July 8, 2013 (FCC Approves Softbank-Sprint-Clearwire Transactions)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for MONDAY, JULY 8, 2013
On the agenda this week http://benton.org/calendar/2013-07-07--P1W/
WIRELESS/SPECTRUM
FCC Approves Softbank-Sprint-Clearwire Transactions - public notice
FCC Is Told Verizon Underpaid Data Refunds
Verizon pursues all-wireless phone service in seaside NY town
Fire Island Erupts Over Verizon's Wireless Voice Link: New York AG Claims Verizon Violated Agreement - op-ed
Auction of Upper and Lower Paging Bands Licenses; 37 Bidders Qualified to Participate in Auction 95 - public notice
AT&T isn't nearly as bad as you think [links to web]
GOVERNMENT & COMMUNICATIONS
Privacy Group to Ask Supreme Court to Stop NSA’s Phone Spying Program
Secret Court's Redefinition of 'Relevant' Empowered Vast NSA Data-Gathering
Digital age expanded the NSA's mission
Technology, Not Law, Limits Mass Surveillance - op-ed
NSA backlash ripples into privacy legislation
Brazil Voices ‘Deep Concern’ Over Gathering of Data by US [links to web]
With Montana’s Lead, States May Demand Warrants for Cellphone Data [links to web]
Using E-Mail Data to Connect the Dots of Your Life - analysis
Snowden revelations imperil cyber hacking talks with China
Intelligence chief Clapper apologizes for ‘erroneous’ statement to Congress
Agreements with private companies protect U.S. access to cables’ data for surveillance
Why “we only spy on foreigners” doesn’t work anymore for the NSA - analysis
NSA spying fuels EU concerns about U.S.-based cloud services
Five unanswered questions about the NSA’s surveillance programs - analysis
TELECOM
Rural Telco Consolidation is Goal of USConnect
FCC Seeks Comment on Protective Order for Special Access Data Collection - public notice
INTERNET/BROADBAND
How the Internet Drives Cable Companies' Consolidation - analysis
Connecting America’s Schools to Next-Generation Broadband - NTIA press release [links to web]
Seattle Mayor Mike McGinn’s failed broadband promise - editorial [links to web]
New life for Benicia (CA) broadband project [links to web]
Ex-FBI chief Louis Freeh warns of cyber threats [links to web]
TELEVISION
FCC flooded with objections to more swearing, nudity on TV [links to web]
FCC receives nearly 16,000 complaints of loud TV commercials [links to web]
A Different Deal Mania Grips TV - analysis
With Political Ad Profits, Swing-State TV Stations Are Hot Properties
Tribune re-enters valley of debt - analysis
WWOR-TV in New Jersey Replaces Nightly News [links to web]
JOURNALISM
Thomson Reuters to Suspend Early Peeks at Key Index
TV Is Americans' Main Source of News - research [links to web]
WWOR-TV in New Jersey Replaces Nightly News [links to web]
CONTENT
The ripple effects of stricter privacy rules for kids [links to web]
State attorneys general blast Google for allegedly monetizing illicit YouTube videos [links to web]
Court: No class-action status in Google book case [links to web]
Six percent of online adults use reddit - research [links to web]
Apple Said to Near Time Warner Cable Deal for TV Programs [links to web]
LABOR
FCC Continues 2013 EEO Audits - public notice [links to web]
LOBBYING
These tech companies are spending millions on high-priced lobbyists [links to web]
POLICYMAKERS
In Congress, Gridlock and Harsh Consequences
The California PUC's not the commission it used to be [links to web]
MORE ONLINE
Forget social and mobile: Our economy needs more “white space” innovation - op-ed [links to web]
WIRELESS/SPECTRUM
FCC APPROVES SOFTBANK-SPRINT-CLEARWIRE TRANSACTIONS
[SOURCE: Federal Communications Commission, AUTHOR: Public Notice]
On July 5, the Federal Communications Commission released an order allowing the applications of SOFTBANK CORP. (“SoftBank”), its indirect subsidiary Starburst II, Inc. (“Starburst II”), and Sprint Nextel Corporation (“Sprint” and, together with SoftBank and Starburst II, the “Applicants”) to transfer control to SoftBank and Starburst II of various wireless licenses and leases, domestic and international section 214 authorizations, earth station authorizations, interests in submarine cable licenses, and cable television relay service station licenses held by Sprint and its subsidiaries, and the various wireless licenses and leases held by Clearwire Corporation (“Clearwire”). The Applicants also requested a declaratory ruling that it is in the public interest for the foreign ownership of Sprint and its licensee subsidiaries to exceed the 25 percent foreign ownership benchmark in section 310(b)(4) of the Communications Act of 1934 (the “Act”).
