October 2012

Mobile: The new frontier in claims against Google

A coalition of rivals prodding regulators in the U.S. and Europe to bring antitrust lawsuits against Google is raising a series of new concerns with the search company’s business practices — this time claiming that Google is using Android to squash competition and corner the increasingly lucrative mobile market.

A confidential white paper provided to POLITICO outlines a range of alleged anti-competitive conduct that is allowing Google to “extend its desktop search dominance and eliminate competition in the mobile OS,” according to the report. The paper written by FairSearch.org — a group that includes some leading Google competitors, such as Microsoft and Expedia — has already been presented to antitrust enforcers in Europe. A version of the report, sources said, will also be shared with U.S. regulators, who are getting ready in the coming weeks to announce whether they will sue Google as part of an investigation into whether it is illegally monopolizing Internet search.

T-Mobile Asks FCC to Approve Merger With MetroPCS

The merger of Deutsche Telekom AG’s T-Mobile USA with MetroPCS Communications will increase competition with larger rivals and benefit consumers, the companies said in a regulatory filing.

The companies made the arguments in papers they submitted Oct. 18 to the Federal Communications Commission. The companies will file later with U.S. antitrust authorities, according to the filing. By having more customers, the company will be able to distribute the fixed costs of its network over a broader base, giving it greater pricing flexibility, according to the filing. The transaction doesn’t harm competition and strengthens the smallest of what the FCC has described as nationwide carriers, the filing said. It said the new company intends to be the leading low-priced carrier in the U.S., with a focus on offering plans attractive to customers seeking affordability.

SoftBank Deal for Sprint Turns on Spectrum

SoftBank’s acquisition of Sprint Nextel would likely give the Japanese company effective control over two U.S. wireless carriers that hold rights to coveted airwave spectrum, adding to the appeal of the $20 billion deal.

Telecom carriers are fighting over spectrum because of the explosive demand for mobile data and the need to build faster networks to accommodate smartphones. Airwaves for wireless signals are controlled by the government, and are licensed by telecom carriers and broadcasters. How much spectrum access a carrier has can determine its coverage, service quality and, ultimately, its competitiveness. The battle over spectrum has been a factor behind recent telecom deals in the U.S. and globally. Softbank's deeper ties with Clearwire through Sprint could speed construction in the U.S. of a type of 4G network called TD-LTE, which is compatible with the technology Softbank is using for some of its 4G mobile services in Japan.

Sprint CEO Hesse May Buy More Strategic Clearwire Stakes

Sprint Nextel Chief Executive Dan Hesse said he may seek to buy out corporate investors in wireless venture Clearwire at the right price. Clearwire’s other corporate investors have lost their interest in the company, Hesse said. Clearwire’s corporate investors include Intel, Comcast, and Time Warner Cable. Hesse said he doesn’t need 100 percent of Clearwire because Sprint’s current partnerships give it access to the spectrum it needs until 2014. “We just never made an offer to buy all of Clearwire, that’s just not on the table,” Hesse said. “We don’t need to do anything, we have a commercial arrangement with Clearwire, we have a contract and they provide us with WiMax 4G service and they are beginning to build out LTE 4G services.”

Sprint: Clearwire stake doesn’t amount to control

Sprint Nextel said it doesn’t have control of Clearwire despite its majority stake in the spectrum-rich Washington company. Sprint, which long has been Clearwire’s largest shareholder, increased its stake in the company from 48 percent to 50.8 percent, but clarified that this increased ownership doesn’t spell control.

“While we have a majority stake, we do not have control of the company, and their finances are not consolidated with Sprint’s,” spokeswoman Melinda Tiemeyer said. “They are an independent company with independent management and board. This is (the) same as when we previously owned more than 50 percent.” Sprint has tweaked its ownership stake in Clearwire over the years in efforts to detach itself from Clearwire’s debt and to avoid Clearwire being considered a legal subsidiary of Sprint.

Sprint's investment designed to scare off Clearwire suitors

Sprint Nextel may not yet have Clearwire in the palm of its hand, but its decision to buy Eagle River Holdings' stake might buy Sprint some time by scaring off any other companies pondering a Clearwire takeover.

