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August 2011

TV's Next M&A Wave Won't Be Like last One

As Mark Twain might put it, news of the death of broadcast television mergers and acquisitions (M&As) has been greatly exaggerated. In fact, as the end of summer looms, we could be on the cusp of an especially dynamic market for mergers and acquisitions in the television space. Of course, throughout the recent downturn there have been regular declarations that a return of broadcast M&A is just around the corner and the predicted uptick seems as elusive as the ever-receding horizon. But this time there are a number of cross-currents forming that will create a particularly strong climate for deal-making. Those deals and the climate itself will be different from what we saw before the economic downturn. This won't be your father’s M&A market.

July 29 - August 5: USF Reform and Broadband Caps

July 29 - August 5: Universal Service Reform and Broadband Caps

Most of the air in Washington has been devoted of late to the debt ceiling deal and deciphering what it means. But that hasn't stopped major developments in how broadband networks will be deployed and used.

Universal Service Reform

At the heart of the National Broadband Plan are the recommendations targeted at modernizing and streamlining the federal Universal Service Fund (USF). Thirty-five recommendations -- approximately 16% of the plan's suggestions -- address this issue. The USF helps provide communities across the country with affordable telecommunications services. The USF has traditionally been focused on making telephone service more available and affordable, but the National Broadband Plan recommended that the Federal Communications Commission modernize the USF, focusing on broadband deployment and affordability.


On July 29, AT&T, Verizon, Frontier, CenturyLink, and FairPoint, and Windstream offered a joint proposal for USF reform. The companies' "America’s Broadband Connectivity Plan” recommends setting aside $2.2 billion annually for broadband deployment and subsidies in (mainly) rural areas, $2 billion annually for rate-of-return carriers (1), and $300 million annually for a mobility fund to support wireless services in rural areas.

To stay within the current fund size, the carriers' plan also recommends:

  • a satellite broadband solution to bring broadband to the 750,000 unserved US homes that would be too costly to serve using a terrestrial solution, and
  • the fund should support only a single carrier in an area and only in areas without competition.

The teleco's plan recommends a minimum broadband target speed of 4 Mb/s downstream and 768 kb/s upstream -- a target that is actually a bit lower than the 1 Mb/s downstream rate initially recommended by the FCC. Rural carriers, on the other hand, have recommended that speeds should be comparable with what is available in urban areas. At the present, perhaps that could be interpreted to mean 4 Mb/s- 768 kb/s speeds, but within a few years the rural carriers’ proposal could call for higher speeds.

Three associations representing small rural telcos -- Organization for the Promotion and Advancement of Small Telecommunications Companies, National Telecommunications Cooperative Association, and the Western Telecommunications Alliance -- indicated general agreement with aspects of the bigger companies' plan. The National Cable & Telecommunications Association also offered some tweaks.

In the wake of the proposal, on August 3, the FCC invited public comment on America’s Broadband Connectivity Plan and other proposals offered in the proceeding. The FCC is asking for public input by Wednesday, August 24 -- with another week for parties to reply to eachother. (So much for your planned break in August.)

Broadband Data Caps

AT&T announced this week that, starting October 1, it will curb browsing speeds for its heaviest users on unlimited wireless data plans to cope with surging data traffic. Customers on an unlimited plan whose monthly use puts them into the top 5 percent of data consumption may experience reduced speeds until the end of that billing cycle. Verizon Wireless made a similar announcement in early July.

The US already ranks highest in mobile Internet costs per month. US users pay more than $40 a month for 2GB of data (the going threshold for new capped data plans). On the other end of the scale, Japanese mobile phone callers pay just a touch over $10 a month for the same plan.

Since AT&T introduced usage-based pricing last year, it’s been gradually shifting smartphone customers to tiered plans, but AT&T grandfathered all of its previous unlimited customers under the new policy, allowing them to keep their restriction-less plans even if they signed new contracts or upgraded handsets. By defining a specific cap, AT&T would essentially be introducing another tier into its pricing plans, which would defeat the purpose of a supposedly unlimited plan. AT&T wants to keep that unlimited allure intact, while reserving the right to judge if that privilege is being abused. Think of like it an unlimited speed limit law: You can drive as fast as you want, but if a state trooper finds your speed to be reckless he can still ticket you.