Based on the record and the FCC’s review of the competitive effects of the proposed transactions – the acquisition of Sprint by SoftBank and Sprint’s acquisition of 100 percent of the stock of Clearwire – the FCC finds that approval of the transactions will serve the public interest. The FCC notes at the outset that the investment by SoftBank in the U.S. market differs from wireless transactions in which two domestic competitors with overlapping service areas or spectrum holdings are seeking approval to merge, thereby eliminating an existing competitor. Rather, SoftBank, which has no attributable interests in any spectrum licenses in the United States, is seeking approval, inter alia, to use approximately $16.64 billion to purchase shares from existing Sprint shareholders, and plans to provide an additional $5 billion to Sprint that it can invest in its network and use to provide wireless broadband service.
The FCC finds that these proposed transactions are not likely to result in competitive or other public interest harms in the provision of mobile wireless services. In addition, the FCC anticipates that the proposed transactions likely will result in key public interest benefits, acceleration of deployment of advanced mobile broadband services and enhanced competition in the mobile wireless market, through the increased investment by Softbank in the Sprint and Clearwire networks.
Further, the FCC finds that the indirect foreign ownership of Sprint and its licensee subsidiaries by SoftBank complies with section 310(b)(4) of the Act. Finally, in response to petitions for reconsideration, the FCC affirms that the Wireless Telecommunications Bureau properly processed as pro forma the applications that were filed to effectuate the transfer of the shares in Clearwire held by Eagle River Holdings, LLC to Sprint. Thus, the FCC concludes that the transactions are in the public interest, and approves them subject to the conditions contained herein.
benton.org/node/155225 | Federal Communications Commission | Chairwoman Clyburn | Commissioner Pai | New York Times | WSJ | The Hill | the Hill | WashPost | USAToday
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UNDERPAID REFUNDS
[SOURCE: New York Times, AUTHOR: Edward Wyatt]
An independent telecommunications lawyer filed a petition with the Federal Communications Commission, claiming that Verizon Wireless had vastly understated the amount it collected from false data charges on customer bills when it agreed to refund the levies in 2010. The lawyer, Arthur V. Belendiuk, of Washington, said in a petition for investigation that Verizon and FCC documents obtained through a Freedom of Information request contained evidence indicating that the company might have taken $240 million or more from the false charges, more than four times the almost $53 million it agreed to refund. Belendiuk, who frequently represents television stations and broadcasters before the FCC, said the documents produced by Verizon in the investigation indicated that in trying to assess how to fix the problem, the company’s proposed solutions would cost it $8 million to $10 million a month. The documents, Belendiuk said in his petition, indicated that when the company put in place a fix for the flaw, “Verizon’s $1.99 data charge revenues dropped by approximately $8 million per month.” Belendiuk said he had filed the Freedom of Information request and the petition on his own behalf and not for a client, and that he was interested in the case from the time it was disclosed. The settlement itself, as a precedent, “makes a difference for me as an attorney, in knowing how to advise my clients,” he said. A Verizon spokesman, Torod B. Neptune, said that the allegations were without merit, and declined to comment further. FCC officials and the Office of the Inspector General declined to comment.
benton.org/node/155211 | New York Times
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VERIZON PURSUES ALL-WIRELESS PHONE SERVICE
[SOURCE: Washington Post, AUTHOR: Cecilia Kang]
Battered by Hurricane Sandy, Fire Island (NY) is being rebuilt with a radically redesigned telephone system — a glimpse of future technology that many residents say they don’t want. Verizon, the only phone company in town, wants most of the island and its 500 homes to go all-wireless, ending for good its century-old copper wire phone network. That means phone lines buried underground or strung between poles and then stretched into homes will go out of service and be replaced by an experimental wireless service that sends calls between cell towers and home receivers. Although it carries only voice calls today, the new technology is a harbinger for faster, more capable mobile and Internet services expanding across the nation. Phone giants Verizon and AT&T have let some of their traditional phone networks atrophy and have put tens of billions of dollars into the mobile and high-speed land-line Internet services that generate more revenue. The new communications infrastructure — which features fiber-optic cables in built-up areas such as Washington, as well as wireless systems in more remote locales — is billed as a catalyst for economic growth. It has introduced new home functions such as video conferencing, streaming games and hundreds of high-definition television channels over cable networks. But customers are finding the rapid change unsettling when it comes to a service that had become a reliable, invisible utility. The Verizon system being phased in at Fire Island, called Voice Link, lacks many basic functions of land-line phones and may not promise the same reliability or regulatory protections.
