October 4, 2012 (T-Mobile USA and MetroPCS to Combine)
BENTON'S COMMUNICATIONS-RELATED HEADLINES for THURSDAY, OCTOBER 4, 2012
Spectrum Management Advisory Committee Meeting http://benton.org/calendar/2012-10-04/
WIRELESS/SPECTRUM
T-Mobile USA and MetroPCS to Combine, Creating Value Leader in US Wireless Marketplace - press release
T-Mobile purchase of MetroPCS is good for consumers, for now - analysis
Can you say MetroPCS iPhone? T-Mobile sure can - analysis
What T-Mobile gains from a MetroPCS merger: Surgical spectrum - analysis
T-Mobile Deal Would Remove Low-Price Rival
T-Mobile/MetroPCS deal would push unlimited data plans
T-Mobile-MetroPCS merger is seen as beneficial for consumers
Sprint Left With Few Options After T-Mobile-MetroPCS Deal
FCC Announces Winners of America's First "Mobility Fund" Auction - press release
US airlines in no rush to allow in-flight cellphone use [links to web]
Clearwire May Delay Network Buildout as Comcast Converts Stake [links to web]
Dish Network slams FCC on slow wireless approval [links to web]
5 Reasons Location Is The Smartphone's Killer Map - analysis [links to web]
NY teens pay valets to store devices [links to web]
INTERNET/BROADBAND
In Kansas, Rural Chanute Built Its Own Gigabit Fiber and Wireless Network - research
The Next Big Battle in Internet Policy - op-ed
Econ 101: Competition lowers broadband costs
Changes to the way we identify Internet users - research [links to web]
Knight Foundation Donating $3 Million to Connect2Compete [links to web]
MEDIA & ELECTIONS
Romney tells Lehrer he will cut PBS
Should TV Stations Refuse To Air Political Ads That Make False Claims?
Obama And Romney's Biggest Social-Media Fails - analysis
How Technology Destroyed The Once Substantive Presidential Debate [links to web]
Fox News exposes itself [links to web]
PRIVACY/SECURITY
FTC Charges Artist Arena With Violating Kids' Online Privacy
Advertisers to FTC: We're Not Going Back on 'Do Not Track' [links to web]
FTC Halts Massive Tech Support Scams - press release [links to web]
‘Do Not Track’ effort is going nowhere fast
What if Web Users Could Sell Their Own Data? [links to web]
CONTENT
Justice Department Grants $2.4M to Local Police for IP Theft Crackdowns [links to web]
MPAA chief admits: SOPA and PIPA "are dead, they're not coming back." [links to web]
NCTA: Rebuttable Presumptions Would Be De Facto Extension of Program Access [links to web]
Despite Growth of Streaming Content, Traditional TV Viewing Still Rules [links to web]
Pulling Reliable Info out of Social Media [links to web]
E-mail Is Getting Harder Because Everything Else Is So Much Easier [links to web]
The real problem with Apple’s maps isn’t the maps; it’s Apple’s whole strategy - analysis [links to web]
Web Profiles Haunt Students [links to web]
TV Anchor Takes on Viewer Who Complains About Her Weight [links to web]
HEALTH
Medicare costs: Are electronic records the solution—or the problem? - analysis [links to web]
TV Anchor Takes on Viewer Who Complains About Her Weight [links to web]
EDUCATION
Education chief wants textbooks to go digital [links to web]
JOURNALISM
Conservative media, making MSM look brilliant - analysis [links to web]
MSNBC President Phil Griffin on Whom He'd Poach From Fox News and Why Obama Avoids the Network [links to web]
Medicare costs: Are electronic records the solution—or the problem? - analysis [links to web]
Fox News exposes itself [links to web]
GOVERNMENT & COMMUNICATIONS
A Big Data Road Map for Government [links to web]
New Features in FCC’s Online Public Inspection File System Announced - public notice [links to web]
POLICYMAKERS
FTC chairman expected to step down after election [links to web]
STORIES FROM ABROAD
Internet Law in Philippines Takes Effect, Raising Fears [links to web]
UK Operators declare peace over 4G [links to web]
UK 4G – a generation later - analysis [links to web]
Cyber attackers disrupt Internet in Iran: official [links to web]
MORE ONLINE
Innovation drives America’s reinvention - editorial [links to web]
US high-tech companies ramping up exports: survey [links to web]
Innovation and Social Change for Girls and Women: Bridging the Gender and Technology Divide - op-ed [links to web]
Pentagon Approves Limited Fielding of Broadband Network Gear [links to web]
