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May 2013

May 2, 2013 (Yes, Wheeler to Head FCC)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for THURSDAY, MAY 2, 2013

The New Digital Age: Reshaping the Future of People, Nations and Business http://benton.org/calendar/2013-05-02/


POLICYMAKERS
   President Obama Announces His Nominee for FCC Chair - press release
   Reaction to FCC Pick
   Blog Shows Wheeler Critical of Broadcasting
   Obama to nominate Penny Pritzker as Commerce secretary

INTERNET/BROADBAND
   CenturyLink Enters the Gigabit Network Era
   USDA Announces Funding to Improve Rural Broadband Service in Nebraska and Montana - press release
   NTIA to lift EAGLE-Net suspension, broadband project needs more money
   CenturyLink, Colorado lawmakers fight over $54 million phone subsidy program [links to web]
   Top Level Domain Names Will Change Search [links to web]
   Cyber-Responders Seek New Ways to Respond to Cyberattacks [links to web]
   I’m still here: back online after a year without the Internet - editorial [links to web]
   Fairness on Sales Taxes - editorial

PRIVACY
   Do You Want the Government Buying Your Data From Corporations? - analysis
   Apple, AT&T, and Verizon fall short in protecting your data
   Groups criticize FBI plan to require Internet backdoors for wiretaps [links to web]

WIRELESS/SPECTRUM
   Would the FCC Chair Nominee Really Have Approved the AT&T/T-Mobile Merger? - analysis
   As T-Mobile Swallows MetroPCS, It Must Avoid Indigestion - analysis [links to web]
   Cellphone Thefts Grow, but the Industry Looks the Other Way [links to web]
   Pentagon Expects to Enlist Apple, Samsung Devices [links to web]

CONTENT
   TV Violence Still Prevalent, According To New PTC Study
   US regulators look at dealing with social media
   US media groups bank on digital rights [links to web]

GOVERNMENT & COMMUNICATIONS
   Pressing for Freedom: The State of Digital and Media Repression Worldwide in 2013 - speech [links to web]
   SF Mayor Signs Landmark Open Data Policy and Procedures Legislation [links to web]
   Keys to Successful Telework May Already be in Feds’ Pockets [links to web]

JOURNALISM
   Battle for New Orleans on the journalism front

COMMUNITY MEDIA
   Parents, Children, Libraries, and Reading - research

LOBBYING
   Mark Zuckerberg's Fwd.us in heated controversy over political ads

COMPANY NEWS
   Pay-TV Fees Lift Media Firms [links to web]
   Fox’s Original Idea: No More Reruns [links to web]
   Comcast: We’ll Stick With Triple Play [links to web]
   Facebook Earnings: Profit Rises Amid Growth in Mobile [links to web]

STORIES FROM ABROAD
   Authors, composers want 3.4% of every Belgian’s Internet bill [links to web]

MORE ONLINE
   Home Spending on Entertainment Rises [links to web]

