BENTON'S COMMUNICATIONS-RELATED HEADLINES for TUESDAY, OCTOBER 15, 2012
Reforming the Universal Service Fund: What’s Changing about the Connect America Fund and the Mobility Fund AND What's Next for Mobile Broadband Pricing? http://benton.org/calendar/2012-10-16/
MEDIA AND ELECTIONS
Lobbyists ready for a comeback under Romney
Surviving the Political Ad Deluge
Study: Secret Donors Significantly Fueling Pro-Romney TV Ads - research
Romney Raises $170 Million to Finance Final Push [links to web]
73,000 Political Ads Test Even a City of Excess [links to web]
Republicans for 'Sesame Street' - op-ed [links to web]
What’s the Real Effect of Political Ads?
E-mail overload dilutes message
Facts Reign on Ryan's Charade
WIRELESS/SPECTRUM
Americans Paying More for LTE Service
Softbank’s New Sprint: Practical Mechanics
Here’s what behind SoftBank’s $20.1 billion Sprint deal - analysis
Bravado Behind Softbank's Sprint Deal [links to web]
Sprint Nextel takeover by Softbank could save unlimited data plans from extinction [links to web]
Will SoftBank buy other U.S. telecom firms after Sprint? - analysis
Sprint Said Not to Plan Buying Clearwire After Softbank Deal [links to web]
Sprint $8 Billion War Chest Threatens AT&T-Verizon Reign [links to web]
Leap Wireless Left Out of the Telecom Consolidation, For Now
T-Mobile’s iPhone-friendly network overhaul: 2 cities down, 227 to go [links to web]
TELEVISION/RADIO
On anniversary of Ed Murrow speech, much still remains the same - analysis
With Too Many Ads, TV Land Subtracts Content
Some Good, Some Bad in FCC Basic Tier Encryption Order - analysis [links to web]
Moonves Extends CBS Deal Through June ‘17 [links to web]
CYBERSECURITY
Senator Coats backs Reid's push to revive cybersecurity legislation [links to web]
Staying Safe Online - press release [links to web]
PRIVACY
EU data chiefs ask Google to change privacy policy
Groups Ask Parents to Promote FTC Kids Online Privacy Proposals [links to web]
The Data-Mining Industry Kicks Off a Public Relations Campaign [links to web]
INTERNET/BROADBAND
Infostructure Is the New Infrastructure - op-ed
TELECOM
FCC Deletes International Phone Traffic Reporting from October Agenda [links to web]
STORIES FROM ABROAD
These headlines presented in partnership with:
EU data chiefs ask Google to change privacy policy
Thousands of UK protestors demand Google censor anti-Islam video [links to web]
US, Israel ink telecom trade agreement [links to web]
MORE ONLINE
Rep Polis warns FTC against suing Google [links to web]
The Future, as Imagined by Google [links to web]
Why I pay extra for "business-class" broadband at home - analysis [links to web]
KC Embraces Fiber, Launches Startup Support [links to web]
MEDIA AND ELECTIONS
LOBBYISTS AND ROMNEY
[SOURCE: Politico, AUTHOR: Anna Palmer]
President Barack Obama’s gone further than any president to keep lobbyists out of the White House — even signing executive orders to do it. But the mood on K Street is brightening. Industry insiders believe that Mitt Romney will unshackle the revolving door and give lobbyists a shot at the government jobs their Democratic counterparts have been denied for the past four years, a dozen Republican lobbyists said in conversations with POLITICO. "I've heard they are likely not to black ball anybody from any particular sector," said Republican lobbyist Sam Geduldig at Clark, Lytle & Geduldig. "I assume, everyone is welcome to apply. I'm sure they are interested in getting the best people possible." Allowing lobbyists back into the White House could be a PR nightmare early on in a new administration, some Republicans fear. Romney would have to toss out Obama’s orders, which shook up how President George W. Bush did business and let Obama claim his agenda wouldn’t be hijacked by special interests.
