August 2011

Use It vs. Lose It: The Threat of Internet Rationing

[Commentary] AT&T’s announcement that it would start to throttle the “heaviest users” on its wireless network is only the latest in a series of developments that place the idea of a thriving, useful Internet at risk. No one knows why rationing schemes like data caps are triggered, what they are supposed to do, much less if they are successful. Serious doubts have been raised whether caps are necessary at all to manage networks or to cover costs from increased Internet use. But consumers who wants to use the Internet more are the ones who will suffer. Some institutions, like the New York Times editorial page, the news pages of the Washington Post, and Canadian regulators, are paying attention. Some institutions, like the Federal Communications Commission (FCC), are not.

FCC Continues Equal Employment Opportunity Audits

On August 1, 2011, the Federal Communications Commission mailed the second of its Equal Employment Opportunity (EEO) audit letters for 2011 to randomly selected radio stations. The FCC annually audits the EEO programs of randomly selected broadcast licensees and multi-channel video programming distributors (MVPDs). Each year, approximately five percent of all radio and television stations and MVPDs are selected for these EEO audits.

Judiciary chairman backs AT&T/T-Mobile

AT&T has picked up the support of powerful House Judiciary Committee Chairman Lamar Smith (R-TX), who urged federal regulators this week to consider the “many benefits” of the company's pending T-Mobile bid.

Chairman Smith sent a letter to Attorney General Eric Holder and FCC Chairman Julius Genachowski that was aimed, in part, at countering several Democratic lawmakers who recently urged the officials to block the $39 billion transaction. “Recently you have heard from members of Congress who, based on the limited information provided in congressional hearings, urged you to conclude that this merger should be blocked,” Chairman Smith wrote in the missive. “Unfortunately, they provided you with only one side of the story. I feel compelled to briefly point out the other side.” Chairman Smith then listed some of the benefits that could be yielded from approving the wireless mega-deal, which are largely similar to AT&T’s arguments in favor of the proposed acquisition. He argued that the deal would allow AT&T to expand its LTE mobile broadband service to 97 percent of Americans, provide better service, and create jobs and innovation through an improved broadband network.

YouTube: The Epic Six-Year Tale

Where were you in May 2005? As with every other medium that has flourished in the last century and a half, YouTube was the catalyst for an online video energy that had been building for a while. Some say the month YouTube went live, May 2005, may be seen as a turning point that falls into the pantheon of the 1947 World Series, which marked the beginning of television's fast rush to household ubiquity.

Privacy Rules

The burgeoning News Corp. phone-hacking scandal has shined a spotlight on the issue of privacy in recent days. For cable operators, programmers and advertisers, though, the issue has long been under the klieg lights, thanks to an inescapable recognition that we - and our kids - are living in the online space these days.

Privacy legislation has been kicking around Washington for almost a decade, generally caught in the ideological gap between Democrats' desire for government involvement and Republicans' defense of free-market forces. That was before broadband became the buzzword on every policymaker's lips and revelations piled up about how cutting-edge technology was slicing into privacy rights. There has never been as much activity on the privacy policy front in the nation's capital as there is today. A raft of bills have been introduced in the House and Senate, with more on the way; the Justice Department and Federal Trade Commission are conducting investigations; and a pair of advisory reports are due from the FTC and the Obama administration, by way of the Commerce Department. All of these efforts seek to provide citizens with basic protections from hackers, thieves and unwanted marketers. The subject of security is also under serious study and scrutiny by corporations, think tanks and legislators. Service providers, online advertisers and marketers - whose digital sales tools peer ever deeper into consumers' lives by recording channel choices and keystrokes - have a lot at stake in how the government chooses to bulk up online privacy protections.

Consumers need to be sold on benefits of mobile payments

The way people have been talking about near field communication, digital wallets and carrier billing, you'd think consumers were ready to embrace mobile payments. But Consumer Reports thinks consumers may not be that excited yet about paying for goods with their phones, nor should they be.