benton.org/node/155209 | Washington Post | Public Knowledge
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FIRE ISLAND AND VOICELINK
[SOURCE: The Huffington Post, AUTHOR: Bruce Kushnick]
[Commentary] The future of telecommunications in the U.S. is being played out on the sandy beaches of Fire Island, NY. Forget about not being upgraded to fiber optic services. Customers are "extremely disappointed," "horrified," "very frustrated," with "grave distress and dissatisfaction" about Verizon's plan to stop fixing their phone lines and giving them an inferior wireless replacement, Voice Link, which can't handle basic plain old telephone service, "POTs" services like fax, DSL or even reliable 911 service. Over 270 townsfolk and other interested parties, (like the fire department), out of only 500 full time residents, have filed comments with the New York State Department of Public Service that Voice Link, well, stinks.
benton.org/node/155207 | Huffington Post, The | Public Knowledge
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AUCTION OF UPPER AND LOWER PAGING BANDS LICENSES 37 BIDDERS QUALIFIED TO PARTICIPATE IN AUCTION 95
[SOURCE: Federal Communications Commission, AUTHOR: Public Notice]
In this Public Notice, the Federal Communications Commission’s Wireless Telecommunications Bureau identifies 37 applicants found to be qualified to bid in the upcoming auction of 5,905 licenses for lower and upper paging bands spectrum (Auction 95). Bidding in Auction 95 is scheduled to begin on Tuesday, July 16, 2013. This Public Notice contains bidding instructions and other important information regarding Auction 95. It also addresses the continuing obligations and auction procedures for all Auction 95 applicants, including those that have not qualified to bid. [June 27]
benton.org/node/155097 | Federal Communications Commission | Attachment A - bidders | Attachment B – Not Qualified
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GOVERNMENT & COMMUNICATIONS
EPIC AND NSA
[SOURCE: New York Times, AUTHOR: James Riven]
The Electronic Privacy Information Center plans to file an emergency petition with the Supreme Court on July 8 asking it to stop the National Security Agency’s domestic surveillance program that collects the telephone records of millions of Americans. EPIC says it is taking the extraordinary legal step of going directly to the Supreme Court because the sweeping collection of the phone records of American citizens has created “exceptional circumstances” that only the nation’s highest court can address. The group, based in Washington, also said it was taking its case to the Supreme Court because it could not challenge the legality of the NSA program at the secret court that approved it, the Foreign Intelligence Surveillance Court, known as the FISA court, and because lower federal courts did not have the authority to review the secret court’s orders. In its petition, the group said the FISA court had “exceeded its statutory jurisdiction when it ordered production of millions of domestic telephone records that cannot plausibly be relevant to an authorized investigation.”
benton.org/node/155253 | New York Times
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THE DEFINITION OF RELEVANT
[SOURCE: Wall Street Journal, AUTHOR: Jennifer Valentino-DeVries, Siobhan Gorman]
The National Security Agency's ability to gather phone data on millions of Americans hinges on a secret court ruling that redefined a single word: "relevant." This change—which specifically enabled the surveillance recently revealed by former NSA contractor Edward Snowden—was made by the secret Foreign Intelligence Surveillance Court, a group of judges responsible for making decisions about government surveillance in national-security cases. In classified orders starting in the mid-2000s, the court accepted that "relevant" could be broadened to permit an entire database of records on millions of people, in contrast to a more conservative interpretation widely applied in criminal cases, in which only some of those records would likely be allowed, according to people familiar with the ruling. The court's interpretation of the word enabled the government, under the Patriot Act, to collect the phone records of the majority of Americans, including phone numbers people dialed and where they were calling from, as part of a continuing investigation into international terrorism. "Relevant" has long been a broad standard, but the way the court is interpreting it, to mean, in effect, "everything," is new, says Mark Eckenwiler, a senior counsel at Perkins Coie LLP who, until December, was the Justice Department's primary authority on federal criminal surveillance law.