WIRELESS/SPECTRUM
T-MOBILE USA AND METROPCS TO COMBINE, CREATING VALUE LEADER IN U.S. WIRELESS MARKETPLACE
[SOURCE: T-Mobile, AUTHOR: Press release]
Deutsche Telekom and MetroPCS have signed a definitive agreement to combine T-Mobile USA and MetroPCS. This transaction will create the leading value carrier in the U.S. wireless marketplace, which will deliver an enhanced customer experience through a wider selection of affordable products and services, deeper network coverage and a clear-cut technology path to one common LTE network. The combined company, which will retain the T-Mobile name, will have the expanded scale, spectrum and financial resources to aggressively compete with the other national U.S. wireless carriers. Deutsche Telekom’s supervisory board and MetroPCS’ board of directors unanimously approved the transaction. The transaction is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders (approximately $4.09 per share prior to the reverse stock split) and acquire all of T-Mobile’s capital stock by issuing to Deutsche Telekom 74% of MetroPCS’ common stock on a pro forma basis. Deutsche Telekom has also agreed to roll its existing intercompany debt into new $15 billion senior unsecured notes of the combined company, provide the combined company with a $500 million unsecured revolving credit facility and provide a $5.5 billion backstop commitment for certain MetroPCS third-party financing transactions. The combined company will be a stronger competitor and will be well-positioned to drive future growth. Based on analyst consensus estimates for 2012, the combined company is expected to have approximately 42.5 million subscribers, $24.8 billion of revenue, $6.3 billion of adjusted EBITDA, $4.2 billion of capital expenditures and $2.1 billion of free cash flow (defined as EBITDA less capital expenditures) in 2012. After closing, the company’s headquarters will be in Bellevue, Washington and it will retain a significant presence in Dallas, Texas. The combined company will have an 11-member board of directors, including a number of members appointed by Deutsche Telekom consistent with its equity ownership. The transaction is subject to MetroPCS shareholder approval, regulatory approvals and other customary closing conditions. The transaction is expected to close in the first half of 2013.
benton.org/node/136215 | T-Mobile | Wall Street Journal | All Things D | CNNMoney | NYTimes | Washington Post | LA Times | AP | The Hill | ars technica | National Journal | GigaOm
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T-MOBILE DEAL GOOD FOR CONSUMERS
[SOURCE: Los Angeles Times, AUTHOR: David Lazarus]
[Commentary] Consumers would normally shake their heads in dismay at news of yet another market-shrinking telecom merger. But T-Mobile USA gobbling up rival MetroPCS is one of those rare examples of a corporate roll in the hay actually being in consumers' best interest — at least for a while. Short term, a revitalized T-Mobile helps prevent the near-duopoly of Verizon and AT&T from owning the entire wireless market. "Given the power of AT&T and Verizon, it's understandable that T-Mobile has to get creative to compete," said John Bergmayer, senior staff attorney for the advocacy group Public Knowledge. "It's a tough call, but on balance I think that the industry will be better off with a stronger T-Mobile." Longer term, however, all this merger does is set the table for even more consolidation. The most likely scenario: A few years down the road, Sprint and T-Mobile will say they need to merge to compete with the two heavyweights. And a few years after that, Verizon or AT&T will make a play for whatever's left. "It's the way the market is structured," said Linda Sherry, a spokeswoman for Consumer Action. "People tend to go with the big names. If a company is a little smaller, it becomes a takeover target." The marriage of T-Mobile and MetroPCS won't exactly change the wireless landscape. But T-Mobile will be in a better position to serve as a lower-cost alternative to the other guys with its greater market share, particularly in light of the compatibility of its and MetroPCS' next-generation 4G networks.
benton.org/node/136258 | Los Angeles Times
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METROPCS IPHONE?
