May 2013

Industry ties run deep for Obama's FCC pick

Tom Wheeler has an extensive history with the industries he would be in charge of regulating. He was the president of the cable industry lobby about 30 years ago and later led the lobbying group for the cellphone carriers. In recent years, he has worked at venture capital firm Core Capital, investing in technology start-ups.

Wheeler was one of the driving forces behind the 1984 Cable Act, which set up a legal framework for cable providers to compete with over-the-air broadcasters. In a bid to win the support of black lawmakers for the legislation, Wheeler agreed to equal opportunity employment requirements for minority groups and women. Larry Irving, who at the time was an aide to Congressional Black Caucus Chairman Rep. Mickey Leland (D-TX), said the employment rules for cable companies were a "huge deal" and gave the bill a boost of momentum to pass the House. Irving said Wheeler fought to keep the employment provisions in the bill when senators tried to take them out.

After several years working for various technology start-ups, Wheeler became the president of the Cellular Telecommunications and Internet Association, now known as CTIA-the Wireless Association, in 1992. Although the cellphone service market is now dominated by only four nationwide firms, at the time, the industry was made up of dozens of small start-ups. As their top lobbyist, Wheeler pushed back against concerns that cellphones cause cancer and successfully lobbied for access to more wireless frequencies for the industry. He often touted the ability of cellphones to save lives during emergencies. He left the association in 2004.

In Commerce Pick’s ’08 Answers on Finances, Possible Hints at Road Ahead

In November 2008, as President-elect Barack Obama began putting together his cabinet, reports emerged that he was considering nominating Penny Pritzker, the billionaire Hyatt Hotels heiress and businesswoman who had served as his chief campaign fund-raiser, as commerce secretary. But faced with awkward questions about her financial dealings, she declared that she did not want the nomination. Recently, she accepted the nomination but amid a far more toxic political atmosphere than President Obama faced at the start of his first term.

Republican senators are likely to be interested in the Pritzker family’s reputation as innovators in the use of offshore trusts and foreign bank secrecy laws to shelter their wealth from income, capital gains and inheritance taxes. Even after tax code loopholes were closed, the family’s trusts were grandfathered in and it kept benefiting from them.

Pritzker's Progress

[Commentary] President Barack Obama presumably nominated Penny Pritzker to be Commerce Secretary for reasons other than her record-breaking fundraising as his 2008 campaign chair. And we assume it's despite her history of investing in toxic mortgage-backed securities and her family trusts' allegedly copious use of offshore tax shelter strategies.

Let us hope the President chose Pritzker to reorganize and streamline government, starting with a Commerce Department that is "an outdated bureaucratic maze" and "produces redundancy and inefficiency." Those are the words President Obama used in January 2012 to ridicule Commerce, adding in the White House East Room that the department was "a mess" and that "these kinds of inefficiencies exist across government." Obama's proposal at the time was for Congress to grant him "consolidation authority" to combine executive branch functions, specifically singling out the five housing agencies and the six shops that deal with business like the Commerce Department and the Export-Import Bank. For some reason none of this came up this week when President Obama introduced Pritzker, though those now forgotten words are worth recalling in the context of the sequester panic. Congress never gave President Obama his consolidation power, but in the 16 months since he asked for it the President seems to have concluded that government is now so efficient it can't tolerate even modest budget cuts without laying off park rangers and meat inspectors. The Commerce job is notoriously one of Washington's least influential. So if she wants to make a difference, perhaps Pritzker can resurrect the agenda to fix a broken government. At least she'd have something to occupy her days.

New Motto for Silicon Valley: First Security, Then Innovation

Although technology companies say they take security seriously, protecting their customers seems to come second to announcing new products. One solution is a bill crawling through Congress over the last two years, the Cyber Intelligence Sharing and Protection Act (CISPA).

The bill would make it easy for tech companies to share information about computer security threats with government agencies, helping fortify against cyberattacks. But privacy groups say that CISPA is not a solution to the problem, and that instead it hands the highly sensitive personal data we want protected to the government. “It has to be the obligation of these tech companies to build in security from the very beginning before we start moving into solutions about bringing the government into the private sector,” said Leslie Harris, president and chief executive of the Center for Democracy and Technology, a Washington-based advocacy group financed by a broad coalition of technology and telecommunication companies. “You want to see these very innovative companies step up and become the leaders in security solutions first.”

Web Sales-Tax Bill Set to Face Bumps

A bill that effectively would end tax-free online shopping appears to be sailing smoothly toward Senate passage May 6 but will hit choppier waters in the Republican-controlled House, where antitax sentiment is stronger.