benton.org/node/155251 | Wall Street Journal
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NSA’S EXPANDED MISSION
[SOURCE: Los Angeles Times, AUTHOR: Ken Dilanian]
It wasn't long ago that the National Security Agency, the intelligence agency responsible for intercepting global communications, seemed overwhelmed by the Internet. "We in the NSA are encountering problems with the flood of information," Eric Haseltine, then the NSA director of research, said in a 2004 speech. "We can either be drowned by it, or we can get on our surfboard and let it propel us." NSA chose the surfboard. Or rather, many of them. Determined to identify and track Al Qaeda terrorists and to prevent another attack after Sept. 11, 2001, the NSA set about vastly enlarging its ability to capture, store and exploit the ocean of texts, emails, videos and other electronic communications. "They took on a new mission that required sifting vast amounts of data to find a few important signals," said Stewart Baker, who was the NSA's general counsel from 1992 to 1994 and held top Homeland Security Department jobs in the George W. Bush administration. Today the NSA secretly siphons an almost unimaginable number of foreign government, corporate and private communications from the World Wide Web
benton.org/node/155249 | Los Angeles Times
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TECHNOLOGY, NOT LAW, LIMITS SURVEILLANCE
[SOURCE: Technology Review, AUTHOR: Ashkan Soltani]
[Commentary] Improved technology enabled the NSA’s mass surveillance programs. Future improvements will make collecting data on citizens easier and easier. What we have learned about the NSA’s capabilities suggests a move toward programmatic, automated surveillance previously unfathomable due to limitations of computing speed, scale, and cost. Technical advances have both reduced the barriers to surveillance and increased the NSA’s capacity for it. We need to remember that this is a trend with a firm lower bound. Once the cost of surveillance reaches zero we will be left with our outdated laws as the only protection. Whatever policy actions are taken as a result of the recent leaks should address the fact that technical barriers such as cost and speed offer dwindling protection from unwarranted government surveillance domestically and abroad.
benton.org/node/155247 | Technology Review
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NSA AND PRIVACY LEGISLATION
[SOURCE: Politico, AUTHOR: Jessica Meyers, Alex Byers]
Congress may have the National Security Agency leaks to thank for tipping the scales on privacy legislation. Recent disclosures about government surveillance programs have reinvigorated hope for a bill that tightens personal privacy rights and torpedoed chances for another that gives more authority to law enforcement. The revelations offer an opening for updates to the Electronic Communications Privacy Act, which would require law enforcement to get a warrant before searching personal emails. And despite a push by the Obama administration, members have gone silent on a bill to expand federal wiretapping capabilities — the Communications Assistance for Law Enforcement Act. While little known beyond Capitol Hill or inner tech circles, the bills help determine the limits of governmental reach in an increasingly digital world. The National Security Agency narrative isn’t tied directly to either issue — the bills focus more on traditional law enforcement’s access to communications data — but it has still rearranged politics over the role authorities play in Americans’ lives online.
benton.org/node/155245 | Politico
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CONNECTING THE DOTS
[SOURCE: New York Times, AUTHOR: Brian Chen]
What is e-mail metadata anyway? It’s information about the people you’re sending e-mails to and receiving e-mails from, and the times that the messages were sent — as opposed to the contents of the messages. It’s the digital equivalent of a postal service worker looking at your mail envelope instead of opening it up and reading what’s inside. That sounds harmless, but it turns out your e-mail metadata can be used to connect the dots of your life story. I learned this from participating in Immersion, a project by M.I.T.’s Media Laborator. Immersion is a tool that mines your e-mail metadata and automatically stitches it all together into an interactive graphic. The result is a creepy spider web showing all the people you’ve corresponded with, how they know each other, and who your closest friends and professional partners are. In an Immersion chart, each person is represented by dots. The more you’ve e-mailed with the person, the bigger the dot gets.
benton.org/node/155223 | New York Times
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CYBER HACKING TALKS
[SOURCE: The Hill, AUTHOR: Julian Pecquet]
Revelations of U.S. spying on Chinese universities and businesses risk undermining cybersecurity talks with China scheduled for next week. The Obama Administration had hoped to press China on the issue during the fifth round of the U.S.-China Strategic & Economic Dialogue. Instead, it finds itself on the defensive amid former contractor Edward Snowden's allegations that the National Security Agency has been spying not only on the Chinese government but on universities, students and businesses as well. “The U.S. in the cyber arena is trying to draw a bright red line,” said Kenneth Lieberthal, a former senior director for Asia at the White House who's now with the Brookings China Center. “I think the Snowden revelations clearly give China an increased opportunity to muddy the waters.”
