July 2011

So Who Really Stands to Benefit from AT&T’s T-Mobile Takeover?

[Commentary] Who really wins if AT&T buys T-Mobile?

The most obvious beneficiary of this takeover is AT&T. By eliminating a competitor, AT&T would gain millions of subscribers, a cache of valuable wireless spectrum and a spot alongside Verizon in a massive wireless duopoly. (So massive in fact that these two companies would rival the market dominance of the top 10 oil companies combined.) AT&T’s shareholders are also poised to reap the benefits of the post-merger “synergies” which translate into tens of thousands of laid off workers and billions less investment. While AT&T tells Congress the merger will lead to more investment and jobs, it’s telling Wall Street the opposite. It’s probably not lying to Wall Street.
Deutsch Telekom has been seeking to unload T-Mobile. T-Mobile has been slowly falling behind Verizon and AT&T, thanks in large part to the slanted regulations and unfair playing field that the duopolists have ordered up from friendly lawmakers. The investment necessary to bring it up to speed is not that large compared to the merger price, but it may be more than Deutsche Telekom wants to put in. Additionally, in order to expand its coverage and improve its network, T-Mobile needs more and better spectrum, and has trouble getting it because AT&T and Verizon are so dominant in that arena, too.
Communication Workers of America has been ceaselessly urging progressives to support the merger, calling it good for jobs and investment, but what it really means is that the merger is good for the union. CWA has been trying to unionize T-Mobile’s workforce for the last four years, and under AT&T it would have access to those workers. T-Mobile's workforce, of course, should be free to join unions. But what CWA doesn't mention in its plugs for the merger is that a significant number of T-Mobile’s workers won't even have the chance to join the union, because they'll be laid off. The only benefits those downsized workers will see are unemployment benefits.
AT&T is one of the biggest contributors to congressional coffers, and it has spent nearly $54 million in campaign contributions over the past 25 years, and over $142 million on lobbying in the last 15. After the Supreme Court's Citizens United decision, the cost of running for Congress has spiraled upward, giving contributing corporations even more power to dictate policy to money-hungry elected officials. The signers of this week’s letter have received a total of nearly $1.8 million from AT&T, a number that probably helped the signers avoid taking a long look into the letter’s claims.

Telecom Lobbying

AT&T spent $6.84 million in the first quarter to lobby the federal government, according to a disclosure report. That's up from the $5.93 million that AT&T spent in the same period last year and more than double the $2.91 million it spent in the fourth quarter of 2010. AT&T said it lobbied Congress, the I.R.S., the Treasury Department, the National Telecommunications and Information Administration, the National Economic Council, the Department of Commerce, the U.S. Trade Representative and the office of Vice President Joe Biden. AT&T was active on a wide array of issues, including the allocation of wireless spectrum, legislation involving patent reform, cellphone taxes and health care reform.

T-Mobile spent $690,000 in the first quarter to lobby Congress, the office of Vice President Joe Biden, the Federal Communications Commission, and the National Telecommunications and Information Administration on cellphone taxes, wireless spectrum, and data roaming rules.

Sprint Nextel spent $583,000, down 25 percent from the $774,100 the cellphone company spent a year earlier, and it's just shy of the $589,500 it spent in the first quarter of 2010. Sprint lobbied Congress, the Department of Commerce, the Department of Homeland Security and the Federal Communications Commission on issues including wireless regulation, privacy legislation involving the use of spectrum, texting while driving and public safety communications. The company has also been an active opponent of AT&T's proposed acquisition of T-Mobile.

Verizon spent $4.68 million in the second quarter to lobby the federal government on a wide array of issues, including cyber security and radio spectrum allocation. The amount was down slightly from the $4.72 million Verizon spent in the same period last year but more than the $3.76 million it spent in the fourth quarter of 2010. Verizon said it lobbied Congress, the White House, the Treasury Department, and the Internal Revenue Service.

