May 23, 2013 (Connect America Fund)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for THURSDAY, MAY 23, 2013
A Nomination Hearing for Secretary of Commerce nominee Penny Pritzker and Privacy on today’s agenda http://benton.org/calendar/2013-05-23/
INTERNET/BROADBAND
$485 Million In New Connect America Fund Investments To Expand Rural Broadband - press release
Verizon: Court Decision Forecloses FCC Speech Argument
Online Gambling Bets on Return to US
Americans are not happy with their Internet service providers [links to web]
Raytown, Missouri approves Google Fiber [links to web]
WIRELESS/SPECTRUM
Remarks of Commissioner Rosenworcel, CTIA 2013 - The Mobile Marketplace - speech
Spectrum Management: Federal Relocation Costs and Auction Revenues - research
Spectrum Drives Wireless M&A: What’s Next? - analysis
Verizon's Shammo: Content providers see value in toll-free data model
Clearwire Board Endorses Sprint’s Sweetened Bid [links to web]
Dish uses national security ads to fight SoftBank deal [links to web]
Wary of China, US Steps Into Sprint's Board
TELECOM
FCC Provides Guidance Regarding The 2013 Lifeline Recertification Process - public notice
Privacy on the Line: Security lapse exposes some Lifeline phone customers to ID theft risk
CONTENT
IPC: U.S. Reaction to IP Theft 'Utterly Inadequate' [links to web]
Penguin to Settle in E-Book Dispute
Amazon’s new Kindle Worlds gives authors a way to sell fan fiction without legal hassles
Study: Viewers Accept Online Content and Ads [links to web]
PRIVACY
Lawmakers seek to bar bosses from asking for Facebook passwords [links to web]
FTC's Ohlhausen Questions Privacy Recommendations [links to web]
Privacy on the Line: Security lapse exposes some Lifeline phone customers to ID theft risk
TELEVISION
Cable Companies Chafe as Low-Rated Channels Change Names
Power Lawyers: How Aereo's Attorneys Beat Hollywood [links to web]
HEALTH
Incentives push doctors to electronic medical records
GOVERNMENT & COMMUNICATIONS
Facebook agrees to human rights standards
How the Great Firewall of China Shapes Chinese Surfing Habits
Another Chilling Leak Investigation - editorial [links to web]
How police can find your deleted text messages
CBO Scores FOIA Act - research [links to web]
Wary of China, US Steps Into Sprint's Board
LOBBYING
Lessons for Silicon Valley on Capitol Hill
Emerging leaders talk about tech’s growing DC role
Federal Government Consolidates Wireless Spending [links to web]
POLICYMAKERS
GAO Fills Vacancy on Health Information Technology Policy Committee [links to web]
Spotlight on NTIA: OSM’s Karl Nebbia [links to web]
STORIES FROM ABROAD
Hackers Find China Is Land of Opportunity
See also: Helping China end its cybercrime spree - editorial [links to web]
MORE ONLINE
Not a rotten Apple - analysis [links to web]
Home Tweet Home: A House with Its Own Voice on Twitter [links to web]
INTERNET/BROADBAND
MORE CONNECT AMERICA FUND PHASE I FUNDS
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
Federal Communications Commission Chairwoman Mignon Clyburn announced a significant public-private effort to connect hundreds of thousands of Americans to high-speed broadband as a result of the second release of Phase I funds of the Connect America Fund. The fund will offer up to $485 million to expand fixed broadband in rural America. The additional investment will leverage millions in additional private investment to quickly serve rural areas currently lacking access to high-speed broadband. This announcement marks the second tranche of Phase I funds to ensure that every American has access to broadband by the end of the decade. This additional investment comes as the FCC moves into Phase II of the Connect America Fund, created in the historic overhaul and reform of the FCC’s traditional universal service program for rural voice service. Phase II will provide ongoing annual support of $1.8 billion for both voice and broadband service, all without increasing growth in the fund. Any funding not accepted in Phase 1 will be used to connect unserved communities in Phase II. Total FCC investment in expansion and support of rural fixed and mobile broadband and voice through universal service is budgeted at $4.5 billion.
