May 2014

OWNERSHIP

WHAT AT&T’S DEAL MIGHT MEAN
[SOURCE: New York Times, AUTHOR: Editorial staff]
[Commentary] Megamergers always raise lots of questions. And that’s particularly true of the telecommunications industry with its high barriers to entry and limited competition. AT&T says that its purchase of DirecTV will be good for consumers, and it is promising several goodies like a pledge to bring high-speed Internet service to rural America to get regulators to look favorably upon the deal. But the company has not yet made a convincing case. As with the Comcast-Time Warner Cable deal, regulators should carefully analyze this acquisition for its impact on the market for paid TV service. The biggest potential losers of this deal are consumers in 22 states -- including California, Texas and Illinois -- where AT&T already provides its own TV service through its U-Verse network. A merger with DirecTV would be bad for these customers because it would reduce choices in markets where AT&T currently competes with cable companies as well as the two national satellite-TV firms, DirecTV and Dish Network. This much is clear about AT&T’s move to buy DirecTV, along with the Comcast-Time Warner Cable deal: These mergers will encourage other telecom companies like Dish Network, Verizon, Charter, Sprint and T-Mobile to contemplate deals of their own. Officials at the Federal Communications Commission and the Justice Department, who have to review mergers for antitrust concerns, need to make sure consumers are not left worse off by these deals.
benton.org/node/184255 | New York Times
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TELECOM WEDDING SEASON
[SOURCE: Wall Street Journal, AUTHOR: Editorial staff]
[Commentary] The combination of the largest US mobile and fixed-line phone carrier with the leading US satellite television provider would create a telecom powerhouse that could compete with the bruited Comcast-Time Warner Cable and Sprint- T-Mobile combinations. This wave of consolidation shows that telecom and television are increasingly the same business, and the companies that succeed will pipe content to any device anywhere from smartphones to TV to broadband. Given this growing convergence in the digital age, there's a certain logic to joining AT&T's networks with DirecTV's video. AT&T inherits relationships with DirecTV's content including the NFL's lucrative Sunday Ticket and can free up bandwidth by shifting traffic to video-over-satellite. The latter gains AT&T's 73 million wireless consumers. There is little overlap between the two core businesses. In that sense the merger is a sign of investment in the innovation that will lead to a faster, cheaper Internet and other next-generation digital communications. Larger companies may increase competitive choice as they experiment with new forms of distribution. That said, the synergies between AT&T and DirecTV may well be less than advertised. All the more reason, then, for the Federal Communications Commission to let the shareholders decide. The case for the deal is that no one knows what the future holds. Technology and changing consumer habits are disrupting the media and telecom industries as they are so much else, and rivals like AT&T-DirecTV and Comcast-Time Warner could be easily outmaneuvered in the marketplace in a few year's time. Telecom merger fever is a sign of more competition, not less.
benton.org/node/184254 | Wall Street Journal
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WHAT GOOD IS DIRECTV FOR AT&T?
[SOURCE: Wall Street Journal, AUTHOR: Miriam Gottfried]
[Commentary] AT&T is buying itself a raft with a slow leak. AT&T and DirecTV are pitching the merger as a way to bundle services and deliver more video content to mobile phones and other devices. But the deal may be more about boosting AT&T's current financials than positioning it strategically for the future. The deal seems to do little to bolster AT&T's core wireless business. Wireless, which accounts for 85% of AT&T's value, according to New Street Research, has been buffeted by heightened industry competition. AT&T says it plans to bundle its wireless and broadband services with DirecTV's video offerings. But about 41% of DirecTV's current subscribers aren't in AT&T's broadband footprint, according to Guggenheim Securities. AT&T is currently investing in broadband and announced plans to expand further into rural areas, using some of the cost savings from the merger. But it is unclear how many DirecTV customers can be convinced to switch their mobile-phone plans to AT&T. More fundamentally, analysts say US video consumption is shifting away from satellite toward providers that offer more integrated broadband and video services. DirecTV's customer base is likely to begin to decline in the next few years as cable competitors introduce more advanced technology such as Comcast's X1 platform, according to UBS. This suggests satellite TV could take the place of wireline phone service, another shrinking business, as a primary drag on revenue growth.
benton.org/node/184251 | Wall Street Journal | Financial Times
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PROGRAMMING COSTS
[SOURCE: Los Angeles Times, AUTHOR: Jim Flint, Jim Puzzanghera]
For anyone wondering what's driving AT&T's deal to buy satellite broadcaster DirecTV, look no further than a new report issued by the Federal Communications Commission on cable TV rates. The FCC report noted DirecTV is often able to negotiate lower fees for channels than its smaller rivals because of its size and national reach. By acquiring the satellite provider, AT&T gets access to 20 million more homes around the country -- and the clout to demand lower rates from cable networks and other content providers. Along with gaining more programming, AT&T also believed that it needed to get bigger to compete with Comcast, the nation's largest video and broadband company that is seeking regulatory approval to buy Time Warner Cable for $45.2 billion. One of the unintended consequences of the consolidation spree is that those left without a new partner may end up paying more for content. Programmers who get squeezed by the big broadcasters then turn around and squeeze the smaller players. Getting content — at the best price possible — is increasingly what the game is all about, media analysts said.