CTIA-The Wireless Association, which represents cell phone companies, spent $2.84 million in the first quarter to lobby the federal government on cellphone taxes and other issues.

Google hiring 12 lobbying firms as FTC readies antitrust probe

Google will hire a dozen new lobbying firms in a sign the search giant is taking the Federal Trade Commission’s upcoming antitrust investigation seriously.

“We have a strong story to tell about our business and we've sought out the best talent we can find to help tell it,” said a Google spokesperson. Google has been under intense scrutiny from Congress since last year due to a host of privacy and other concerns, prompted in part by the Street View WiFi spying incident, in which Google vehicles collected personal information through unencrypted wireless networks. The firm is also frequently mentioned during the ongoing legislative debate over online privacy and behavioral advertising, due to Google’s huge online ad business. The firms in question are Akin, Gump; Bingham; Capitol Legislative Strategies; Chesapeake Group; Crossroads Strategies; Gephardt Group; Holland & Knight; Normandy Group; Prime Policy; The First Group; The Madison Group; and the Raben Group. Most of the firms have yet to register on behalf of Google, but will do so in the coming days.

Apple and Microsoft Beat Google for Nortel Patents

Nortel Networks, the defunct Canadian telecommunications equipment maker, said that it had agreed to sell more than 6,000 patent assets to a consortium made up of Apple, Microsoft and other technology giants for $4.5 billion in cash. The group of companies — which also included Research in Motion, Sony, Ericsson and EMC — beat out Google and Intel for the patents and patent applications that Nortel had accumulated when it was still one of the largest telecom equipment makers in North America.

Kent Walker, Google’s general counsel, said that the auction’s outcome was ‘‘disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition.” In April, Google made a stalking-horse bid of $900 million for the patents, some of which are related to the 4G wireless technology known as long-term evolution. Networks based on that technology, considered crucial to the future of telecommunications, are created to carry large amounts of data like streamed video to mobile devices. The Google offer was interpreted as a defensive move by the search engine giant, which was seeking intellectual property rights to shield itself from lawsuits as it moves deeper into the mobile business with its Android platform.

Two years after it filed for bankruptcy, Nortel sold off its last remaining patents — covering businesses from wireless and networking technology to semiconductors. The sale will require approval from courts in Canada and the United States, Nortel said. Some 2,600 of the patent assets are American. A joint hearing has been scheduled for July 11.

Google in preliminary talks to buy Hulu

Apparently, Google is in preliminary talks to buy online video pioneer Hulu.

Hulu has begun meeting with potential buyers including Google, Microsoft Corp. and Yahoo Inc. to drum up interest in a sale, said these people, who requested anonymity because the discussions are confidential. The presentations to the potential suitors are a first step as Hulu's owners weigh whether to sell the site after having received an overture from Yahoo. The technology heavyweights are seeking to capitalize on the widespread popularity of online video and position themselves to reach the growing number of viewers who watch television shows, movies and short videos on computers, mobile devices and Internet-connected television sets.

NBA Lockout Will Cost Television Networks Billions

Should the NBA season be scuttled altogether billions of dollars would be washed away, and no one will take a bigger hit than the league’s network of TV partners.

ESPN/ABC Sports and TNT stand to lose as much as $1.25 billion in ad sales revenue if the labor dispute negates the entire 2011-12 NBA campaign. Indeed, the NBA audience has become so valuable that the postseason inventory alone accounts for nearly a fifth of the full-season take. According to Kantar Media, ESPN/ABC and TNT took in $417.7 million in total ad sales revenue over the course of the 2010 NBA playoffs and finals. The going rate for a 30-second spot in the Celtics-Lakers series: $402,000 a pop. If the networks stand to lose a fortune in ad dollars, the league itself risks billions in media rights, ticket sales, and merchandising. ESPN/ABC pays $485 million per year for the rights to air NBA games while TNT forks over $445 million. Adding up to a cool $930 million per season, both TV contracts expire in 2016.

