April 2015

April 27, 2015 (Comcast/Time Warner Cable; Spectrum; Cybersecurity)

BENTON'S COMMUNICATIONS-RELATED HEADLINES for MONDAY, APRIL 27, 2015

See this week’s events on our Policy Calendar https://www.benton.org/calendar/2015-04-26--P1W

INTERNET/BROADBAND
Net Vitality: Identifying the Top-Tier Global Broadband Internet Ecosystem Leaders - research
Net neutrality rules will be used to regulate online marketers, advertisers and app developers -AEI op-ed [links to web]

SPECTRUM/WIRELESS
   Analyst: US carriers and Dish now hold spectrum worth $368 Billion [links to web]
   The big challenge facing Google's new smartphone service - Timothy Lee analysis [links to web]
   Satellite industry aims smaller and lower [links to web]

TELECOM
Rural phone woes persist in Minnesota, across the country

TELEVISION
   Resistance to Verizon FiOS Promotion
   FCC Suspends September 1, 2015 Deadline for LPTV and Translator Stations to Shift from Analog to Digital [links to web]
   It's Not a Video Revolution -- It's a TV Evolution - op-ed [links to web]

ELECTIONS AND MEDIA
Can Hollywood help Martin O’Malley take on Hillary Clinton? [links to web]

HEALTH
Remarks of FCC Commissioner Mignon Clyburn at Connect2Health Promoting Medical Technology Innovation - speech [links to web]

EDUCATION
The debate over whether we should DVR the classroom experience [links to web]

PRIVACY/SECURITY
   Russian Hackers Read Obama’s Unclassified Emails, Officials Say
   Declassified Report Shows Doubts About Value of NSA’s Warrantless Spying
   Can the Defense Department Rekindle Romance With Silicon Valley? [links to web]
   Feds Say Encrypting Data is Key but Don't Want to Pony up the Cash [links to web]
   The Internet’s dark corners cannot be without laws - op-ed [links to web]
   Potent, in-the-wild exploits imperil customers of 100,000 e-commerce sites [links to web]

OPEN GOVERNMENT/GOV & COMMUNICATIONS
   End the Supreme Court’s Ban on Cameras - op-ed [links to web]
   LA prosecutors to use Nextdoor app to strengthen ties with residents [links to web]
   Court reminds State to produce Clinton e-mails in ‘shortest’ time possible [links to web]

CHILDREN AND MEDIA
Turning a Children’s Rating System Into an Advocacy Army

STORIES FROM ABROAD
Effort by Japan to Stifle News Media Is Working

back to top

OWNERSHIP

COMCAST/TIME WARNER CABLE/CHARTER TRANSACTIONS TERMINATED
[SOURCE: Comcast, AUTHOR: Press release]
Comcast announced that its merger agreement with Time Warner Cable and its transactions agreement with Charter Communications have been terminated. The following is a statement from Comcast Chairman and CEO Brian Roberts: "Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away. Comcast NBCUniversal is a unique company with strong momentum. Throughout this entire process, our employees have kept their eye on the ball and we have had fantastic operating results. I want to thank them and the employees of Time Warner Cable for their tireless efforts. I couldn’t be more proud of this company and I am truly excited for what’s next." Time Warner Cable Chairman and Chief Executive Officer Robert Marcus said, “We have always believed that Time Warner Cable is a one-of-a-kind asset. We are strong and getting stronger. Throughout this process, we’ve been laser focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers. Through our strong operational execution and smart capital allocation, we are confident we will continue to create significant value for shareholders. I’m extremely proud of the professionalism, dedication and resiliency our 55,000 employees have shown over the past year and thank them for their continued commitment to Time Warner Cable.”
benton.org/headlines/comcasttime-warner-cablecharter-transactions-terminated | Comcast | Time Warner Cable | New York Times | NPR | The Hill | USAToday | Washington Post | ars technica | Broadcasting&Cable | The Wrap | Hollywood Reporter | The Verge
Share: Twitter | Facebook
back to top