[SOURCE: GigaOm, AUTHOR: Kevin Fitchard]
One of the unstated benefits of T-Mobile’s proposed merger with MetroPCS is one that T-Mo’s customers have been clamoring over for years: the iPhone. T-Mobile is already on a technology trajectory that will make its network compatible with the iPhone 5’s fickle radios. But tying up with MetroPCS will get T-Mobile there a lot faster. The iPhone 5 requires T-Mobile to support two common frequency configurations: 3G in the 1900 MHz PCS band and LTE in the 1700 MHz/2100 MHz Advanced Wireless Service (AWS) band. T-Mobile has neither today, but it will meet the first requirement shortly as it completes the relocation of its HSPA+ network this and early next year. As for LTE, T-Mobile won’t have a commercial network ready until the second half of 2013 and even then it won’t have a sizable LTE footprint until 2014. That’s where MetroPCS comes in.
benton.org/node/136257 | GigaOm
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SURGICAL SPECTRUM
[SOURCE: GigaOm, AUTHOR: Kevin Fitchard]
Within hours of making their merger plans official, T-Mobile and MetroPCS started selling their grand plan to investors, customers, the media and the world. On a conference call with analysts and press, T-Mobile’s new CEO John Legere painted a picture of a new hyper-competitive carrier that would dominate the prepaid and budget mobile markets and offer the country’s most powerful 4G network in the biggest metro markets. In short, the new carrier – which the companies are referring to as NewCo while waiting for regulatory approval – would be much greater than the sum of its parts, according to Legere, who would take over the helm of the new carrier. “When you add MetroPCS to an already aggressive challenger strategy, it acts as an accelerant,” he said. From a consumer’s perspective, there’s a lot to like in combined T-Mobile and MetroPCS assuming they can pull their complex transition plan off. Its 42 million subscribers would still leave it the No. 4 carrier in the U.S. rankings, but it will have closed considerable distance with No. 3 Sprint. What’s more, those two subscriber bases would match up almost perfectly, Legere said.
benton.org/node/136214 | GigaOm
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DEAL WOULD REMOVE LOW-PRICE MODEL
[SOURCE: Wall Street Journal, AUTHOR: Anton Troianovski]
The merger between T-Mobile USA and smaller rival MetroPCS will solve one problem for regulators by giving industry leaders Verizon Wireless and AT&T a more formidable competitor. But the deal could also create a new complication: Fewer competitors at the price-sensitive low end of the market. Regulators who shot down AT&T's planned $39 billion acquisition of T-Mobile last year are expected to view the combination favorably, because it makes T-Mobile a stronger, low-priced competitor to Verizon and AT&T. But the deal will remove MetroPCS as an independent, low-cost competitor and create an increasingly concentrated prepaid cellphone market. After the deal, three companies—T-Mobile, Sprint, and América Móvil unit TracFone—will account for three-quarters of all prepaid cellphone customers, according to data from UBS AG. John Bergmayer, a senior staff attorney in Washington at consumer-interest group Public Knowledge, said he expected the Federal Communications Commission to examine the deal's impact on the prepaid market as part of its usual review of whether the merger is in the public interest. Bergmayer said, however, that he believed the merger was good for consumers. T-Mobile says it wants to continue to present itself as the better-value alternative to AT&T and Verizon Wireless, and that the merger with MetroPCS will provide added scale to help it compete. "They're not going to become mini-Verizon," Bergmayer said. "I'm not going to be thrilled to see the number of competitors go down, but I think in the context of trying to keep up with AT&T and Verizon it actually makes a lot of sense."
