July 2011

BENTON'S COMMUNICATIONS-RELATED HEADLINES for TUESDAY, JULY 19, 2011

What Can the U.S. Learn From New Zealand's Broadband Plan? http://benton.org/node/81592

JOURNALISM
   Murdoch Aides Long Tried to Blunt Scandal Over Hacking
   Murdoch’s Board Stands By as Scandal Widens
   Too Little, Too Late? News Corp Forms Group To Oversee Ethics
   News and Its Critics - editorial
   The Murdoch Empire: An Inside View - editorial
   Phone-hacking scandal could force Murdoch to let go of newspapers
   News Corp. scandal sparks questions of U.S. broadcast licenses
   The Tables Are Turned on Murdoch - editorial [links to web]
   Tabloids don't deserve the 1st Amendment - op-ed [links to web]
   A tipping point for journalism - op-ed
   Tribune Cuts More Jobs, Reorganizes Newspapers [links to web]
   As Weather Becomes Big Story, TV Forecasters Play the Hero [links to web]

WIRELESS/SPECTRUM
   FCC Convenes Economic Workshop on AT&T/T-Mobile
   If Phone Giants Merge: A Rural Take - op-ed
   AT&T/T-Mobile merger approval would come at a price
   Credit Suisse report: U.S. wireless networks running at 80% of total capacity
   NextWave heads toward bankruptcy despite a spectrum goldmine
   America: Land of the crummy-sounding cell phone
   Rep Boren Says FCC Must Protect Broadcasters [links to web]
   CEA President Shapiro Plugs Spectrum Auctions as Big Revenue Raiser [links to web]

INTERNET/BROADBAND
   A Growing Digital Divide - research
   OSCE media freedom representative calls on governments to recognize access to the Internet as a human right - press release [links to web]
   Telecom New Zealand slashes price of fiber optic broadband [links to web]
   Cyber-Security Task Force Finalized

PRIVACY
   Privacy Coalition Asks Administration for Teen-Targeted Privacy Protections
   Tech IPOs grapple with privacy

OWNERSHIP
   U.S. Rules HTC Infringed on Apple Patent [links to web]
   Google, this is why you’re under investigation [links to web]
   Cisco Will Cut 6,500 Workers, Record $1.3 Billion in Costs

MARKETING/ADVERTISING
   Marketers target moms armed with smartphones [links to web]
   Facebook ad prices soar more than 74% [links to web]
   Facebook reportedly blocks user-created Google+ ad [links to web]

CONTENT
   Google: Belgian Papers To Appear In Searches Again [links to web]
   Amazon Announces Kindle Textbook Rental [links to web]

LOBBYING
   Microsoft Lobbyist at White House Event

MORE ONLINE
   Getting Away From It All Now Means Taking All Your Tech With You [links to web]
   10 technologies that will change the world in the next 10 years [links to web]
   OMB issues memo on telework security [links to web]