benton.org/node/137157 | Politico
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POLITICAL AD DELUGE
[SOURCE: AdAge, AUTHOR: Brian Steinberg]
Brian Ahladas should be cheering. The local ad inventory he supervises at NBC affiliate WWBT in Richmond (VA) is in high demand, thanks to the coming election. He's fielded a heady influx of advertising from political organizations and, in recent weeks, the presidential candidates themselves. But instead of sleeping easy at night counting his political ad dollars, Ahladas has to constantly monitor ad rates and juggle schedules, trying to ensure his local advertisers -- at least those unafraid of their spots running in a sea of attack ads -- aren't kept completely off the air. Legal requirements say that if a candidate requests time, the station is obligated to provide it. That can sometimes require replacing parts of an ad schedule already established by local sponsors.
benton.org/node/137155 | AdAge
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SECRET DONORS
[SOURCE: National Public Radio, AUTHOR: Peter Overby]
Since April, most of the TV ads supporting Republican presidential nominee Mitt Romney have come from outside groups, not from Romney's own campaign. And those groups raised more than half of their money from secret donors, according to a six-month study of ads. From April through September, Romney for President aired slightly more than 144,000 ads on broadcast TV. The outside groups supporting him ran nearly 250,000. That enabled Romney to start saving cash for a last-minute TV blitz, which has just now begun. This is the first presidential campaign since the Supreme Court's Citizens United ruling of 2010. And it's giving us a good look at how that decision and other recent court cases have changed politics.
benton.org/node/137191 | National Public Radio
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THE REAL EFFECT OF POLITICAL ADS
[SOURCE: Associated Press, AUTHOR: Beth Fouhy]
By the end, the campaigns and independent groups will have spent about $1.1 billion on television advertising this year, with $750 million already allocated in the handful of states likely to determine the outcome of the contest. There's no doubt that TV advertising has the power to shift voter perceptions, particularly when a candidate is not well known. But It's also enough to turn off voters, leaving them frustrated and annoyed.
benton.org/node/137129 | Associated Press
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E-MAIL OVERLOAD
[SOURCE: Politico, AUTHOR: Steve Friess]
The public is fast learning how to dodge and ignore the hail of political e-mail, quickly diminishing the impact of what’s been a reliable and low-cost campaign tool. Open rates for marketing-related e-mails are now at historic lows — more than 80 percent go unread — a trend that is scary to campaign operatives who rely on it as their primary mode of communications with potential donors, voters and volunteers. “People aren’t opening candidates’ emails as much because campaigns have abused the tool so many times,” said former Barack Obama 2008 external online director Scott Goodstein of the online campaign firm Revolution Messaging. “Nobody should be shocked that their email response has deteriorated.”
benton.org/node/137154 | Politico
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RYAN’S CHARADE
[SOURCE: The Huffington Post, AUTHOR: Sue Wilson]
[Commentary] Rep Paul Ryan (R-WI) is not used to reporters verifying statements or asking hard questions because, throughout his career, he's been well supported by Big Media owners so blatantly right wing they publicly brag about their power to get Wisconsin Republican candidates elected. The Milwaukee media market is unique (note: Ryan's 1st District does not include Milwaukee but is a mere 10 miles south, and Milwaukee media dominates it, as well as much of Wisconsin.) A single corporation, Journal Communications, owns Milwaukee's Journal Sentinel newspaper, TV station WTMJ, and uses its 50,000 watt radio giant WTMJ as an unabashed cheerleader for all GOP candidates, especially Rep Ryan. Clear Channel Communications, which owns six radio stations in Milwaukee, joins the Republican lovefest on its own 50,000 watt blowtorch WISN. Their political preference and clout is so clear, critics in the community call WTMJ and WISN "WGOP." Five local right wing radio hosts hold court fifteen hours a day, every Monday through Friday, from studios in Milwaukee. Charlie Sykes, Mark Belling, Vicki McKenna, Jay Weber, and Jeff Wagner dominate signals that travel hundreds of miles and reach millions of people in four states. They wave the flag in one hand and the Bible in the other, whipping up fervor for their favored Republican candidates, meanwhile lying to audiences about facts of importance and propping up falsehoods of those same "moral" GOP candidates they promote without question. Daily they mischaracterize and demonize Democrats, but never do they allow them on the air to mount a defense.
