The massive cable and telecom mergers under review may just be the start of a broader wave of consolidation to hit the entertainment industry.
Rumors are rife that Time Warner is negotiating with Vice Media, the magazine-turned-media company now known for producing edgy documentaries that air on HBO. Viacom could rejoin CBS, which it split from nearly a decade ago. Univision may be seeking a buyer and has been in talks with Time Warner and CBS, according to the Wall Street Journal.
Some lawmakers and analysts say it's inevitable that television programmers will bulk up to stand up against demands from increasingly powerful cable and telecom distributors like Comcast who want to lower their costs for programming.
Could an AT&T merger with DirecTV result in savings for consumers? Senate lawmakers pressed the two companies' chief executives on that question.
But although both firms said that the acquisition would lower their operating costs, consumers wouldn't likely see those savings reflected in their monthly bills immediately, if ever. The most that TV viewers can expect right now, said AT&T chief executive Randall Stephenson, would be that prices simply rise less quickly.
That didn't seem very comforting to members of the Senate Judiciary Committee, who kept asking variations of the same question in an attempt to secure a commitment by AT&T to price relief.
AT&T expects the DirecTV deal would eliminate the need for both companies to seek profits on the products they each sell to consumers separately. That would give AT&T greater bargaining leverage with content companies. AT&T might be able to save as much as 15 percent on programming costs, said Stephenson. But citing complexities in the programming industry, Stephenson stopped short of predicting any effects on consumers' bills.
[Commentary] AT&T hit Capitol Hill to sell Congress on its proposed merger with DirecTV. Among its arguments? If the merger goes through, we can go head-to-head with Comcast.
AT&T's case boils down to two arguments when it comes to challenging Comcast: A bigger AT&T will lower programming costs and offer a more efficient bundle of services. Testifying before a House subcommittee, AT&T chief executive Randall Stephenson dropped a fascinating statistic. He claimed that for every dollar the company makes off of its video subscribers, $0.60 goes straight to the people who make the content.
In other words, 60 percent of AT&T's video revenue turns right around and leaves.
This brings us to AT&T's second argument, which is that a DirecTV merger would promote cheaper bundles. AT&T took aim at what it and DirecTV called a "synthetic bundle" -- taking, for example, broadband from one company, combining it with video from another, and then selling that as a package to consumers. Because AT&T and DirecTV each have to visit a home to make two separate equipment installations for the synthetic bundle to work, that drives up costs.
Sprint announced that it's going to let consumers take a 30-day test run with its network as part of a push to advertise a string of network tune-ups it has made across the country.
The carrier, the nation's third-largest, has spent years overhauling its network. The company said that it was launching 4G LTE networks in 28 new cities, offering high-definition voice service across the country and planning to launch its high-speed "Sprint Spark" service in three new cities. The company also said that it will begin offering consumers the option to call and send texts via Wi-Fi networks in the coming weeks.
Given all of those changes, the company said, the firm is going to let users try out its network for 30 days, starting June 27. Those who take advantage of the offer can opt to cancel their service within 30 days for a full service and device refund, the firm stated in a press release.
The offer is available to new customers opening lines with Sprint, or to existing customers who wish to add a line to their accounts. The promotion may help Sprint, which has struggled to retain customers during its network makeover, lure some who have switched to other competitors such as Verizon, AT&T and T-Mobile back to the flock.
Company spokeswoman Adrienne Norton confirmed that the trial period option is a promotion -- as in, it won't last forever -- but that Sprint has not yet set an end date.
[Commentary] A new messaging app, called Yo, has created a sensation in Silicon Valley. It is being hailed as the next big thing. The amazing breakthrough? Sending the word “Yo” to a contact with just one click. This app received justifiable ridicule from Comedy Central’s Stephen Colbert and many others.
But some technology industry moguls are taking it seriously. Marc Andreessen wrote on Twitter that people who make light of it are missing the point; that Yo is “an instance of ‘one-bit communication’ -- a message with no content other than the fact that it exists.
My concern is that the adulation and funding that the Yo app has received will send a terribly wrong message to entrepreneurs all over the world, encouraging them to misdirect more investment into building more silly apps and other equally meaningless, mindless projects. Silicon Valley, which could be taking the lead in ridding humanity of its ills, is focused on scoring big hits by solving problems so small they can be said to be non-existent.
The venture-capital system, which fuels the technology industry’s growth, is geared towards rolling the dice in the hope of receiving returns of five to 10 times the invested capital within five or seven years. Such home runs are rare, and this has sent the system into decline, but little has changed. It’s still the silly apps that get the funding and attention.
Is the Federal Communications Commission the wrong agency to handle matters of net neutrality and Internet openness? That's what some in Congress and elsewhere are suggesting. Instead, they say, ensuring that Internet providers don't abuse their network operator roles should be a matter for the Federal Trade Commission and antitrust law.