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JOURNALISM

AIDES TRIED TO BLUNT SCANDAL
[SOURCE: New York Times, AUTHOR: Jo Becker, Ravi Somaiya]
Two days before it emerged that The News of the World had hacked the cellphone of a murdered schoolgirl, igniting a scandal that has shaken the media empire of Rupert Murdoch, his son James told friends that he thought the worst of the troubles were behind him. And he was confident that the News Corporation’s $12 billion bid for the satellite company British Sky Broadcasting would go through, according to a person present. Now, with their most trusted lieutenant, Rebekah Brooks, arrested on suspicion of phone hacking and paying the police for information, the broadcasting bid abandoned, the 168-year-old News of the World shuttered, and nine others arrested, Rupert and James Murdoch are scheduled to face an enraged British Parliament on July 19. It is a spectacle that Rupert Murdoch’s closest associates spent years trying to avoid. Interviews with dozens of people involved in the hacking scandal, including current and former News Corporation employees, provide an inside view of how a small group of executives pursued strategies for years that had the effect of obscuring the extent of wrongdoing in the newsroom of The News of the World, Britain’s best-selling tabloid. And once the hacking scandal escalated, they scrambled in vain to quarantine the damage. Evidence indicating that The News of the World paid the police for information was not handed over to the authorities for four years. Its parent company paid hefty sums to those who threatened legal action, on condition of silence. The tabloid continued to pay reporters and editors whose knowledge could prove embarrassing even after they were fired or arrested for hacking. A key editor’s computer equipment was destroyed, and e-mail evidence was lost. Internal advice to accept responsibility was ignored, former executives said.
benton.org/node/82006 | New York Times | Wall Street Journal | Financial Times
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WHERE'S NEWS CORPS BOARD?
[SOURCE: New York Times, AUTHOR: Andrew Ross Sorkin]
The board of the News Corporation might as well be named “Friends of Rupert.” The independent directors — who have a fiduciary responsibility to the company’s shareholders — have remained silent amid the widening scandal at Rupert Murdoch’s media empire. Despite multiple arrests stemming from the phone hacking accusations so far, not one independent board member has made a statement denouncing the company’s dubious activities. Not one has publicly called for the resignation of top officials at the company. And not one has pushed for an outside investigation, although the company has started its own. “This is a board that qualifies for an ‘F’ in every category,” Nell Minow, a member of the board of GovernanceMetrics International and founder of the Corporate Library, a governance firm, said without any hesitation. “It is the ultimate crony board.”
benton.org/node/82005 | New York Times
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NEWS CORP ETHICS BOARD
[SOURCE: paidContent.org, AUTHOR: Ingrid Lunden]
When News Corporation ran an ad in multiple newspapers across the UK this weekend, it promised “further concrete steps” to right the wrongs that have engulfed the company and its key executives in scandal. Here's an example: the company has announced the “formal establishment and extension” of the Management and Standards Committee, independent of News International, which will cooperate with the current investigations and also provide standards for ethics and governance in the future. News Corp has appointed Lord Grabiner QC as the independent chairman of the MSC. Grabiner is a commercial lawyer, who is also non-executive chairman of the retail holding company Arcadia Group, and has been a past head of the London School of Economics. The MSC will work with authorities that are currently investigating News International in relation to the phone hacking scandal and the police corruption that has emerged as a by-product of that investigation. By appointing an outsider -- not just to News Corp but to the media world as a whole -- it is hoped that this will give the arm’s-length independence that the MSC will need to be credible.
benton.org/node/81885 | paidContent.org
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NEWS AND ITS CRITICS
[SOURCE: Wall Street Journal, AUTHOR: Editorial staff]
[Commentary] When News Corp. and CEO Rupert Murdoch secured enough shares to buy Dow Jones & Co. four years ago, these columns welcomed our new owner and promised to stand by the same standards and principles we always had. That promise is worth repeating now that politicians and our competitors are using the phone-hacking years ago at a British corner of News Corp. to assail the Journal, and perhaps injure press freedom in general. Do our media brethren really want to invite Congress and prosecutors to regulate how journalists gather the news? Phone-hacking is deplorable, and we assume the guilty will be prosecuted. More fundamentally, the News of the World's offense -- fatal, as it turned out -- was to violate the trust of its readers by not coming about its news honestly. We realize how precious that reader trust is, and our obligation is to re-earn it every day.
benton.org/node/81887 | Wall Street Journal
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AN INSIDE VIEW
[SOURCE: Wall Street Journal, AUTHOR: Robert Pollock]
[Commentary] If Rupert Murdoch has a thought-out plan to influence politics and the op-ed editor of The Wall Street Journal doesn't know about it, it must be a very subtle plan indeed. Wall Street Journal editors and writers had been by far the freest at a major American newspaper. That freedom continued under Rupert Murdoch.
People who have never worked in large corporations or in government are often inclined to ascribe near magical powers of management to the people who lead them. The truth about organizations is much more interesting, if less satisfying to the conspiracy-minded. It is nearly impossible to control more than about 20 or so people, and only then if they directly report to you. Most people go about their business in semi-autonomous units, perhaps with a vague notion of pleasing someone distant up the chain of command, but most often with a simple desire to do their best job as they and their immediate colleagues see it. If you want an example of editorial independence at News Corp., look at how often "The Simpsons" mock their broadcasters at Fox. So what about the phone-hacking issue that now has politicians on both sides of the pond demanding investigations of the Murdoch "empire"? It's not part of a corporate culture that I have been exposed to. Do I believe some editors and reporters could have skirted ethical norms without direction or knowledge at the top? Yes, such things happen in large organizations.
benton.org/node/82003 | Wall Street Journal
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MURDOCH TO SHED NEWSPAPERS?
[SOURCE: Los Angeles Times, AUTHOR: Joe Flint]
In the eyes of Wall Street, News Corp. Chairman Rupert Murdoch's Achilles' heel has always been his unabashed love of newspapers. Now media analysts are hoping the phone-hacking scandal at the company's now-closed News of the World tabloid will finally convince the 80-year-old mogul that it is time to stop the presses that threaten the family empire. In a global conglomerate with revenue of more than $30 billion and assets that include a major movie studio and broadcast and cable television networks, News Corp.'s newspaper holdings are one of the smallest profit centers. The division, which includes British papers the Sun and the Sunday Times as well as the Wall Street Journal and the New York Post in the U.S., will contribute about $6.2 billion, or 18% of News Corp.'s total revenue for fiscal year 2011 and $543 million, or 10%, of the company's $5 billion in operating income, according to estimates by Nomura Equity Research. But Wall Street's concerns about Murdoch's newspaper operations extend far beyond their financial results. Dubbing News Corp.'s newspapers "toxic," Nomura analyst Michael Nathanson said in a report that the company should use the News of the World debacle to "take another look at its assets to determine which are noncore."
benton.org/node/82002 | Los Angeles Times
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NEWS CORP AND BROADCASTING
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
As News Corp.’s phone-hacking scandal spreads to the United States, experts say federal scrutiny of the media conglomerate’s practices probably won't result in the shutdown of the company’s broadcast licenses. News Corp.’s broadcast TV licenses — including Fox — cover 40 percent of U.S. households, and jittery investors have asked telecom policy experts about how the widening scandal could affect those broadcast businesses, analysts say. The Federal Communications Commission has the broad statute to revoke broadcast licenses that are not in the public interest. But doing so would be difficult and the FCC hasn't shown interest in following the FBI in investigating the phone hacking scandal. “Even in the unlikely event the FCC were to pursue license revocation, it would likely happen only after years of litigation at the FCC and in federal courts,” said MF Global analyst Paul Gallant.
benton.org/node/81983 | Washington Post
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A TIPPING POINT FOR JOURNALISM
[SOURCE: Saint Louis Post-Dispatch, AUTHOR: Mike Fancher]
[Commentary] The long-awaited Federal Communications Commission report on the state of America's news media landed with a big thud, sort of like the Sunday newspaper of old hitting your front porch. Initial reactions to the recent FCC report have uniformly praised its exhaustive diagnosis of the problems facing local news reporting. But there also has been disappointment that the report didn't offer remedies.
Can that really be a surprise? American journalism is at a tipping point. The Internet has disrupted the business model that underwrote local news for more than 100 years. The Great Recession made matters worse, resulting in local newspaper and television newsrooms dramatically cutting staffs and other news resources. Another economic shock would hit the media like the tornado that devastated Joplin. Little would be left that we could recognize as local news coverage. If remedies to this were obvious, they would be working by now.
Journalistic institutions do not need saving; they need creating. Technology is opening amazing possibilities to give people convenient access to both civic and life-enhancing information, without regard to income or social status, the commission said. What is needed, it added, is "fresh thinking and new approaches to the gathering and sharing of news and information."
The key question going forward is what policies will promote original reporting in local communities. Further consolidation of media ownership is unlikely to do that. The FCC should promote its mandated goals of competition, localism and diversity. Most important, we must remember that the purpose of journalism is to give people the information they need to be free and self-governing. So each of us has a stake in its future. As the Knight Commission concluded, "the information issue is everyone's issue."
[Fancher is the 2011-2012 Donald W. Reynolds Chair in the Ethics of Entrepreneurial and Innovative Journalism at the University of Nevada-Reno]
benton.org/node/81965 | Saint Louis Post-Dispatch
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WIRELESS/SPECTRUM