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POLICYMAKERS

TOM WHEELER
[SOURCE: The White House, AUTHOR: Megan Slack]
President Barack Obama announced his intent to nominate a new Federal Communications Chair. President Obama said that Tom Wheeler, his choice for FCC Chair “has been at the forefront of some of the very dramatic changes that we’ve seen in the way we communicate and how we live our lives.” "He was one of the leaders of a company that helped create thousands of good, high-tech jobs," the President said. "He’s in charge of the group that advises the FCC on the latest technology issues. He’s helped give American consumers more choices and better products." And as technology continues to shape the way that we do business and communicate and transform the world, President Obama said that Wheeler will help the FCC fulfill a very important mission, “giving businesses and workers the tools they need to compete in the 21st century economy, and making sure we’re staying at the cutting edge of an industry that again and again we’ve revolutionized here in America.”
benton.org/node/151034 | White House, The | President Obama | NYTimes | Bloomberg | WSJ | The Hill | B&C | TVNewsCheck
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REACTION TO FCC PICK
[SOURCE: Benton Foundation, AUTHOR: Kevin Taglang]
When a new Federal Communications Commission chairman is named, people talk. Here’s what they are saying…
benton.org/node/151033 | Benton Foundation | House Commerce | B&C - FCC | Chairman Genachowski | Commissioner McDowell | Commissioner Clyburn | Commissioner Rosenworcel | Commissioner Pai | B&C – reaction
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CRITICAL OF BROADCASTING
[SOURCE: TVNewsCheck, AUTHOR: Doug Halonen]
One well-placed industry source said that, judging from Wheeler’s personal history as the former head lobbyist for both the cable TV industry (NCTA) and the wireless industry (CTIA) in Washington — and the entries on his blog page — broadcasters have reason for some anxiety that he’s likely the next chairman of the Federal Communications Commission. A quick review of the more than 50 entries on Wheeler’s blog suggests that Wheeler wholeheartedly buys the wireless industry’s argument that many broadcasters are wasting their spectrum. “When only 10% of households rely exclusively on over-the-air signals (for TV reception) and digital technology can cram most market’s existing signals into a single license allocation, the question gets asked whether there might be a higher and better use for those airwaves,” Wheeler wrote in a Nov. 4, 2009, blog entry. “Broadcast spectrum is being kept out of the hands of rapid-paced innovators, while those who hold the spectrum appear to be taking their time embracing the opportunities digital presents,” he wrote on Jan. 11, 2011
benton.org/node/151031 | TVNewsCheck
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PENNY PRITZKER
[SOURCE: Los Angeles Times, AUTHOR: Christi Parsons]
Making official what many Democrats have expected for weeks, President Obama plans to nominate Chicago business executive Penny Pritzker, a longtime political supporter and heavyweight fundraiser, as his new Commerce secretary on May 2. Pritzker’s nomination could prove controversial. She is on the board of Hyatt Hotels Corp., which was founded by her family and has had rocky relations with labor unions, and she could face questions about the failure of a bank partly owned by her family. With a personal fortune estimated at $1.85 billion, Pritzker is listed by Forbes magazine among the 300 wealthiest Americans. She is the founder, chair and chief executive of PSP Capital Partners, a private equity firm, and its affiliated real estate investment firm, Pritzker Realty Group. She played an influential role in Obama’s rise from Illinois state senator to the nation’s 44th president, serving as his national finance chairwoman in his 2008 campaign for the White House and as co-chairwoman of his reelection campaign.
benton.org/node/151020 | Los Angeles Times
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INTERNET/BROADBAND