benton.org/node/137126 | Huffington Post, The
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WIRELESS/SPECTRUM
PAYING TOO MUCH FOR LTE
[SOURCE: New York Times, AUTHOR: Kevin O’Brien]
Does LTE, the superfast wireless service based on Long Term Evolution technology, cost too much in the United States? A recent study by the research arm of the GSM Association, a group based in London that represents mobile operators, suggests that may be the case. A comparison by Wireless Intelligence, a unit of the GSM Association, suggests that being in the biggest LTE market has not brought low prices to U.S. consumers. According to the study, Verizon Wireless, which is a joint venture of Verizon and Vodafone, charges $7.50 for each gigabyte of data downloaded over its LTE network. That is three times the European average of $2.50 and more than 10 times what consumers pay in Sweden, where a gigabyte costs as little as 63 cents. Calum Dewar, the Wireless Intelligence analyst who made the comparison, said there were several reasons for higher LTE prices in the United States.
First, U.S. operators like Verizon sell LTE as part of a larger mobile package, whereas European operators increasingly sell it as a stand-alone service at a lower price. U.S. operators are phasing out unlimited data plans, which is causing the price of data to increase above their levels in Europe, where a similar shift began two years ago. And you can buy LTE on a pay-as-you-go basis, often from virtual network discounters.
But another big reason for the trans-Atlantic discrepancy in LTE costs, Mr. Dewar said, is a difference in the levels of competition. Europe has the greatest number of operators selling LTE: 38 of 88 operators worldwide. Even small markets like Austria, Finland and Portugal have three LTE operators.
benton.org/node/137139 | New York Times
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HOW THE DEAL IS SET UP
[SOURCE: Wall Street Journal, AUTHOR: Kenneth Maxwell, Isabella Steger]
The SoftBank-Sprint deal is quite a piece of financial engineering. The end result is that Softbank will inject $8.0 billion of new capital to strengthen Sprint’s balance sheet, and will pay a further $12.1 billion to buy existing Sprint shares.
Softbank will set up a new U.S. subsidiary, New Sprint. This company will buy a $3.1 billion convertible senior bond from Sprint. The bond will have a seven-year term and 1% coupon rate, and will be convertible into Sprint common stock at $5.25 per share. Sprint will become a wholly-owned subsidiary of New Sprint, which will become a publicly traded company. Following shareholder approval of the deal, Softbank will pay $4.9 billion to buy new common shares of New Sprint — now the parent of old Sprint — at $5.25 per share. That, plus the bond, accounts for the $8 billion injection of new funds, fortifying Sprint’s balance sheet.
Sprint holders have a choice to make. The remaining $12.1 billion chunk of the overall price tag will be paid to existing Sprint stockholders, at a rate of $7.30 per share, in exchange for approximately 55% of currently outstanding stock. The other 45% of currently outstanding shares will simply convert into shares of New Sprint — at a rate one share for each share in Sprint. The offer price represents a 36% premium to Sprint’s average share price in the last 20 trading days prior to the announcement. Another twist: Softbank will also receive a warrant to purchase 55 million additional Sprint shares at an exercise price of $5.25 per share.
Softbank will own approximately 70% of New Sprint on a fully-diluted basis, and Sprint equity holders will own approximately 30%.
Sprint’s headquarters will continue to be in Overland Park (KS) and Sprint CEO Dan Hesse will stay on as CEO of New Sprint, and as a board member.