FCC AT&T/T-MOBILE WORKSHOP
[SOURCE: Federal Communications Commission, AUTHOR: Renata Hesse]
On July 13, 2011, a workshop of economists was convened at the Federal Communications Commission to discuss certain economic issues of AT&T's proposed acquisition of T-Mobile. The workshop was divided into two panels. The first, on Market Definition and Unilateral and Coordinated Effects, included the following panelists: representing the Applicants from Compass Lexecon, Dennis Carlton, Robert Willig, and Mark Israel. Representing Sprint from Charles River Associates were Steven Salop, Serge Moresi, and Craig Romaine.
Participating in the second panel, which discussed Efficiencies, the But-For World, and Exclusionary Effects/Raising Rivals’ Costs, were the following panelists: representing the Applicants from Compass Lexecon, Dennis Carlton, Robert Willig, and Mark Israel. Representing Sprint from Charles River Associates were Steven Salop, Stanley Besen, and John Woodbury.
When it is available, the transcript of the workshop will be provided for review by individuals with access to highly confidential and confidential information
benton.org/node/81972 | Federal Communications Commission
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AT&T, T-MOBILE AND RURAL AREAS
[SOURCE: Daily Yonder, AUTHOR: Parul Desai]
[Commentary] AT&T says its acquisition of T-Mobile will help the company to expand its networks in rural and underserved communities by providing spectrum and increasing its scale and scope to levels that can support investment. Acquiring access to T-Mobile’s cell towers would quickly add more towers to the AT&T network than could be built in the next eight-years. However, in recent testimony before the House Judiciary Committee, Rene Obermann, CEO of Deutsche Telekom, stated that T-Mobile does not have the spectrum to deploy in rural areas. He and critics of the deal claim that the spectrum that T-Mobile controls won't increase AT&T’s geographic reach since the companies’ networks almost entirely overlap. The issue of “spectrum crunch” or overload of the network, which AT&T insists the merger would help solve, is occurring in highly trafficked urban areas, not rural communities. Given AT&T’s track record, there is no guarantee of additional investment and development in the rural network. Past actions and performance are important to consider. Critics contend that it is not a lack of spectrum or towers that prevents rural development; they also suggest that the benefits to rural network development AT&T is promising can come without the merger for much less than the $39 billion price tag the merger will cost. According to a Congressional Research Services report, AT&T already has a substantial amount of spectrum that it isn't using -- up to one third, according to some commentators. Tapping into that spectrum would mitigate numerous complaints of dropped calls coming from customers.
The review to approve or deny the merger will likely stretch into next year, but regardless of when it occurs the decisions made by the Federal Communications Commission in Washington, and by the corporate boards of AT&T and T-Mobile have substantial consequences for communities who rely on wireless services. The merger may produce the most profound effects on rural customers who have already been ill served by the major communication carriers in the past. The merger could result in a less competitive system, with the remaining companies continuing to cite the same lack of incentive to invest that has hampered rural networks to date.
[Desai is the Telecommunications Policy Counsel for Consumers Union]
benton.org/node/81970 | Daily Yonder
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MERGER APPROVAL WOULD COME WITH PRICE
[SOURCE: Kansas City Business Journal, AUTHOR: Alyson Raletz]
If the AT&T Inc. acquisition of T-Mobile USA is approved, expect a laundry list of conditions. And don't count on LightSquared Inc.’s interference issues to resolve themselves by the end of the year. These were just some of the observations Citadel Securities analysts made after the group hosted a recent series of meetings with investors and key telecommunications stakeholders in Washington. Citadel analyst Shing Yen released a summary of the observations Friday. Earlier this month, Yen predicted Apple would select Sprint Nextel to carry the iPhone by the end of 2011. Among those who attended the meetings were: Jeffrey Carlisle, executive vice president of regulatory affairs for LightSquared; Thomas Tauke, executive vice president of public affairs for Verizon Wireless; U.S. Sen. John Kerry (D-MA); a handful of Federal Communications Commission officials and others. In the analyst summary, Yen wrote that “hurdles may be higher than previously thought” on AT&T’s proposed purchase of T-Mobile, which Sprint vehemently opposes. But if it were approved, Yen said, regulators would consider the most likely acquirers of divested assets, but it isn't clear if sufficient credible buyers exist. “Even if AT&T is willing to accept onerous conditions, we believe the prospect of increased regulatory oversight could cause other industry players — most notably Verizon — to object,” Yen wrote. “Both FCC and (the U.S. Department of Justice) want to ensure that T-Mobile isn't weakened by a prolonged review.”
benton.org/node/81968 | Kansas City Business Journal
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US WIRELESS AT 80%
[SOURCE: Fierce, AUTHOR: Phil Goldstein]
Wireless networks in the United States are operating at 80 percent of total capacity, the highest of any region in the world, according to a report prepared by investment bank Credit Suisse. The firm argued that wireless carriers likely will need to increase their spending on infrastructure to meet users' growing demands for mobile data.
The report said that, globally, average peak network utilization rates are at 65 percent, and that peak network utilization levels will reach 70 percent within the next year. The proprietary report is based on a survey of 38 "key decision makers" at wireless operators globally. In addition to network utilization, the report found that 23 percent of base stations globally have capacity constraints, or utilization rates of more than 80 to 85 percent in busy hours, up from 20 percent last year. In the United States, the percentage of base stations with capacity constraints is 38 percent, up from 26 percent in 2010. The report said that 57 percent of survey respondents expect spending on radio access networks (RAN) to grow fastest within mobile infrastructure on the whole, as carriers try and handle users' data traffic. Further, the analysts found, RAN spending plans have been revised up by 6 percent this year already.
benton.org/node/81874 | Fierce
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NEXTWAVE'S SPECTRUM GOLDMINE?
[SOURCE: GigaOm, AUTHOR: Stacey Higginbotham]
NextWave, a wireless spectrum holding company, said it could not renegotiate the terms of its debt with lenders, which means its next stop may be the bankruptcy courts. But amid a coming spectrum shortage, NextWave has hundreds of megahertz that could be used for mobile broadband that it has tried to sell since November 2009. NextWave’s woes help explain why the U.S. spectrum policy is so difficult.
The company owns huge chunks of spectrum in the 2.3 GHz and 2.5 GHz bands that could be used for mobile broadband, and it covers some important metro areas such as San Francisco, Los Angeles, Chicago, New York City and Boston, as well as dozens of other cities. So why can't it sell, given the looming spectrum shortage and the all-out effort from the FCC and Congress to get some of the spectrum currently used by the local broadcasters? Maybe if NextWave and its spectrum assets hit the bankruptcy courts, we'll see someone pick up those airwaves with the intent to deploy mobile broadband, or maybe we'll see another speculator.
benton.org/node/81880 | GigaOm
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HD CELL PHONES
[SOURCE: Fortune, AUTHOR: Scott Woolley]
Thirty years of experience have taught people to expect conversations over mobile phones to be low-fidelity affairs. But around the world people are quickly learning it doesn't have to be that way. Today, the technology exists to make mobile phone calls sound not just good, but flat-out great. This month Uganda became the 22nd country in the world to offer users "high-definition" mobile phones. Ads around the capitol city of Kampala boast of a dramatic increase in voice quality. "Hear better, feel closer with these HD-enabled phones," reads one Ugandan ad. The global trend of rapidly improving voice quality may come as a surprise to America's 270 million cellular subscribers, who never see an ad for a high-definition phone. The reason: Not a single American company sells an HD cell phone. Not AT&T, not Verizon, not Sprint. No one.
benton.org/node/81872 | Fortune
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INTERNET/BROADBAND

