October 2014

FCC’s Wheeler: “We Now Return To Our Transition of the Phone System Already In Progress.”

[Commentary] In the last two days, Federal Communications Commission Chairman Tom Wheeler has made back-to-back speeches that on their surface appear as dissimilar as could be. First, he gave a speech at the Fall 2014 COMPTEL Show. The next day, he gave this speech at the 32nd Annual Everett Parker Lecture. Dig a little deeper, however (and keep in mind what I have previously said about Chairman Wheeler signaling what he wants to do if anyone actually pays attention) you notice some startling commonalities between these two speeches. Notably, this is the first time Chairman Wheeler has brought up the transition of the phone network in a serious way in a long time. And, in both speeches, he made it very clear that transition of the phone system to an all IP platform does not end the FCC’s role.

To summarize my takeaways:

Chairman Wheeler wants to shift the FCC back into working on the IP Transition despite the fact that AT&T is not going to have its pilot project ready until the second half of 2015. It is, after all, the thing he came to the FCC to do in the first place before net neutrality and Comcast/TWC essentially hijacked 2014.
While the nature and form of regulation will change, the FCC will continue to play a critical role -- during the transition and after the transition -- both in promoting competition and protecting consumers.
That Network Compact Chairman Wheeler keeps talking about? He really means it. When he leaves the FCC, he wants to leave an agency that still protects network users under this fundamental set of values.

Tim Berners-Lee, Web Creator, Defends Net Neutrality

Tim Berners-Lee, the creator of the World Wide Web, has big plans for the future of the Internet. Greater use of online data, faster computers to take care of day-to-day tasks and more collaboration among people around the world are all possible, Berners-Lee told an audience at a technology conference in London. But the British computer scientist warned that this future would happen only if people continued to have unfettered access to the basic infrastructure that powers the Internet.

“It’s all predicated on a neutral network,” said Berners-Lee, in a reference to the heated debate around so-called net neutrality, a principle according to which everyone should have equal access to online content. “Net neutrality is really, really important,” he added. “Never before have you had something in the system that could throttle your app.” The intervention of the founder of the World Wide Web, which celebrated its 25th anniversary this year, comes as both sides of the net neutrality debate are sharpening their claws.

Wireless data caps more about profit than congestion

[Commentary] Wireless carriers like to say that monthly data caps are necessary to prevent heavy users from slowing down less active ones. I won't argue that data caps have no positive impact on wireless networks -- they can prevent the most egregious overuse of what is a limited resource. But it's a crude tool at best, targeting monthly averages with no regard for whether the network is congested at a particular time or place.

Recent actions and statements from carriers suggest this is the case: data caps are largely a profit play, not an efficient means of preventing network problems. “If you try to use monthly volumes as a way of managing congestion, you never do a very good job of it,” said Sandvine cofounder and CTO Don Bowman. Sandvine is known for its research on Internet traffic and its products that help Internet providers (including Comcast) manage network congestion. Data caps “are more about defining a differentiated value than they are about protecting the network or protecting the other users on the network,” Bowman said. “You don’t want to launch a lower price point and have your higher users jump down into it.”

Comcast Shareholders Vote 99 Percent in Favor of Stock Issuance Attached to Time Warner Cable Merger

More than 99 percent of Comcast shareholders voted to support a company proposal that continues the march towards a merger with Time Warner Cable. The shareholders supported Comcast’s proposal to issue 2.875 shares of Comcast Class A common stock for every one share of Time Warner Cable common stock. Of course, this doesn't mean that the merger is a done deal. Time Warner Cable shareholders will vote on similar merger terms on Oct 9, and the merger will then be subject to several FCC regulatory approvals and customary conditions.

Rep Cárdenas: Proposed Comcast-Time Warner merger has 'chilling effect' on opposed voices

Rep Tony Cárdenas (D-CA) said the Federal Communications Commission's decision to extend the comment period for the proposed Comcast-Time Warner merger would allow a full opportunity to hear from all sides.