Opponents portray the bill as a tax increase and say it would burden small online businesses with complex tax-collection responsibilities. Supporters say the bill would enable states to collect sales taxes that already are owed, not create a new tax or raise tax rates. "It's probably more complicated in the House," said Rep. Steve Womack (R-AR), the chief House supporter of the bill. "There's a lot of political difficulty getting through the fog of it looking like a tax increase." Supporters cast the bill as an issue of fairness, saying brick-and-mortar stores are hurt as consumers increasingly check out merchandise in shops but buy the products online. Many House Republicans are sympathetic to that argument but are reluctant to embrace legislation that constituents could see as a tax increase, wary of a potential grass-roots voter backlash. Many of these legislators are silent on the issue or vague about their intentions. House leaders haven't come out against the measure but aren't jumping to move it along. Speaker John Boehner (R-OH) has taken no public position on the Senate bill, and a spokesman directed questions to the House Judiciary Committee. House Majority Leader Eric Cantor (R-VA) said Congress should address the fairness issue, but he hasn't said how or when.

Helping Seniors Learn New Technology

Only 54 percent of Americans over age 65 have access to the Internet, according to Pew Research studies.

Among those 77 and older, the proportion drops to about a third. In an era when everything, from personal health records to nursing home quality ratings, is moving online, when the best way to stay in touch with grandchildren may involve texting, this amounts to slow progress. The tech analyst Laurie Orlov of the Aging in Place Technology Watch blog has called for a national campaign to bring 100 percent of seniors online. Teaching skills only addresses part of the problem, of course; the costs of devices and of Internet service also keep older people offline, and so do physical limitations or cognitive impairment. Still, learning the technology is key.

For Media Moguls, Paydays That Stand Out

What’s the difference between a media mogul and a chief executive elsewhere in the business world? About $10 million in compensation, give or take.

Leaders in other industries may be well paid, but as the accompanying chart shows, they earn far less than their media counterparts. Consider: the top 20 companies in the United States ranked by market capitalization include no media companies. But according to figures assembled for The New York Times by Equilar, which compiles data on executive compensation, media companies employ seven of the top 20 highest paid chief executives.

The names are familiar and the numbers are large: Leslie Moonves of CBS ($60,253,647), David M. Zaslav of Discovery Communications ($49,932,867), Robert A. Iger of Walt Disney ($37,103,208), Philippe P. Dauman of Viacom ($33,396,104), Jeffrey L. Bewkes of Time Warner ($25,670,263), Brian L. Roberts of Comcast ($25,087,379), and Rupert Murdoch of News Corporation ($22,418,292).

The data indicates that average pay of the 10 highest paid chief executives for media companies was about $30 million, more than the captains of technology or finance and other industries, who average $6 million to $14 million less. Median pay for the top 20 media executives rose 10 percent in 2012, adding to a very tall stack. Not bad for a legacy industry that is supposedly under sustained attack from insurgents and secular challenges.

Spanish TV Eyes English Ad Budgets

For the top four broadcast networks, which have endured a tough television season, the coming "upfront" advertising-sales negotiations for next season could be difficult. But for another of the majors, Univision, it may be a different story.

Propelled by the country's rapidly growing Hispanic population, the Spanish-language broadcaster is the only one of the top five networks to have increased its prime-time viewership this season in the coveted 18-to-49-year-old demographic. Although it will likely end the season in fifth place, its audience in that age group is up 1% for the season to date, compared with declines of 3% for CBS, 22% for News Corp.'s Fox, 7% for Comcast's NBC and 9% for Walt Disney's ABC, according to Nielsen. Univision has long dominated its market, drawing 70% of the Spanish-language prime-time audience in that demographic. But lately it has emerged as a more serious competitor to the big English-language networks, ad buyers say.

Internet has extended battlefield in war on terror

The Boston Marathon bombing appears to be a pernicious reminder that the Internet has extended the battlefield in the war on terror. The Internet has become crucial in the evolution of modern terrorism, experts say. Terrorism today is largely leaderless, executed by an informal network of disaffected misfits. Cloaked with a veil of anonymity, the discontent radicalize with the help of the Web's reassuring echo-chamber — hatred is stoked and jihad justified.

Bernstein Research Likes What it Sees in Google KC Fiber

Bernstein Research is high on Google Fiber as a viable overbuilder with the possibility of it grabbing a bigger share of cable customers than traditional overbuilders, in part by offering a differentiated service. A Bernstein Research door-to-door survey of 204 residents of Kansas City found both "extremely high" awareness of Google's new fiber offering (98%), and a willingness to buy, which the researcher said could mean it will be a successful cable overbuilder.

Benton

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