May 2013

What would Wheeler do? 6 issues to watch

President Barack Obama’s nomination of Tom Wheeler to head the Federal Communications Commission has led to a new game in Washington: What would Wheeler do? Boliek offers six clues:

Look to the past: Wheeler is an accomplished amateur historian.
Mend fences: Running the FCC is different from running a trade association, operating a company or being managing partner in a venture capital firm. The chairman of the FCC is a powerful person, but he still needs three votes. While he can usually count on the two other Democrats, that isn’t always the case. Wheeler is coming into an odd situation in which one of his peers — Commissioner Mignon Clyburn — will have already served a stint in the center seat in an interim role. And Sen. Jay Rockefeller (D-WV) was outspoken in his support of Commissioner Jessica Rosenworcel for the post. Wheeler will need good relationships with both Democrats to succeed.
Past as prologue for the IP transition: Wheeler will need that experience to tackle what is known as the IP transition. The nickname is shorthand for the big enchilada of proceedings at the FCC. The commission is trying to decide what concepts from the old Alexander Graham Bell days that define the public interest need to be applied to the new Internet world — and how to do it. When Wheeler was chairman of FCC’s Technological Advisory Committee in 2011, he pushed the agency to “highlight this concern and initiate a public dialogue so that the technology and know-how for replacing such services is widely disseminated.” A subcommittee report recommended that the commission “take steps to expedite the transition, with a target date of 2018.”
The spectrum hunter: Wheeler will have to hit the ground running because the FCC is on a short time frame for the incentive auction that will move broadcasters off some of their frequencies and sell them for high-speed wireless uses.
Wheeler dealer: There is little doubt that Wheeler will have to deal with a major merger or transaction during his term.
Keeping it in neutral: While it isn’t his policy, Wheeler is likely to get a crack at the network neutrality issue anyway.

Google Glass Picks Up Early Signal: Keep Out

Google’s wearable computer, the most anticipated piece of electronic wizardry since the iPad and iPhone, will not go on sale for many months. But the resistance is already under way.

The glasseslike device, which allows users to access the Internet, take photos and film short snippets, has been pre-emptively banned by a Seattle bar. Large parts of Las Vegas will not welcome wearers. West Virginia legislators tried to make it illegal to use the gadget, known as Google Glass, while driving. “This is just the beginning,” said Timothy Toohey, a Los Angeles lawyer specializing in privacy issues. “Google Glass is going to cause quite a brawl.” As personal technology becomes increasingly nimble and invisible, Glass is prompting questions of whether it will distract drivers, upend relationships and strip people of what little privacy they still have in public.

Apple, Samsung Share of Smartphone Industry Profits Declines to 100 Percent

If you’re a smartphone manufacturer who’s name isn’t Apple or Samsung, condolences on your March quarter. Because according to new research from Canaccord Genuity, it was a massive, will-crushing disappointment.

In the first quarter of the year, Apple captured 57 percent of global smartphone industry profits. That left 43 percent for the taking. And Samsung, says Canaccord Genuity, took all of it — leaving nothing for BlackBerry, Nokia, or anyone else competing for the currently mythical title of “third smartphone platform.” Ugly news for would be smartphone players, but not quite as ugly as it could have been. For them, the first quarter of 2013 is actually an improvement over last quarter when Apple and Samsung captured 103 percent of handset industry profits — a milestone achievement made possible by only by their heroic operating loss sacrifice.

The Quest for a Third Mobile Platform

Some of the world's biggest handset makers and telecom carriers are embracing alternative mobile operating systems this year in a quest to become credible challengers to smartphones run by Apple and Google.

These companies are hoping they can outgun attempts by Microsoft and Research In Motion to emerge as a third alternative platform to the iPhone and Android devices, which have a virtual stranglehold on the market. Manufacturers such as Huawei Technologies Co., LG Electronics and ZTE are building phones for Mozilla's Firefox OS due out this year with the support of several major carriers. The first mobile phone using Tizen, a system co-developed by Samsung Electronics and Intel, is slated to be unveiled in the third quarter. London-based Canonical Ltd. is making a smartphone version of its Linux-based computer operating system called Ubuntu, with plans to ship the software on phones through mobile operators in the early part of 2014. And Jolla Ltd., a Finland startup, plans to launch a smartphone based on its own proprietary "Sailfish" platform later this year.

Who would win or lose on online sales tax

Major retailers and local stores will be the big winners if the House follows the Senate and requires Internet retailers to collect sales taxes on online purchases.