A GROWING DIGITAL DIVIDE
[SOURCE: New America Foundation, AUTHOR: Sascha Meinrath, James Losey, Benjamin Lennett]
There is a growing consensus that communications is a fundamental right. However, achieving digital equality in the broadband age has become considerably more complex than just universal access. This article offers a more nuanced perspective on the widening digital divide that’s centered on a user’s utility of a broadband connection and outlines networking technologies that place control in users’ hands.
benton.org/node/81871 | New America Foundation
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CYBERSECURITY TASK FORCE
[SOURCE: Government Technology, AUTHOR: ]
In late June, House GOP leaders announced the creation of a Republican task force that will by October evaluate the White House’s cybersecurity legislation proposed May 12. The legislation -- Protecting Cyberspace as a National Asset Act -- focuses on protecting domestic federal networks and the national infrastructure, but would make the Department of Homeland Security responsible for protecting civilian networks and gives President Barack Obama new emergency authority over private networks. The proposal also calls for a national data breach notification law -- one that would generally pre-empt existing state breach notification laws. The task force is charged with making recommendations to cyber-security authorities and evaluating the government’s approach to information sharing, public-private partnerships and critical infrastructure. On July 3, Rep. Lee Terry (R-NE) was appointed to serve on the Cybersecurity Task Force, completing the 12-member team and joining Reps. Jason Chaffetz (R-UT), Dan Lungren (R-CA), Mike McCaul (R-TX), Steve Stivers (R-OH), Mike Coffman (R-CO), Bob Goodlatte (R-VA), Robert Hurt (R-VA), Bob Latta (R-OH), and Tim Murphy (R-PA). Mac Thornberry (R-TX) will lead the task force. All members are appointed by House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA).
benton.org/node/81974 | Government Technology
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PRIVACY