Softbank will use a combination of cash on hand and has lined up a bridge loan worth a cool Y1.6 trillion, or $20.4 billion, from Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc, as well as Deutsche Bank AG. Other banks involved include Citigroup Inc., Rothschild and UBS AG, which are advising Sprint. Raine Group LLC and Mizuho Securities Co. are advising Softbank.
Softbank will pay a $600 million break-up fee if the deal falls through because it failed to pony up the money for the deal. If Sprint accepts an offer from another suitor, it pays $600 million to Sprint. If Sprint shareholders reject the deal, it must pay Softbank $75 million.
benton.org/node/137135 | Wall Street Journal
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WHAT’S BEHIND SOFTBANK-SPRINT
[SOURCE: GigaOm, AUTHOR: Stacey Higginbotham]
SoftBank is acquiring the stake in part to take advantage of Sprint’s spectrum — the nation’s No. 3 carrier is in the midst of a nationwide LTE deployment — as well as to advance SoftBank’s own growth in the saturated Japanese market. And Sprint needs the cash. The company has made bet after bet that haven’t panned out — from the ill-fated Nextel acquisition to the all-in investment on the iPhone. Sprint has upwards of $21 billion in debt with some of that maturing next year. However, buying a stake in Sprint as a means to pay down debt it a pretty crappy use of cash, so one hopes that Sprint will use of the dollars to acquire spectrum — either through consolidating more control over Clearwire, or perhaps in an upcoming spectrum auction. So the deal is a positive for Sprint, and perhaps might help SoftBank by giving it a foothold in the U.S. market, but it raises several questions about the state of mobile play in the U.S. While this deal addresses Sprint’s need for cash, it doesn’t address a fundamental question for the U.S. market– namely does it need four nationwide carriers? With this deal and the T-Mobile acquisition of Metro PCS, we’re no closer to getting the U.S. market to three operators, so the real question after this deal, is still going to be whether the U.S. can support four operators as the need for network investment and spectrum escalates to meet our demand for mobile data.
benton.org/node/137133 | GigaOm
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MORE BUYS FOR SOTBANK
[SOURCE: Los Angeles Times, AUTHOR: David Lazarus]
[Commentary] In a soda market completely dominated by Coke and Pepsi, it wouldn't make much business sense to purchase Royal Crown Cola unless you also had plans to get your hands on Mountain Dew or Dr Pepper. I'm guessing Japan's SoftBank has just such an idea in mind after announcing it'll spend about $20 billion to acquire 70% of Sprint Nextel Corp., the No. 3 wireless carrier in the United States. SoftBank would be crazy to pony up that kind of scratch for a perpetual place in the shadow of market leaders Verizon Wireless and AT&T. But the Sprint deal looks a whole lot more intriguing if you also have plans to add other carriers to the fold. Or maybe even to acquire the No. 4 wireless service, T-Mobile USA, which is itself now gobbling up No. 5 MetroPCS. "I don't think SoftBank will be content to remain in the No. 3 spot," said Julien Blin, directing analyst for consumer electronics at Infonetics Research in Silicon Valley. "They're going to want to move up to No. 2 or even No. 1."
benton.org/node/137197 | Los Angeles Times
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LEAP AND CONSOLIDATION
[SOURCE: Wall Street Journal, AUTHOR: Thomas Gryta]
In the recent flurry of deal activity in the U.S. wireless industry, Leap Wireless has been left hanging -- for now. With potential acquirers preoccupied with other deals, any move involving Leap isn’t expected soon. But the pay-as-you-go wireless provider, which offers service under the Cricket brand, is expected to sell eventually because -- in an industry that increasingly relies on size and scale -- the company will find it harder to compete against larger competitors and its spectrum will become more attractive to possible buyers. Leap has remained on the outside, so far, because its spectrum is located in more rural areas and, thus, is deemed less desirable than others. Also, the company has high debt levels, a sluggish core business and a majority shareholder who has appeared unwilling to make a deal in the past.