benton.org/node/184249 | Los Angeles Times
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RISING PAY-TV RATES AND MERGERS
[SOURCE: San Jose Mercury News, AUTHOR: Troy Wolverton]
With two planned megamergers threatening to further reduce competition in the pay-TV industry, consumer advocates have been looking for a way to shoot down the deals. A new report on industry pricing may have given them some needed ammunition. The Federal Communications Commission quietly released a report documenting that -- yet again -- the average pay-TV bill grew faster than inflation in 2012. In addition, the FCC report noted that cable-related equipment prices, such as monthly fees for DVRs, also outpaced inflation. "Consumers continue to see price hikes and lousy service," said Delara Derakhshani, policy counsel at Consumers Union, the public advocacy group that publishes Consumer Reports. But pay-TV operators have argued that rising content costs -- the amounts they pay companies such as Disney to carry channels -- largely explain the rate hikes. And as noted in the FCC report, the pay-TV operators have consistently added channels to their offerings at a faster pace than their prices have risen. For example, expanded basic customers had access to about 160 channels last year, up from about 150 the year before, according to the report. The FCC report on pay-TV bills, which the agency is required to issue annually under the 1992 Cable Act, comes as federal regulators are about to weigh the merits of two mergers that would reshape the pay-TV industry.
benton.org/node/184248 | San Jose Mercury News
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CONSUMERS LOSE IN AT&T-DIRECTV
[SOURCE: Los Angeles Times, AUTHOR: David Lazarus]
[Commentary] Why can't AT&T and DirecTV just man up and admit the truth: "We're merging because this will give us more clout against the cable industry in our efforts to dominate the market." Two words were noticeably lacking in their deal announcement: "lower prices." Instead, the companies touted their ability to offer "new bundles," "a more competitive bundle" and "a better bundle" of phone, Internet, TV and wireless services. And that's fine for AT&T, which wants to lock people in to as many services as possible to make it harder for them to jump ship. For consumers, however, bundles of telecom options are a far lower priority than reduced bills and better overall service. So when AT&T CEO Randall Stephenson says the deal is "pro-consumer," what he really means is "pro-company." His company, in particular. "These companies don't care about providing better services or even connecting more Americans," said Craig Aaron, president of the advocacy group Free Press,. "It's about eliminating the last shred of competition in a communications sector that's already dominated by too few players."
benton.org/node/184245 | Los Angeles Times
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DEAL CHURNS REGULATORY WATERS
[SOURCE: New York Times, AUTHOR: Edward Wyatt]
Many supporters of the blockbuster Comcast-Time Warner Cable merger breathed a sigh of relief, when AT&T and DirecTV announced plans to merge, thinking the latest pairing would divert some regulatory scrutiny of the other high-stakes deal. Perhaps some gasps of concern were also in order. Opponents of the consolidation in the telecommunications industry -- including on Capitol Hill -- latched onto the AT&T and DirecTV deal, arguing that such rapid merging in the markets for cable television, high-speed Internet and telephone service should lead regulators to hit the brakes on all such deals. But while both sides declared that the latest deal helped their cause, antitrust experts said the truth was more murky. While the deals are similar in some ways, they say, including blurring the lines between sectors of the telecommunications business, the two mergers are also different in significant ways that could lead regulators to separate conclusions for each one. Just one thing is certain: The deals will force antitrust officials to undertake months of digging and analysis to determine whether the multibillion-dollar mergers will squelch competition, leading to higher prices for consumers.
benton.org/node/184242 | New York Times
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DEAL COMPLICATES JOB OF REGULATORS
[SOURCE: Wall Street Journal, AUTHOR: Gautham Nagesh, Brent Kendall]
The AT&T-Dish transaction doesn't appear to pose a serious threat to competition outside of markets where AT&T already offers pay-TV service. But it comes amid a spate of telecom megamergers, including Comcast’s proposed acquisition of Time Warner Cable, making it hard for regulators to gauge the potential impact of both the Comcast and AT&T deals. Both the Justice Department and Federal Communications Commission must sign off on the DirecTV deal, with the former concerned about competition and the FCC charged with a broader mandate to protect the public interest. The deal's primary selling point is that the combined company would be in a position to compete with Comcast and other cable companies in the lucrative pay-TV and broadband markets. Should regulators approve the Comcast-Time Warner Cable merger, the combined AT&T-DirecTV would be in a position to compete nationally with the new cable giant for subscribers and the most-popular video content. The merger is unlikely to face insurmountable antitrust hurdles because the two companies aren't major head-to-head competitors and already have joined forces to sell DirecTV in areas where AT&T doesn't offer its U-verse pay-television service, antitrust experts said.
benton.org/node/184241 | Wall Street Journal
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AT&T’S LOBBYING TEAM
[SOURCE: The Hill, AUTHOR: Kate Tummarello, Megan Wilson]
