September 2011

Tech Blogger to Invest in Start-Ups

Michael Arrington, whose influential TechCrunch blog covers Silicon Valley, has started a venture capital fund to invest in start-ups, including some that he and his staff write about.

The $20 million CrunchFund is the latest example of Arrington’s casting aside one of traditional journalism’s cardinal rules — that reporters should avoid conflicts of interest by maintaining distance from the people, organizations and issues they cover — and raises questions about whether industry bloggers are journalists.

Samsung Presses Ahead on Android

Samsung Electronics has shrugged off early court losses in patent disputes with Apple, apparently confident that it will be able to navigate around them.

The South Korean company, whose fast-rising smartphone business is poised to overtake Apple in unit sales this quarter, introduced several new phones and tablet computers based on the Android operating system that is at the heart of 19 lawsuits brewing between Samsung and Apple in nine countries. Unnamed Samsung executives over the past week have told South Korean media that the company would find ways around recently granted injunctions in Germany and the Netherlands and portrayed both decisions as victories because the courts narrowed the number of disputed patents.

Nokia Sells 2,000 Patents

Mosaid Technologies Inc. said it is taking over about 2,000 wireless patents and patent applications originally filed by Nokia, in a move that Mosaid says will help monetize the intellectual property.

The deal comes amid a recent drive by technology companies to essentially outsource the sometimes-expensive process of squeezing revenue out of their patent holdings. As wireless communication booms, companies big and small are increasingly battling in the courtroom over alleged patent infringement of mobile-related technology. Technology giants, meanwhile, have been on the prowl for patents, both to go after new revenue and to protect themselves from litigation.

Netflix offered $300 million-plus, but Starz wanted higher consumer prices

Starz didn't just want Netflix to pay more money for its content. It wanted Netflix consumers to pay more too.

Netflix offered Starz more than $300 million per year to renew their agreement, but the pay cable channel was insistent on so-called tiered pricing. Tiered pricing would require Netflix subscribers who want movies and television shows from Starz and other premium providers to pay more than the standard $8 per month. That demand was apparently a key sticking point in talks that fell apart, meaning the two companies' deal, which began in 2008, will expire at the end of February. Starz wanted Netflix to charge a premium price for its content in order to put the popular online video service more in line with cable and satellite providers. Protecting relationships with multiplatform video programming distributors (MVPDs) like DirecTV and Time Warner Cable is critical to Starz. The MVPDs are wary of Netflix because they fear customers will "cut the cord" if enough fresh content is available online at a lower price.

Netflix was apparently unwilling to introduce higher prices for access to certain content on its streaming service. However, the company was willing to pay a very high price for access to the movies from Walt Disney Pictures and Sony Pictures that Starz controls, as well as original series like "Camelot." It offered more than $300 million annually, a person close to the talks said, more than 10 times the rate that it currently pays.

Amazon's offer in California sales tax fight gets tepid response

Gov. Jerry Brown (D-CA) and the state's two top legislative leaders are showing little enthusiasm for an offer by Amazon to hire as many as 7,000 workers if the state would delay efforts until 2014 to force all online retailers to collect California sales taxes.

Gov Brown did not dismiss the Amazon bid out of hand, but he said he was worried about losing hundreds of millions of dollars in sales taxes from Amazon and other Internet sellers based out of state under a new law requiring them to collect the money. "I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," Gov Brown said after attending an awards ceremony for correctional officers in Sacramento. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

Most legislators and business groups, after having more time to absorb the details, viewed the offer as too good to be true, panning it as an attempt to stall for time.

Cyberattacks popular way to conduct social protest

[Commentary] "Hacktivism" is fast becoming the new normal of social protests, an information-age reality likely to continually trip up local government agencies.

Cyberattacks of all types are on the rise, as hackers snatch sensitive information or impede information systems in acts of espionage, theft, cyber warfare or, increasingly, public demonstrations. Government departments often don't have the staffing, expertise or funding to realistically combat the threats, experts say. "Not just government, but many smaller organizations are outmatched when it comes to a determined hacker," said Matt Pauker, co-founder of Voltage Security in Cupertino. "In the current situation we're in, with government spending being cut back across the board, these kind of attacks are something unfortunately that I think we'll see more of, not less."

Super Wi-Fi or white spaces, what’s up with unlicensed broadband?