benton.org/node/152476 | Federal Communications Commission | Report and Order | Chairwoman Clyburn | Commissioner Pai
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VERIZON NETWORK NEUTRALITY FILING
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Verizon has told the U.S. Court of Appeals for the DC Circuit that its recent ruling in a National Labor Relations Board case forecloses the Federal Communications Commission's argument in defense of network neutrality rules that broadband providers are not speakers but only "conduits" for speech. In its January filing to the court, the FCC said that Verizon and other broadband providers "do not engage in speech; they transport the speech of others, as a messenger delivers documents containing speech." It drew the distinction between that and "cable systems, newspapers, and other curated media," saying that broadband providers "do not exercise editorial discretion." In a filing with the court, attorneys for Verizon, which has challenged the FCC's open Internet order, pointed to the case, National Association of Manufacturers [NAM], et al. v. National Labor Relations Board [NLRB], decided by the circuit May 7 to argue that the FCC was wrong. In that decision, the court pointed to what it said were "some firmly established principles of free speech law," including "the dissemination of messages others have created is entitled to the same level of protection as the creation' of messages."
benton.org/node/152455 | Broadcasting&Cable
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ONLINE GAMBLING
[SOURCE: Wall Street Journal, AUTHOR: Alexandra Berzon]
Until a year ago, the U.S. Justice Department considered online gambling illegal, but PokerStars, arguing against that interpretation of the law, kept taking bets until the government filed a civil action against it. Now, the legal landscape has taken a surprising shift, and states like Nevada and New Jersey have passed laws allowing some forms of online gambling. PokerStars, which reached a $731 million settlement with the government but admitted no wrongdoing, wants back in. To some extent, analysts say, the PokerStars homecoming bid reflects the difficulties many states will face as they open their doors to a long-banned business, itself a groundbreaking development. A good number of PokerStars' online competitors have had their own legal issues, or operate in countries that don't license online casinos. "There aren't pure companies," said Clive Hawkswood, the chief executive of the Remote Gambling Association, a trade group for online gambling.
benton.org/node/152502 | Wall Street Journal
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WIRELESS/SPECTRUM
COMMISSIONER ROSENWORCEL AT CTIA
[SOURCE: Federal Communications Commission, AUTHOR: FCC Commissioner Jessica Rosenworcel]
Speaking at a CTIA conference, Federal Communications Commission member Jessica Rosenworcel offered ideas to inform wireless policies going forward.
Consumers come first. We should continue to work to help prevent bill shock; help deter the sale of stolen cell phones; make contracts and bills more clear; and clean up wireless cramming.
Simplicity is the path to successful incentive auctions. The success of incentive auctions is built on three simple goals—making it attractive and easy for those who want to return their spectrum; treating broadcasters that want to stay on their air fairly under the law; and raising enough revenue to support a national interoperable, wireless broadband public safety network.
An open auction process matters. Hold public hearings to explore the four major aspects of the auctions—the reverse auction, the repacking, the forward auction, and the transition process.
Have a 600 MHz bandplan in place by the third quarter of this year.
Auction the 65 megahertz identified in the Middle Class Tax Relief and Job Creation Act in the third quarter of 2014—and all at once. By auctioning these bands in a single auction we can generate more interest, and get a head start on funding the public safety network.
Hold the incentive auction in the fourth quarter of 2014. This gives carriers time to reassess their spectrum needs following the traditional auction of 65 megahertz of spectrum identified in the law.
Auction 2155-2180 MHz along with the right to work with the federal incumbents in the 1755-1780 MHz band. This raises the value of the 2155-2180 MHz band and creates opportunity for specific parties to negotiate with federal users.
Sharing the repacking methodology by the end of the year will enhance transparency.
To help unpack the issues in the repacking process along the border, the Commission should convene an international working group, including minds from the federal side, state side, industry, and public.