benton.org/node/136288 | Wall Street Journal
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PUSHING UNLIMITED DATA PLANS
[SOURCE: Politico, AUTHOR: Brooks Boliek]
The proposed merger of T-Mobile and MetroPCS will allow the combined company to push unlimited data plans, as a counterbalance to the other major carriers’ attempts to charge customers according to their use, company leaders said. “The combination of our complementary spectrum will allow our combined company to drive unlimited as a key differentiator,” T-Mobile President and CEO John Legere told reporters in a conference call. “That’s a big part of who we are now and who we’ll be in the future.” The decision to compete with major carriers Verizon and AT&T by continuing to offer unlimited data plans addresses what has been a major concern for policymakers. While the deal would allow the combined company to increase its customer base to 42 million customers, so that it can become a more robust competitor to Verizon, AT&T and Sprint, it is fundamentally a play by T-Mobile’s parent, Deutsche Telekom, for more airwaves.
benton.org/node/136284 | Los Angeles Times
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BENEFICIAL FOR CONSUMERS?
[SOURCE: Los Angeles Times, AUTHOR: Andrea Chang]
A merger between T-Mobile and MetroPCS would create a beefed-up, low-cost carrier that could give consumers another viable choice in a market dominated by Verizon and AT&T. Several analysts said the merger would probably result in a more segmented wireless industry, with Verizon and AT&T competing for postpaid consumers, and T-Mobile focusing on price-sensitive pay-as-you-go customers. Rep. Anna G. Eshoo (D-CA), ranking member of the House Subcommittee on Communications and Technology, said the deal had "the right ingredients to provide consumers with a viable alternative" for wireless service. "At a time when two companies continue to dominate the wireless marketplace, the need for a strong national competitor has never been greater," Rep Eshoo said. "I hope the FCC and the Department of Justice will conduct a thorough but swift review of the transaction's merits."
benton.org/node/136285 | Politico
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SPRINT HAS FEWER OPTIONS
[SOURCE: Wall Street Journal, AUTHOR: Spencer Ante]
Two weeks ago, Sprint Nextel Corp. Chief Executive Dan Hesse stood up at an investor conference, predicted that deals were coming in the wireless industry and said his company would participate. He was right about the deals, but wrong about the players. While T-Mobile was busy talking with MetroPCS about the deal that ultimately came to pass, Sprint was also talking with T-Mobile about a merger, people familiar with the negotiations said. The talks with Sprint weren't very advanced, the people said. Still, the situation echoed developments in early 2011, when Sprint was in much more serious talks with T-Mobile just before the Deutsche Telekom unit agreed to be acquired by AT&T, a deal that ultimately was killed by regulators. The near misses have roiled Sprint's stock and sparked debate about whether it needs to do a deal, and with whom.
benton.org/node/136283 | Wall Street Journal | All Things D
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MOBILITY FUND
[SOURCE: Federal Communications Commission, AUTHOR: Press release]
Federal Communications Commission Chairman Julius Genachowski announced the winners of America’s first ‘Mobility Fund’ auction. This market-based policy innovation was part of the Commission’s once-in-a-generation reform of the Universal Service Program last year, which allocated $300 million in savings from cutting waste and inefficiency, to a new Mobility Fund aimed at closing gaps in mobile coverage across the U.S. The effort marks the first time in history the Commission has made universal mobile service an express universal service goal. As a result of the auction, new mobile infrastructure deployment will begin in 31 states with areas that currently lack access to 3G or 4G mobile service. In total, up to 83,000 new U.S. road miles on which millions of Americans live, work, or travel will gain access to advanced mobile networks that significantly enhance opportunities for jobs, education, healthcare and public safety. As part of the auction rules, winning companies must complete projects within three years. They must also make their networks available to other providers for roaming so that as many consumers as possible can benefit from the new networks.
