if any.

Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band

The Federal Communications Commission seeks comments on the development of a technical interoperability framework for the nationwide public safety broadband network. This document considers and proposes additional requirements to further promote and enable nationwide interoperability among public safety broadband networks operating in the 700 MHz band. This document addresses public safety broadband network interoperability from a technological perspective and considers interoperability at various communication layers.

Submit comments on or before April 11, 2011. Submit reply comments on or before May 10, 2011.

[PS Docket No. 06–229; WT Docket 06–150; WP Docket 07–100; FCC 11–6]

Facebook Vs. FTC Round 2: Facebook Responds

Facebook just released a 26-page retort to the Federal Trade Commission’s preliminary report on privacy regulation -- a report that social media firms see as an ominous approaching storm of chaotic bureaucracy.

In summary, Facebook fears that government meddling could stifle both its ability to profit and smother the industry’s progress on yet-unknown technological advancements. Facebook responded in mirror-image to the FTC; first, (respectively) reminding the FTC how much social media has done for the government itself, the advancement of democracy, and the growing cottage industry of social software. Finally, Facebook urged the FTC to be sensitive to the business implications of its decisions, “For Facebook -- like most other online service providers--getting this balance right is a matter of survival,” the report notes. It continued, "Ultimately, the FTC's enforcement activities in the area of privacy must be guided by the realization that aggressive enforcement and imprecise standards can lead to more legalistic disclosures-and, as described above, chill economic growth-as companies seek to manage regulatory risk by over-disclosing, reserving broad rights, and under-innovating. To avoid these unintended consequences, the FTC should err on the side of clarifying its policies rather than taking aggressive enforcement action against practices that previously were not clearly prohibited."

Study: One-fourth of federal websites surveyed rank high in transparency

A quarter of federal websites surveyed scored high in online transparency, which also was found to be associated with high ratings for customer satisfaction and participation, according to a new study from the research firm ForeSee Results.

For the eight of 32 federal websites that scored 80 or higher on a 100-point transparency scale in 2010, there is a strong correlation with customers being more satisfied, more likely to rely on the website as a primary resource of information and more likely to recommend the website to others, ForeSee said in a report issued Feb. 22. Top-scoring agencies for the fourth quarter of 2010 included the U.S. Citizenship and Immigration Services agency, National Oceanic and Atmospheric Administration, Navy, Air Force and the National Human Genome Research Institute.

Verizon Attacks FTC's Proposal For Deep-Packet Inspection

The Federal Trade Commission's recent privacy report indicated that Internet service provider-based targeting, which relies on deep packet inspection technology, requires "enhanced consent or even more heightened restrictions." Unsurprisingly, not all ISPs agree.

Consider, Verizon recently slammed the FTC's proposal regarding deep packet inspection. "This heavy-handed view unfairly disadvantages ISPs and favors companies, technologies, and business models based on cookies and other technologies and software that collect and use similar (and perhaps a greater amount of) information," the telecom wrote in comments filed at the FTC. "The underlying principles of meaningful notice and choice should apply across the board based on the type of information collected and how the information will be used."

Motorola, Verizon establish public-safety LTE alliance

Motorola Solutions and Verizon Wireless announced an alliance between the two companies to provide a solution that is designed to ease public-safety agencies’ transition to their own private LTE broadband networks operating in the 700 MHz band.

While Motorola is working with more than 200 public-safety entities to deploy LTE networks, funding issues have caused many agencies to delay construction entirely or drastically reduce the scale of their initial broadband wireless buildouts. Through the new alliance, Motorola plans to provide public-safety customers with an opportunity to leverage LTE applications across Verizon’s commercial network as a coordinated supplement to a private LTE network and/or a roaming partner when the private network is not available.

Benton

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