Our federal spectrum policy needs to be built on carrots, not sticks. Across government, we need to consider incentives for more efficient use of federal spectrum. We must find ways for agencies to see gain and not just loss from commercial reallocation.
benton.org/node/152472 | Federal Communications Commission
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SPECTRUM RELOCATION
[SOURCE: Government Accountability Office, AUTHOR: Mark Goldstein]
The Government Accountability Office was directed to review the costs to relocate federal spectrum users and revenues from spectrum auctions. This report addresses 1) estimated and actual relocation costs, and revenue from the previously auctioned 1710-1755 MHz band; 2) the extent to which DOD followed best practices to prepare its preliminary cost estimate for vacating the 1755-1850 MHz band; and 3) existing government or industry forecasts for revenue from an auction of the 1755-1850 MHz band. Some federal agencies underestimated the costs to relocate communication systems from the 1710-1755 megahertz (MHz) band, although auction revenues appear to exceed relocation costs by over $5 billion. As of March 2013, actual relocation costs have exceeded estimated costs by about $474 million, or 47 percent. The National Telecommunications and Information Administration (NTIA) expects agencies to complete the relocation effort between 2013 and 2017, with a final relocation cost of about $1.5 billion. Actual relocation costs have exceeded estimated costs for various reasons, including unforeseen challenges and some agencies not following NTIA’s guidance for developing cost estimates. However, the Department of Defense (DOD) expects to complete its relocation for about $71 million less than its estimate of about $355 million. NTIA and the Office of Management and Budget (OMB) are taking steps to ensure that agencies improve their cost estimates by, for example, preparing a cost estimation template and guidelines for reporting reimbursable costs. The auction of spectrum licenses in the 1710-1755 MHz band raised almost $6.9 billion. [GAO-13-472, May 22]
benton.org/node/152442 | Government Accountability Office
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WIRELESS MERGERS AND ACQUSITIONS
[SOURCE: telecompetitor, AUTHOR: Joan Engebretson]
There’s a major paradox in the wireless industry today. On the one hand it’s never been more difficult to compete. With subscribers heavily concentrated in the hands of the two largest carriers AT&T and Verizon Wireless – a situation compounded by the advent of exclusive and near-exclusive handset deals — you won’t find many people who are very bullish about the business prospects for anyone but the two dominant carriers. Yet some of the second-tier companies have succeeded recently in commanding higher than anticipated valuations. MetroPCS was successful in persuading T-Mobile to boost its price when it acquired the company several weeks ago. Sprint raised its bid for Clearwire. And Sprint itself is weighing purchase offers from two different companies – including Japanese carrier Softbank as well as satellite service provider and would-be wireless operator Dish Network. Dish Network also is exploring other options. According to news reports, the company also this week revealed it had made a bid for LightSquared – a company widely characterized as foolhardy for its attempt to use satellite spectrum for a terrestrial network. Apparently in today’s environment, even a company many people wrote off months ago is worth another look. It’s not difficult to fathom what’s going on here. With relatively little new spectrum expected to come on the market in the near future, carriers are looking at other carriers’ holdings. To make a real estate analogy, it’s as if there’s not much farmland left for suburban developments so there’s no choice but to look at downtown renovations.
benton.org/node/152445 | telecompetitor
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TOLL-FREE DATA MODEL
[SOURCE: Fierce, AUTHOR: Sue Marek]
Fueling the fire surrounding the likelihood of toll-free data coming to the U.S. market soon, Verizon Communications CFO Fran Shammo told investors at a Barclays Global Technology, Media and Telecommunications conference that content providers are starting to see the value in paying the wireless operator for the data consumed by their subscribers when they view their content via a mobile device. Likening the service to a toll-free calling service, in which a company buys an 800-number for consumers to call instead of racking up long-distance charges, Shammo said that content companies understand the value they will get if they pay an operator like Verizon for the data charges a consumer incurs when viewing their content. "The content providers will be willing to pay for the content, if we don't charge the consumer," Shammo said. He added that content companies want eyeballs on their content and Verizon can potentially deliver 100 million eyeballs across its various channels. He also shrugged off concerns this model may fly in the face of net neutrality constraints. "Net neutrality is about prioritizing the delivery of content," he said. "We aren't talking about that. This is who pays for the delivery of that content."
benton.org/node/152446 | Fierce
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US ON SPRINT BOARD?
