May 2013

Do-Not-Track Talks Could Be Running Off the Rails

After nearly two years of negotiating and little progress, the international group trying to agree on a Do Not Track standard is convening its final official face-to-face meeting next week.

Although many people may not know that advertisers and other third parties operating on Web sites install cookies, which are small bits of code that track users’ browsing history, a small subset of consumers have already activated the Do Not Track mechanisms on their devices. These don’t-track-me browser settings send out signals telling third parties that a user does not want to have his or her online activities tracked. Advertisers say they need to collect tracking data in order to show relevant ads to consumers. Without behavior-based ads to support free content and services, they argue, certain sites would have to shut down or start charging for access. Privacy advocates, for their part, argue that consumers have a right to choose not to be tracked by companies they don’t do business with. If the price consumers have to pay is more generic ads that are not tailored to them, they say, so be it.

Alaska Media Battle Pits Old Power vs. Cable Rival

Yes, Alaska is woolly and wild. But here is the paradox: it functions in many ways like a medium-size city with a big backyard. Nearly 54 percent of the population, in a state more than twice the size of Texas, clusters in the largest metropolitan area, Anchorage. That degree of single-city dominance is matched in only a few other places in the United States, notably Nevada, where a tail named Las Vegas wags its dog. Concentration of population, in turn, creates concentration of power in economics, news and culture, which means that Anchorage — though very different from the rest of the state, if only by virtue of being urban — largely defines what it means to be Alaskan through the messages it sends out and controls.

Now, there is a fight over who wields that Anchorage-centered, Alaska-size microphone. In one corner, wearing the rainbow-colored peacock logo, is the powerful NBC affiliate, KTUU. As Channel 2, it was one of the first stations on the air here, starting in the early 1950s, before statehood, and it has been crushingly dominant just about ever since in statewide news coverage. In the other corner, just as muscular in its own way, is a homegrown cable company, General Communication Inc., Alaska’s biggest provider of telecommunications services, from cable to telephone. Last fall the company, known as GCI, proposed going into the content side of the business, putting its own programming into the cable lines it controls with near-monopoly power in parts of the state. The fight that has raged ever since: will access to the cable system that snakes out of Anchorage to inform and entertain the state still be fair?

Is Internet Killing the Video Star?

[Commentary] Instead of adapting to changing viewer behavior, the cable companies, Hollywood and broadcasters are holding onto old business models for dear life and calling the lawyers. Sound familiar?

Ignoring or fighting digital consumer behavior is a recipe for disaster — resulting in rejection faster than an unpalatable creation by a contestant on Hell’s Kitchen. It’s time for TV broadcasters, content creators and advertisers to innovate their businesses instead of maintaining existing models through threats and litigation. First, they need to understand that their viewers are setting the rules and defining the life expectancy of their programming and services. They will decide your fate — not you. Not only accepting, but also realizing that TV programs and movies are easily accessible via proliferating distribution channels such as Netflix and Aereo, the industry can turn the tables and find opportunities with additional platforms and options to reach viewers for their eyeballs and spending. Most importantly, cable, broadcasters and Hollywood have the opportunity to move forward and determine better and more efficient business models to thrive.

[White is President of Gracenote]

Clearwire Shareholders to Press for Higher Buyout

Some Clearwire shareholders have formed a group with the aim of getting a higher buyout price for the mobile broadband provider than the one currently in place from Sprint Nextel.

In December, Clearwire's majority owner, Sprint, offered to buy the rest of Clearwire that it doesn't own for $2.2 billion, or $2.97 a share. The next month, satellite TV company Dish Network bid $3.30 a share, and Clearwire shares have traded well above the Sprint offer since. Dish since has bid for the entirety of Sprint, putting its Clearwire bid in question. In a regulatory filing, the four shareholders—Mount Kellett Capital Management, Highside Capital Management, Glenview Capital Management and Chesapeake Partners Management—said they hold a collective 127.4 million shares, or about 18.2% of the non-Sprint shares outstanding. They intend to act as a group in beginning discussions with Sprint and other interested parties, including Dish, about the deal. The filing said the group members "unanimously believe that such price offered by Sprint is too low" and they have retained legal counsel to assist in any negotiations. The group members have agreed not to sell or transfer their shares before May 22, when the pact will end unless members holding a majority of the group shares decide to end it earlier.

Apple Leads Samsung in U.S. Smartphones

136.7 million people in the United States owned smartphones during the three month period ended in March, and nearly 40 percent of them used iPhones. According to the latest metrics from comScore, Apple was the top smartphone manufacturer in the U.S. during the quarter, capturing a 39 percent share of the market, up from 36.3 percent in the prior quarter. With a 21.7 percent share, up slightly from the 21 percent it posted in December, Samsung placed second in comScore’s rankings. Bringing up the rear: HTC, Motorola and LG, which all claimed less than 10 percent shares after quarter-to-quarter declines.