OMAHA TO GET A GIG
[SOURCE: telecompetitor, AUTHOR: Bernie Arnason]
If you believe that Google, with their Google Fiber initiative, intended to raise awareness about gigabit FTTP networks and persuade other ISPs to move in that direction, it appears to be working. The latest to join the movement is CenturyLink, who announced that they will bring a symmetrical gigabit FTTP network to Omaha. The network will pass 48K homes in CenturyLink’s Omaha footprint. “CenturyLink is pleased to offer its Omaha customers ultra-fast broadband speeds up to 1 Gbps to help keep pace with growing broadband demands,” said Karen Puckett, CenturyLink chief operating officer in a CenturyLink press release. “This demonstrates our commitment to deliver communications solutions that provide our customers with the technology they need to enhance their quality of life, now and into the future.” CenturyLink reports they will begin rolling out this network as early as next week and expects it to be completed by early October 2013.
benton.org/node/150971 | telecompetitor
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RURAL BROADBAND FUNDING
[SOURCE: Department of Agriculture, AUTHOR: Press release]
The Department of Agriculture announced funding for two rural telecommunications companies that will expand broadband service in rural Nebraska and Montana. More than $26 million will be provided from USDA's Rural Utilities Service (RUS) to install fiber networks to improve telecommunications services in these areas. InterBel Telephone Cooperative, Inc., in Montana, will receive a $20.8 million loan to complete a Fiber-to-the-Premises network to help meet future growth requirements. In Nebraska, Hartington Telecommunications Co., Inc., will use a $5.2 million loan to replace copper with Fiber-to-the-Home technology. USDA funding is contingent upon the recipient meeting the terms of the loan agreement.
benton.org/node/151002 | Department of Agriculture
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NTIA TO LIFT EAGLE-NET SUSPENSION, BROADBAND PROJECT NEEDS MORE MONEY
[SOURCE: Denver Post, AUTHOR: Andy Vuong]
The National Telecommunications and Information Administration (NTIA) is allowing EAGLE-Net Alliance to resume the buildout of a taxpayer-funded high-speed Internet network aiming to connect the majority of Colorado's school districts, many of them in dire need of additional bandwidth. EAGLE-Net, the much-criticized organization awarded a $100.6 million grant in 2010 as part of the broadband stimulus program, has been suspended since December after altering its rollout plans without first obtaining the required environmental approvals. Initially scheduled for completion by the end of August, EAGLE-Net will now need an additional year and about $10 million to $15 million in private financing to finish its network. "NTIA has been working closely with EAGLE-Net over the past few months to address the environmental requirements needed to get the project back on track, and it has met those requirements," said NTIA Associate Administrator Anthony Wilhelm. "We'll continue to vigorously oversee the project to protect taxpayers' investment." He added that lifting the suspension now "will allow the organization to take advantage of the spring construction season and focus on helping western Colorado school districts get access to high capacity broadband."
benton.org/node/150974 | Denver Post
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FAIRNESS ON SALES TAXES
[SOURCE: New York Times, AUTHOR: Editorial staff]
[Commentary] Twenty-one years is a long time to wait. But that is how long local retailers have waited for Congress to undo a 1992 Supreme Court decision that exempted many online retailers, like Amazon, from collecting most state sales taxes. The exemption has given online sellers a 5 percent to 10 percent price advantage over Main Street stores. The wait, however, may soon be over. Next week, the Senate is expected to pass the Marketplace Fairness Act of 2013, a bipartisan bill that would authorize states to require out-of-state sellers with more than $1 million in sales to collect sales taxes. The states, in turn, must simplify their sales-tax codes and give retailers free software to calculate the taxes — steps already taken by most states. An identical bill in the House also has bipartisan support. The proposed law would close a loophole, not impose new taxes. It’s a matter of efficiency and fairness, of necessity and competitiveness. If those really are bipartisan values, the Senate will act without further delay to pass the Marketplace Fairness Act, and the House will follow suit.
benton.org/node/151028 | New York Times
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PRIVACY

GOV BUYING DATA FROM CORPORATIONS
[SOURCE: The Atlantic, AUTHOR: Bruce Schneier]
Our government collects a lot of information about us. Tax records, legal records, license records, records of government services received-- it's all in databases that are increasingly linked and correlated. Still, there's a lot of personal information the government can't collect. Either they're prohibited by law from asking without probable cause and a judicial order, or they simply have no cost-effective way to collect it. But the government has figured out how to get around the laws, and collect personal data that has been historically denied to them: ask corporate America for it. Soon, governments won't have to bother collecting personal data. We're willingly giving it to a vast network of for-profit data collectors, and they're more than happy to pass it on to the government without our knowledge or consent.
benton.org/node/151007 | Atlantic, The
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PROTECTING YOUR DATA
[SOURCE: InfoWorld, AUTHOR: Woody Leonhard]
The Electronic Frontier Foundation released a report, Who Has Your Back?, which asks a probing question: What does the company do to keep customers' personal information out of the government's hands? The examined companies could receive a gold star in each of six categories:
If the company requires a warrant before releasing information to the government.
If the company notifies customers when their information has been requested (except when prohibited by law).
If the company publishes a report about how many government requests it has fulfilled.
If the company has published formal guidelines on how it responds to information requests from governmental bodies.
If the company has ever fought a request for information in the courts. "[N]ot all companies will be put in the position of having to defend their users before a judge, but those who do deserve special recognition."
If the company belongs to the Digital Due Process Coalition, a group that is pushing the U.S. Congress to rewrite the (largely outmoded) Electronic Communications Privacy Act of 1986.
Of the companies surveyed, only Twitter and Sonic.net lit up the boards with six stars, and Dropbox, LinkedIn, and SpiderOak fell short only in the "fought a request" category -- quite possibly through no fault of their own.
benton.org/node/151006 | InfoWorld
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WIRELESS/SPECTRUM