THE WEEK THE COMCAST-TIME WARNER CABLE DEAL DIED
[SOURCE: Benton Foundation, AUTHOR: Kevin Taglang]
"Once you get through the hysteria, [this transaction] is pro-consumer, pro-competitive and strongly in the public interest," Comcast Executive Vice President David Cohen told reporters in February 2014 when the nation’s biggest cable TV and broadband service provider announced it would purchase Time Warner Cable, the number 2 provider. Fourteen months later -- hysteria duly subsided -- and it appears regulators may not agree. On the morning of April 24, 2015, Comcast Chairman and CEO Brian L. Roberts said, “Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away.” And, with that, the deal was dead. With Comcast's announcement, we are and will be seeing lots of post-game analysis on why an army of 128 lobbyists couldn't sell this deal to regulators. Pro Publica's Leticia Miranda pointed to: 1) TV program stifling; 2) Monopoly on broadband Internet service; and 3) Comcast's broken promises in the NBCUniversal transaction. The real issue in Comcast + Time Warner Cable was broadband, just as Om Malik called it when the deal was first announced and GigaOm's Stacey Higginbotham highlighted back in November 2013.
https://www.benton.org/blog/week-comcast-time-warner-cable-died
Share: Twitter | Facebook
back to top

COMCAST TRIPS OVER WHEELER NIXON-TO-CHINA MOMENT AS FCC BOSS
[SOURCE: Bloomberg, AUTHOR: Mark Drajem, Chris Strohm]
Tom Wheeler came to the Federal Communications Commission in 2013 with a resume featuring stints as the top lobbyist in Washington for both the cable and wireless industries. Consumer advocates weren’t amused. Now, almost two years later, FCC Chairman Wheeler is confounding his former allies and winning praise from public interest groups. He recently pushed for strong net-neutrality rules, and scrutiny by FCC staff helped push Comcast to abandon its yearlong effort to buy Time Warner Cable. “It’s like Nixon going to China,” said Gene Kimmelman, president of the Washington-based policy group Public Knowledge, which opposes the Comcast merger. “He’s used his industry background not to favor his old friends in industry but to take that knowledge and apply it towards strong public interest protections.” With the cable industry facing its stiffest challenge yet from Internet-based video providers such as Netflix, a central issue for the agency is how to promote innovation as well as protect competition, according to a person familiar with the Comcast case. The FCC’s net neutrality decision and its resistance to the Comcast deal both recognize that the FCC needs to keep up with a world that is changing rapidly. “This is exactly why I thought he was good for the job,” said Andrew Schwartzman, senior counselor at the Georgetown University Law Center’s Institute for Public Representation in Washington. “He’s been around the block, he’s made his money” and he knows the issues, he said.
benton.org/headlines/comcast-trips-over-wheeler-nixon-china-moment-fcc-boss | Bloomberg | Washington Post
Share: Twitter | Facebook
back to top

WHY COMCAST NEEDED AN EXCUSE TO TURN ITS ATTENTION ELSEWHERE
[SOURCE: Revere Digital, AUTHOR: James McQuivey]
[Commentary] Comcast CEO Brian Roberts made the rumors official: Comcast is dropping its bid to buy Time Warner Cable. Certain regulators and politicians will claim victory. But that’s because they don’t understand the industry they are supposed to manage. In fact, despite the obvious egg on the face, Comcast executives either already know or will soon realize that losing this deal this soon is one of the better things to happen in a long time. Because Comcast needs to direct its attention elsewhere immediately -- or miss the biggest shift in pay TV history since the advent of cable itself. Once it became clear that regulators were going to treat this deal like we were still living in 1985, Comcast executives were smart to realize that wasting a year trying to accommodate regulators’ concerns is a colossal waste of time when there are other, more pressing issues to confront. Remember that when the deal was announced, HBO still wasn’t going direct, Sling TV didn’t exist, and Verizon hadn’t announced a national, over-the-top pay TV offering. Times have changed and in many regards, that’s the competitive field that Comcast needs to set its sights on, not the mucky and overregulated business of putting cables in the ground and obsolete set-top boxes in people’s homes. Yes, Comcast could have consummated this deal and used those extra revenues to help finance exactly that kind of over-the-top solution. But it would lose at least a year in doing so, a year during which everyone from Apple to Verizon, Netflix to Amazon, Sony to Sling TV, will have shifted the entire pay TV landscape, making Comcast a profitable provider of bits to those services.
[James McQuivey is vice president and principal analyst at Forrester Research]
benton.org/headlines/why-comcast-needed-excuse-turn-its-attention-elsewhere | Revere Digital
Share: Twitter | Facebook
back to top