Tony Bradley in PCWorld writes that the move may be more political than technical, but it also begs the question "who is going to keep any eye on AT&T to make sure they measure usage accurately and don't abuse the throttling?" AT&T plans to throttle the data speed for the top five percent of data consumers--with a few significant caveats. The throttling only impacts users still grandfathered on the extinct unlimited mobile data plan, and it doesn't count or throttle data over Wi-Fi, just the data consumed over AT&T's wireless data network. Something doesn't seem to add up, though. Either AT&T is exaggerating the impact of this five percent and making a spectacle out of the policy change as a political move to justify the case for why it "needs" the T-Mobile acquisition approved, or AT&T is not being completely honest with regard to how many users will be affected or what the impact will be.

Robert X. Cringely (aka Mark Stephens) argues that data caps are a ploy by Internet service providers to position themselves to increase their profits as data consumption explodes in the coming years. He concedes that bandwidth usage is certainly increasing, but at the same time "backbone costs [basically, what ISPs pay to hook themselves into the Internet] are going down and have been doing so for many years," he writes. In Tokyo, he says, the ISP Softbank BB charges its customers about half of what American ISPs charge, even while offering speeds four times faster. "Yet Softbank BB is profitable. Their backbone costs are inconsequential and to argue otherwise is probably a lie."

Art Brodsky at Public Knowledge noted two seemingly unrelated threads which in reality have more in common than might appear obvious. The "use it" thread comes from a vibrant, diverse group of companies, large and small, that are fulfilling their entrepreneurial visions in creating new businesses and new opportunities using broadband (think Amazon, iTunes, and Netflix). The "lose it" thread consists of some of the largest companies in the world, which offer, and control, the means by which all of those other services can be offered and the means by which they can be choked off and have their futures put in jeopardy. Rationing Internet services through a combination of caps and “throttling” for those who “use” more bandwidth, AT&T, Verizon and Comcast are making sure charges for consumers who use all those new devices to watch movies or TV or play games will go through the roof.

Public Knowledge released a report this week that finds that consumers should be wary of pitches by telecommunications companies for their newer, faster “4G” wireless service. Consumers will find their experiences with the faster services severely hampered by the rationing techniques the carriers impose on customers who use lots data. These data caps actively discourage the types of activities (watching movies or uploading video to the Internet, etc) that 4G enables. As a result most users will avoid taking advantage of these new services out of fear of incurring large overage fees. That makes capped 4G little more than a bait and switch. While the report notes that 4G can be a useful technology because it could provide faster and better service, the report concludes: “The imposition of data caps on 4G networks marks an unfortunate milestone in the history of network innovation. For the perhaps first time, the introduction of a generationally faster technology will not have a widespread impact on online behavior. As long as there are low data caps, most users will be better off staying with a (cheaper and slower) 3G connection than paying a premium for 4G. [For more on 4G networks, see Connect Planet's "4G Scorecard"]

As broadband providers scrap unlimited data plans in favor of pricing based on consumption, the Federal Communications Commission is under growing pressure to decipher whether Internet service providers are reasonably managing their networks — or snuffing out competitors like Netflix. It’s a problem partly of the FCC’s own making — and one lawmakers could soon hear about. When the FCC adopted network neutrality rules in December, FCC Chairman Julius Genachowski publicly embraced metered pricing. He was signaling his sincerity that ISPs should be allowed to manage their networks in a reasonable way, even as the FCC moved to impose network neutrality rules that would force providers to treat all traffic equally. But the rush by Internet providers in recent months to end all-you-can-eat data is producing a dangerous side effect, critics say: potentially crippling the booming market for so-called over-the-top video and other data-rich services from Netflix and other providers. Now consumer groups are calling on the FCC to investigate the practice of metered pricing, arguing that there isn't any justification for it.

Next week the FCC holds its monthly open meeting (wireless backhaul is the issue du jour) and the Commission's Emergency Access Advisory Committee meets as well. We'll see you in the Headlines.