WHEELER AND AT&T/T-MOBILE
[SOURCE: Public Knowledge, AUTHOR: Harold Feld]
[Commentary] I want to tackle the current "Tom Wheeler would have approved the AT&T/T-Mo merger in 2011." It's easy to say, "oh, all that lobbying for the cable and wireless industry was long ago when they were scrappy upstarts. Why, that was so long ago that the cable industry were battling the broadcasters and the wireless industry were battling the telcos (as opposed to these days when the cable industry battles the telcos and the wireless industry battles the broadcasters)!" But if Wheeler was actually a supporter of AT&T/T-Mobile, then it would seem to prove he still has sympathies to his old industry incumbent comrades. I confess I don't see the same enthusiasm for a combined AT&T/T-Mobile that some have seen. Mind you, perhaps I am unduly charmed by Wheeler's embrace of unlicensed spectrum, Wi-Fi and federal spectrum sharing back in October 2011 – well before his supposed cable masters embraced it and while his supposed wireless masters at AT&T and Verizon still rejected this as a "distraction" from clearing and auctioning. Or perhaps as a fellow who writes long-winded blogs on complex telecom policy I'm unduly sympathetic to complaints that one's blog posts get misinterpreted. But in any event, it’s worth looking at what Wheeler actually said.
benton.org/node/150978 | Public Knowledge
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CONTENT

TV VIOLENCE STUDY
[SOURCE: Associated Press, AUTHOR: David Bauder]
Violence, gore and gunplay were staples on prime-time television even in the most sensitive period directly following the Newtown school shooting. A study of 392 prime-time scripted programs on broadcast networks shown during the month following Vice President Joe Biden's January meeting with entertainment industry executives on the topic revealed that 193 had some incident of violence, according to the Parents Television Council. Some are cartoonish – quite literally, with Homer strangling Bart for mouthing off on "The Simpsons" – but there is plenty of gunplay, stabbings and beat-downs.
benton.org/node/151009 | Associated Press
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SOCIAL MEDIA
[SOURCE: Associated Press, AUTHOR: ]
A week after hackers broke into The Associated Press' Twitter feed and roiled financial markets, federal regulators say they need to find ways to deal with the impact of social media. Members of the Commodity Futures Trading Commission didn't outline immediate action. CFTC Commissioner Bart Chilton suggested they consider imposing tougher cybersecurity rules for investment firms and others that trade. Firms could be held accountable and sanctioned if their security systems were inadequate to prevent a breech.
benton.org/node/150982 | Associated Press
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JOURNALISM

BATTLE FOR NEW ORLEANS
[SOURCE: USAToday, AUTHOR: Rem Rieder]
It doesn't sound like the smartest strategy for success. Despite all the travails in the newspaper business today, a not particularly distinguished paper with a circulation under 100,000 decides to compete in a market 80 miles away. But that's what is happening in southern Louisiana, where The Advocate in Baton Rouge, under new ownership and new leadership, seems poised to significantly expand its foray into New Orleans. Of course, this is New Orleans, where the rules are different. So the audacious game plan might not be so crazy. The Newhouse family's Advance Publications, which owns New Orleans' Times-Picayune, opened the door to this unlikely newspaper war last May when it announced that it was adopting a digital-first strategy and that the paper would only come out three days a week, laying off a third of its staff in the process. Sensing an opening, The Advocate opened up a New Orleans bureau and last October launched a New Orleans edition. It now sells about 20,000 copies a day there, a remarkable number in such a short time. And the stakes are about to be raised, big time.
benton.org/node/151011 | USAToday
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COMMUNITY MEDIA