AT&T’s expansive lobbying operation is seeking redemption as it tries to win approval of a $49 billion merger with DirecTV. The company tried and failed to purchase competitor T-Mobile in 2011, when federal regulators dashed the company’s hopes of further expanding into the booming cellphone market. The stakes are also high this time around, with AT&T seeking to strengthen its foothold in the television business by buying one of the top satellite providers in the country. Critics are already expressing concerns that the new AT&T would have too much power, and lawmakers on Capitol Hill have promised to give the proposal close scrutiny. Adding to the challenge for AT&T representatives, the merger is being proposed at a time of rapid consolidation in the telecommunications industry, with Comcast also fighting for approval to acquire Time Warner Cable.
benton.org/node/184238 | Hill, The
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HERE'S WHY AT&T IS TRYING TO BUY DIRECTV
[SOURCE: The Verge, AUTHOR: Ben Popper]
The news that AT&T had agreed to acquire DirecTV for a whopping $48.5 billion came as no surprise to observers of the pay-TV industry. "If you think back to the ’90s the marketplace was full of small companies. We've seen wave after wave of mergers and now there are fewer and larger companies," says Jeff Kagan, an independent analyst. "Going forward were going to see even fewer and even larger competitors going forward or moving toward a national, competitive marketplace for television, telephone, Internet, wireless." For AT&T, the deal is mainly about gaining scale in video and acquiring the bargaining power that comes with that to license premium content -- particularly with the looming specter of a tie-up between Comcast and Time Warner Cable. AT&T will combine its 5.7 million U-verse TV customers with DirecTV's roughly 20.3 million US subscribers. "All of a sudden you're talking about the number-two pay-TV provider in the country," says Dan Rayburn, an analyst with Frost & Sullivan. "That means you can negotiate for better programming, and at a better price." Having access to premium content is key to AT&T's ambition to become a major player in the world of streaming video. "DirecTV is way ahead of AT&T in terms of licensing deals. Something like NFL Sunday Ticket is a game-changer for AT&T if they can offer it as part of a package to their wireless customers," says Rayburn. AT&T CEO Randall Stephenson said the deal will allow AT&T to offer premium video on all screens, from TVs to smartphones to cars and airplanes. Just how important is big-ticket content like the NFL? The deal terms actually stipulate that AT&T can walk away from the merger if DirecTV doesn't win the contract with the NFL to renew that exclusive.
benton.org/node/184140 | Verge, The
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WILL AN AT&T-DIRECTV MERGER FLY?
[SOURCE: Multichannel News, AUTHOR: Mike Farrell]
[Commentary] AT&T finally pulled the trigger on an acquisition of DirecTV,. The merger creates a 26-million subscriber rival for the television business. But as AT&T and DirecTV tout the benefits of the merger, analysts and observers are split as to the deal’s benefits. On the plus side, it could allow AT&T to free up bandwidth for its U-verse broadband service -- it currently allocates 15 Megabits per second for video and 10 Mbps for high-speed Internet service in about 25% of the country, and could give the telephone giant the incentive to upgrade its digital subscriber line plant (which maxes out at around 1.5 Mbps) to fiber. Critics of the deal point to the merger as a temporary fix -- DirecTV’s video business is basically flat, adding just 12,000 net new customers in the first quarter -- and though the business is well run, operating DirecTV as a separate entity would require AT&T to support two cost structures in 25% of the country with just a one-product offering in the other 75%. Here’s a look at some of the reasons for DirecTV to sit this one out.
The price could be too “frothy” or too pricey for what is at best a stable business.
The merger will solve AT&T’s cash problem, but only temporarily.
On the surface, it doesn’t look much better from a DirecTV perspective.
The broadband benefit to the deal is questionable.
AT&T gets a national video footprint in a slow-to-no growth business.
benton.org/node/184147 | Multichannel News
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AT&T EXEC: DEAL STRUCK WITH REGULATORS IN MIND
[SOURCE: The Hill, AUTHOR: Kate Tummarello]
The merger of AT&T and DirecTV was designed with regulators in mind and will benefit consumers, executives from the two companies said. “There were a few areas we looked at that we thought might be areas of concern or caution for regulators,” AT&T CEO Randall Stephenson said. “We’ve tried to be very proactive ... and tried to get out in front of those.” Stephenson added that the companies are making “unprecedented commitments to address concerns that the regulators might have.” Those commitments include abiding by the Federal Communications Commission’s net neutrality rules, which kept Internet providers from slowing or blocking access to certain websites before they were struck down in federal court in early 2014. As the agency attempts to rewrite them, AT&T is pledging to obey the now-defunct rules for three years if the merger with DirecTV is approved. Additionally, AT&T said the merger would allow it to expand its Internet service to 15 million households and would not keep the company from participating in the FCC’s upcoming airwave auctions, where it is expected to spend billions. “We have structured this transaction to ensure we have plenty of capacity to be very active in both of these auctions,” Stephenson said.
benton.org/node/184171 | Hill, The
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AT&T CLAIMS TO EMBRACE NET NEUTRALITY BUT COULD STILL OFFER “FAST LANES”
[SOURCE: ars technica, AUTHOR: Jon Brodkin]
AT&T offered to follow the Federal Communications Commission's old network neutrality rules for three years if the government approves its acquisition of DirecTV. Even though the FCC's 2010 Open Internet Order was largely overturned by a federal appeals court, AT&T said its merger with DirecTV would come with a "continued commitment for three years after closing to the FCC's Open Internet protections established in 2010, irrespective of whether the FCC re-establishes such protections for other industry participants following the DC Circuit Court of Appeals vacating those rules." But AT&T hasn't said exactly how it interprets those rules. Judging by statements made by Comcast, AT&T could argue that the 2010 rules allow the controversial Internet "fast lanes" in which Web services pay Internet service providers for priority access to consumers over the network's last mile.