CABLE CONSOLIDATION
[SOURCE: Associated Press, AUTHOR: Tali Arbel]
[Commentary] Cable companies are likely to keep merging as online video options proliferate, the number of cable and satellite TV subscribers slips and costs rise for the shows, sports and movies piped to subscribers. At the same time, there will be more competition for young customers seeking stand-alone Internet and mobile video offerings and cheaper TV channel packages. "I don't think it's the demise of the cable industry. But its complete dominance of distribution is over," said Randy Giusto, a media industry analyst with advisory firm Outsell. A dropped Comcast-Time Warner Cable deal means a transaction with Charter Communications Inc. aimed to smoothing the way for regulatory approval also falls apart. Charter's bid for Bright House Networks, which it announced in March, could also be killed. Many analysts expect that Charter, which lost out on its bid for Time Warner Cable to Comcast, to resurrect its effort. "Other cable deals that don't involve Comcast might be allowed to go through," former Federal Communications Commission member Robert McDowell said. There "seems to be an antipathy towards Comcast at the FCC" because the agency thinks Comcast didn't stick to the conditions of its acquisition of NBCUniversal, he said. Comcast may have to look overseas for big cable acquisitions. "Washington's concern here is excessive control of broadband in the hands of a single company," wrote MoffettNathanson analyst Craig Moffett in a client email. "For all intents and purposes, their M&A ambitions would be on ice in the US."
benton.org/headlines/consolidation-lives-despite-comcast-twc | Associated Press | Huffington Post
Share: Twitter | Facebook
back to top

COMCAST-TWC DOCS
[SOURCE: Multichannel News, AUTHOR: John Eggerton]
So, now that the Comcast/Time Warner Cable deal is off, what will become of the lawsuit filed by programmers against the Federal Communications Commission's decision to allow third-party access to thousands of programming contract-related documents and work product in the deal? The US Court of Appeals for the DC Circuit has not yet ruled, but the case involved contracts in both the Comcast-TWC and AT&T-DirecTV deals, so the suit goes on, as does the vetting by the FCC and Justice of the AT&T-DirecTV merger proposal. If the court rules in favor of allowing access, an attorney involved in the suit speaking on background said that they presumed the FCC would not make the contracts related to the Comcast-TWC deal available to those hundreds of third parties since there is no longer any justification for doing so. Public Knowledge, which was one of the outside parties seeking access to the Comcast-TWC documents, said that it considered the request moot now that the deal was off. It did not request access to the AT&T-DirecTV documents.
benton.org/headlines/comcast-twc-third-party-documents-table | Multichannel News
Share: Twitter | Facebook
back to top

INTERNET/BROADBAND

NET VITALITY -- MEDIA INSTITUTE REPORT
[SOURCE: Media Institute, AUTHOR: Stuart Brotman]
This is the first-ever quantitative and qualitative composite analysis of the global broadband Internet ecosystem, viewed in a country comparative context. The development of this index helps identify the top-tier global broadband Internet leaders -- an elite grouping of five countries that distinguish themselves as pacesetters for future benchmarking and best practices analyses. These leaders, grouped in a leadership tier rather than rank ordered, are the United States, South Korea, Japan, the United Kingdom, and France. The Open Internet as a broadband Internet goal is worthwhile, but also too narrow as a foundation for Net Vitality. Rather, the Wide Open Internet is what the United States and other countries around the world should be trying to achieve. The Wide Open Internet encompasses the broader goal of an efficient ubiquitous broadband Internet ecosystem with virtually unlimited content and applications available without government restrictions. With continuing focus on the broadband Internet ecosystem, the idea of Net Vitality can be realized through a future-oriented policy process that capitalizes on the blazing speed of Internet time that has propelled us so far, so fast, and so impactfully.
benton.org/headlines/net-vitality-identifying-top-tier-global-broadband-internet-ecosystem-leaders | Media Institute | Brotoman op-ed
Share: Twitter | Facebook
back to top

