July 2011

Rep. Mike Thompson endorses AT&T deal

In a letter sent to the Federal Communications Commission and the Department of Justice, Rep. Mike Thompson (D-Calif.) endorsed AT&T’s takeover of T-Mobile.

“I urge that the Department of Justice and the Federal Communications Commission expeditiously review and approve the proposed merger between AT&T and T-Mobile. Once approved, this merger will allow AT&T to significantly expand and strengthen its broadband network, better serving constituents in Northern California and nationwide.”

Rep Thompson noted the rapid growth in demand for wireless broadband has led to a “spectrum crunch” for AT&T. “If approved, this merger would bring the added benefit of increasing the spectrum available to AT&T, allowing them to expand its latest generation 4G broadband network,” he wrote. Rep Thompson argued the merger would be good for his constituents. “Many communities in my district clearly gain expanded and improved service under this merger,” he wrote. “It is my strong hope however, that if and when this merger is approved, AT&T will remain committed to continued critical infrastructure investments in the remaining rural communities who do not yet enjoy access to their services.”

Sprint hatchets AT&T's new T-Mobile economic analysis as 'do-over'

AT&T's proposed $39 billion acquisition of T-Mobile USA will lead to lower prices "adjusted for quality," AT&T said in a new filing to the Federal Communications Commission that is aimed at bolstering its case that the deal should be approved.

The filing is based on new economic analysis of the potential impacts of the deal, and the FCC has halted its 180-day review "shot clock" so that it can analyze the data and allow third parties to comment. AT&T said that the deal "will relieve significant capacity restraints faced by both companies and lead to improved service quality." The new economic analysis focused on "the likely output and price effects of the proposed transaction, focusing on the extent to which the efficiencies of the proposed transaction will result in lower marginal costs of output and higher quality levels." The filing itself, which looks at the deal's potential impact on 15 U.S. markets, including Los Angeles, New York and Washington (DC), is confidential and filed under seal. The letter has some parts redacted. "In each market, the merger simulations project that industry output will rise and average price adjusted for quality will fall as a result of the transaction," AT&T and T-Mobile parent Deutsche Telekom said in the letter.

Sprint Nextel, the most outspoken critic of the deal, blasted AT&T's new filing as an attempt to "distract regulators."

Free Press Research Director S. Derek Turner said, "New models or not, this is the same bad deal for American consumers, workers and businesses. After failing to make a credible case in the first go-round, AT&T is desperately trying a do-over. Yet while AT&T is spinning, support for the merger continues to unravel, from Capitol Hill to California. AT&T is asking the FCC for a do-over because its case for the merger was obliterated by the evidence. Free Press and others have demonstrated time and again before the FCC that both of AT&T's central claims — that the merger will lead to greater rural buildout and improved quality — are nothing more than a facade. AT&T could accomplish both of these goals without this merger and without killing off a major competitor."

"It is clear that AT&T’s submission of a new justification for taking over T-Mobile is exactly like the coach of a losing team calling time out so he can work the referees," said Public Knowledge President Gigi Sohn. "While the Federal Communications Commission (FCC) stops its merger review process to examine the new plan, AT&T will use the time to spend more millions of dollars lobbying federal, state and local officials and recruiting non-governmental groups to support what is clearly a failing action. Unless this new ‘model’ can come up with a different answer to the problem of 4-1=3, (which would inevitably be followed by 3-1=2) we’re not interested. Removing a major competitor from the national wireless market still makes no sense."

Squeezing More Blood From The Spectrum Turnip -- Harry Reid's Contribution To The Spectrum Muddle

[Commentary] No sooner had I posted my wonkish critique of the Congressional Budget Office (CBO) score for S.911, the Rockefeller Public Safety/Spectrum Bill, when Senator Harry Reid (D-NV) turns around and drops a new version of the plan as part of his debt ceiling bill.

Sen Reid promises to raise $15 billion in “spectrum sales” while still reallocating the D Block to public safety. That’s quite a trick, given that CBO had given S.911 a “score” (meaning the amount of money it will add or subtract from the deficit) of $6 billion.