benton.org/node/184161 | Ars Technica
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WHAT DOES AT&T BUYING DIRECTV MEAN FOR CONSUMERS? A WHOLE LOT OF BUNDLING
[SOURCE: GigaOm, AUTHOR: Kevin Fitchard]
We won’t see the first AT&T-DirecTV wireless-broadband-satellite service package until the summer of 2015 -- assuming the deal goes through. But what would such a bundle look like? AT&T wants to tie together as many of the two companies’ products and services as possible. Most significantly, AT&T wants to tie the video distribution network more closely to the broadband network. AT&T doesn’t just want consumers to buy their satellite TV and Internet from the same provider, it may require it -- or at least make it much more costly to separate them. AT&T said it would continue to offer stand-alone DSL and U-Verse connections at guaranteed prices for three years after the deal’s close. The same goes for DirecTV service.
benton.org/node/184175 | GigaOm
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HOW AN AT&T-DIRECTV DEAL MIGHT AFFECT YOUR MONTHLY BILL
[SOURCE: Washington Post, AUTHOR: Hayley Tsukayama]
[Commentary] What does the AT&T/DirecTV deal mean for consumers? Details are still rolling in, but here is what we know so far. First, be on the lookout for price increases. AT&T has said DirecTV customers will continue to pay standard, nationwide prices -- but only for three years. After that, there are no guarantees. AT&T is also committing to offer a stand-alone broadband service, which caters to customers who only watch video content online, for three years after the deal closes. AT&T and DirecTV don't compete for television customers in most of the country -- U-Verse only reaches about 25 percent of the country. But some consumer advocacy groups are concerned that AT&T could drop one of the services. Getting rid of any option for consumers could drive prices up, or trap customers into service that doesn't serve their needs because they simply don't have other services to run to.
benton.org/node/184172 | Washington Post
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WHAT AT&T-DIRECTV DEAL MEANS FOR CONSUMERS
[SOURCE: CNNMoney, AUTHOR: Brian Stelter]
In the short term, AT&T’s acquisition of DirecTV is unlikely to affect either company's customers. But the long term is another story. clearly wants to sell bundles of broadband and television that deliver on the promise of anything/anytime/anywhere programming. Wall Street analysts pointed to a number of other motivations for the deal. "While this transaction has some strategic merits, it appears more to be structured to enhance AT&T's financial position," Vijay Jayant of ISI Group said. Craig Moffett of MoffettNathanson agreed -- he commented that AT&T is "in dire need of a cash producer to sustain their dividend." Moffett said he was struggling to find "greater meaning" in the deal. "It's a huge transaction, but I think it's very unlikely to change the landscape of pay TV very much," he said. Whether people want to sit back and watch live TV on a big screen, Netflix-style on a smart phone, or some other way that's still being dreamed up, AT&T wants to have a stake in it.
benton.org/node/184145 | CNNMoney
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AT&T CAN BAIL ON $48.5 BILLION MERGER IF DIRECTV LOSES NFL SUNDAY TICKET
[SOURCE: The Verge, AUTHOR: Chris Welch]
If DirecTV fails to lock up NFL Sunday Ticket beyond this coming season, AT&T has given itself the right to back away from the colossal $48.5 billion acquisition. The out clause contained in the proposal’s fine print shows just how valuable of a property the NFL is. "The parties also have agreed that in the unlikely event that DirecTV’s agreement for the NFL Sunday Ticket service is not renewed substantially on the terms discussed between the parties, AT&T may elect not to consummate the merger," it reads. The careful wording also says that AT&T won’t be able to collect any damages if this scenario plays out. DirecTV just has to prove that it "used its reasonable best efforts to obtain such renewal." And from the sounds of it, the satellite provider is already trying its best to get the deal done.
benton.org/node/184142 | Verge, The
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OPTIONS FOR RIVALS IN WAKE OF AT&T’S BID FOR DIRECTV
[SOURCE: New York Times, AUTHOR: Michael de la Merced]
[Commentary] Few industries have been as deeply embroiled in merger mania as the telecommunications industry, particularly after AT&T’s $48.5 billion bid for DirecTV. Now, with another mega-deal in the works, how will others respond? Perhaps with even more consolidation. AT&T‘s acquisition most clearly affects the country’s other major satellite television provider, Dish. Dish Chairman Charles Ergen has made no secret that deals were an important part of his strategy, whether they be a foiled attempt at buying Sprint or a withdrawn bid to acquire the bankrupt broadband wireless provider LightSquared. And in recent months, news reports contended that Ergen was interested in pursuing deals either for T-Mobile USA or DirecTV. At the same time, analysts had long speculated that Dish might make an attractive acquisition target for AT&T. A bigger and more emboldened AT&T may also have repercussions for Sprint, whose majority owner, the Japanese telecom Softbank, has long coveted a deal with T-Mobile to gain much-needed scale. Yet a tie-up of the two has already drawn hints of vocal opposition from several officials at the Federal Communications Commission, who have worried that a merger of the two would constitute an unacceptable level of consolidation. Sprint and SoftBank have argued not so subtly that acquiring T-Mobile would create more competition in the wireless industry, blunting the power of Verizon and AT&T.
benton.org/node/184214 | New York Times
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NETWORK NEUTRALITY