Notes:
(1) A rate-of-return (ROR) carrier is a carrier that is allowed to recover its revenue requirement by setting rates on its various products and services so that it earns no more than the rate-of-return authorized by the FCC. (Source: Universal Service Administrative Company)
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August 5, 2011 (Pozen in at Justice)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for FRIDAY, AUGUST 5, 2011

Two FCC meetings next week http://benton.org/calendar/2011-08-07--P1W/


POLICYMAKERS
   Sharis Arnold Pozen, Acting Assistant Attorney General, Antitrust Division
   Steven VanRoekel hopes to cut tech costs

COMCAST/NBC UNIVERSAL
   Sen Franken calls on FCC to enforce merger conditions on Comcast
   Needy families offered low-cost Internet service, computers

WIRELESS/SPECTRUM
   GOP Senators See Benefits In AT&T Merger, Cite Limited Role Of Congress
   AT&T's Great Leap Back - analysis
   Rep. Chabot Asks AT&T Merger Regulators To Consider The Little Guys
   Apple and Samsung smartphones outsell Nokia’s for first time in second quarter [links to web]
   Smartphones, the cigarettes of the next century? - analysis
   FCC approves latecomer Microsoft as white-space database provider [links to web]
   Deutsche Telekom Profit Falls on T-Mobile USA Client Losses [links to web]
   Falcone Accuses AT&T, Verizon Of Blocking LightSquared [links to web]

INTERNET/BROADBAND
   100,000 New Broadband-Enabled Call Center Jobs
   Does USF Reform Put RUS Loans at Risk of Default?
   A Call to Rethink Internet Search
   ANA To ICANN: 'Oh No You Can't,' Domain Plan Would Be 'Disastrous' [links to web]
   US Internet providers hijacking users' search queries
   Dot-Gov Web Sites and Ad Revenues: Why Not Cash In?

CYBERSECURITY
   White House Cybersecurity Coordinator: Privacy, Speech Protections Are Core Tenets
   Expert: Cyberattacks might be the tip of the iceberg [links to web]
   The threat facing Android [links to web]

JOURNALISM
   After years of decline, the audience for network news jumps upward - analysis
   7% Of Arab Bloggers Have Been Arrested: Harvard Survey [links to web]
   Tea Party and Debt Ceiling Lead Online [links to web]
   RTDNA/Hofstra Survey Finds Changing Social Media Landscape for TV & Radio - research [links to web]

OWNERSHIP
   The E-Mail That Google Really Doesn't Want A Jury To See
   French online deal firm wants EU probe into Google [links to web]
   Microsoft calls Google out over patent bullying accusations [links to web]
   News Corp. Board Offers Trash In, Trash Out [links to web]

LABOR
   Verizon, Union Far Apart in Talks
   100,000 New Broadband-Enabled Call Center Jobs

MORE ONLINE
   ACLU might sue over law limiting teachers' Facebook use [links to web]
   96 Stations Have Installed Mobile DTV [links to web]
   New York can’t and shouldn't try to rival Silicon Valley - op-ed [links to web]

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POLICYMAKERS

POZEN TO HEAD ANTITRUST DIVISION
[SOURCE: Department of Justice, AUTHOR: Press release]
Attorney General Eric Holder announced the appointment of Sharis Arnold Pozen as Acting Assistant Attorney General of the Department of Justice’s Antitrust Division. Pozen will become Acting Assistant Attorney General upon the departure of Assistant Attorney General Christine Varney. Pozen came to the department’s Antitrust Division in February 2009, as Chief of Staff and Counsel, and has served as a key deputy to Varney.
Pozen is instrumental in the overall enforcement and management of the division and played a leading role on several matters, including in the healthcare, technology, energy and agriculture industries. This includes the department’s pending lawsuit against Blue Cross and Blue Shield of Michigan (BCBSM), which alleges that BCBSM’s agreements with hospitals stifle competition, and a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibited anticompetitive contracts with health insurers–the first case brought by the department since 1999 that challenged a monopolist with engaging in traditional anticompetitive unilateral conduct.
Pozen was the lead antitrust official for the CPTN Holdings LLC and Novell Inc. matter in which the division required the companies to change the terms of their proposed merger in order to address open source concerns. Pozen was also an important principal in the department’s update of the Horizontal Merger Guidelines and its revision of the division’s Merger Remedy Guidelines.
benton.org/node/85526 | Department of Justice | National Journal | Reuters
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VANROEKEL
[SOURCE: Politico, AUTHOR: Kim Hart]
Steven VanRoekel starts his new job as the federal chief information officer on August 5, hoping to launch the next phase of technology cost-cutting efforts at the White House. VanRoekel will replace Vivek Kundra, the first CIO who will leave the White House Aug. 12. “Rarely do you get to take over in a place where so much good work has been done and so much momentum is already established with teams charging ahead at full steam,” VanRoekel said just after the White House announced his appointment. VanRoekel will continue Kundra’s agenda of eliminating waste in bloated information technology projects, move agencies to cloud computing technologies and make the government more transparent using Web-based and crowd-sourced tools. VanRoekel will inherit oversight of roughly $80 billion in federal IT spending.
benton.org/node/85535 | Politico | ars technica
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COMCAST/NBC UNIVERSAL

