Benton's Communications-related Headlines for 5/04/04

For upcoming media policy events, see http://www.benton.org/calendar.htm

Communications-related Headlines is a free online news summary service=20
provided by the Benton Foundation (www.benton.org). Posted Monday through=20
Friday, this service provides updates on important industry developments,=20
policy issues, and other related news events. Headlines are compiled by=20
Kevin Taglang (headlines( at )benton.org) -- we welcome your comments.

BROADBAND BACKLASH
No Net Taxes? Why Not?
There's No Need For U.S. to Subsidize Broadband Access
Florida Paves Way for VoIP Taxation

TELECOM
Hearing Generates Ideas for Telecom Act Rewrite
Telecom's Potential
Baby Bell, Union Far Apart Amid Strike Talk

NEWS FROM THE BIG EASY
Sachs Tells Cable to Improve Pitch
Cable Lawyer: A la Carte Would Face Court Buzz Saw
Cable CEOs Downplay Reg Risk

SATELLITE
Update: Satellite Home Viewer Improvement Act
Nextel Would Pay $500M ENG Bill

QUICKLY
Republicans Lure the Arts to Politics and Protests
Newspaper Circulation Continues Overall Decline
Wireless Living

BROADBAND BACKLASH

NO NET TAXES? WHY NOT?
By March, 2004, 41.5% of U.S. households with Internet access already had=20
broadband and that share is growing by about 1% a month. So why does=20
broadband need subsidies and tax breaks, asks Gleckman. What problems are=20
lawmakers trying to solve. Local and state telecom taxes average about 6.5%=
=20
-- that means ~60 cents/month on dial-up accounts and maybe $2.60/month for=
=20
broadband connections. Are those figures scaring away any potential=20
Internet subscribers? The why did the Baby ells just increase the cost of=20
DSL by $2 to $3 a month? Gleckman concludes: High-speed Internet access is=
=20
a marvelous economic success story. In a few years, it will be a=20
near-universal means of communications in the U.S. And it's hard to imagine=
=20
how imposing a modest sales tax on the service will slow that trend or why=
=20
costly new government subsidies are needed to accelerate it.
[SOURCE: BusinessWeek, AUTHOR:Howard Gleckman]
http://www.businessweek.com/technology/content/may2004/tc2004053_0658_tc...
htm

THERE'S NO NEED FOR U.S. TO SUBSIDIZE BROADBAND ACCESS
Broadband services may be useful, but not useful enough to merit government=
=20
subsidies, Murray argues in his column. Governments normally step in when=20
markets fail, but the marketplace for broadband is working just fine. Rural=
=20
access is growing just fine, too, Murray argues. "Rural users may have to=20
pay more, but so what? The government doesn't intervene to ensure I can buy=
=20
a house in Washington, D.C., at Montana prices. Why would it intervene to=20
ensure Montanans can buy broadband at Washington, D.C., prices?" Instead of=
=20
tax breaks and subsidies, Congress should concentrate on creating=20
regulatory parity, privacy and security laws. "But the government doesn't=20
need to be setting prices, defining the products or subsidizing services.=20
The industrial policy debate ended more than a decade ago, when the=20
Japanese economy tanked and U.S. technology businesses soared. No reason to=
=20
revive it now."
[SOURCE: Wall Street Journal, AUTHOR: Alan Murray at Alan.Murray( at )wsj.com]
http://online.wsj.com/article/0,,SB108362192708100709,00.html?mod=3Dtoda...
s_page_one
(requires subscription)

FLORIDA PAVES WAY FOR VoIP TAXATION
Last week, the Florida House of Representatives failed to pass a bill that=
=20
would have postponed the enforcement of a tax levied on businesses and=20
individuals using substitute communications such as VoIP. The statute was=20
originally meant to tax businesses that bypassed the local telephone=20
network by establishing their own communications network. While it was=20
originally written with technologies such as satellite and microwave in=20
mind, it could be applied to businesses carrying voice traffic over their=20
IP data networks as well as individuals using VoIP services from companies=
=20
like Vonage. The Department of Revenue will now establish rules for the=20
enforcement of the tax. These rules must be approved by the governor and=20
his cabinet before the tax can be enforced.
[SOURCE: C-Net|News.com, AUTHOR: Marguerite Reardon]
http://news.com.com/2100-7352_3-5204656.html?tag=3Dnefd.top

TELECOM

HEARING GENERATES IDEAS FOR TELECOM ACT REWRITE
Jackson's commentary highlights six interesting ideas presented at the=20
Senate Commerce Committee's hearing on telecom policy last week. 1)=20
Simpler, less vague legislation would help keep telecom policy out of the=20
courts. 2) Legislation should not delegate major decisions to the FCC. 3)=20
The telecom industry spends more on litigation and regulation than on=20
research and development; this may be evidence that a regulatory revamp=20
which streamlines the process is long overdue. 4) Regulatory parity is=20
needed between technologies. 5) Set universal service goals and decide how=
=20
to fund them. 6) Every man, woman and child with either a telephone or a=20
television should receive Benton's Headlines -- so start sharing with your=
=20
friends. Jackson ends: It will be interesting to see how many of these=20
ideas become part of the next telecom legislation package, if one ever gets=
=20
passed in the next couple of years. Many of these notions sound good in a=20
hearing, but may not play as well in the harsh arena of political reality.
[SOURCE: Telephony's Regulatory Insider, AUTHOR: Donny Jackson]
djackson( at )primediabusiness.com