TIME TO TREAT NET NEUTRALITY AS MORE THAN A HASHTAG
[SOURCE: American Enterprise Institute, AUTHOR: Michael Pratt]
[Commentary] Believe it or not, Jimmy Fallon’s April 24 monologue on NBC’s The Tonight Show mentioning the Federal Communications Commission’s network neutrality proposal for the Internet was a rare guest appearance by the topic on broadcast and cable television. A recent study from Pew Research Center revealed that television news programs covered net neutrality just 25 times between January 1 and May 12, which comes to less than 1% of all programs reviewed. And while the top 23 newspapers provided slightly more coverage than television, six of them carried nearly 70% of the 203 newspaper stories. The consensus on Twitter doesn’t reflect reality. Many have grave concerns about the FCC overstepping when trying to enforce net neutrality. Classifying the Internet as Title II could end innovation in the Internet ecosystem, as it has done in the telecommunications sphere. And some point out that net neutrality, supported by so many large companies, is a pretty fine example of crony capitalism. It’s possible that Washington is once again taking itself too seriously and making an inside-the-beltway mountain out of something the watchers of Jimmy Fallon consider a molehill. But there’s a more troubling possibility: that the story of how a critical decision affecting the way Americans access and pay for the Internet is being ignored by the media and left to 140-character explanations from self-appointed experts on #netneutrality. This issue is serious. It’s time to treat it as more than a hashtag.
benton.org/node/184153 | American Enterprise Institute
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NET NEUTRALITY AND THE IDEA OF AMERICA
[SOURCE: New Yorker, AUTHOR: Tim Wu]
[Commentary] Network neutrality has undoubtedly captured national attention. You’d be excused for wondering what all the fuss is about. Most people have a rough sense that net neutrality is about the rules for Internet traffic; but the precise debates about regulatory authority and the rules themselves are abstruse. Net neutrality has seized the moment because it is standing in for a national conversation about deeper values. It is, among other things, a debate about opportunity -- or more precisely, the Internet as another name for it. As such, the mythology of the Internet is not dissimilar to that of America, or any open country -- as a place where anyone with passion or foolish optimism might speak his or her piece or open a business and see what happens. No success is guaranteed, but anyone gets to take a shot. That’s what free speech and a free market look like in practice rather than in theory. The ideal of equality in the public sphere is another underlying theme in the current debate. While there’s always been some inequality, it is especially acute today. The prospect that the FCC might allow a “fast lane” for some traffic, leaving everyone else in a slower lane, has ignited the argument that private inequality must have its limits, and that some public spaces must remain open to all. Apart from these abstract ideas, net neutrality is also standing in for a debate regarding the future of television, which is the most popular medium of our time. The clash between Comcast and Netflix over allegations of false congestion and the payment of extra fees is woven into the larger discussion. Comcast, of course, mainly represents what television is now, while Netflix represents what it is becoming.
benton.org/node/184151 | New Yorker
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FCC PROVES YET AGAIN THAT IT’S OUT TO KILL NET NEUTRALITY
[SOURCE: Wired, AUTHOR: Art Brodsky]
[Commentary] Well, the last meeting of the Federal Communications Commission was certainly a lot of sound and fury signifying next to nothing. FCC Chairman Tom Wheeler, despite weeks of backlash, still wants to allow Internet Service Providers like Comcast and Verizon to “offer” different levels of service to Internet companies, although he refused to call them a “fast lane” and a “slow lane” and refused to recognize how those arrangements up the food chain affect consumers and a neutral Internet. His concession to those of us who value a neutral Internet is to allow it on a case-by-case basis, guaranteeing that nothing will ever get settled, and Internet companies will be allowed to bleed money. Sure, the FCC will ask whether the telecommunications services that carry Internet content should be regulated like utilities (Title II of the Communications Act), and there will be people who make an argument for it. But here’s the rub. The damage is already done. It was done months ago. And the FCC did nothing to stop it. Regardless of what rule the FCC finally approves, and defends through the years of court challenges, it already established the bad precedent that big ISPs can cause traffic congestion, demand tribute to fix it, and get away with it.
benton.org/node/184183 | Wired
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MORE INTERNET/BROADBAND