FRANKEN ON COMCAST
[SOURCE: The Hill, AUTHOR: Gautham Nagesh]
Sen. Al Franken (D-MN) wrote to the Federal Communications Commission and Justice Department urging them to enforce a condition attached to the NBC Universal-Comcast merger that requires all news channels to be grouped in the same neighborhood. Sen Franken called Comcast's attempt to challenge the condition rather than negotiate to reach a solution a troubling indication the cable giant plans to fight over the language of the merger conditions rather than attempt to implement them in good faith. Sen Franken said he fears that other stakeholders such as small online video providers and independent channels may not have the resources of a Bloomberg to file a complaint and see it to fruition. He urged the FCC to examine the dispute and act if Comcast has violated the neighborhooding condition. Sen Franken also said he hopes that if a violation is found, the FCC considers extending the length the conditions apply to match the date Comcast first came into compliance with them.
benton.org/node/85523 | Hill, The
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COMCAST LOW INCOME PROGRAM
[SOURCE: eSchool News, AUTHOR: ]
As part of its merger with NBC Universal earlier this year, Comcast is required to provide 2.5 million low-income households with high-speed Internet access for less than $10 a month; computers for less than $150 a month; and digital literacy training, according to the Federal Communications Commission. Nearly everything Miami-Dade students -- and their parents -- need for school can be done online: Check homework assignments. Work on extra tutoring. View digital textbooks. Check children’s grades. Or e-mail their teachers. But 72 percent of families in this Florida county’s neediest neighborhoods didn't have Internet service at home in 2008, when Miami-Dade County Public Schools last did a survey. A program launching this week in partnership with the cable provider Comcast seeks to change that. Families with children who qualify for free or reduced-price school lunches can sign up for low-cost, high-speed Internet access, buy a computer at a discount, and take free digital literacy training. “Access to the Internet is akin to a civil rights issue for the 21st century,” said David Cohen, Comcast’s executive vice president. “It’s that access that enables people in poorer areas to equalize access to a quality education, quality health care and vocational opportunities.”
benton.org/node/85443 | eSchool News
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WIRELESS/SPECTRUM

GOP SUPPORT FOR AT&T/T-MOBILE
[SOURCE: National Journal, AUTHOR: Sara Jerome]
Senate Antitrust Subcommittee Ranking Member Mike Lee (R-Utah) and Sen. John Cornyn (R-TX) appear to be taking on Senate Antitrust Subcommittee Chairman Herb Kohl (D-WI) who called on authorities to block AT&T's purchase of T-Mobile. The two senators wrote to federal regulators arguing that the deal "may prove to be a positive step on the path to world-class wireless broadband throughout the United States." The senators say benefits of the merger could include "enhanced service quality, expanded network capacity, and increased data speeds -- particularly given the companies' roughly compatible networks, complementary spectrum holdings, and well-matched cell site grids."
The GOP senators urged regulators to thoroughly review the transaction, while suggesting it is not the role of Congress to say whether the merger should be blocked or approved. "Unlike some of our colleagues, who have specifically called for your agencies to block the merger...we urge you to evaluate all evidence in deciding whether proposed transaction" is legal, the GOP senators said.
benton.org/node/85444 | National Journal
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AT&T'S LEAP BACK
[SOURCE: Wall Street Journal, AUTHOR: Martin Peers]
Industry leaders don't normally shed tears over poor performance by their smaller competitors. But this week's 40%-plus plunge in the stock prices of Leap Wireless International and MetroPCS Communications, triggered by disappointing quarterly results, could be bad news for AT&T. After all, when the telecom giant unveiled its proposed purchase of T-Mobile USA earlier this year, it countered questions about the anticompetitive nature of the deal by pointing to the existence of competitors like MetroPCS and Leap. Any sign that those rivals are struggling can't help AT&T's case. Admittedly, it wasn't the most compelling argument to begin with. AT&T and Verizon Wireless each have about 10 times as many customers as MetroPCS, the bigger of the pair. Leap and Metro's ability to compete against companies of such greater scale has to be a real question.
benton.org/node/85542 | Wall Street Journal
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CHABOT QUESTIONS MERGER
[SOURCE: National Journal, AUTHOR: Josh Smith]
AT&T's proposed merger with T-Mobile could have serious repercussions for regional and rural wireless carriers, Rep. Steve Chabot (R-OH) said in a letter to federal regulators. "If the merger goes through, a vast amount of the most valuable spectrum for deployment of advanced services will be controlled by one carrier," Rep Chabot wrote. "In addition, elimination of the alternative roaming partner for the regional and rural providers that utilize GSM technology will greatly impact the regional and rural wireless providers." In the letter, sent to Federal Communications Commission Chairman Julius Genachowski and Attorney General Eric Holder, Rep Chabot does not take a position on the merger but asks the agencies to carefully examine the proposed deal.
benton.org/node/85541 | National Journal
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ADDICTIVE SMARTPHONES
[SOURCE: GigaOm, AUTHOR: Stacey Higginbotham]
[Commentary] Smartphones are addictive, according to a study from the British telecom regulator Ofcom, which, like many other studies on the topic, emphasizes that people do things like using handsets in bathrooms in lieu of talking to their children and points out how they are changing social behavior. The press release on the research, issued Thursday, uses the word addiction in a variety of forms five times, including when it says 37 percent of adults and 60 percent of teens admit they are “highly addicted” to the devices. But why wouldn't they be? Thanks to apps such as Twitter, texting or even email we are assured that someone is out there on the other end, listening and caring about us. And if the repercussions of such easy and electronically limited socializing mean that we have less time for reflection, or less time for dull or difficult conversations with those who are standing right in front of us, then it’s worth asking what that means for people, society and business.
benton.org/node/85453 | GigaOm | Ofcom
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INTERNET/BROADBAND