Silicon Valley uses growing clout to kill a digital privacy bill

Silicon Valley has wielded its growing political clout at the California state Capitol to kill a digital privacy bill that would have given consumers access to information about them being collected online. Had the Right to Know Act become law, California would have been the first state to take direct aim at an online industry that stockpiles and trades in a wide range of personal data about nearly every adult in the United States.

In a major defeat for consumer groups and privacy watchdogs, AB 1291 will instead become a two-year bill, effectively putting it into a deep freeze until next year. Assemblywoman Bonnie Lowenthal (D-Long Beach) said she preferred to wait rather than "water down" the substance of her bill. "Californians don't need to be persuaded that they should be able to ask a business what it knows about them and who it's sharing that information with. But in the Legislature, it has become clear that we still have our work cut out for us," she said. The bill faced vehement opposition from a powerful coalition of technology companies and business lobbies that included Facebook Inc., Google Inc., the California Chamber of Commerce, insurers, bankers and cable television companies as well as direct marketers and data brokers. Their members collectively give millions of dollars to lawmakers and politicians.

Norquist presses Senate sponsor on online sales tax

The anti-tax activist Grover Norquist is expanding his criticism of a proposed online sales tax measure, raising a slew of issues with a key sponsor of the bill. Norquist, the founder of Americans for Tax Reform, is pressing Sen. Mike Enzi (R-WY) over whether the Marketplace Fairness Act would make businesses more vulnerable to out-of-state audits, and why the bill would count tribal lands as states.

Norquist also asks whether bill could have a negative impact on financial transactions, an idea that has also worried Wall Street groups. Norquist and ATR have suggested that the bill would raise taxes without expressly saying that lawmakers backing the measure would run afoul of the anti-tax pledge administered by ATR. Other conservative groups, like Heritage Action and Americans for Prosperity, also oppose the bill, as does the online retailer eBay.

Plan to boost in-flight Internet could wreak havoc on satellite networks

The Federal Communications Commission will soon consider a plan to beam Internet signals up to airplanes from 150 ground stations operating in a spectrum band already used by satellites.

Qualcomm has proposed such a service in the 14.0-14.5GHz band but faces opposition from the satellite industry, which says the service is unnecessary and would interfere with satellite transmissions. Qualcomm's proposal came in July 2011 and is now on the verge of moving forward. The FCC's meeting on May 9 "will consider a Notice of Proposed Rulemaking [NPRM] seeking to improve consumer access to broadband aboard aircraft and encourage innovation through establishment of an Air-Ground Mobile Broadband secondary service in the 14.0-14.5 GHz band, while ensuring that existing users are protected from interference." This isn't the final step. If approved, the NPRM will be followed by extensive debate, public comment, and likely testing to determine whether interference concerns are valid. Already, the Satellite Industry Association (SIA) and others using the spectrum band say Qualcomm's proposal should be rejected or heavily restricted.

Survey: Most parents support mobile learning devices

A majority of parents overwhelmingly think that mobile apps, mobile content, and technology in the classroom promote positive learning habits and yield benefits, according to a new survey from Grunwald Associates, the Learning First Alliance, and underwritten by AT&T.

Most children in preschool through 12th grade have access to different technologies at home, and this includes mobile learning devices:

Seventy-eight percent of parents said someone in their family owns a laptop or portable computer, and of that group, 52 percent said their child uses the device.
Twenty-four percent own and eReader and 11 percent of those children use the eReader.
Forty-six percent of parents own a tablet and 34 percent of those children use the tablet, with 47 percent using it daily, 46 percent weekly, and 7 percent less than once per week.
Seventy-seven percent of parents own a smart phone and 43 percent of children in smart phone-owning homes use the devices. Sixty-five percent of those children use the smart phone each day.

How will we measure the internet of things?

[Commentary] In writing about the plethora of startups, devices and strategies that companies large and small are throwing at the internet of things, I’ve been thinking about market size.

Cisco says it will generate $14.4 trillion in profits by 2022. GE says it will add $10 trillion to $15 trillion in GDP by 2030. These numbers are hard to be believed. For example the federal government only brought in $2.45 trillion in tax revenue in 2012. But there’s also the question of how to measure the market or the value. Do we count the devices themselves? The dollars spent on platforms and services that tie connected devices together? What about subscriptions to wireless networks? In GE’s case it’s counting dollars saved by implementing better data gathering systems. But the whole idea of trying to measure what is fundamentally a technological shift as a market baffles me.

Benton

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