Thirty-eight companies and subsidiaries participated in the auction, submitting nearly 900 bids. Winners ranged from larger national carriers like T-Mobile and U.S. Cellular to smaller carriers like Pine Belt Cellular, Inc. in Alabama, and VTel Wireless, Inc. in Vermont. The Commission expects millions more in private investment to complement the auction funding.
benton.org/node/136212 | Federal Communications Commission | Public Notice | Bidder Summary | Long-Form Application Filing Instructions | National Journal
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INTERNET/BROADBAND
CHANUTE, KANSAS
[SOURCE: Institute for Local Self-Reliance, AUTHOR: Christopher Mitchell]
Chanute first built a vision, then a network. The fiber network connects schools and other community anchor institutions with gigabit networks. The wireless network serves public safety. Soon, both may serve everyone. The “Hub of southeast Kansas” is a small town where schools have gigabit connections, the City operates a 10Gbps fiber-optic broadband ring, and several local businesses credit the publicly owned utility with giving them the best broadband option available. Chanute has made impressive strides in solving its broadband problems by developing innovative partnerships with local businesses and community anchor institutions. Local businesses are strong supporters of the network. From Ash Grove Cement to MagnaTech, business clients have remained satisfied subscribers. The network continues to encourage economic development and provides connectivity options that attract high bandwidth employers. The network generates $600,000 per year for Chanute’s Electric Utility, 5 percent of which goes to the general fund as a franchising fee each year.
benton.org/node/136255 | Institute for Local Self-Reliance
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THE NEXT BIG BATTLE
[SOURCE: Slate, AUTHOR: Marvin Ammori]
[Commentary] For two years, network neutrality, the nation’s most high-profile and contentious Internet policy conflict has taken a backseat to other debates—privacy investigations by the Federal Trade Commission, cybersecurity orders from the White House, proposed copyright legislation like SOPA and PIPA, software patents in courts, and censorship abroad. After nearly a decade of (rarely productive) debate, net neutrality—restrictions on Internet service providers to ensure consumers experience freedom online—has rarely been in the news since early 2011. But that quiet won’t last much longer. We have merely been in an extended intermission, and soon we will watch the third act in this play unfold. At stake is access to the mobile Internet on the handhelds and tablets in our pockets—as well as access by the chips increasingly embedded in our clothes, toasters, and heart monitors.
Act I: Dial-up, from Internet’s birth to circa 2005
Act II: High-Speed Broadband, 2005-2010
Act III: Mobile and Everything Else, 2012-?
[Ammori is a Bernard L. Schwartz fellow at the New America Foundation and a visiting scholar at Stanford Law School’s Center for Internet Society]
benton.org/node/136194 | Slate
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COMPETITION AND BROADBAND
[SOURCE: GigaOm, AUTHOR: Stacey Higginbotham]
The cost of local access to the Internet is disproportionately higher than the cost of sending the same bits over long haul networks, but the price difference is far from random. A study of access prices on long haul and local transit found that the technology used and local competition were likely to determine how much higher the cost would be. The study, by analyst firm TeleGeography isn’t really a surprise, but it’s a nice, thorough look at the difference in transmission costs for bits under the ocean as compared to transmission into a business park or corporate campus. TeleGeography focused on corporate connections back to a local point of presence, so it’s not the same as your Comcast or BT connection to the home, but many of the same conditions apply. The review of prices found that Ethernet is cheaper than a T-1 line and that Mumbai has the cheapest local access prices. It also noted the disproportionate costs of shorter local access compared to long haul. For example the report notes, “the average annual price of a 2 Mbps E-1 local loop within central London is $6,823 — nearly 30 percent more than that of a 5,500-kilometer E-1 circuit from New York to London.”