BROADBAND AND CALL CENTERS
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
Federal Communications Commission Chairman Julius Genachowski joined business leaders from Jobs4America – a coalition of call center companies -- in Jefferson, Indiana, to announce the creation of 100,000 new broadband-enabled, call center jobs over the next two years in the U.S., helping to revive some communities hardest hit by the economic downturn. Many of these call center jobs will be brought onshore from foreign countries and can be performed at a new cell center or through connectivity at home.
An average of 4,000 call center jobs are being created each month in the U.S. In the second quarter of 2011, over 18,000 new call center jobs were created in the U.S. Chairman Genachowski announced that 175 new jobs will come to Jeffersonville, Indiana including jobs that can be performed at home to benefits people with disabilities or working parents who need more flexibility. Call center employees will handle customer service calls for companies like BJ’s Wholesale Club and Charbroil.
Chairman Genachowski said, “This initiative involves meaningful job creation that will have a meaningful impact across America. Bringing broadband to your town and home in the 21st century is like bringing in electricity in the 20th – connecting you and your community to the larger economy and opening up new worlds of commerce and opportunity.”
benton.org/node/85461 | Federal Communications Commission | Fact Sheet | Connected Planet | Chairman Genachowski
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USF REFORM AND RUS
[SOURCE: telecompetitor, AUTHOR: Joan Engebretson]
Loans recently made to small telcos by the Rural Utilities Service would no longer be “financially feasible” if the Federal Communications Commission caps the Universal Service fund, according to data filed by the RUS with the FCC. The filing came to light just as the nation’s largest and smallest telephone companies announced they had reached accord on Universal Service and inter-carrier compensation reform. Although the large carriers apparently have agreed on a USF cap to the areas they serve, the smaller carriers are recommending that Universal Service funding for their service areas be allowed to continue to grow
benton.org/node/85459 | telecompetitor
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RETHINKING INTERNET SEARCH
[SOURCE: New York Times, AUTHOR: Steve Lohr]
“We could soon view today’s keyword searching with the same nostalgia and amusement reserved for bygone technologies such as electric typewriters and vinyl records.” So declares Oren Etzioni, a computer scientist at the University of Washington, in an essay published in the science journal Nature. The missing ingredients, he writes, are mainly the necessary investments in money and science by leading technology companies and universities. The better world of search, according to Mr. Etzioni, will be services that field spoken or typed questions and generate useful answers. Or, as he writes, “natural-language searching and answering, rather than providing the electronic equivalent of the index at the back of a reference book.”
benton.org/node/85524 | New York Times
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SEARCH HIJACKING
[SOURCE: New Scientist, AUTHOR: Jim Giles]
Searches made by millions of Internet users are being hijacked and redirected by some Internet service providers in the US. Patents filed by Paxfire, the company involved in the hijacking, suggest that it may be part of a larger plan to allow ISPs to generate revenue by tracking the sites their customers visit. It may also be illegal. Reese Richman, a New York law firm that specializes in consumer protection lawsuits, filed a class action against one of the ISPs and Paxfire, which researchers believe provided the equipment used to hijack and redirect the searches. The suit, filed together with Milberg, another New York firm, alleges that the process violated numerous statutes, including wiretapping laws. The hijacking seems to target searches for certain well-known brand names only. Users entering the term "apple" into their browser's search bar, for example, would normally get a page of results from their search engine of choice. The ISPs involved in the scheme intercept such requests before they reach a search engine, however. They pass the search to an online marketing company, which directs the user straight to Apple's online retail website. More than 10 ISPs in the US, which together have several million subscribers, are redirecting queries in this way
benton.org/node/85533 | New Scientist
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SELLING ADS ON DOT GOV
[SOURCE: Wall Street Journal, AUTHOR: Mark Lewyn]
[Commentary] Shouldn't government find creative new ways to raise revenue before it imposes higher taxes on anybody? Government websites have been around, in one form or another, for decades. In 1985, the feds launched the "dot-gov" domain as a trusted and secure zone for virtually all government websites—everything from IRS.gov to Virginia.gov. Today these sites have become vibrant hubs of web activity, used by citizens to pay their taxes, renew their driver's licenses, talk to their elected representatives, and a lot more. So why aren't more governments -- many of which are already facing sizeable deficits -- lining up behind Washington state to cash in on what could be a multibillion-dollar ad bonanza? Simple: A federal regulation effectively bans commercial ads on any dot-gov Web address, which most governments -- federal, state and local -- use as their virtual homes. While some side-step the rule by putting ads on websites using a dot-com address -- which is what Washington state did, and some others are now doing -- these sites often aren't as well-known to citizens as their dot-gov cousins. Therefore there's less opportunity for governments to cash in on ads.
benton.org/node/85531 | Wall Street Journal
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CYBERSECURITY