A quick review shows how Sen Reid is trying to squeeze more blood from the spectrum turnip.

Specifically, the bill would:

Cut the proposed level of public safety funding from $12 billion to $7 billion.
Cut the proposed level of funding for public safety research from $500 Million to $300 Million.
Give the FCC much greater flexibility to repack broadcasters.
Limit the total amount of incentive auction reimbursement to $1 billion.
While the FCC could allocate 6 MHz for unlicensed if it reclaimed more than 84 MHz of broadcast spectrum, any additional unlicensed would need to come from somewhere else — although you could use the incentive auction fund to clear other licensees.

'What About the Journal?' A Report from the Special Committee

[Commentary] As a condition of the acquisition of Dow Jones & Co., publisher of The Wall Street Journal, in late 2007, Rupert Murdoch and News Corp. agreed to the establishment of a five-person Special Committee to oversee the continued editorial integrity of the Journal and its sister organization, Dow Jones Newswires. Given the recent revelations of telephone hacking, police bribery and other violations of ethical and legal standards at News Corp. properties in the United Kingdom, it's fair to ask of us -- as many people have in recent weeks -- "What about the Journal?" Since its inception, the committee has repeatedly reached out to a broad range of staff and management at Dow Jones. We have reviewed ethics procedures and enforcement standards. We have talked with former employees. We have reviewed the journalistic offerings of the newspaper. We have asked again and again: "Is anybody putting political, ideological or commercial pressure on you to influence your news judgment?" The broad and consistent answer we get is "no." To be sure, the Journal has changed in focus, style and content since coming under News Corp. ownership. This is both obvious to readers and documented in various studies. Reasonable people debate the merits of the new versus the old Journal. But in our view the long-established reputation of Dow Jones as a highly trusted source of news and commentary endures.

No need for cloud-specific legislation, SIIA industry group says

The Software and Information Industry Association pressed for self-regulation instead of government rules in a white paper on cloud computing.

The industry group, which comprises about 500 software and information companies, said that policymakers should allow sector-specific bills — such as HIPAA, which governs the privacy and security health data — to apply to cloud computing. The policymakers should instead focus on promoting open standards for national and international privacy and data security, the group said. On the issue of security, a common concern for those wary of the centralized, off-site nature of cloud storage, the SIIA argues that cloud computing actually affords companies a higher level of data security. “By centralizing data storage and governance,” the group writes, “it can provide better security at a lower cost than trying to protect data in many dispersed locations.”

Microsoft tells lawmakers to reform high-skill immigration

The United States needs to reform its immigration system to attract and keep high-skilled workers, a top Microsoft official said.

“If done right, attracting the talents of the best and brightest from other countries can help, rather than hurt, prospects for American workers because in an innovation economy, jobs often beget jobs,” Brad Smith, Microsoft’s general counsel, said Tuesday at a Senate Judiciary subcommittee hearing on high-skill visa programs. Smith said although the country continues to suffer from high unemployment, jobs for high-skilled technology workers are going unfilled. But Ronil Hira, a professor of public policy at Rochester Institute of Technology, argued that foreign workers are actually displacing American workers in the technology industry.

FCC Seeks Input on Regional Sports Network Marketplace

The Federal Communications Commission's Media Bureau seeks comment on issues related to regional sports network (“RSN”) access and carriage in order to prepare a report.

The FCC prohibits Time Warner Cable and Comcast from entering into any exclusive distribution agreements with existing and future affiliated RSNs and unduly or improperly influencing the sale of the programming of those RSNs to unaffiliated multichannel video programming distributors (“MVPDs”). The companies are also required to provide the programming of affiliated RSNs to all MVPDs pursuant to non-discriminatory terms and conditions. Moreover, the FCC applied the program access rules applicable to satellite-delivered, cable-affiliated programming to all of the Applicants’ affiliated RSNs, regardless of the method of delivery. However, the FCC partially exempted Comcast’s SportsNet Philadelphia from these requirements given that it was delivered terrestrially before being acquired by Comcast, and therefore the method of delivery was not chosen for anticompetitive purposes. Finally, the FCC implemented a dispute resolution process allowing aggrieved MVPDs and unaffiliated RSNs respectively to submit program access or carriage disputes with the Time Warner and Comcast to an arbitrator.