[SOURCE: Wall Street Journal, AUTHOR: Anton Troianovski, Danny Yadron, Spencer Ante]
SoftBank is readying a plan to allow the U.S. government an unusual level of influence over the operations of Sprint Nextel, a concession to ease security concerns raised by the proposed cross-border takeover. SoftBank has agreed to give the federal government the right to approve one of the directors it names to Sprint's board. That director will be responsible for overseeing national security issues. People familiar with the matter said the government is also seeking the right to approve some of Sprint's equipment purchases and wants the removal of Chinese gear from a Sprint affiliate's network. While the U.S. government has a long history of imposing restrictions on the operations of telecom companies when foreign investors get involved, it is unusual for officials to exert such broad influence over how a company is run, people who follow such deals say. The negotiations shed new light on the government's growing concerns about foreign intrusion into U.S. telecommunications networks and its determination to limit access by Chinese equipment suppliers like Huawei Technologies Co.
benton.org/node/152501 | Wall Street Journal
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TELECOM
FCC PROVIDES GUIDANCE REGARDING THE 2013 LIFELINE RECERTIFICATION PROCESS
[SOURCE: Federal Communications Commission, AUTHOR: Public Notice]
In this public notice, the Federal Communications Commission’s Wireline Competition Bureau provides guidance regarding the 2013 Lifeline recertification process. The Bureau clarifies that all active Lifeline subscribers enrolled or recertified in a calendar year must be recertified the next calendar year and in every calendar year thereafter. The Bureau also describes the process by which eligible telecommunications carriers (ETCs) can elect to have the Universal Service Administrative Company (USAC) perform the recertification process.
benton.org/node/152507 | Federal Communications Commission
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CONTENT
PENQUIN’S E-BOOK DISPUTE
[SOURCE: Wall Street Journal, AUTHOR: Lilly Vitorovich]
Pearson PLC's book publishing business, Penguin Group, has agreed to pay $75 million to settle a dispute in the U.S. over the way it priced electronic books, drawing to a close an investigation into the publishing industry's e-book pricing tactics. In a brief statement, Pearson said that Penguin has reached a "comprehensive agreement with the U.S. State Attorneys General and private class plaintiffs to pay $75 million in consumer damages plus costs and fees to resolve all antitrust claims relating to e-book pricing." In anticipation of reaching the agreement, Pearson said it made a $40 million provision for settlement in its 2012 financial accounts. An "incremental charge" will be expensed in Pearson's 2013 financial results as part of the accounting for the Penguin Random House joint-venture. A Pearson spokesman declined to provide the specific figure.
benton.org/node/152461 | Wall Street Journal | paidContent.org
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KINDLE WORLDS
[SOURCE: paidContent.org, AUTHOR: Laura Hazard Owen]
50 Shades of Grey, which started out as Twilight-inspired fan fiction, raised a few copyright questions that didn’t stop it from selling millions and millions of copies. But when a work is more directly based on another author’s creation — using the same characters and setting, for instance — the legal hurdles can be greater. That doesn’t stop readers from writing their own spinoffs anyway: The largest fan fiction site, FanFiction.net, hosts millions of free stories. And in works like these — and the passionate readers who create them — Amazon sees the potential for profit. Amazon Publishing announced Kindle Worlds, “the first commercial publishing platform that will enable any writer to create fan fiction based on a range of original stories and characters and earn royalties for doing so.” The company is making this work by securing licenses from existing entertainment properties and by paying royalties to both the original author and the fan fiction author.