SCHMIDT ON C-SPAN
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
White House Cybersecurity Coordinator Howard Schmidt said the Administration continues to work with industry on how to work together to combat cyber crimes and protect infrastructure and that he expects the cybersecurity package, whose reporting requirements have troubled some companies, would change with give and take over those concern. He also said that protecting privacy and civil liberties would continue to be a "core tenet." Asked about pushback from telecom companies -- the White House submitted proposed cybersecurity legislation that included information sharing (as in reporting requirements) with critical infrastructure (broadband providers among others) -- Schmidt took issue with the suggestion that some had come out with "guns blazing" on the proposed new laws. He said most of the people he had talked to said the White House proposal was "measured," and added that it was "the beginning of the dialog" rather than the end of it. He conceded that the "devil was in the details," and said that it was yet to be determined just exactly what critical infrastructure would be defined as and what the reporting requirements would be. He said that includes making sure that if a company already has a reporting requirement to some government agency "that we are not piling more reporting requirements on top of them.
benton.org/node/85446 | Broadcasting&Cable
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JOURNALISM

TV NEWS AUDIENCES
[SOURCE: American Journalism Review, AUTHOR: Deborah Potter]
Finally, there's some good news for network TV news. Ratings are up this year, both evening and morning, and not just a little. But hold the celebration, too, because it could just be a blip. At first glance, the numbers are nothing to sneeze at. The three evening newscasts added almost 2 million viewers combined in the second quarter compared with the same period the year before. That amounts to a 10 percent increase – the first major jump in a decade – not too shabby for programs that have been written off as dinosaurs. The network morning shows saw a similar uptick, adding 1.2 million viewers for a total of 13 million. It's too soon to call it a trend, but the numbers are significant enough to be worth a closer look. What's going on here? There's no question that more viewers tune in when there's big news, and there was plenty of it this spring. The aftermath of the Japanese earthquake and tsunami raised fears of a nuclear meltdown. The killing of Osama bin Laden by U.S. forces in Pakistan marked a turning point in the 10-year fight against terrorism. And the devastating tornadoes across the South provided the kind of emotional footage that TV news thrives on. But that's not the whole story behind the numbers.
benton.org/node/85514 | American Journalism Review
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OWNERSHIP