The FCC seeks comment generally on issues related to RSN access and carriage. What effect, if any, have marketplace and program access rules revisions had on MVPDs’ ability to gain access to RSN programming? Similarly, what impact have regulatory and marketplace changes had on the ability of unaffiliated RSNs to gain carriage on MVPD systems? Has there been an increase in the delivery of RSNs by terrestrial means? In addition, has the number of RSNs affiliated with a cable operator changed? If there has been a change, how does this number compare with the overall number of RSNs in the marketplace? Are there examples since the release of the Adelphia Order involving the withholding of an RSN and what impact has this had on the MVPD marketplace? Further, has there been a change in the number of exclusive deals involving MVPDs and unaffiliated RSNs?

Moreover, the FCC seek comment on the access of MVPDs, other than the Applicants, to RSN programming in which the Applicants hold an interest. We also request comment on whether unaffiliated RSNs have obtained carriage on the Applicants’ cable systems and on what terms. Finally, we seek comment on the Applicants’ compliance with the Adelphia Order’s RSN conditions, the dispute resolution process and the effectiveness of these remedies. Do such conditions continue to be necessary in light of marketplace and regulatory changes since the time of their adoption?

Coalition Launches To Push For Online Poker Regime

A new coalition launched with the goal of persuading lawmakers to set up a regulatory regime that would allow Americans to legally place bets on online poker games.

The FairPlayUSA coalition has attracted some high-profile advisers, including former Homeland Security and ex-Pennsylvania Gov. Tom Ridge (R-PA), to push Congress to fully legalize online poker and to clarify the nation's online gambling laws to more clearly define what is legal and what is not. Congress enacted legislation in 2006 to crack down on Internet gambling by barring U.S. payment processors such as credit card companies and PayPal from handling payments for online bets. However, critics argue that the law has done little to stop Americans from continuing to gamble online and say this denies the U.S. government of potential tax revenues. They also say it exposes U.S. participants to fraud and abuse since most Internet gaming sites are based offshore.

State of the Internet: What are the fastest cities in the world

The Internet continues to grow bigger and bigger, thanks to growing number of Internet subscribers and Internet connected devices according to Akamai, which is about to release its latest State of the Internet (for Q1 2011) report. The Internet’s expansion is accompanied by steady growth in bandwidth and connection speeds, Akamai’s research shows.

Here are some factoids from the report:

Nearly 60 percent of South Korean broadband connections had speeds above 5 Mbps.
South Korea also achieved the highest average connection speed at 14.4 Mbps. Hong Kong had an average connection speed of 9.2 Mbps, and Japan came in third with 8.1 Mbps.
More than 40 countries/regions saw average connection speeds increase by 10 percent or more in the first quarter, a healthy sign for broadband adoption overall and even better news for startups building applications that consume a lot of bandwidth.
Nearly 72 percent of all broadband connections in the state of Delaware were faster than 5 Mbps.
Delaware also had the highest average connection speed, at 7.5 Mbps.
Based on data collected by Ericsson, mobile data traffic saw 130 percent yearly growth in the first quarter and is now more than double the measured volume of voice traffic.
During the first three months of 2011, there was a 5.2 percent increase in the number of unique IPv4 addresses connecting to Akamai’s global network. US, China and Japan were the top three countries in terms of unique IP addresses.

Smartphones, iPads & the state of the mobile Internet

The first quarter of 2011 turned out to be a big one for smartphone makers, especially Apple and Android-based device makers such as Samsung.

In the US alone, slightly more than half of the phones sold were smartphones, which now account for 80 percent of the revenues from phones sold in the US. Smartphones – along with the booming demand for personal hotspots, tablets and iPads — have caused mobile data usage to explode, increasing by 130 percent during the first quarter of 2011 versus the first quarter of 2010, according to Akamai and Ericsson. In comparison, voice is becoming less important on wireless networks.

Benton

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