PARENTS, CHILDREN, LIBRARIES, AND READNG
[SOURCE: Pew Internet & American Life Project, AUTHOR: Carolyn Miller, Kathryn Zickuhr, Lee Rainie, Kristen Purcell]
The vast majority of parents of minor children — children younger than 18 — feel libraries are very important for their children. That attachment carries over into parents’ own higher-than-average use of a wide range of library services. The ties between parents and libraries start with the importance parents attach to the role of reading in their children’s lives. Half of parents of children under age 12 (50%) read to their child every day and an additional 26% do so a few times a week. Those with children under age 6 are especially keen on daily reading with their child: 58% of these parents read with their child every day and another 26% read multiple times a week with their children. The importance parents assign to reading and access to knowledge shapes their enthusiasm for libraries and their programs:
94% of parents say libraries are important for their children and 79% describe libraries as “very important.” That is especially true of parents of young children (those under 6), some 84% of whom describe libraries as very important.
84% of these parents who say libraries are important say a major reason they want their children to have access to libraries is that libraries help inculcate their children’s love of reading and books.
81% say a major reason libraries are important is that libraries provide their children with information and resources not available at home.
71% also say a major reason libraries are important is that libraries are a safe place for children.
Almost every parent (97%) says it is important for libraries to offer programs and classes for children and teens.
benton.org/node/150969 | Pew Internet & American Life Project
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LOBBYING

CONTROVERSIAL ADS
[SOURCE: Los Angeles Times, AUTHOR: Jessica Guynn]
Mark Zuckerberg is being unfriended by progressives angered by television ads from his political advocacy group Fwd.us that praise lawmakers for supporting the expansion of the Keystone XL oil pipeline and drilling in the Arctic National Wildlife Refuge. Their ire is being directed at the billionaire founder and chief executive of Facebook with a protest planned for May 1 at the company's Menlo Park (CA) headquarters shortly before the company releases its first-quarter earnings. The TV ad campaign is designed to give political cover to vulnerable conservatives back home to rally support for comprehensive immigration reform. But controversy generated by the ads could become a problem for Zuckerberg and Facebook. Though none of the ads suggest that Zuckerberg or Facebook support these policies, that distinction may be lost on the general public. "Years and years ago, Michael Jordan was asked why he was not endorsing a Democratic candidate for senator in North Carolina. He said: 'Republicans buy shoes, too.' One of the biggest obstacles for a business leader considering political involvement is the potential impact it would have on his client base," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. "Zuckerberg’s primary goal is to have immigration reform, and this is a very savvy way of making that happen. But invariably there is going to be people who don’t understand and the inevitable result is going to be this type of press fire."
benton.org/node/151012 | Los Angeles Times | The Hill
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President Obama Announces His Nominee for FCC Chair

President Barack Obama announced his intent to nominate a new Federal Communications Chair. President Obama said that Tom Wheeler, his choice for FCC Chair “has been at the forefront of some of the very dramatic changes that we’ve seen in the way we communicate and how we live our lives.”

"He was one of the leaders of a company that helped create thousands of good, high-tech jobs," the President said. "He’s in charge of the group that advises the FCC on the latest technology issues. He’s helped give American consumers more choices and better products." And as technology continues to shape the way that we do business and communicate and transform the world, President Obama said that Wheeler will help the FCC fulfill a very important mission, “giving businesses and workers the tools they need to compete in the 21st century economy, and making sure we’re staying at the cutting edge of an industry that again and again we’ve revolutionized here in America.”

Reaction to FCC Pick

When a new Federal Communications Commission chairman is named, people talk. Here’s what they are saying:

  • House Commerce Committee Chairman Fred Upton (R-MI) and Communications Subcommittee Chairman Greg Walden (R-OR) said they were concerned about some of Wheeler's views “on merger conditions that can be misused to affect whole industries, not just those seeking merger approval. The FCC should use its lawful rule making authority as a public and transparent process if it wants to change industry-wide behavior and stop using closed door, strong-arm merger conditions.”
  • Rep. Henry Waxman (D-CA), ranking member of the House Commerce Committee, called Wheeler a tremendous asset and said the FCC was in good hands with Interim Chairman Mignon Clyburn.
  • "Tom Wheeler will bring a deep understanding of the wireless industry," said Sen. Mark Warner (D-VA). "He is a good choice for the FCC during an exciting and tumultuous time for communications policy.”
  • "The FCC's commitment to ensuring adequate local news coverage in New Jersey remains a major concern that I will continue to pursue,” said Sen. Frank Lautenberg (D-NJ). “Mr. Wheeler's vision to expand broadband services will be critical to families and businesses and I look forward to hearing how he plans to utilize America's innovative spirit and communications infrastructure to improve the economy."
  • Current FCC Chairman Julius Genachowski said, “I was pleased to appoint Tom as chairman of the FCC's Technological Advisory Council in 2010, and under his leadership the TAC has made strong contributions to the FCC's work, including on unleashing spectrum for mobile, removing barriers to private investment, and strengthening our cyber security.”
  • "Given his wealth of private-sector experience and his knowledge of the communications industry, Tom is superbly qualified to lead the commission," said Republican Commissioner and soon-to-be senior Republican Commissioner Ajit Pai. "I look forward to working with him on creating a regulatory environment in which innovation and competition will flourish for the benefit of all Americans."
  • "I am excited by the news that President Obama has decided to nominate Tom Wheeler to be the next chairman of the Federal Communications Commission," said FCC Commissioner Jessica Rosenworcel. I know he will bring a deep understanding of communications policy to the role, which he has already demonstrated through his leadership of the Commission's Technological Advisory Council. This agency will face complex issues during the days ahead, but I am confident that he will be a terrific leader and I look forward to working with him."
  • FCC Commissioner Clyburn joined others in congratulating Tom Wheeler on his nomination. She thanked President Obama for the nod to lead the FCC until Wheeler’s nomination is confirmed. “I am committed to continuing the FCC’s strong record of promoting competition, investment, and advancing the public interest. I am a firm believer that our government can be an effective problem-solver with an important role to play in opening doors of opportunity for all Americans.”

Blog Shows Wheeler Critical of Broadcasting

One well-placed industry source said that, judging from Wheeler’s personal history as the former head lobbyist for both the cable TV industry (NCTA) and the wireless industry (CTIA) in Washington — and the entries on his blog page — broadcasters have reason for some anxiety that he’s likely the next chairman of the Federal Communications Commission.

A quick review of the more than 50 entries on Wheeler’s blog suggests that Wheeler wholeheartedly buys the wireless industry’s argument that many broadcasters are wasting their spectrum. “When only 10% of households rely exclusively on over-the-air signals (for TV reception) and digital technology can cram most market’s existing signals into a single license allocation, the question gets asked whether there might be a higher and better use for those airwaves,” Wheeler wrote in a Nov. 4, 2009, blog entry. “Broadcast spectrum is being kept out of the hands of rapid-paced innovators, while those who hold the spectrum appear to be taking their time embracing the opportunities digital presents,” he wrote on Jan. 11, 2011

Cellphone Thefts Grow, but the Industry Looks the Other Way

When a cell phone is stolen, it is entered in a new nationwide database for stolen cellphones, which tracks a phone’s unique identifying number to prevent it from being activated, theoretically discouraging thefts. But police officials say the database has not helped stanch the ever-rising numbers of phone thefts, in part because many stolen phones end up overseas, out of the database’s reach, and in part because the identifiers are easily modified. Some law enforcement authorities, though, say there is a bigger issue — that carriers and handset makers have little incentive to fix the problem. “The carriers are not innocent in this whole game. They are making profit off this,” said Cathy L. Lanier, chief of the police department of the District of Columbia, where a record 1,829 cellphones were taken in robberies last year.

Fairness on Sales Taxes

[Commentary] Twenty-one years is a long time to wait. But that is how long local retailers have waited for Congress to undo a 1992 Supreme Court decision that exempted many online retailers, like Amazon, from collecting most state sales taxes.