benton.org/node/136210 | GigaOm
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MEDIA & ELECTIONS
ROMNEY WOULD CUT PBS
[SOURCE: The Hill, AUTHOR: Brendan Sasso]
Mitt Romney promised during the first presidential debate to cut funding for PBS. "I'm sorry Jim, I'm going to stop the subsidy to PBS," Romney told PBS anchor Jim Lehrer, who was moderating the debate. "I like PBS. I love Big Bird," Romney said. "I actually like you too." But he emphasized that he will cut any federal program that he said is not worth borrowing money from China for.
benton.org/node/136281 | Hill, The
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POLITICAL ADS AND FALSE CLAIMS
[SOURCE: National Public Radio, AUTHOR: Scott Finn]
If a television or radio station determines that a political ad is false, should it refuse to run the ad? That's exactly what the nonpartisan group Free Press is calling on stations to do. "They certainly could reject some of them," said Matt Wood, the group's policy director. At the very least, they could do more fact checking, he said. Free Press's new report, Left in the Dark, analyzes political ads in several swing-state markets: Charlotte (NC); Cleveland; Las Vegas; Milwaukee; and Tampa (FL). It says viewers are seeing more political ads than ever before, but television stations only rarely fact check any of the ads. And even when television stations conduct fact checks, that story is overwhelmed by a flood of TV ads. In Denver, there was one minute of fact checking for every 162 minutes of campaign ads.
benton.org/node/136193 | National Public Radio
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BIGGEST SOCIAL MEDIA FAILS
[SOURCE: Fast Company, AUTHOR: John Souza]
Just as social media heavily impacted this year’s London Summer Olympics, it’s also playing a very prominent part in this year’s U.S. presidential election. In 2008, President Obama showed everyone just how powerful social media could be. Now, both sides are proving just how essential leveraging Facebook, Twitter, and other online platforms are to a successful run at the White House. The constant social media spotlight has meant several significant “campaign stops” for both candidates as unexpected Internet blowbacks forced them to pause and take stock of how the ongoing onslaught of online scrutiny has suddenly turned conventional politics upside down. Here are three of the most significant ones:
Campaign Stop #1: Fact-Checking Is Now an Amateur Sport
Campaign Stop #2: The Speed of Social Media Is a Double-Edged Sword
Campaign Stop #3: Social Media Knows Where You’re Hiding
benton.org/node/136236 | Fast Company
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PRIVACY/SECURITY
WARNER MUSIC’S ARTIST ARENA
[SOURCE: AdWeek, AUTHOR: Katy Bachman]
The Federal Trade Commission filed suit against Warner Music’s Artist Arena -- which operates fan sites for music artists such as Justin Bieber, Selena Gomez, Demi Lovato and Rihanna -- for violating the online privacy of 100,000 children under the age of 13. Filed in the federal district court for the southern district of New York, the FTC is asking for a $1 million penalty plus a civil injunction against Artist Arena. According to the FTC’s complaint, the fan sites collected a host of personal information from children, including their birth date and email addresses, and gave them access to the site. Children were then asked to provide even more personal information before the site obtained parental consent as required under the Children’s Online Privacy Act.
benton.org/node/136197 | AdWeek
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DO NOT TRACK GOING NOWHERE
[SOURCE: Politico, AUTHOR: Tony Romm]
Internet companies had a shot to avoid the dreaded R-word — regulation — when they began hatching a plan to help Web users avoid being tracked online. But more than a year later, online advertising giants, tech companies and privacy advocates are not much closer to deploying technology that would allow consumers to flip a digital switch and avoid targeted ads — and the stalemate is prompting growing calls for action from Washington policymakers. The online ad industry initially pledged to regulators to honor so-called Do Not Track signals sent from Web browsers like Microsoft’s Internet Explorer and Google’s Chrome by the end of the year. They made the commitment when the Obama administration revealed its blueprint for online privacy protection last year. But that commitment appears on the verge of falling apart as the industry meets with privacy advocates at a standards-setting meeting in Amsterdam.
benton.org/node/136279 | Politico
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