benton.org/node/155221 | Hill, The
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ERRONEOUS STATEMENT
[SOURCE: The Hill, AUTHOR: Jeremy Herb]
Director of National Intelligence James Clapper has apologized for a “clearly erroneous” statement he made to Congress over the National Security Agency’s surveillance activities. In a letter to Senate Intelligence Committee Chairwoman Dianne Feinstein (D-CA), Clapper said he was mistaken when he told Sen. Ron Wyden (D-OR) that the United States did not collect data on millions of Americans. “My response was clearly erroneous — for which I apologize,” Clapper wrote in the letter dated June 21. “While my staff acknowledged the error to Senator Wyden’s staff soon after the hearing, I can now openly correct it because the existence of the metadata collection program has been declassified,” Clapper said. Clapper’s statements at the March 12 Senate hearing have received enormous scrutiny ever since news stories revealed the NSA’s telephone and Internet surveillance programs last month. Clapper directly contradicted those stories in his comments on March 12.
benton.org/node/155219 | Hill, The
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SURVEILLANCE AND AGREEMENTS WITH PRIVATE COMPANIES
[SOURCE: Washington Post, AUTHOR: Craig Timberg, Ellen Nakashima]
The U.S. government had a problem: Spying in the digital age required access to the fiber-optic cables traversing the world’s oceans, carrying torrents of data at the speed of light. And one of the biggest operators of those cables was being sold to an Asian firm, potentially complicating American surveillance efforts. Enter “Team Telecom.” In months of private talks, the team of lawyers from the FBI and the departments of Defense, Justice and Homeland Security demanded that the company maintain what amounted to an internal corporate cell of American citizens with government clearances. Among their jobs, documents show, was ensuring that surveillance requests got fulfilled quickly and confidentially. This “Network Security Agreement,” signed in September 2003 by Global Crossing, became a model for other deals over the past decade as foreign investors increasingly acquired pieces of the world’s telecommunications infrastructure. The publicly available agreements offer a window into efforts by U.S. officials to safeguard their ability to conduct surveillance through the fiber-optic networks that carry a huge majority of the world’s voice and Internet traffic.
benton.org/node/155217 | Washington Post
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WE ONLY SPY ON FOREIGNERS
[SOURCE: Washington Post, AUTHOR: Timothy Lee]
[Commentary] In recent weeks, the National Security Agency (NSA) has stressed that it only “targets” people with foreign ties. That argument may satisfy most Americans. But the foreigners in Europe aren’t happy about it. On July 4, as Americans celebrated their independence, the European Parliament passed a resolution demanding that the U.S. government provide the E.U. with “full information on PRISM and other such programmes involving data collection.” If the U.S. doesn’t cooperate, the E.U. is threatening to curtail a variety of data sharing with the United States. The E.U. has also demanded that surveillance issues be put on the agenda of the upcoming U.S.-E.U. trade talks. The Internet is forcing the world’s governments to rethink a fundamental premise of surveillance law: the distinction between foreign and domestic surveillance. That distinction makes less and less sense as the Internet becomes increasingly globalized.
benton.org/node/155215 | Washington Post
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NSA AND CLOUD SERVICES
[SOURCE: Los Angeles Times, AUTHOR: Paresh Dave]
The fallout from the National Security Agency's secret surveillance programs is spreading to companies such as Amazon, Rackspace and SoftLayer. The U.S.-based cloud-computing providers stand to lose out on billions of dollars if they can’t assure European companies that their data are free from the federal government’s prying eyes, the European Union’s digital chief said. Lacking assurances, European Commission Vice President Neelie Kroes warned that the EU may adopt stringent laws governing the storage of Europeans' data. European consumer protections have forced tech giants such as Google and Microsoft to change their business practices in the past. “Why would you pay someone else to hold your commercial or other secrets if you suspect or know they are being shared against your wishes?” Kroes said after a European Cloud Partnership Board meeting July 4. “Front or backdoor, it doesn’t matter. Any smart person doesn’t want the information shared at all. Customers will act rationally, and providers will miss out on a great opportunity.”
benton.org/node/155213 | Los Angeles Times
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FIVE UNANSWERED QUESTIONS
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
Leaks by former National Security Agency contractor Edward Snowden have provided new insight into how the government monitors domestic and foreign communications for threats to national security. Although the government has disclosed some additional details about the programs in response to the leaks, important questions remain about the nature and scope of the surveillance programs.