benton.org/node/152453 | paidContent.org
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TELEVISON
CABLE OPERATORS VS CABLE CHANNELS
[SOURCE: Bloomberg, AUTHOR: Alex Sherman, Andy Fixmer]
Cable networks are rebranding themselves, and pay-TV operators aren’t pleased. At least six channels are changing their names and programming this year to attract more viewers, advertising dollars and higher subscriber fees. News Corp.’s Speed, for instance, will become Fox Sports 1 in August. DirecTV and Time Warner Cable, two of the largest U.S. pay-TV services with 32 million total subscribers, complain they have no control over the changes and are wary the networks will demand more money for unproven shows. The companies agreed to carry specific content, their executives said. Now they’re saddled with programming they didn’t order, and unsure they can pass on future fee increases to customers.
benton.org/node/152497 | Bloomberg
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HEALTH
DOCS ADOPTING EHRs
[SOURCE: USAToday, AUTHOR: Kelly Kennedy]
More than half of doctors' offices and 80% of hospitals that provide Medicare or Medicaid will have electronic health records by the end of the year, the Department of Health and Human Services announced. "We have reached a tipping point in adoption of electronic health records," said HHS Secretary Kathleen Sebelius, and they "are critical to modernizing our health care system." The announcement comes as a key part of the 2010 health care law: Doctors with have can better track errors and prevent future problems. The government can track organizations for quality, as the law requires. And electronic records allow each of a patient's doctors to see what tests have been performed and what medications have been administered, which could prevent duplicated prescriptions and procedures and bad drug interactions. About 17% of physicians used electronic records in 2008, but now 50% "have demonstrated meaningful use and received an incentive payment," according to HHS. About 9% of hospitals had electronic records in 2008, but HHS found that 80% have now demonstrated use. The federal government gave health providers grants to buy technology as part of the Recovery Act in 2009 but also required that they show "meaningful use" to get incentive payments. They are now in the stage in which they must show they can store data and track it, report quality measures and begin to engage patients electronically, among other things.
benton.org/node/152504 | USAToday
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GOVERNMENT & COMMUNICATIONS
FACEBOOK AND GLOBAL NETWORK INITIATIVE
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
Facebook announced that it has joined the Global Network Initiative (GNI), a human rights group made up of Internet companies, nonprofits and academics. The social media giant is the sixth company to join the initiative, following Google, Microsoft, Yahoo and others. GNI issues principles and guidelines to companies for responding to government requests in a way that protects free speech and privacy. Companies that join the coalition agree to independent assessments of their compliance with the standards. Facebook was an "observer" of the group for one year before formally agreeing to the principles. "Advancing human rights, including freedom of expression and the right to communicate freely, is core to our mission of making the world more open and connected," said Elliot Schrage, a Facebook vice president, said in a statement. "We're pleased to join GNI and contribute to its efforts to shed a spotlight on government practices that threaten the economic, social and political benefits the internet provides."
benton.org/node/152459 | Hill, The
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CHINA’S FIREWALL
[SOURCE: Technology Review, AUTHOR: ]
Harsh Taneja and Angela Xiao Wu at Northwestern University argue that Chinese websites are clustered in a similar way to others that share a common language and geographic connections. What’s more, they argue that the Chinese cluster is no more isolated than other clusters. Taneja and Xiao Wu argue that this shows that the Chinese cluster is no more isolated than other culturally defined markets. And their conclusion is that online behavior must be more strongly influenced by cultural factors than by censorship.
benton.org/node/152450 | Technology Review
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CELLPHONE PRIVACY
[SOURCE: CNNMoney, AUTHOR: David Goldman]
Think that a secure password and erasing your phone's memory will protect sensitive information on your smartphone? Think again. Smartphone forensics experts can retrieve just about anything from any phone. Police will often seize and analyze phones for evidence of things such as indecent photos and videos, what calls were placed when and to whom, browser history, calendar events and explanations of a suicide or murder. All of that can be uncovered whether or not a user deleted it from their phone.