IT’S NOT A “FAST LANE” BUT COMCAST BUILT A CDN TO CHARGE FOR VIDEO DELIVERY
[SOURCE: ars technica, AUTHOR: Jon Brodkin]
Comcast is now competing against content delivery networks (CDNs) such as Akamai with a new service that can improve delivery of video to Comcast subscribers in exchange for payment. "This new offering allows content owners to go directly to the ISP and have their content stored and delivered via the last mile, thereby displacing some traffic currently delivered by third-party CDNs like Akamai and Limelight Networks," well-connected industry analyst Dan Rayburn reported. "While this is the same type of CDN service that other commercial CDNs like Akamai already offer, Comcast can offer a very good SLA since they are a last mile provider." The service will let Web content companies "bypass network middlemen and deliver their services directly to Comcast Internet customers," The Information article said. Despite making an argument that it would be allowed to offer “paid prioritization,” Comcast has said it doesn't intend to offer fast lanes. And the new CDN service is not a fast lane, Rayburn told Ars.
benton.org/node/184199 | Ars Technica
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SPECTRUM/WIRELESS

FCC SETS $10 BILLION-PLUS RESERVE ON AWS-3
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
The Federal Communications Commission has proposed a reserve price of a combined $10,066,326,600 for the paired spectrum bands (1755-1780/2155-2180 MHz licenses) in the AWS-3 auction. The auction (dubbed Auction 97) must raise at least that much for it to conclude. It has also set Nov. 13, 2014 as the scheduled start date of the auction. FCC Chairman Tom Wheeler had signaled to Congress in written testimony that the auction outline notice would be released soon. The 65 megahertz of AWS-3 spectrum available (1,614 licenses) will be licensed on a geographic area basis. Of those, 880 will be by Economic Area (EA) and 734 will be Cellular Market Area (CMA). The frequencies will be licensed in five and 10 MHz blocks, with licenses available for five, 10 and 20 MHZ. That 65 will be the largest amount of spectrum auctioned since the FCC's 2008 700 MHz auction.
benton.org/node/184220 | Broadcasting&Cable
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IN WI-FI, COMCAST SEES AN OPPORTUNITY TO KNEECAP WIRELESS PROVIDERS
[SOURCE: Washington Post, AUTHOR: Brian Fung]
In what seems certain to become a wider battle, Comcast is eyeing the wireless industry as a possible market for expansion. Someday soon, Comcast might be counted among the likes of AT&T, Verizon, Sprint and T-Mobile, the businesses that now provide millions of Americans with mobile voice and data services. Thanks to a growing network of Wi-Fi hotspots, Comcast is arguing that it, or another company piggybacking off of its technology, could shake up the wireless industry by delivering cheaper cellular service to consumers and introducing another competitor to the market. Comcast is already rolling out the infrastructure it would need for such a push; it operates 1 million Wi-Fi hotspots around the country and plans to expand that to 8 million by the end of 2014. Comcast says that it has no imminent intention to launch a cellular service. But in April, the cable company raised that possibility as one of several arguments to support its Time Warner Cable purchase. "A ubiquitous Wi-Fi network built by Comcast could make a 'Wi-Fi-first' service, which combines commercial mobile radio service with Wi-Fi, a more viable alternative," Comcast wrote in its public interest filing to federal regulators.
benton.org/node/184177 | Washington Post
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ELECTIONS AND MEDIA