What other data is being collected under the Patriot Act?
How broad are the programs?
What’s the legal rationale?
Is the NSA still collecting email records?
Are there other programs that we don’t know about?
benton.org/node/155203 | Hill, The
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TELECOM
RURAL TELECO CONSOLIDATION
[SOURCE: telecompetitor, AUTHOR: Joan Engebretson]
At least five rural telcos are embracing the idea that companies such as theirs need to consolidate. Those companies back in March created a new entity known as USConnect Holdings that aims to acquire other rural and independent communications providers. “USConnect is an industry-rooted effort committed to sustaining the financial and operational viability of rural and independent communications providers,” said a USConnect press release to announce the organization’s first acquisition – Livingston Telephone Company of Livingston, TX. Five rural telcos are the “majority investors” in USConnect, a USConnect spokeswoman told Telecompetitor this morning. The spokeswoman declined to reveal the names of minority investors. The five rural telco majority investors are:
Golden West Telecommunications of Wall, SD
Horry Telephone Cooperative of Conway, SC
Telephone Cooperative of Kingstree, SC
Brazoria Telephone Company of Brazoria, TX
Dickey Rural Networks of Ellendale, ND
benton.org/node/155193 | telecompetitor
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SPECIAL ACCESS DATA COLLECTION
[SOURCE: Federal Communications Commission, AUTHOR: Public Notice]
On December 18, 2012, the Federal Communications Commission issued a Report and Order and Further Notice of Proposed Rulemaking initiating a comprehensive data collection (collection) and seeking comment on, among other things, a proposal to use the data to evaluate competition in the market for special access services. The Wireline Competition Bureau is working to implement the collection and is in the process of seeking Paperwork Reduction Act approval. As part of these implementation efforts, the Bureau seeks comment on the procedures for designating, handling, submitting and accessing the confidential and highly confidential data and information sought in the collection. Comment Date: July 29, 2013 [June 28]
benton.org/node/155095 | Federal Communications Commission
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INTERNET/BROADBAND
INTERNET AND CABLE CONSOLIDATION
[SOURCE: Bloomberg, AUTHOR: Justin Bachman]
Media mogul John Malone appears ready to get the U.S. cable industry into mergers and acquisitions mode. Three months after Malone’s Liberty Media acquired a 27 percent stake in Charter Communications, the fourth-biggest U.S. cable operator, Malone is angling to merge the company with Time Warner Cable, a company that is much larger and more profitable. Time Warner Cable has about 15 million customers, nearly three times as many as Charter. The potential dealing comes as Charter and other cable operators are facing a future in which their subscribers—millions of Americans who loathe them with a passion—are increasingly turning to the Internet to watch video, and content providers are inexorably seeking higher payments for sports and popular shows. Already the cable companies have seen millions of people defect, or “cut the cord,” on video service, turning to Netflix, Hulu, Amazon, and other online venues. But it has been a radically different story for cable companies’ high-speed Internet revenues, which continue to grow. At Time Warner Cable, for example, Internet revenue per customer rose to $42.60 in the first quarter, up from $38.96 a year prior, Barrington Research analyst James Goss wrote in a client note last month. Into that void comes Malone’s new acquisition vehicle, Connecticut-based Charter, which reportedly wants to cobble together some parts of a fragmented industry.
http://www.businessweek.com/articles/2013-07-01/how-the-internet-drives-...