benton.org/node/152440 | CNNMoney
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LIFELINE AND PRIVACY
[SOURCE: Scripps News, AUTHOR: Isaac Wolf]
More than 170,000 records from two Lifeline participating companies -- Oklahoma City-based TerraCom Inc. and its affiliate, YourTel America Inc. -- were posted online. The records, from residents of at least 26 states, include Social Security numbers, dates of birth and information about participation in other government-assistance programs. Of those records, 343 were viewed by unknown, and potentially unauthorized, individuals, an official for both companies acknowledged. Scripps unearthed the documents through a simple Google search and alerted TerraCom and YourTel of its findings on April 26. Within hours, the records no longer were publicly accessible.
benton.org/node/152505 | Scripps News | ars technica – reporters branded hackers | Slate – journalists threatened
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LOBBYING
LESSONS FOR SILICON VALLEY
[SOURCE: New York Times, AUTHOR: Somini Sengupta]
There were two stark object lessons for the technology industry in Congress. One showed the power of influence. The other showed the power of the iPhone. In the Senate Judiciary Committee, the industry scored an enormous victory. It got its way on the immigration bill after Senator Orrin G. Hatch, Republican of Utah, told his fellow committee members that he would not vote for the bill unless they agreed to changes that Silicon Valley pushed for. It reflected an aggressive effort by the industry: companies have vastly expanded their lobbying budgets in Washington and dispatched executives to meet with lawmakers to push for an immigration overhaul. The latest, brashest entrant is an advocacy group led by Mark Zuckerberg, chief executive of Facebook, which raised huge sums of money to sponsor advertisements supporting several critical Republicans who back the immigration bill. In the Senate Permanent Committee on Investigations, meanwhile, Apple‘s chief executive, Timothy D. Cook, testified. He was questioned by panel members about how Apple’s subsidiaries had helped the company pay as little as one-twentieth of 1 percent in taxes on billions of dollars in income. Congressional investigators earlier this week unveiled a report detailing those tax diversions by Apple subsidiaries, based in Ireland but spanning other regions around the world.
benton.org/node/152464 | New York Times
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TECH’S GROWING ROLE IN DC
[SOURCE: Politico, AUTHOR: Bobby Cervantes, Happy Carlock]
The growing influence of Silicon Valley, Austin and New York continues to reverberate in Washington, rising tech leaders said. The participants at POLITICO’s Emerging Tech Leaders event all agreed that technology — from drones and privacy to politics and social media — has vaulted into consequential policy areas. Evan Burfield, co-founder of startup platform 1776, said understanding “the logic of these machines” is a second language in many fields now. “I’m a big proponent of the idea that understanding technology is a new form of literacy,” Burfield said at the Microsoft Innovation and Policy Center. “Frankly, those have been communities speaking different languages, wearing different clothes, hanging out in different places.” While technology literacy has already moved many industries to a more data-driven, collaborative model, startups and developers still need help making waves in Washington, he said.
benton.org/node/152467 | Politico
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STORIES FROM ABROAD
HACKER OPPORTUNITY
[SOURCE: New York Times, AUTHOR: Edward Wong]
Name a target anywhere in China, an official at a state-owned company boasted recently, and his crack staff will break into that person’s computer, download the contents of the hard drive, record the keystrokes and monitor cellphone communications, too. The culture of hacking in China is not confined to top-secret military compounds where hackers carry out orders to pilfer data from foreign governments and corporations. Hacking thrives across official, corporate and criminal worlds. Whether it is used to break into private networks, track online dissent back to its source or steal trade secrets, hacking is openly discussed and even promoted at trade shows, inside university classrooms and on Internet forums. The Ministry of Education and Chinese universities, for instance, join companies in sponsoring hacking competitions that army talent scouts attend, though “the standards can be mediocre,” said a cybersecurity expert who works for a government institute and handed out awards at a 2010 competition. Corporations employ freelance hackers to spy on competitors. In an interview, a former hacker confirmed recent official news reports that one of China’s largest makers of construction equipment had committed cyberespionage against a rival. One force behind the spread of hacking is the government’s insistence on maintaining surveillance over anyone deemed suspicious. So local police departments contract with companies like Xhunter to monitor and suppress dissent, industry insiders say.
benton.org/node/152500 | New York Times
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