GOOGLE'S E-MAIL
[SOURCE: paidContent.org, AUTHOR: Joe Mullin]
Lawyers defending Google against a patent and copyright lawsuit brought by Oracle are trying desperately to keep a particular engineer’s e-mail out of the public eye -- but it looks like they’re unlikely to succeed. The e-mail, from Google engineer Tim Lindholm to the head of Google’s Android division, Andy Rubin, recommends that Google negotiate for a license to Java rather than pick an alternative system. The key portion of the email was read aloud from the bench by U.S. District Judge William Alsup during a July 21 hearing. The second paragraph of the email reads: “What we've actually been asked to do by Larry [Page] and Sergey [Brin] is to investigate what technical alternatives exist to Java for Android and Chrome. We've been over a bunch of these and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.”
benton.org/node/85437 | paidContent.org
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LABOR

VERIZON LABOR TALKS
[SOURCE: Wall Street Journal, AUTHOR: Greg Bensinger]
As a contract with Verizon Communications's unionized workers is set to expire August 6, the two sides remain far apart, potentially setting the stage for the first strike in 11 years as Verizon seeks some of the biggest concessions in years from its unions. The contracts cover 45,000 Verizon workers in the Mid-Atlantic and Northeast regions. The vast majority of them serve as field technicians or in call centers in the so-called wireline side of the business. The wireline business faces continuing revenue declines as cable companies poach landline customers and consumers switch to cellphones. A strike could hurt Verizon's business, delaying service work on its FiOS television unit, and Internet and phone lines. To deal with the wireline weakness, Verizon wants to tie pay increases more closely to job performance, make it easier to fire workers for cause, halt pension accruals this year, and require union workers to contribute to health-plan premiums. The company's push for concessions follows rollbacks of union benefits in the airline, auto and municipal work forces. Officials of the Communications Workers of America and the International Brotherhood of Electrical Workers, meanwhile, contend the proposed cuts are meant to lessen the unions' power and point out that the company remains profitable.
benton.org/node/85544 | Wall Street Journal
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STORIES FROM ABROAD
   Seoul Warns of Latest North Korean Threat: An Army of Online Gaming Hackers

ONLINE GAMING HACKERS
[SOURCE: New York Times, AUTHOR: Choe Sang-Hun]
The North Korean leader Kim Jong-il has found a novel way of raising badly needed cash, according to the South Korean authorities: unleashing young hackers on South Korea’s immensely popular online gaming sites to find ways to rack up points convertible to cash. Despite its decrepit economy, North Korea is believed to train an army of computer programmers and hackers. The police in Seoul said Thursday that four South Koreans and a Korean-Chinese had been arrested on charges of drawing on that army to organize a hacking squad of 30 young video gaming experts. Working from Northern China, the police said, the squad created software that breached the servers for such popular South Korean online gaming sites as “Lineage” and “Dungeon and Fighter.” The breach allowed round-the-clock play by “factories” of dozens of unmanned computers. Their accumulated gaming points were exchanged for cash at Web sites where human players are focused on acquiring enhancements for their online personas, or avatars. The gaming software was also sold, the police said; such factories, while illegal, are common in South Korea and China.
benton.org/node/85530 | New York Times
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Verizon, Union Far Apart in Talks

As a contract with Verizon Communications's unionized workers is set to expire August 6, the two sides remain far apart, potentially setting the stage for the first strike in 11 years as Verizon seeks some of the biggest concessions in years from its unions.

The contracts cover 45,000 Verizon workers in the Mid-Atlantic and Northeast regions. The vast majority of them serve as field technicians or in call centers in the so-called wireline side of the business. The wireline business faces continuing revenue declines as cable companies poach landline customers and consumers switch to cellphones. A strike could hurt Verizon's business, delaying service work on its FiOS television unit, and Internet and phone lines. To deal with the wireline weakness, Verizon wants to tie pay increases more closely to job performance, make it easier to fire workers for cause, halt pension accruals this year, and require union workers to contribute to health-plan premiums.

The company's push for concessions follows rollbacks of union benefits in the airline, auto and municipal work forces. Officials of the Communications Workers of America and the International Brotherhood of Electrical Workers, meanwhile, contend the proposed cuts are meant to lessen the unions' power and point out that the company remains profitable.