So what is behind all this talk of cable TV consolidation? (GigaOm)
benton.org/node/155195 | Bloomberg | GigaOm
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TELEVISION
MEDIA OWNERSHIP DEALS
[SOURCE: New York Times, AUTHOR: David Carr]
[Commentary] After years of small-bore shifting and tweaking by media companies in an effort to stay in front of consumers, big deals are back on the table. Using relatively cheap capital, companies in dire need of diversification away from wounded businesses like print are going shopping. “It’s time to gobble or get gobbled,” a media analyst said. Business people could not be blamed for thinking that they had seen this movie before. Someone blows a whistle in a particular media space and suddenly a company is either a hunter or the hunted. Rhetoric heats up, as do prices, and before you know it investment bankers are racking up fees, reporters finally have deals to cover and moguls are in full frolic.
benton.org/node/155237 | New York Times
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POLITICAL AD PROFITS
[SOURCE: New York Times, AUTHOR: Brian Stelter]
The increasingly expensive elections that play out across the country every two years are making broadcast television stations look like a smart investment, with the revenue piling up each time a candidate says “I approve this message.” Despite an array of digital alternatives and a rapidly transforming television business, 30-second commercials remain one of the most valuable tools of campaigns and political action committees. As Leslie Moonves, the chief executive of the CBS Corporation, which owns 29 stations, memorably said last year, “Super PACs may be bad for America, but they’re very good for CBS.” Next year’s midterm elections will be a boon to stations as well, and “2016 could be amazing,” said Mark Fratrik, the chief economist for BIA/Kelsey, a media research firm and consultancy. Station owners have come to dread what they call “odd years,” like 2013, when there is little political spending. For stations blessed to be in swing states, political ads routinely represent a third of their overall ad revenue in election years.
benton.org/node/155191 | New York Times
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TRIBUNE DEBT
[SOURCE: Crain’s Chicago Business, AUTHOR: Joe Cahill]
[Commentary] The last time Tribune Co. borrowed billions of dollars to finance a big acquisition, it didn't work out very well. Real estate mogul Sam Zell’s ill-fated 2007 leveraged buyout cashed out existing shareholders and took the media company private in a deal that loaded Tribune with $8 billion in debt. That turned out to be too much for Tribune, which landed in bankruptcy after advertising revenues plummeted during the recession. Apparently the experience left Tribune executives with no fear of debt. Barely six months after emerging from bankruptcy, the Chicago-based media company is borrowing about $2.7 billion to buy 19 local television stations from Local TV Holdings LLC. Debt-rating companies are alarmed. Standard & Poor's Ratings Services put Tribune on credit watch with “negative implications,” because the deal would boost debt to about 4.3 times earnings before interest, taxes, depreciation and amortization, a big jump from 2.3 before the acquisition but still within the range debt markets consider reasonable. Moody's Investors Service put Tribune credit on “review for downgrade,” citing increased debt levels resulting from the deal. Tribune predicts about $100 million in acquisition synergies, mostly from squeezing higher prices out of advertisers and boosting fees on cable TV companies that carry Tribune programming. The latter, known as “retransmission fees,” seem to be a driving force behind the recent spate of local television station buyouts. Industry experts predict broadcasters like Tribune will be able to boost retransmission fees substantially over the next few years. Tribune posted a 32 percent increase in retransmission fees during the first quarter. The logic holds up — as far as it goes. Bigger broadcasting companies will have more clout with advertisers and cable operators. But even scale has limits.
benton.org/node/155189 | Crain’s Chicago Business
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JOURNALISM
THOMSON REUTERS
[SOURCE: New York Times, AUTHOR: Peter Lattman]
Over the last several years, an exclusive group of investors has paid a steep premium to receive the results of a closely watched economic survey a full two seconds before its broader release. Those two seconds can mean millions of dollars in profits for the investors, who practice a computer-driven strategy called high-frequency trading. On July 8, the company providing these investors with that lucrative edge, Thomson Reuters, is expected to announce that it will suspend the practice, yielding to pressure from the New York attorney general, according to a person with direct knowledge of the matter.
benton.org/node/155239 | New York Times
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POLICYMAKERS
CONGRESSIONAL GRODLOCK
[SOURCE: New York Times, AUTHOR: John Weisman]
Even in some of the worst years of partisan gridlock, a deadline has meant something to Congress — until 2013. Drop-dead dates have come and gone this year, causing real-world consequences. On Jan. 1, tax rates went up not only for affluent families, but also for virtually all workers when lawmakers looked the other way and let a payroll tax cut expire. On March 1, after leaders from both parties declared that automatic, across-the-board spending cuts would never happen, they happened anyway because of inaction. “One hundred percent of Congress opposed it, and we’re doing it,” said Rep Peter Welch (D-VT). “That’s a sign of a dysfunctional institution.” Congress returns on July 8.
benton.org/node/155255 | New York Times
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