DARK MONEY FLOODS ELECTIONS
[SOURCE: Financial Times, AUTHOR: Richard McGregor]
Long used to opposing candidates bitterly facing off in elections, US voters are being offered a different choice for this year’s congressional polls -- the spectacle of billionaires battling each other head on. On top of the formal campaigns, spending by so-called super political action committees -- bodies that face no restrictions on donations but cannot co-ordinate with candidates -- has exploded in recent years. But the greatest spurt of growth in the run-up to the 2014 congressional elections is through “dark money” channels, funds that are donated to non-profit advocacy groups and trade and business associations. Unlike campaigns and super PACs, donations to non-profits and trade associations do not have to be declared and their spending can only be tracked by examining their purchases of advertising and tax returns. Ahead of the November polls, the outlays of such bodies is running at three times the rate of the 2012 presidential campaign, and at 17 times that of the 2010 midterms elections for the House and the Senate. At the current rate, these groups might spend upwards of $1 billion on the 2014 elections, according to a report by Robert Maguire, of the Center for Responsive Politics, in Washington.
benton.org/node/184234 | Financial Times
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PRIVACY/SECURITY

WHAT YOU REALLY AGREE TO WHEN YOU CLICK 'ACCEPT'
[SOURCE: CNNMoney, AUTHOR: Jose Pagliery]
You can spot the words "privacy policy" at the bottom of nearly every website. Don't be fooled. Those policies are more about data collection than privacy. Companies use these policies to alert you to how they track your location, read your emails, spy on your Web browsing -- and sell some of that to advertisers. It doesn't help that these disclaimers are close to unintelligible. With the help of several legal experts, CNN has reviewed policies at many top websites and apps. The conclusion: Most privacy policies are basically useless.
They're too vague. Unclear language isn't just annoying. It arms companies with more legal muscle. Having ambiguous language in privacy policies lessens a consumer's ability to fight back if their personal information is ever mishandled.
Terms are open-ended.
Policies change all the time.
Sometimes they don't even exist. Mobile app developers are increasingly relying on even more nebulous "permissions" instead of privacy policies. These pop-ups list all the features an app can access on your phone. It's worth paying attention to them, because they're starting to get weird.
benton.org/node/184128 | CNNMoney
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CYBERSECURITY

CHINESE MILITARY UNIT CHARGED WITH CYBER-ESPIONAGE AGAINST US FIRMS
[SOURCE: Washington Post, AUTHOR: Ellen Nakashima, William Branigin, William Wan]
The Justice Department accused five members of the Chinese military of conducting economic cyber-espionage against American companies, marking the first time that the United States has leveled such criminal charges against a foreign country. Industries targeted by the alleged cyberspying ranged from nuclear to steel to solar energy, officials said. The hacking by a military unit in Shanghai, they said, was conducted for no other reason than to give a competitive advantage to Chinese companies, including state-owned enterprises. Attorney General Eric Holder Jr said: “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. . . . Success in the international marketplace should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.” Attorney General Holder said the Obama Administration “will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.” In response, China’s Foreign Ministry charged that the US government “fabricated facts” in the indictment, which it said “seriously violates basic norms of international relations and damages Sino-US cooperation and mutual trust.” It said China lodged a “protest” with the United States, urging it to “correct the error immediately and withdraw its so-called prosecution.”
benton.org/node/184158 | Washington Post
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US DRAWS A LINE THAT FEW OTHERS RECOGNIZE
[SOURCE: New York Times, AUTHOR: David Sanger]
By indicting members of the People’s Liberation Army’s most famous cyberwarfare operation, the Obama administration has turned to the criminal justice system to reinforce its argument that there is a major difference between spying for national security purposes, something the United States does daily, and the commercial, for-profit espionage carried out by China’s military. The Chinese argue that the distinction is an American artifact, devised for commercial advantage. They believe that looking for business secrets is part of the fabric of national security, especially for a rising economic powerhouse. And while American officials are loath to admit it, Washington’s view has relatively few advocates around the world.
benton.org/node/184235 | New York Times
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GOVERNMENT & COMMUNICATIONS

NSA TO TEST LEGAL LIMITS ON SURVEILLANCE IF USA FREEDOM ACT BECOMES LAW
[SOURCE: The Guardian, AUTHOR: Spencer Ackerman]
[Commentary] In a secured room beneath the US Capitol, legislative aides working to finalize a bill intended to constrain the National Security Agency attempted to out-think a battery of lawyers working for the Obama Administration and the intelligence services. The NSA, its credibility hurt by whistleblower Edward Snowden’s disclosures, is trying to reassure its overseers that it will abide by new congressional action, even as its advocates labor to shape the bill to its liking. But the agency's post-9/11 history has left the architects and advocates of the bill concerned about the ways in which it might once again reinterpret a law intended to restrain it into one allowing it more surveillance leeway than congressional architects intend. Recent meetings between Hill aides and administration and intelligence lawyers yielded a sense of the legal reasoning likely to result if the USA Freedom Act becomes law. The NSA thinks it has not earned the public’s suspicion and has sought to assuage it since the Snowden disclosures. Its battalions of lawyers are preoccupied with restraining surveillance, veterans say, far more than they are with expanding the frontiers of the law. Still, recent congressional testimony has suggested that the agency will be reluctant to let legislation aimed at restricting surveillance have the final word.
benton.org/node/184181 | Guardian, The
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TELECOMMUNICATIONS