In a hearing, members of the House Judiciary Committee grilled current and former federal officials over the possibility of letting the FTC take on the punishing of broadband companies that have harmed consumers.
"Do you believe the FTC would be effective at protecting the competitive interest?" asked Rep Jason Smith (R-MO). Former Republican FCC Commissioner Robert McDowell and current FTC commissioner Joshua Wright told the committee that using the FTC to regulate companies after the fact would be enough and that the FCC does not need to regulate Internet service providers (ISPs).
So far, there's been no evidence of a market failure that would require the FCC's preemptive regulation, they said. But network neutrality advocate Tim Wu testified in the hearing that looking at Internet policy solely through the lens of antitrust law would ignore the non-economic harms that Internet providers could wreak on the Internet, such as suppressing speech and limiting diversity.
By an overwhelming margin, the House passed a funding bill that among other things would significantly rein in intelligence agencies' ability to search through data they have collected and stop them from placing secret "back doors" into software and hardware products.
The bill includes an amendment, sponsored by Reps Thomas Massie (R-KY), Jim Sensenbrenner (R-WI) and Zoe Lofgren (D-CA), that adds the new restrictions.
The bill passed on a 340-to-73 vote. The amendment was passed in a 293-to-123 vote that surprised even those who have supported greater limits on the National Security Agency's powers.
The 2015 defense appropriations bill still needs to get worked out with the Senate, where the amendment's prospects are uncertain. If passed as-is by the Senate, the bill would block the government from doing two things: search government databases for information on a US citizen without a warrant, and force an organization to build into its product any technical "back door" that would assist the CIA or NSA with electronic surveillance. The amendment would bar the use of funds for searching an American's communications under this authority without a warrant.
Government officials contend that they are not required to obtain a warrant to search on data acquired lawfully. To do so would be a burden that would impair intelligence investigations, they say. The Foreign Intelligence Surveillance Court in 2011 reversed a previous ban on such warrantless searches.
The amendment would also block the NSA and the CIA from asking or requiring a person to "alter its product or service to permit the electronic surveillance" of users -- essentially a ban on back doors in software and hardware.
[Commentary] The Supreme Court's ruling on software patents dealt a blow to companies that want to patent abstract ideas -- a no-no under intellectual property law.
The unanimous opinion effectively raises the bar for what computer programs can be patented, helping to limit the number of "bad" patents entering the system and the number of lawsuits that can be filed by patent trolls.
But intellectual property experts are a little put out by the decision in Alice Corp. v. CLS Bank. Here's why: While the court struck down what was universally said to be a bad patent, it didn't do much to say what kinds of software should be patentable. In other words, the court decided the most basic conflict in the case, but more or less declined to offer guidance for other, future cases.
T-Mobile threw another one of its flashy "Uncarrier" events again, announcing that it will not charge its customers for data they use when listening to streaming music from some of the industry's top services. The news came just hours after Amazon.com announced that its first smartphone, the Fire phone, would offer free integration with Amazon's own Prime Music service and Prime Video.
Both add more fuel to a trend we've seen coming for a while: The future of entertainment is in the bundle.
With its latest announcement, T-Mobile has gone even further, by making music essentially a part of its data plan. Under the new program, any data charges customers would have picked up by streaming Pandora, Spotify, Rhapsody, iHeartRadio, iTunes Radio, Slacker, Samsung's Milk streaming services are excused. T-Mobile will also extend the same deal to the upcoming Beatport app. The company said that, between those eight services, it believes it has covered over 80 percent of the streaming music market.
Comcast's bid to win over regulators for its proposed merger with Time Warner Cable has mostly focused on Washington, where the cable company has testified before Congress, met with officials and given millions of dollars in political donations. But now, Comcast is devoting its attention to regulators a little farther north of the nation's capital. And wooing these folks will be no less important to the merger's outcome.
Since recent changes in the state's cable franchise laws, New York has vowed to take a close look at the Comcast-Time Warner Cable merger. In May, Gov Andrew Cuomo (D-NY) pledged a "hands-on review" of the proposal, and afterwards, the state public service commission (PSC) will hold the last of three hearings to consider the acquisition. If Comcast fails to convince state regulators that buying up Time Warner Cable (TWC) would benefit consumers, the PSC has the power to block the merger from happening within the state, says Brad Ramsay, the top lawyer for the National Association of Regulatory Utility Commissioners.
"They can't stop the entire merger, but they can stop the part that involves facilities in the state of New York," Ramsay said in an interview. "Would that require [Comcast] to go back to the drawing board? Well, if it's central to the synergies in this merger, sure."
How important is it that Comcast get New York's blessing? Look at it this way: Comcast has a fraction of the customers in New York that TWC has -- 23,000 versus more than 2.5 million. Considering that the entire merger nationwide would give Comcast control over 30 million subscribers, New Yorkers alone would account for nearly 10 percent of merger company's total customer base.