SEMICONDUCTOR DEAL SCRAPPED
[SOURCE: Financial Times, AUTHOR: Robin Harding, Arash Massoudi]
The proposed merger of Tokyo Electron and Applied Materials into a $30 billion semiconductor equipment giant has collapsed due to competition concerns from the US Department of Justice. The failure of the merger -- first agreed more than 18 months ago -- is likely to mean lower profit margins at Applied and Tokyo Electron but will benefit competitors such as Lam Research and customers such as Intel. The number of players in semiconductor equipment, one of the world’s most technologically demanding industries, has been falling as research and development costs increase and the pool of customers shrinks. Only a small number of chipmakers -- such as Intel, TSMC and Samsung -- now operate at the cutting edge of semiconductor technology, giving them significant power over equipment suppliers. A merger of Applied Materials, the largest company in the sector, with Tokyo Electron would have had about 25 percent of the total equipment market. But it would have had market shares closer to 50 percent for some tools, such as silicon etching machines, forming a near-duopoly with Lam Research.
benton.org/headlines/department-justice-scuppers-30-billion-semiconductor-merger | Financial Times
Share: Twitter | Facebook
back to top

TELECOM

RURAL PHONE WOES PERSIST IN MINNESOTA, ACROSS THE COUNTRY
[SOURCE: Star Tribune, AUTHOR: Jim Spencer]
Rural telephone connection problems continue to plague remote communities in Minnesota and across the country. A national test of 2,150 rural calls in 2011 showed that 344 never reached their destination and another 172 were “unacceptably delayed or of poor quality,” according to the Federal Communications Commission. Critics claim that some cut-rate long distance routers moving calls in the middle of the nation’s telecommunications network simply do not connect rural calls to avoid expensive connection fees. No one is sure how many of these intermediate carriers exist because they don’t have to register with the government. They can set up operations simply by downloading free software on the Internet and filing a rate plan with phone companies. “It’s outrageous to have fly-by-night carriers just dump the calls,” said Sen Amy Klobuchar (D-MN), who with Sen Jon Tester (D-MT) and Sen Jeff Merkley (D-OR), recently introduced legislation to try to fix rural call problems that she calls ¬“literally devastating.” When health care, law enforcement and emergency personnel cannot reach each other or the public, the threats are obvious. But telecommunications breakdowns can upend rural businesses, too. “It almost bankrupted us,” said Roger Brazier, sales manager for Mattracks Inc., a 50-employee manufacturer in Karlstad (MN), 30 miles from the Canadian border. “People we talked to said, ‘Did you guys get bought out? You never answered your phone so I ended up buying from a competitor.’ ” It happens in small communities all over the state, from Chokio (MN), where an insurance agent got angry e-mails from would-be customers who said they would not do business with him because they could not reach him by phone to Brainerd (MN), where a tire dealer plagued by failed calls made a symbolic point by slapping his local phone company with a bill for $50,000 in lost business. “In rural areas it costs more to deliver long distance calls [than in urban areas] so they just don’t put them through,” explained Brent Christensen, who heads the Minnesota Telecom Alliance, a group of rural phone service providers. “We’ve been dealing with this for years.”
benton.org/headlines/rural-phone-woes-persist-minnesota-across-country | StarTribune
Share: Twitter | Facebook
back to top

TELEVISION

RESISTANCE TO VERIZON FIOS PROMOTION
[SOURCE: New York Times, AUTHOR: John Koblin]
Disney and Fox took another swipe at Verizon, informing the telecommunications company that they would not run a commercial for FiOS’s new cable package on some of their channels. Disney, Fox and NBCUniversal objected this week to the FiOS cable package, which offers a slimmer version of basic cable. The product, called FiOS Custom TV, made its debut on April 19. A Verizon spokeswoman, Deidre Hart, said Disney told the company that it would not run ads for FiOS Custom TV on local stations, including WABC, A&E and ESPN Radio in New York (NY) and the ABC affiliate in Philadelphia (PA). Likewise, Fox will not run the ad on its New York affiliate, WNYW, and on the sports cable channel YES, Hart said. The FiOS ad began airing on April 22 on local broadcast stations. “This anticompetitive tactic is only hurting consumers,” Hart said. “As we’ve been saying, FiOS Custom TV is a product consumers want, and it’s all about consumer choice. We believe we are allowed to offer consumers and small businesses this choice and flexibility under our existing contracts.” A Fox spokesman said that the company preferred “to keep our commercial discussions confidential.” Disney declined to comment.
benton.org/headlines/resistance-verizon-fios-promotion | New York Times | Wall Street Journal
Share: Twitter | Facebook
back to top