TELECOM'S POTENTIAL
A new report from the American Council for Capital Formation to be released=
=20
today will suggest that if telecom deregulation was done right capital=20
spending on communications equipment alone could increase by an average of=
=20
$2.8 billion a year over the next five years and create jobs. Regulatory=20
uncertainty is one of the reasons both market capitalization and capital=20
investment in the industry is down. Under-investment in infrastructure is=20
credited to price controls and an industrial policy that ignores property=20
rights in this editorial. It concludes: "[President] Bush rightly says 'a=20
proper role for the government is to clear regulatory hurdles so those who=
=20
are going to make investments do so.' Let's hope Washington's gridlocked=20
regulators finally get the message."
[SOURCE: Wall Street Journal Editorial Staff]
http://online.wsj.com/article/0,,SB108362611545400865,00.html?mod=3Dtoda...
s_opinion
(requires subscription)

BABY BELL, UNION FAR APART AMID STRIKE TALK
The Communications Workers of America and Baby Bell SBC may be headed to a=
=20
work stoppage as the two sides try to negotiate a new contract. Sticking=20
points in the talks include the company's insistence that union members=20
start shouldering more of their healthcare costs and the union's insistence=
=20
that SBC curtail the number of jobs it shifts to outside companies, many of=
=20
them overseas. In the last three years, 20,000 of SBC's union jobs were=20
eliminated, most of them in the local wireline business that has seen=20
demand plummet. Meantime, the company has been moving high-speed Internet=20
and other high-tech customer support jobs to overseas companies. CWA=20
represents 100,000 workers employed by SBC. More information is available=20
at www.cwa-union.org/sbc
[SOURCE: Los Angeles Times, AUTHOR:James S. Granelli]
http://www.latimes.com/business/printedition/la-fi-sbclabor4may04,1,7066...
story?coll=3Dla-headlines-pe-business

NEWS FROM THE BIG EASY

SACHS TELLS CABLE TO IMPROVE PITCH
National Cable & Telecommunications Association president Robert Sachs told=
=20
cable executives they need to do a better job of making the case to=20
Washington and consumers that they are getting additional value and=20
programming for their dollar. But a la carte pricing is not a solution Mr.=
=20
Sachs told the audience in New Orleans, "A la carte pricing would have a=20
devastating impact on ad-supported program networks that depend upon wide=20
distribution." As to indecent content, Mr. Sachs said, "I am proud our=20
industry responded swiftly by offering free channel blocking equipment to=20
consumers and informing them about tools to protect children from=20
inappropriate programming. Our follow-through will be just as critical."
[SOURCE: Broadcasting&Cable, AUTHOR: John Eggerton]
http://www.broadcastingcable.com/article/CA414692?display=3DBreaking+News
(requires subscription)
SACHS: CABLE SHOULD EMBRACE VOIP SOCIAL POLICIES
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
http://www.multichannel.com/article/CA414707?display=3DBreaking+News
(requires subscription)

CABLE LAWYER: A LA CARTE WOULD FACE COURT BUZZ SAW
Comcast's top lawyer said a la carte legislation will be tough for Congress=
=20
to pass because many lawmakers know the courts would probably strike it=20
down under the First Amendment. "Lawmakers who have talked about and=20
offered to introduce legislation acknowledge that there are serious=20
constitutional infirmities in going this route," said Terry Bienstock,=20
executive vice president and general counsel of Comcast Cable. "So,=20
ultimately, I don't think it will get done, but we're taking it seriously =
=85=20
and doing what we can to make sure it doesn't get any legs," he added.=20
Charter Communications executive VP and general counsel Curtis Shaw said a=
=20
la carte would include lots of hidden costs like developing a "specialty=20
billing" system. Lost ad revenue would be made up by higher retail prices=20
-- exactly what people don't want.
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
http://www.multichannel.com/article/CA414670?display=3DBreaking+News
(requires subscription)

CABLE CEOs DOWNPLAY REG RISK
At the National Cable Show in New Orleans, cable executives downplayed the=
=20
possibility that Congress will enact a la carte or decency mandates on the=
=20
industry any time soon. Comcast CEO Brian Roberts questioned whether the=20
indecency restriction push is =93a legitimate debate or an election-year=20
debate=94. Time Warner CEO Richard Parsons noted that =93The indecency issue=
is=20
as old as our democracy.=94 But =93I don't think it=92s going to be a=
significant=20
issue for our industry.=94 He said that media companies may tone things down=
=20
a little, but ultimately =93you run your business the way your customers=
tell=20
you to run your business.=94 Charter Communications CEO Paul Allen said that=
=20
a la carte pricing would destroy the economics of ad-supported basic cable=
=20
networks. All the nodding heads in the audience sighed and felt a lot=
better.
[SOURCE: Broadcasting&Cable, AUTHOR: John Higgins]
http://www.broadcastingcable.com/article/CA415052?display=3DBreaking+News
(requires subscription)
Also see:
CABLE LEADERS RIP A LA CARTE
[SOURCE: Multichannel News, AUTHOR: Ted Hearn]
http://www.multichannel.com/article/CA415046?display=3DBreaking+News
(requires subscription)