The exemption has given online sellers a 5 percent to 10 percent price advantage over Main Street stores. The wait, however, may soon be over. Next week, the Senate is expected to pass the Marketplace Fairness Act of 2013, a bipartisan bill that would authorize states to require out-of-state sellers with more than $1 million in sales to collect sales taxes. The states, in turn, must simplify their sales-tax codes and give retailers free software to calculate the taxes — steps already taken by most states. An identical bill in the House also has bipartisan support.

The proposed law would close a loophole, not impose new taxes. It’s a matter of efficiency and fairness, of necessity and competitiveness. If those really are bipartisan values, the Senate will act without further delay to pass the Marketplace Fairness Act, and the House will follow suit.

Facebook Earnings: Profit Rises Amid Growth in Mobile

Twelve months ago, Facebook barely had a mobile business. On May 1, Facebook disclosed how that has changed: Nearly one out of every three dollars it produces now comes from advertising on smartphones and tablets.

The shift came as the company posted a 38% revenue rise to $1.46 billion in the first quarter from a year earlier, as net income rose 6.8% to $219 million. In particular, Facebook's mobile-ad sales jumped 22% to $374 million from the prior quarter. The company said mobile-ad sales now form 30% of advertising revenue, up from 23% in the fourth quarter and 14% in the third quarter. Results were also buoyed by new targeting tools for advertisers and other new ad products.

Pentagon Expects to Enlist Apple, Samsung Devices

Samsung and Apple are bringing the smartphone wars to the Pentagon. The U.S. Department of Defense expects in coming weeks to grant two separate security approvals for Samsung's Galaxy smartphones, along with iPhones and iPads running Apple's latest operating system—moves that would boost the number of U.S. government agencies allowed to use those devices.

Both companies have been pushing hard to win over U.S. defense agencies, some of the government's most security-conscious customers. That market is small and still largely dominated by Research In Motion’s BlackBerrys, so the new security approvals won't likely translate into any immediate, big sales or new customers. Still, the approvals are among a handful considered to be the gold standard in communications security. Passing muster at the Pentagon can go a long way in making other security-minded customers—such as bankers and lawyers—feel more comfortable using the devices.

Pay-TV Fees Lift Media Firms

Big media companies are relying more on growth in the fees they get from pay-TV distributors to offset a tepid and uncertain advertising market, a trend highlighted in their quarterly results.

  • Time Warner, which reported a 23% increase in profit for the quarter ended March 31, said ad revenue at its television networks shrank 1%. By contrast, the "affiliate fees" it charges cable and satellite operators to carry its networks—such as TBS, TNT and premium channel HBO—grew 5.3%.
  • Comcast’s NBCUniversal division said earnings growth at its cable networks, which include USA Network, MSNBC and Bravo, was driven by an 8.6% rise in affiliate fees, outstripping their 2.5% growth in ad revenue. Comcast's first-quarter earnings rose 17%, fueled by growth in its broadband and business-services units as well as NBCUniversal, which also owns the NBC broadcast network.

Cable networks have become the profit engine of the big media companies over the past decade because they generate two streams of revenue. While their ad revenue can fluctuate wildly depending on economic conditions, their affiliate fees, which come from multiyear deals in which pay-TV providers agree to share a portion of their subscriber revenue, are more predictable. But the networks' increased reliance on affiliate fees raises questions for the pay-TV industry, such as how cable and satellite operators will handle steadily rising content fees without robust subscriber growth.

US media groups bank on digital rights

Media companies are banking on the prospect that tech firms will continue to pay up for digital rights to their programs, despite recent warnings from Netflix that it would become choosier in its deals for traditional television content.

“With people consuming more and more video all the time, the key to success is pretty simple. If you keep creating the best content, you will keep getting paid better and better as technology improves,” said Les Moonves, chief executive of CBS. Jeff Bewkes, chief executive of Time Warner, echoed that sentiment, saying his company is in an enviable position with its top-tier programming on networks such as HBO becoming more valuable as tech firms become more selective in striking content deals. “We think we’re in the catbird seat from that point of view with all of the [subscription video on demand] buyers,” he said. The comments came as a slew of media companies, including Comcast, Viacom, CBS and Time Warner, reported a mixed bag of quarterly earnings.

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