PRIVACY/SECURITY

HACKERS READ PRESIDENT’S E-MAIL
[SOURCE: New York Times, AUTHOR: Michael Schmidt, David Sanger]
Some of President Barack Obama’s e-mail correspondence was swept up by Russian hackers in 2014 in a breach of the White House’s unclassified computer system that was far more intrusive and worrisome than has been publicly acknowledged, according to senior American officials briefed on the investigation. The hackers, who also got deeply into the State Department’s unclassified system, do not appear to have penetrated closely guarded servers that control the message traffic from Obama’s BlackBerry, which he or an aide carries constantly. But they obtained access to the e-mail archives of people inside the White House, and perhaps some outside, with whom President Obama regularly communicated. From those accounts, they reached e-mails that the President had sent and received, according to officials briefed on the investigation.
benton.org/headlines/russian-hackers-read-obamas-unclassified-emails-officials-say | New York Times
Share: Twitter | Facebook
back to top

VALUE OF WARRANTLESS SPYING
[SOURCE: New York Times, AUTHOR: Charlie Savage]
The secrecy surrounding the National Security Agency’s post-9/11 warrantless surveillance and bulk data collection program hampered its effectiveness, and many members of the intelligence community later struggled to identify any specific terrorist attacks it thwarted, a newly declassified document shows. The document is a lengthy report on a once secret NSA program code-named Stellarwind. The report was a joint project in 2009 by inspectors general for five intelligence and law enforcement agencies, and it was withheld from the public at the time, although a short, unclassified version was made public. Shortly after the terrorist attacks on Sept. 11, 2001, President George W. Bush secretly told the NSA that it could wiretap Americans’ international phone calls and collect bulk data about their phone calls and emails without obeying the Foreign Intelligence Surveillance Act. Over time, Stellarwind’s legal basis evolved, and pieces of it emerged into public view. The report amounts to a detailed history of the program. While significant parts remain classified, it includes some new information.
benton.org/headlines/declassified-report-shows-doubts-about-value-nsas-warrantless-spying | New York Times
Share: Twitter | Facebook
back to top

CHILDREN AND MEDIA

COMMON SENSE MEDIA
[SOURCE: New York Times, AUTHOR: Natasha Singer]
James Steyer, chief executive of Common Sense Media, is trying to engage the country’s power brokers in his new crusade to put children and education at the top of the nation’s political agenda. Through a combination of sophisticated strategy and high-powered networking, Steyer and his children’s advocacy group, Common Sense Media, have quietly become a political dynamo. The nonprofit group, largely known for its reviews and ratings of children’s videos, now plays a role in influencing billions of dollars in government spending on education-related technologies, like classroom broadband access, as well as teachers’ choices of learning apps. The group plans to introduce an even more ambitious national advocacy effort, called Common Sense Kids Action, to push for certain state and federal efforts to bolster education for children. After years of providing free children’s entertainment ratings, Common Sense Media now hopes to galvanize its user base, asking consumers to get behind issues like technical career training for students and technology training for teachers.
benton.org/headlines/turning-childrens-rating-system-advocacy-army | New York Times
Share: Twitter | Facebook
back to top

STORIES FROM ABROAD

JAPAN STIFLING NEWS MEDIA
[SOURCE: New York Times, AUTHOR: Martin Fackler]
Many journalists and political experts say the government of Prime Minister Shinzo Abe is trying to engineer a fundamental shift in the balance of power between his administration and the news media in Japan, using tactics to silence criticism that go beyond anything his predecessors tried and that have frustrated many journalists. These have included more aggressive complaints to the bosses of critical journalists and commentators and more blatant retaliation against outlets that persist in faulting the administration. At the same time, Prime Minister Abe has tried to win over top media executives and noted journalists with private sushi lunches. He has also appointed a new chairman to the national public broadcaster, NHK, who has declared that the network will not deviate too far from the government’s views. Members of the Abe government have openly hinted at revoking the broadcasting licenses of overly critical networks under a law that requires that TV news reports not intentionally twist facts.
benton.org/headlines/effort-japan-stifle-news-media-working | New York Times
Share: Twitter | Facebook
back to top

Benton

Search

Benton

Daily Digest

Analysis

April 2015

Why exporting fair use through TPP is a bad idea

April 27, 2015 (Comcast/Time Warner Cable; Spectrum; Cybersecurity)

The dissolution of Comcast’s mega-merger is great for consumers

Comcast-Time Warner Cable Deal’s Collapse Leaves Frustrated Customers Out in the Cold

Government’s Internet Monopoly

Department of Justice scuppers $30 billion semiconductor merger

Satellite industry aims smaller and lower

Turning a Children’s Rating System Into an Advocacy Army