PRIVACY LETTER
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Over a dozen privacy and child advocacy groups are asking the Obama Administration to include teen-agers in whatever privacy policy recommendations it makes in a white paper to be released by year's end. The groups are the Center for Digital Democracy (CDD), Consumer Federation of America, Children Now, Benton Foundation, the American Academy of Pediatrics, the American Academy of Child and Adolescent Psychiatry, Center for Science in the Public Interest, Consumer Action, Consumer Watchdog, National Consumers League, Privacy Rights Clearinghouse, Public Health Law and Policy, and the World Privacy Forum. The groups sent a letter to the White House, Justice Department, Commerce Department, and the co-chairs of the Interagency Subcommittee on Privacy and Internet Policy of the White House's National Science and Technology Council.
benton.org/node/81996 | Broadcasting&Cable
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IPOs AND PRIVACY
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
For social media start-ups, going public these days involves more than sprucing up business and financial models. Also showing up in the blogs and securities filings of companies such as Groupon, LinkedIn, Pandora and Zynga is a new consideration: privacy. These social networking firms after all are in the business of data — collecting, sharing and sometime selling user information for targeted ads. They want to signal to investors that they have a plan to make money from the trove of information they have on users. So as federal lawmakers contemplate new online privacy laws and regulators take up investigations of consumer protection violations, this year’s flood of social networking IPOs are looking anew at how those activities in Washington, D.C., could affect their stock market prospects.
benton.org/node/81982 | Washington Post
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OWNERSHIP