SATELLITE

UPDATE: SATELLITE HOME VIEWER IMPROVEMENT ACT
The Senate Commerce Committee will hold a hearing today on reauthorization=
=20
of the Satellite Home Viewer Improvement Act (SHVIA). Public Knowledge=20
President Gigi B. Sohn will tell the Committee that controversial bills=20
that would change copyright law should be left off of legislation. The law,=
=20
which allows satellite TV providers such as Dish Network and DirecTV to=20
carry local and network TV signals, expires later this year. In her written=
=20
testimony, Ms. Sohn wrote =93We are concerned that because SHVIA must pass=
=20
by Sept. 30, 2004, it may become a vehicle for other intellectual=20
property-related legislation, some of which proposes radical changes to=20
copyright law.=94 Ms. Sohn will mention several bills pending in the Senate=
=20
and House to change copyright law that sponsors may wish to attach to=20
SHVIA. Public Knowledge is most concerned about H.R. 4077, a bill which=20
would lower the legal standard for copyright infringement. The Commerce=20
Committee =93should reject any and all attempts to turn SHVIA into a Trojan=
=20
Horse for those who would like to change copyright and trademark law,=94 Ms.=
=20
Sohn plans to say. Also in her testimony, Ms. Sohn will stress that the=20
broadcast industry should be held to a Dec. 31, 2006 deadline for=20
converting to digital transmissions. The spectrum turned back by=20
broadcasters would lead to improvements in wireless services, including=20
broadband offerings, telephony and emergency communications. Ms. Sohn will=
=20
also endorse a proposal to allow satellite providers to carry distant=20
network signals in areas where viewers don't yet have access to locally=20
broadcast digital TV. Such a proposal, she'll say, would =93not only=20
encourage the purchase of digital television sets, but would provide local=
=20
broadcasters an incentive to provide a full-power digital signal."
The hearing will be webcast; see the URL below.
[SOURCE: US Senate]
http://commerce.senate.gov/hearings/witnesslist.cfm?id=3D1174

NEXTEL WOULD PAY $500M ENG BILL
The FCC has ordered broadcasters to relinquish control of spectrum used to=
=20
transmit live news reports and sports coverage back to the studio. Over the=
=20
next decade, broadcasters supposed to give up one-third of these=20
"electronic newsgathering" (ENG) channels to satellite communications=20
companies. The problem is, the move is expected to cost stations hundreds=20
of millions of dollars and, even though the satellite companies are legally=
=20
obligated to pay for the costs of buying or adapting transmission trucks=20
and receive sites, few have raised enough money to build out their=20
communications networks, much less pay broadcasters. Nextel has developed a=
=20
proposal to pay $500 million upfront to help broadcasters make the move. In=
=20
return, Nextel wants FCC assurance that it will get a small sliver of the=20
spectrum now used for ENG channels as well as another chunk of spectrum=20
close by. Besides speeding the ENG takeback, the government would get=20
another benefit from the new plan: Nextel would vacate crowded spectrum at=
=20
800 MHz where phone users routinely interfere with communications of public=
=20
safety departments.
[SOURCE: Broadcasting&Cable, AUTHOR: Bill McConnell]
http://www.broadcastingcable.com/article/CA415063?display=3DBreaking+News
(requires subscription)
Nextel Strikes Deal With TV Broadcasters
[SOURCE: Washington Post, AUTHOR: ]
http://www.washingtonpost.com/wp-dyn/articles/A64125-2004May3.html
(requires registration)

QUICKLY

REPUBLICANS LURE THE ARTS TO POLITICS AND PROTESTS
A look at the political events artists are organizing in New York for the=20
Republican National Convention in August/September.
[SOURCE: New York Times, AUTHOR: Julie Salamon]
http://www.nytimes.com/2004/05/04/arts/04PROT.html
(requires registration)

NEWSPAPER CIRCULATION CONTINUES OVERALL DECLINE
The Audit Bureau of Circulations reported yesterday that the newspaper=20
industry's overall long-term decline is continuing. The New York Post, the=
=20
New York Times, the Daily News, the Wall Street Journal and the USA Today=20
all saw circulation gains in the last six months, but for the majority of=20
papers, subscribership is down. "Their readers are dying off faster than=20
they're being replaced," said John Morton, president of Morton Research, a=
=20
newspaper consulting firm. "The encouraging thing is that nationally, this=
=20
time, it wasn't a very big drop.''
[SOURCE: New York Times, AUTHOR: Jacques Steinberg]
http://www.nytimes.com/2004/05/04/business/media/04circulation.html
(requires registration)

The New York Times has a special section today -- Wireless Living. See=20
articles at http://www.nytimes.com/technology/techspecial/
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