He argued that the potentially enormous company has discouraged some media, as well as cable and broadband companies that would be affected, to speak out against the merger due to fear of later retribution. “Part of the challenge we face is that many of those concerned with the merger will potentially have to sit across the negotiating table with a new Comcast-Time Warner Cable. Because this new entity will have such broad control over media production, distribution, cable and broadband, there is a natural chilling effect for many of those voices," Rep Cárdenas said. He warned that the merger had potential to limit media diversity.

AT&T to Pay $80 Million to FTC for Consumer Refunds in Mobile Cramming Case

As part of a $105 million settlement with federal and state law enforcement officials, AT&T Mobility LLC will pay $80 million to the Federal Trade Commission to provide refunds to consumers the company unlawfully billed for unauthorized third-party charges, a practice known as mobile cramming.

The refunds are part of a multi-agency settlement that also includes $20 million in penalties and fees paid to 50 states and the District of Columbia, as well as a $5 million penalty to the Federal Communications Commission. In its complaint against AT&T, the FTC alleges that AT&T billed its customers for hundreds of millions of dollars in charges originated by other companies, usually in amounts of $9.99 per month, for subscriptions for ringtones and text messages containing love tips, horoscopes, and “fun facts.” In its complaint, the FTC alleges that AT&T kept at least 35 percent of the charges it imposed on its customers. Consumers who believe they were charged by AT&T without their authorization can visit www.ftc.gov/att to submit a refund claim and find out more about the FTC’s refund program under the settlement. If consumers are unsure about whether they are eligible for a refund, they can visit the claims website or contact the settlement administrator at 1-877-819-9692 for more information.

The key to keeping cyberspace safe? An international accord.

When Americans think about cybersecurity, they tend to focus on symptoms rather than causes -- it’s a symptom when almost every month a major company is hacked and millions of personal records are stolen. We pit weak defenses against skilled opponents. Changing this won’t be easy, because there is no automatic fix, no new technology and no private action that can stop cybercrime and tame the Internet’s Wild West.

First, we must recognize that most malicious actions in cyberspace directed against the United States come from hackers in two countries: China and Russia. These nations encourage their hackers to go after networks, data and money in the United States, and they protect them from prosecution. That the United States’ most active opponents in cyberspace are China and Russia (along with up-and-comers Iran and North Korea) is not a coincidence. These countries are our military rivals. Cyberspace creates opportunities to exercise national power, and these nations have seized those opportunities.

The science behind why our inboxes are so full of political losers

If it appears that your favorite candidate has been flooding your e-mail box with tales of woe lately, here's one reason why: New research shows that the Internet loves an underdog candidate.

A pair of behavioral scientists, Todd Rogers of the Harvard Kennedy School of Government and Don A. Moore of the University of California at Berkeley, examined whether campaign donors are more likely to open their wallets for a candidate who's projected to win or one who's projected to lose. The down-by-a-hair e-mails turned out to be the big winner, with people far more likely to support a candidate who is barely losing than one just barely winning. The underdog e-mails raised 60 percent more money than those that suggested that the race was still close but that the preferred candidate had pulled ahead, according to "The Motivating Power of Under-Confidence."

Pandora starts PAC for political giving

Pandora has started a political action committee to send money to political campaigns and candidates. The company started its PAC in September, it revealed in new Federal Election Commission filings, days after a court ruling seemed to spell trouble for the service. The move comes as part of a new focus on Washington. The company has come under pressure to pay more music royalties to songwriters and musicians.

Who’s making money on the Internet? Comparing ROIC across Internet sectors

[Commentary] One of the background questions in Internet policy debates concerns what and who contributes value to the overall system and who extracts profits. In a perfectly functioning market, profits will reward innovation, investment, and the creation of value for users; unfortunately, there exist very few perfect markets.

A number of things distort market efficiency; government policy is certainly one such thing, and market power is another. Return on invested capital (ROIC) is a very good way to evaluate competition, profitability, and leverage in capital-intensive industries. According to Morningstar, firms with 15 percent or more ROIC for a number of years are most likely have a “moat” that protects them from competition. So let’s look at three sectors: content creators such as Disney and Viacom, who create the movies and TV shows that we stream into our homes; network services firms such as Comcast and AT&T, who provide us with broadband networks; and Internet “edge services” such as Netflix and Google, who connect network users with content and services.

Benton

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