National and regional chains are tired of being showrooms for shoppers who then search their smartphones for lower prices and buy online. The chains say they are at a 5% to 10% price disadvantage by having to charge sales tax. "Retailers compete for customers on many different levels, distribution channels and fronts, including service and selection, but they cannot compete on sales tax," says Stephen Sadove, chairman of the board of the National Retail Federation and CEO of Saks Fifth Avenue. "Retailers of all shapes, sizes and channels deserve a level playing field." Local stores are sick of having to compete with online retailers who only have to charge sales tax to consumers in states where they have a physical presence. According to research from the University of Tennessee, states are missed out on more than $11 billion in uncollected taxes in 2012 from online purchases, .

Backroom Internet Tax Ambush

[Commentary] Now that the Senate has approved a bill to give state and local governments more power to collect Internet sales taxes, the bill's author intends to find out what's in it.

Specifically he's trying to find out how many audits his bill authorizes against e-commerce companies. The original bill went a little beyond the usual 50 in defining what a state is. The legislation also empowered the District of Columbia, Puerto Rico, Guam, American Samoa, the Virgin and Marianas Islands "and any other territory or possession" of the United States to force distant e-sellers to collect taxes. Then, somewhere in a Senate backroom, Sen Harry Reid (D-NV) rewrote the definition of "state" again. In Reid's version of the bill approved by the Senate, "any tribal organization" will also qualify for a license to audit, which can really amount to a license to kill small business.

Mark Zuckerberg needs to take Politics 101

[Commentary] Mark Zuckerberg is an extraordinary young man who at age 28 has achieved things that most people in Silicon Valley can only envy. He also has a lot to learn about politics.

You may have read how Zuckerberg's political group is funding TV spots on behalf of Senators Lindsey Graham (R-SC) and Mark Begich (D-Alaska), taking stands that many tech industry veterans would privately decry. The idea is to give the politicians political "cover" in exchange for supporting key immigration proposals that Facebook wants, primarily a loosening of H1B visas. The TV spots laud Graham for fighting Obamacare and commend Begich for working to open the Arctic National Wildlife Refuge for oil drilling. Neither of those messages is central to the thinking of Silicon Valley. In fact, they would irritate a lot of Facebook users and managers. In adopting Machiavellian tactics, Zuckerberg has done more than upset his core constituency. In a real sense, the Facebook CEO has raised questions about what he and his company stand for.

What Exactly Does 'Do Not Track' Mean?

A Q&A with Digital Advertising Alliance managing director Lou Mastria.

The digital ad business last month took a beating from Sen. Jay Rockefeller (R-W.Va.) during the Commerce committee's eighth privacy hearing in the past 18 months. Rockefeller, a big proponent of Do Not Track legislation and disbeliever in self-regulation, harangued marketers and browser companies for having failed so far to come to a consensus on voluntary Do Not Track standards. A direct target of Rockefeller’s tirade was the Digital Advertising Alliance, a coalition of media and marketing trade groups including the 4A’s, IAB and DMA. The DAA has spent the past two years touting the benefits of an ad-choices program that lets consumers opt out of targeted ads. But clearly its efforts haven’t resonated with lawmakers.

Mastria offers his take on whether DAA can help the industry achieve consensus on DNT.

Russian Court Strikes Down YouTube Suit

YouTube's first attempt to take on Russian authorities over a new child-protection law that restricts Internet content resulted in defeat, when a Moscow court struck down a pioneering lawsuit the Google video unit had filed against regulators.

YouTube's lawsuit—which has served as a litmus test for the scope of new online content restrictions here—challenged the implementation of a new Russian law that blocks drug, suicide and pornography-related Web content deemed harmful to the "health and development" of children. The Russian government has defended the law, which came into effect last autumn, as a necessary protection for vulnerable children surfing the Web. But critics, including civil liberties advocates, say its broad wording gives Russian authorities the power to restrict content that many would consider innocuous, setting a worrisome precedent for online censorship that could creep into other areas of life. Google has come under fire from Russian authorities after challenging the boundaries of the law in court and publishing statistics on the rising number of content-removal requests it has received in Russia. Rospotrebnadzor, the Russian regulator overseeing compliance with the new law, released a statement criticizing the U.S. company the day those statistics were published last month.

Senate passes Internet sales-tax bill

Congress took a step toward ending tax-free shopping on the Internet, as the Senate passed a bill empowering states to collect sales tax for purchases made online.

But online shoppers won’t have to pay sales tax just yet. The measure — which got 69 yes votes and 27 no votes in the Senate — next goes to the House of Representatives, where anti-tax sentiment among many Republicans may make it more difficult to pass.

Rep. Bob Goodlatte (R-VA), who chairs the House Judiciary Committee which the bill would go through, has raised concerns about the complexity of complying with the bill. “I understand the concerns of retailers on this issue,” he said. “Brick-and-mortar retailers must compete with Internet companies that do not have the same sales-tax-collection responsibilities,” Rep Goodlatte said. “All of that being said, I do not believe legislation like the Marketplace Fairness Act is sufficiently simplified yet. While it attempts to make tax collection simpler, it still has a long way to go,” he said.

Benton

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