SPRINT TO PAY $7.5 MILLION FOR UNWANTED MARKETING CALLS AND TEXTS
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
Sprint will pay $7.5 million to resolve a Federal Communications Commission Enforcement Bureau investigation of the mobile wireless company’s failure to honor consumer requests to opt out of phone and text marketing communications. This represents the largest Do-Not-Call settlement that the FCC has ever reached. In addition to the $7.5 million payment, Sprint will implement a two-year plan to ensure compliance with FCC requirements designed to protect consumer privacy and prevent consumers from receiving unwanted telemarketing calls. This follows a 2011 settlement with Sprint arising from complaints that Sprint made telemarketing calls to consumers who had requested to be placed on the company’s Do-Not-Call list. In its consent decree with the Enforcement Bureau, Sprint has agreed to:
Make a payment of $7.5 million to the U.S. Treasury;
Develop and put into action a robust compliance plan designed, among other things, to help ensure future compliance with the FCC’s rules requiring companies to maintain internal Do-Not-Call lists and honor consumers’ requests;
Develop operating procedures and policies specifically designed to ensure that Sprint’s operations comply with all company-specific Do-Not-Call rules;
Designate a senior corporate manager as a Compliance Officer to ensure that Sprint complies with the terms and conditions of the compliance plan and the consent decree;
Implement a training program to ensure that Sprint employees and contractors are properly trained how to record consumers’ Do-Not-Call requests so that the company removes their names and numbers from marketing lists;
Report to the FCC any noncompliance with respect to consumers’ Do-Not-Call requests; and
File with the FCC an initial compliance report within 90 days and annual reports for two years.
benton.org/node/184156 | Federal Communications Commission | FCC order
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AGENDA

COMMITTEE FOCUSES ON COMPETITION POLICY IN LATEST #COMMACTUPDATE WHITE PAPER
[SOURCE: House of Representatives Commerce Committee, AUTHOR: Press release]
House Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR) continued the process leading to an update of the Communications Act with the release of a white paper focused on competition policy. “On the Internet, everyone from 100 year-old blue-chip companies to startups that are little more than one person with a great idea compete head-to-head. The paper we released today seeks public input on how this dynamic affects competition policy - specifically how the Communications Act, as well as policies at the FCC, promote or limit competition in the marketplace,” said Chairmen Upton and Walden. “We have received great input from our first two white papers, Modernizing the Communications Act and Modernizing U.S. Spectrum Policy, and look forward to continued public response as we work to ensure our laws appropriately reflect the realities of the innovation era.” The committee encourages the filing of comment on any aspect of competition policy and updating the Communications Act by June 13, 2014.
benton.org/node/184198 | House of Representatives Commerce Committee
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WALDEN ON WHEELER
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
Federal Communications Commission Chairman Tom Wheeler agreed to be the lone witness at the House Communications Subcommittee FCC oversight hearing May 20, where he could hear it from both sides of the aisle on network neutrality, and Subcommittee Chairman Greg Walden (R-OR) indicated May 19 that it was not going to be a triumphal return for Chairman Wheeler. "[G]iven some of the most recent decisions out of the commission, I fear that we may be heading into rough waters," Chairman Walden will say. In December 2013, Chairman Walden advised the commission to proceed with regulatory humility and restraint. "Unfortunately, recent actions have hinted that my advice was ignored.” Those recent actions include the vote to launch new open Internet rules that include the possibility of Title II reclassification and "forc[ing] broadcasters to divest stations and unwind shared service agreements that are beneficial to ensuring local content in smaller markets." "Contrary to any intended effect, the reclassification of broadband service under Title II will harm consumers, halt job creation, curtail innovation and stifle investment.”
benton.org/node/184233 | Broadcasting&Cable
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May 2014

May 20, 2014 (What AT&T’s Satellite Deal Might Mean)

What AT&T’s Satellite Deal Might Mean

Telecom Wedding Season

DirecTV Deal Leads AT&T in Wrong Direction

AT&T deal for DirecTV driven by desire to pare programming costs

Rising pay-TV rates could play role in merger debates

Honestly speaking, consumers lose in AT&T-DirecTV deal

AT&T-DirecTV Deal Churns Regulatory Waters

AT&T-DirecTV Deal Further Complicates Job of Regulators

AT&T’s lobby force seeks redemption