The UK’s equivalent of the Federal Communications Commission laid out plans to use white spaces broadband in the UK, and expects to see such networks in use by 2013. Ofcom, the British regulator believes so-called white spaces, which are the fallow areas of spectrum between digital TV bands, could be used to help mobile operators offload traffic from their networks. Ofcom also suggests that it will evaluate using more spectrum for such a purpose with unused FM radio bands.

In the US, where the FCC has taken to calling the service Super Wi-Fi, a combination of rules designed to keep those trying to use the spectrum for broadband from interfering with those trying to use the spectrum for TV or wireless microphones have made the deployment of services and building devices a time-consuming challenge. A year after the rules were approved there are just a few test networks, no commercial devices and nine companies that have volunteered to operate databases that will help keep white spaces signals from interfering with nearby broadcasts.

Instead of being a utopian vision of mobile broadband, which Google and others portrayed it as back in 2008, it has morphed more into a utilitarian way to provide broadband to rural areas at a lower cost than laying fiber. So goodbye to white spaces as the future home for an economical Internet of things and hello to it as a WISP of sorts for rural America. In the UK it’s still discussed as potential backhaul, but perhaps that vision will also change.

FCC Releases Sept Meeting Agenda

Federal Communications Commission Chairman Julius Genachowski announced the tentative agenda for the next open meeting scheduled for Thursday, September 22, 2011:

Framework for Next Generation 911 Deployment, Notice of Proposed Rulemaking. A Notice of Proposed Rulemaking to accelerate the development and deployment of Next Generation 911 (NG911) technology to improve public safety by enabling the public to send text, photos, videos, and data communications to 911 Public Safety Answering Points (PSAPs) and enhancing the information available to PSAPs and first responders for assessing and responding to emergencies.
Deployable Aerial Communications Architecture White Paper. The Public Safety and Homeland Security Bureau will present a white paper on the use of deployable aerial communications architecture to facilitate the ability of first responders to communicate with each other and consumers to reach first responders in the wake of natural and manmade disasters, even in situations where there is severe damage to terrestrial communications infrastructure. The report will make recommendations regarding next steps the FCC should consider to promote the development and use of deployable aerial communications architecture.

AT&T, T-Mobile job creation claims debunked

Sprint hired a respected economist to look more closely at AT&T's job-creation claims. The T-Mobile acquisition, the study found, is more likely to result in job losses, just as other AT&T takeovers have. David Neumark, a professor of Economics and director of the Center for Economics and Public Policy at the University of California at Irvine, reiterated that the merger is "good for the CWA but, in the aggregate, not good for Americans."

AT&T is overlooking its best argument for the T-Mobile merger

AT&T advertised the benefits of the acquisition of T-Mobile in high-minded, almost patriotic terms. The deal will create jobs, the company vowed, and it will bring broadband to rural America. Even after the Justice Department sued to block the deal, AT&T's retort focused on jobs and network upgrades. It ignored the classic economic argument that consolidation would make the industry dramatically more efficient, slashing the cost of providing wireless service to its customers.

It seems a peculiar omission, since over the last 30 years the cellular industry has repeatedly demonstrated just that link: the more users you put on a cellular network, the less it costs to serve each one. It's practically an iron law of mobile communications business: Bigger means cheaper. On page 51 of a long filing with the FCC in support of the merger, AT&T did get around to describing how the deal would save it $3 billion a year starting three years after it was complete. One of the ways will be "optimizing" the combined company's retail and distribution networks (a process that traditionally involves more firing than hiring). It's easy to see how AT&T got in this pickle. Back when the company first announced the $39 billion takeover, its biggest stumbling block appeared to be regulators at the FCC. So, perhaps not surprisingly, the company tailored its arguments to appeal to the political climate, promising to increase spending and create jobs. Now a federal court date is AT&T's biggest problem and while promises to hire call center workers won't sway a federal judge, blunt arguments centering around economic efficiency might. Courts must balance the rights of consumers and corporations according to a "rule of reason" in which "anticompetitive consequences of a challenged practice are weighed against the business justifications upon which it is predicated."

The Justice Department argues that AT&T "cannot demonstrate merger-specific, cognizable efficiencies" that outweigh the harm to consumers. A judge will ultimately assess the validity of that statement. Right now, AT&T's doesn't seem to have a problem "cognizing" the merger's actual benefits. Verbalizing them is a different matter.

Benton

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