CISCO CUTS
[SOURCE: Bloomberg, AUTHOR: Zachary Tracer]
Cisco Systems, the largest networking-equipment maker, plans to eliminate about 6,500 jobs, or 9 percent of its full-time workforce, to help trim $1 billion in annual costs and step up profit growth. The cuts include 2,100 employees who took a voluntary early-retirement program. As part of the move, the company expects to book pretax expenses of $1.3 billion over several quarters, with $750 million in the fiscal fourth quarter. Cisco also said it will sell a set-top box manufacturing plant in Juarez, Mexico, to Foxconn Technology Group, transferring 5,000 workers. Cisco Chief Executive Officer John Chambers has been eliminating jobs and abandoning less-profitable businesses amid slowing sales gains. Cisco has lost market share in its main switching and routing units to Juniper Networks Inc. and Hewlett-Packard Co., and its forays into consumer products, such as the Flip video camera, faltered.
benton.org/node/81990 | Bloomberg
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LOBBYING

MICROSOFT AT WHITE HOUSE
[SOURCE: National Journal, AUTHOR: Chris Frates]
At a White House event, Microsoft announced a $15 million investment in immersive learning technologies like game-based instruction. Microsoft SVP Fred Humphries sat in for CEO Steve Ballmer, who couldn't make the education roundtable that featured other high-powered current and former executives like United Way's Brian Gallagher and former Intel chief Craig Barrett, who were both registered to lobby until several years ago. Humphries lobbies on copyright, immigration reform, broadband, taxes, free trade and, appropriately for today's White House meeting, "promoting excellence in technology, education, standards, and science," according to the company's latest lobbying disclosure. "Microsoft is making a significant investment in education today announcing a new $15 million investment in research and development," said White House spokesman Eric Schultz. "They are committing over the next three years to train 150,000 educators and leaders and provide access to professional learning communities." Still, the meeting left some on K Street grumbling about what they see as the president's double standard, regularly knocking lobbyists until they can help his administration.
benton.org/node/81976 | National Journal
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