AT&T's Great Leap Back

Industry leaders don't normally shed tears over poor performance by their smaller competitors. But this week's 40%-plus plunge in the stock prices of Leap Wireless International and MetroPCS Communications, triggered by disappointing quarterly results, could be bad news for AT&T.

After all, when the telecom giant unveiled its proposed purchase of T-Mobile USA earlier this year, it countered questions about the anticompetitive nature of the deal by pointing to the existence of competitors like MetroPCS and Leap. Any sign that those rivals are struggling can't help AT&T's case. Admittedly, it wasn't the most compelling argument to begin with. AT&T and Verizon Wireless each have about 10 times as many customers as MetroPCS, the bigger of the pair. Leap and Metro's ability to compete against companies of such greater scale has to be a real question.

Rep. Chabot Asks AT&T Merger Regulators To Consider The Little Guys

AT&T's proposed merger with T-Mobile could have serious repercussions for regional and rural wireless carriers, Rep. Steve Chabot (R-OH) said in a letter to federal regulators.

"If the merger goes through, a vast amount of the most valuable spectrum for deployment of advanced services will be controlled by one carrier," Rep Chabot wrote. "In addition, elimination of the alternative roaming partner for the regional and rural providers that utilize GSM technology will greatly impact the regional and rural wireless providers." In the letter, sent to Federal Communications Commission Chairman Julius Genachowski and Attorney General Eric Holder, Rep Chabot does not take a position on the merger but asks the agencies to carefully examine the proposed deal.

Apple and Samsung smartphones outsell Nokia’s for first time in second quarter

Apple and Samsung Electronics zoomed to the top of the list of global smartphone makers in the second quarter, blowing past Nokia and BlackBerry maker Research In Motion, according to research firm IDC.

Korea’s Samsung made the biggest jump, from No. 4 in the first quarter to No. 2 in the second, on the strength of its Galaxy phones, which run Google’s Android software. It sold 17.3 million smartphones in the second quarter, up from 10.8 million in the first, IDC said. Apple rose to No. 1, taking the spot from Nokia, by selling 20.3 million iPhones, up from 18.7 million in the first quarter. That relegated Finland’s Nokia, the long-time leader, to third place. Apple has yet to top Nokia’s high-water mark of 28.1 million phones in a quarter.

News Corp. Board Offers Trash In, Trash Out

[Commentary] The worst-kept secret in recent business history is that News Corp. is an underachiever when it comes to matters of corporate governance.

Long before hacked phone messages and bribed London cops replaced Dominique Strauss-Kahn as the hot global story, the people who analyze how well public companies manage themselves were holding their noses whenever they perused regulatory filings from Rupert Murdoch’s media empire. Now, shares of the company are themselves a scandal, losing 19 percent since the scandal heated up July 4. Garbage in -- that is, a board encumbered with conflicts of interest -- turns out to be a reliable predictor of garbage out. So who’s kidding whom here?

When you buy shares of a company where more than one person on the board has the same last name, and spouses, in-laws, and directors cash in on job appointments, contracts and asset sales to the company, you should expect to get what you pay for. The best favor News Corp. could do for shareholders is to make sure nobody named Murdoch sits in the C-suite. Barring that, shareholders with a complaint about the downside of investing in a family dynasty have only themselves to blame.

Falcone Accuses AT&T, Verizon Of Blocking LightSquared

Hedge-fund manager Phil Falcone claimed that competing wireless companies were trying to undermine his efforts to launch LightSquared, a nationwide wholesale wireless network. He accused AT&T and Verizon of working with members of the global positioning systems industry to block the new wireless network.

Steven VanRoekel hopes to cut tech costs

Steven VanRoekel starts his new job as the federal chief information officer on August 5, hoping to launch the next phase of technology cost-cutting efforts at the White House.

VanRoekel will replace Vivek Kundra, the first CIO who will leave the White House Aug. 12. “Rarely do you get to take over in a place where so much good work has been done and so much momentum is already established with teams charging ahead at full steam,” VanRoekel said just after the White House announced his appointment. VanRoekel will continue Kundra’s agenda of eliminating waste in bloated information technology projects, move agencies to cloud computing technologies and make the government more transparent using Web-based and crowd-sourced tools. VanRoekel will inherit oversight of roughly $80 billion in federal IT spending.

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