Town finds iPads make paperless painless

The town of Cornelius (CO) has found that a new pilot program replacing paper with iPads is saving the administration money, time and helping the environment along with increasing government transparency, according to the Huntersville Herald.

Cornelius Mayor Jeff Tarte and the town’s five commissioners were each issued an iPad 2 recently, paid for by the town, which they premiered at the town’s board meeting on Monday, June 20. The iPads all plug into the town’s NovusAgenda software, providing commissioners with all necessary meeting materials, including budget worksheets, zoning maps and PowerPoint presentations, which once comprised 210 pages of printed materials each. These packages used to be distributed in paper form to 19 members, which meant a whole lot of time spent copying, and money spent leasing and maintaining copy equipment, in addition to the cost of supplies. Town Manager Anthony Roberts says he’s amazed with how much sense it makes to use iPads and digital material instead of paper.

Internet-Connect TV Soars, Clicks With Mainstream Audience

Internet-connected television sets have been growing fast, and by the end of the year -- for the first time -- there will be more connected TVs than videogame consoles.

By the end of 2011, some 52 million connected TV sets will be sold globally -- from Samsung, LG and Sony versus 37 game consoles in the market from Microsoft, Nintendo and Sony --Xbox, PlayStation and Wii respectively. This is according to U.K.-base Informa Telecoms & Media. "Until now, many online video services were launched primarily with the game console in mind, mainly because console users innately understand how to connect these devices and demand interactive video services from them," stated Andrew Ladbrook, analyst at Informa Telecoms & Media. He said this trend is changing as "connected TVs bring these services to a mainstream audience." Informa projects that in five years -- 2016 -- there will be 1.8 billion in-home video devices -- including tablets -- that will be sold, an 800% increase. That means 70% of all in-home video devices sold will be able to connect to the Internet. But connected TVs might have to undergo a change by then. Informa says new TV set makers will need to build and support platforms that works across both the latest and legacy video devices.

Apparent wave of cyber breaches is an illusion

A proliferation of hacktivists and frustration with cleanup costs are prompting agencies and companies to disclose breaches they would have kept under wraps in the past, Internet security researchers say. While it may seem that cyber crooks are poking into databases more frequently based on increased media coverage, the fact is that government and corporate networks have been under constant assault for years, the researchers note.

"There are those that have been hacked and those that do not know they have been hacked -- there are really only two groups," said Dmitri Alperovitch, vice president of threat research for McAfee Labs, the research division of the computer security firm. "When we do an investigation, 99 percent of the time we're forced to sign a [nondisclosure agreement]" so word of the incident does not surface. He attributes the recent rise in reports of network intrusions to publicity-seeking perpetrators that have become more organized during the past year.

TW Telecom asks the FCC to declare IP voice a telecommunications service

TW Telecom has asked the Federal Communications Commission to declare that voice calls transmitted using IP are telecommunications services -- a move aimed at minimizing the carrier's costs of interconnecting calls with incumbent telcos.

“Everybody is putting in IP switches,” said Kelsi Reeves, vice president of federal government relations for TW Telecom, in an interview. But, she said, “incumbents are saying they have no obligation to interconnect on an IP-to-IP basis.” Although TW Telecom has IP voice interconnection agreements with some competitive carriers, the company has not yet been able to negotiate any such deals with an incumbent. Instead, Reeves said calls originating in IP form have to be converted to TDM for interconnection with the incumbents. IP-to-IP interconnection, she said, would be preferable for two reasons. First, she said, it would be more efficient because it would require fewer facilities, which could decrease costs for customers. Second, she said service quality would be better because information associated with the call would be transmitted using SIP. Without direct IP-to-IP connection, calls must be converted from SIP to SS7 and sometimes some of the information associated with the call does not translate correctly, resulting in service degradation, Reeves said.

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