benton.org/node/137171 | Wall Street Journal
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TELEVISION/RADIO
MURROW SPEECH
[SOURCE: Los Angeles Times, AUTHOR: Joe Flint]
[Commentary] Fifty four years ago, Edward R. Murrow delivered a controversial speech to television and radio news executives, a speech that took the industry to the woodshed for being more focused on profits than on serving the public interest. "One of the basic troubles with radio and television news is that both instruments have grown up as an incompatible combination of show business, advertising and news," Murrow said. That speech pretty much cost Murrow his career at CBS News. He remained with the network for a few years after the 1958 Radio and Television News Directors Association conference, but his presence at the network was greatly diminished as CBS Chairman Bill Paley felt betrayed by his No. 1 news talent. Little has changed since those remarks were delivered. While the evening news format still exists, coverage of the world has diminished. If a story cannot be summed up in a minute or two, odds are it won't make the news. The more complex the issue, the less likely it will be explored. The morning shows are, for the most part, about gossip, celebrities and cooking. Take a look at some old clips of a network morning show from even as recently as the 1980s and compare it to what is on today. The old shows look like serious news programs while the current versions are a notch or two above "Entertainment Tonight." Murrow warned of the dangers of trying to reach everyone by enlightening no one.
benton.org/node/137169 | Los Angeles Times
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TV LAND SUBTRACTS CONTENT
[SOURCE: Broadcasting&Cable, AUTHOR: Jon Lafayette]
Viacom has come under fire lately for cluttering some of its channels with extra commercials in order to make up for advertising revenue shortfalls caused by lower ratings. But one little-noticed effect of squeezing in more ads is that networks such as TV Land and Nick at Nite are actually running fewer episodes of series in many dayparts, sometimes running only five episodes of sitcoms like King of Queens and George Lopez in a three-hour block rather than the six 30-minute episodes that normally fill a programming grid.
benton.org/node/137163 | Broadcasting&Cable
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INTERNET/BROADBAND
INFOSTRUCTURE IS THE NEW INFRASTRUCTURE
[SOURCE: Wall Street Journal, AUTHOR: Walter Russell Mead]
[Commentary] Lobbying for more highways and high-speed rail misses the point. What's needed instead is support for advancing the Information Age economy. Government policy could reward companies that promote telecommuting and teleconferencing, for example, or otherwise facilitate the transition. There is still much work to do to build the information superhighways we will need to compete in this century and the defense systems that can protect them against cyberattack. Government will have a significant role to play in creating a suitable regulatory structure and policy framework to accelerate this process. Yes, our existing roads, bridges and highways should be maintained, and in some cases enhanced. Even so, more physical infrastructure isn't our main need at this point. We don't want to build the 21st-century equivalent of a new and improved national canal network. Infostructure rather than infrastructure should be the priority.
benton.org/node/137201 | Wall Street Journal
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STORIES FROM ABROAD
These headlines presented in partnership with:
GOOGLE ASKED TO CHANGE PRIVACY POLICY
[SOURCE: Reuters, AUTHOR: Claire Davenport, Leila Abboud]
European Union regulators want Google to make changes to its new privacy policy to protect the rights of its users, the EU's national data protection regulators said in a letter to the company. Leading the inquiry on behalf of Europe, France's data protection watchdog had already questioned the legality and fairness of Google's new privacy policy, introduced in March. This consolidated 60 privacy policies into one and pooled data collected on individual users across its services, including YouTube, Gmail and its social network Google+. Users cannot opt out. The regulators' letter said: "Combining personal data on such a large scale creates high risks to the privacy of users." "Therefore, Google should modify its practices when combining data across services for these purposes," the letter said. It was signed by 24 of EU's 27 data regulators plus those of Croatia and Liechtenstein.
benton.org/node/137167 | Reuters
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