Sprint would be unable to block a spectrum sale by Clearwire to AT&T, Dish Network or anyone else that might be interested. Dish may be the company Sprint most fears getting its hands on Clearwire. Charlie Ergen, Dish's founder and chairman, is rumored to already hold in excess of $900 million of Clearwire's debt, according to Tim Farrar, head of Telecom, Media and Finance Associates. Sprint previously had majority control of Clearwire but reduced its voting interest below 50 percent during June 2011 in order to eliminate potential cross default risk. Sprint could choose a similar route to reduce only its voting interest if Clearwire struggles more financially, say analysts who expect Sprint to surrender Clearwire shares to take their stake back under 50 percent if they are unable to take control or materially fund Clearwire before the closing of the Softbank transaction.

Internet anti-censorship tools are being overwhelmed by demand

U.S.-funded programs to beat back online censorship are increasingly finding a ready audience in repressive countries, with more than 1 million people a day using online tools to get past extensive blocking programs and government surveillance. But the popularity of those initiatives has become a liability.

Activists and nonprofit groups say that their online circumvention tools, funded by the U.S. government, are being overwhelmed by demand and that there is not enough money to expand capacity. The result: online bottlenecks that have made the tools slow and often inaccessible to users in China, Iran and elsewhere, threatening to derail the Internet freedom agenda championed by the Obama administration. “Every time we provide them with additional funding, those bottlenecks are alleviated for a time but again fill to capacity in a short period of time,” said André Mendes, director of the Office of Technology, Services and Innovation at the Broadcasting Board of Governors (BBG), which funds some of the initiatives. “One could reasonably state that more funding would translate into more traffic and, therefore, more accessibility from behind these firewalls.” The United States spends about $30 million a year on Internet freedom, in effect funding an asymmetric proxy war against governments that spend billions to regulate the flow of information. The programs have been backed by President Obama, who promoted the initiatives at a town-hall-style meeting in Shanghai three years ago.

Facebook privacy targeted by Austrian law student

To carry on his war against Facebook, Max Schrems figures he needs at least 200,000 euros — about $250,000 — no small sum for a law student scraping by on a government stipend. But like those he is targeting, Schrems, 25, is a creature of the Internet age. He envisions a fundraising campaign that could go viral: If 10,000 people give 20 euros each, Schrems figures, he will have enough to take the world’s most effective user revolt against Facebook to the next level — in a court of law.

Schrems contends that Facebook collects too much information on its users, keeps it too long and uses it for purposes that violate European privacy laws. As evidence, he points to the 1,222 pages of data the social media company catalogued on him before he formally requested his file from Facebook last year. The account it offered of his life — every friendship declared, every photo uploaded, every “poke” or comment or invitation sent or received over three years of casual use — sparked an online sensation when he posted it online.

McSlarrow Advising Romney Campaign

President Barack Obama has some supporters in high places at Comcast, but so does Mitt Romney. Comcast/NBCU Washington President Kyle McSlarrow, former chairman of the National Cable and Telecommunications Association, has been lending his expertise, albeit in an informal capacity, to the Romney presidential campaign.

"Kyle has been informally advising the campaign on energy and telecommunications issues," a source close to McSlarrow confirmed to The Wire -- McSlarrow, a longtime Republican and McCain supporters last time around, is a former deputy secretary of the Department of Energy and was the national chairman for the Quayle 2000 Presidential Campaign. A source close to the Romney transition advised B&C of McSlarrow's advisory role, then offered up his name as a possible candidate for the FCC chairmanship if the Romney camp looks beyond the two current Republican FCC members -- Rob McDowell and Ajit Pai -- said to be strong candidates for the post.

Obama Winning Social Media, If #Hashtagwars Really Matter

In the battle to win every undecided voter, drive enthusiasm and boost turnout, a new front has opened in the 2012 election: the #hashtagwar.

Within 24 hours of President Barack Obama dubbing Republican challenger Mitt Romney’s policy shifts as “Romnesia,” #Romnesia was trending worldwide on Twitter. Within 48 hours, two Romnesia postings on Obama’s Facebook page were “liked” by 364,963 people and shared nearly 57,696 times. On Tumblr, a series of animated pictures -- or GIFs -- with speech excerpts was liked or re-posted 16,861 times. Four years ago, when Facebook was one-tenth its size today and before smart phones were the norm, Obama pioneered the use of social media in presidential politics. Today, with the Internet an integral part of people’s lives, Obama’s campaign again has the upper hand, leveraging its ability to communicate with masses on different platforms in ways that weren’t possible in 2008. Yet 2012 may present the first test of whether it makes a difference.

Benton

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