The consumer advocacy organization highlighted transaction problems and fees when warning about potential hurdles standing in the way for mobile payments. Consumer Reports said only 5 percent of recent survey respondents had used their cell phone to pay for day-to-day purchases in the previous month, and only 10 percent had billed a purchase to their home or cell phone account. The low usage number isn't completely surprising, given that mobile payments are still quite new to most people, but it underscores the challenges ahead in getting consumers to opt-in to the tech. Many are open to the idea, but there needs to be a good case for ease of use and added flexibility. Payment processes like near field communication require new hardware purchases and some changes in behavior. The challenge for Google , the carrier consortium Isis and others pursuing NFC payments will be to convince consumers that it’s clearly a better option than swiping a card, which is pretty familiar and easy for people.

Cable Upfront Scores $9 Billion, Beats Broadcasters

The recently completed cable upfront marked a 16% increase over last year and set an all-time record with $9.29 billion in spending commitments for the 2011-12 season, according to the trade group that promotes cable advertising.

The total volume topped $9 billion for the first time and after "parity" a year ago, surpassed what the broadcasters took in collectively, according to the Cabletelevision Advertising Bureau (CAB). Last summer, dollars were up 19%, more than making up for the steep dive during 2009's Great Recession Upfront, when volume dropped 13% (by $875 million). TV in general continues to be a strong medium as the economy sputters. A recent survey of agency executives by Strata, a media-buying processing firm, pegged TV as making up 41% of ad budgets. The survey did conclude the medium is losing share to digital, which is now at 24%.

In Battle With MPAA, Zediva Is Down For The Count

When the Zediva DVD-streaming service popped up earlier this year, its novel legal strategy immediately became a subject of debate among law school professors and digital copyright pundits. Whatever the bounds of copyright are in the digital age, Zediva now appears to be outside them.

A Los Angeles federal judge has hit the service with an injunction that will force Zediva to stop streaming very soon. Zediva hoped to preserve its business with a legal argument that it wasn't so different from a bricks-and-mortar DVD shop; Zediva was simply “place-shifting” the physical DVD rental, making the internet into essentially a “cord” from a user’s computer to a DVD player borrowed from Zediva. Unlike services like Netflix or digital rentals like those available on iTunes and Amazon, Zediva never made a digital copy. It simply put a physical DVD into a DVD player located in its Silicon Valley data center and streamed the movie online to its customers. It’s now clear that strategy, described by some as a “loophole,” isn't going to work so easily. Zediva was hit with a lawsuit by the Motion Picture Association of America back in April, and although the small company lawyered up and vigorously defended itself, it’s now lost a key battle.

MetroPCS to begin VoIP transition in early 2012

MetroPCS will introduce its first carrier VoIP services in the first quarter of 2012, CEO Roger Linquist said today during Metro’s earnings call. Using its new long-term evolution (LTE) network, MetroPCS will take the first steps in migrating its circuit-switched voice service over to an IP Multimedia Subsystem (IMS)-driven voice-over-LTE (VoLTE) service, a process it has already begun with the migration of its SMS and MMS services to the same platform.

“We are planning to begin introducing VoLTE-capable handsets early next year to move voice as well as data traffic to our LTE network,” Linquist said. Linquist added that moving to VoIP will allow MetroPCS to use its limited spectrum much more efficiently. While MetroPCS already is one of the most efficient operators on a subscriber per megahertz basis, it is always looking for more ways to increase that efficiency as well as expand its frequency base through strategic acquisitions., Lindquist said.

AT&T subs holding on to their unlimited plans -- but change is coming

Starting in October, AT&T will start throttling speeds to its heaviest smartphone data users still using unlimited data plans, cutting back their download speeds after the reach an unspecified threshold.

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. With throttling, obviously those days of unfettered access are over, though only the top 5% of heaviest users will feel the effects of the new policy. It’s worth examining, though, just how many AT&T customers will see any difference. Approximately 19+ million AT&T customers are still on unlimited plans. 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.

Benton

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